Unfounded Allegations of Online Intellectual Property Infringement: A Potential Backfire!

An Important Decision for Businesses Selling on Online Marketplaces

The implications of this decision are of particular interest to all companies that conduct business on online sales platforms.

False Intellectual Property Infringement Allegations Found by the Court

In this case, the defendant, The Shrunks, had posted an unfounded negative comment against the plaintiff, Keezio, on Amazon, a platform both parties use to sell their products. The comment accused Keezio of copying The Shrunks’ products, infringing intellectual property rights. In addition, The Shrunks had lodged complaints against Keezio and requested that its products be removed from Amazon’s platform as per its terms and conditions. The complaints alleged that Keezio had encroached on The Shrunks’ trademark and copyright rights, which led to the temporary removal of Keezio’s products from the platform. Subsequently, the Court found these allegations to be false.

Product Removal from Amazon Resulted in Financial Losses

In its legal action, Keezio argued that it had lost profits because of the baseless complaints. It stated that removing of its products from the Amazon platform resulted in lost sales opportunities.

Removing Products from Amazon May Constitute Disparagement

It is worth noting that, in his decision, the judge considered that the removal of Keezio’s products by Amazon constituted sufficient evidence of discredit for paragraph 7(a) of the Trademarks Act to apply. On this basis, Keezio was awarded damages of close to US$25,000. The Court, however, did not award the punitive damages sought by the plaintiff as it had not been shown that the defendant knew that its allegations of intellectual property infringement were false (the allegations were rooted in a misunderstanding of the scope of the intellectual property rights in question).

The Risks Associated with False Counterfeit Claims Online

From this decision, we learn that it is possible to punish false online allegations that have a real impact on a competitor’s business. The consequences of such statements may be costly, particularly if it can be demonstrated that the allegations were knowingly false. Hence, before any company requests that a competitor’s product be removed from an online platform due to potential infringement, we strongly recommend that it seek an assessment from a qualified professional. 

Obtaining Legal Guidance on Intellectual Property and E-Commerce Issues

Our Intellectual Property team advises businesses on trademark protection, online enforcement strategies and the legal risks associated with e-commerce platforms and intellectual property infringement claims. Contact our professionals to assess your rights, protect your brands and secure your online presence.

Learn more here : Keezio Group, LLC v The Shrunks’ Family Toy Company Inc., 2021 BCSC 1042