• by Wendy Davis  @wendyndavis, March 10, 2022

A bill that would effectively require online marketplaces to vet their platforms for fakes is drawing new opposition from tech companies, digital rights groups and law professors.

The SHOP SAFE (Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce) Act would provide that companies like Amazon, eBay and Etsy are liable for contributing to trademark infringement when third parties sell counterfeits, unless the companies take specific steps in advance.

Among other measures, the companies would have to verify sellers' identities, and screen merchandise to authenticate it, in order to avoid liability.

More than three dozen companies and organizations are urging lawmakers to reject the bill, arguing it will harm small businesses as well as consumers.

“While we support the goals of the SHOP SAFE Act -- to promote consumer welfare, health, and safety -- the bill as-drafted is not tailored to achieve those goals without risking substantial and negative unintended consequences,” Etsy, Pinterest, Reddit, Shopify, and others said Wednesday in a letter to lawmakers.

“It marks a fundamental change to how individuals and businesses across the country communicate, engage, and conduct business online, and threatens to undermine free speech, innovation, and consumer choice,” the groups add.

They specifically say the bill creates new hurdles for smaller platforms by effectively forcing them to proactively monitor sellers' posts. What's more, the groups say, smaller services and sellers “may cautiously err on the side of removing legitimate listings or even shut down due to compliance burdens.”

The groups are asking Congress to remove SHOP SAFE from the final version of the United States Innovation and Competition Act and the America COMPETES (America Creating Opportunities for Manufacturing, Pre-Eminence in Technology, and Economic Strength) Act, which aim to boost competition with China. SHOP SAFE was included in a version of the America COMPETES Act that was passed last month by the House.

Dozens of law professors, led by Santa Clara University's Eric Goldman, Harvard University's Rebecca Tushnet and University of Tulsa's Betsy Rosenblatt, also urged lawmakers to reject the bill.

“The SHOP SAFE Act represents a negative-sum policy, where it likely hurts every stakeholder and benefits none of them,” the law professors write.

They say the bill would fundamentally change trademark law, which currently requires online marketplaces to honor takedown notices regarding specific listings.

Goldman and the other law professors say the bill would revise the status quo in two ways. One is that it would authorize trademark owners to send broad takedown notices that don't specify which listings are fake. The second is that it would impose liability even when trademark owners don't send takedown notices.

“Trademark owners will misuse their new and extraordinary powers to broadly restrict legitimate competitive offerings on online marketplaces, such as non-infringing imitators and resellers of used goods,” the law professors write. “Furthermore, in the face of essentially unmanageable legal liability, online marketplaces would proactively restrict many legitimate marketplace activities.”