Rep. Nadler Advocates for Law Penalizing Online Retailers for Selling Unsafe Counterfeit Goods

On Thursday, the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property, and the Internet held a hearing gathering information for a proposed bill, the SHOP SAFE Act: Stemming the Rising Tide of Unsafe Counterfeit Products Online. The law would create liability for e-commerce platforms that sell third-party counterfeit goods which cause health and safety concerns, unless the platform takes certain proactive steps to curb abuse.

Prior to the hearing, House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) made opening remarks about the importance of updating the law to bolster consumer safety in an increasingly online world. Rep. Nadler noted that he previously introduced the act in March 2020, a year in which Americans spent more than $790 billion in e-commerce, a figure up 30% from the previous year.

He contended that brick-and-mortar stores, unlike online sellers, must vet their supply chains to ensure that the products they sell are authentic, or face legal responsibility. The proposed bill does away with this online seller exemption using a “balanced approach,” Nadler claimed.  

In particular, the bill would make platforms contributorily liable if a seller makes use of a counterfeit mark in connection with selling, offering, or advertising such goods on the platform. Online marketplaces would need to take various actions to shield themselves from liability, including requiring the seller to be available for service of process in the United States, verifying the seller’s identity and contact information, requiring the seller to agree to not to sell inauthentic goods, implementing technical measures to pre-screen and remove non-compliant goods, and instituting policies to ban repeat offenders.

Rep. Nadler noted that a bipartisan Senate companion bill was introduced earlier this week. He concluded his remarks by expressing his hope the hearing “will serve as a stepping stone on the path to moving this critical legislation forward.”