• by Wendy Davis  @wendyndavis, February 4, 2022

The House of Representatives on Friday passed a bill that would require online marketplaces to proactively police their platforms for counterfeits in order to avoid liability for trademark infringement.

The SHOP SAFE (Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce) Act was passed as part of the 2,900-page America COMPETES (America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength) Act, which aims to boost competition with China.

The SHOP SAFE Act isn't currently included in the Senate version of the America COMPETES Act.

SHOP SAFE, introduced last year, provides that online marketplaces such as Amazon, eBay, Etsy and others contribute to trademark infringement when third parties sell counterfeits, unless the marketplaces undertake a host of proactive measures. Among other steps, the bill would require marketplaces to verify sellers' identities, and screen merchandise to authenticate it, in order to avoid liability.

Tech industry groups and some digital rights advocates said last week in a letter to House leaders that the bill “misses the mark on protecting consumers, and will instead punish small businesses, stifle competition, limit artistic expression and cause economic disruption.”

Signatories, including the tech industry funded policy group Chamber of Progress, industry organization NetChoice and digital rights group Electronic Frontier Foundation, urged lawmakers to remove the bill from the broader COMPETES Act.

“Rather than bringing stakeholders together to address the complex issue of counterfeit products holistically, the SHOP SAFE Act appears to be a Trojan Horse for policies that the biggest brands in the world ... will use to drive American small businesses out of business,” they wrote.

“This legislation would force onerous, impractical, and unnecessary requirements on online sellers, including small businesses and individuals,” the groups added. “It also raises serious privacy concerns, forcing Americans to choose between protecting their identity and making a living.”

Santa Clara University law professor Eric Goldman criticized the bill last year, writing that it would “drive most or all online marketplaces out of the industry.”

He added: “The SHOP SAFE Act will reduce our marketplace choices, and increase our costs, during a pandemic shutdown when online commerce has become even more crucial.”