Finnegan client Maglula delivers crushing blow to Amazon’s arbitration practices over counterfeit products

Finnegan represented Maglula Ltd. in a one-of-a-kind district court litigation including patent, trademark, and copyright claims over Maglula's assertions that Amazon sold counterfeit consumer products. This widely followed case is important because Amazon has been criticized as one of the main sources of counterfeit products sold in this country, and its conduct has caused extensive harm to brand owners and consumers. Policymakers have also been scrambling to enact legislation to impose liability on platforms like Amazon, which have been effective in avoiding liability as a supposed pass-through of counterfeit products.

Amazon mounted an early and aggressive attack in an attempt to dismiss the case, force arbitration, or transfer the litigation to its home court of Seattle, WA. Finnegan defeated all attempts, marking one of the first cases finding Amazon’s onerous arbitration provisions inapplicable. In addition to defeating Amazon’s motions to dismiss, arbitrate, or transfer, Maglula successfully compelled Amazon to open warehouses for inspections. The court also determined Amazon committed spoliation when it destroyed evidence after Maglula filed the lawsuit.

The Eastern District of Virginia denied Amazon’s attempt to dispose of the case via summary judgment, finding Maglula presented a “straightforward counterfeit case;” “Chinese manufacturers did their best to create copies, or ‘knockoffs,’ of Maglula products, packaging, markings, and literature;” “Amazon proceeded to sell these products online as genuine Maglula products;” “the evidence of unlawful counterfeiting … is overwhelming;” and concluding “this is simply not a case where Amazon can avoid liability.” After defeating Amazon’s attempts to make the case go away, the parties were ordered to mediate, they entered into an agreement, and the case was dismissed.