In two prior blog posts, we covered how online marketplaces, like Amazon, are being held responsible for defective and counterfeit products sold on their platforms. In the latest development in this space, California’s Court of Appeal (Second Appellate District) determined that Amazon could be held strictly liable for injuries a consumer suffered from a defective hoverboard she bought from the retailer, even though Amazon neither manufactured nor sold the product. Loomis v. Amazon.com LLC.
In a recent post, we summarized recent developments in litigation and legislative activity concerning whether online marketplaces may be directly liable for the sale of defective and counterfeit products on their platforms. Now the executive branch has weighed in, with President Trump issuing (on Prime Day, no less) a Memorandum on Stopping Counterfeit Trafficking on E-Commerce Platforms Through Fines and Civil Penalties.
Consumers are doing more and more shopping online. But when a consumer buys a product that is defective or counterfeit, are online marketplaces liable for misconduct by third-party sellers?
E-commerce platforms have generally avoided being treated like their brick-and-mortar counterparts by arguing that they do not actually “sell” goods, but rather provide services (e.g., payment processing, storage, shipping) to third-party sellers, who in turn sell products to consumers. However, recent court decisions and looming legislation may change this dynamic, opening up online marketplaces to product liability and intellectual property claims for products sold by third-parties on their platforms.