The Responsibility of e-Platforms for 3rd Party Sellers – a Case in the USA
There has always been a global discussion on the responsibility of e-platforms for the goods sold by 3rd parties. This is true in Africa, Europe and North America. Now the US trade group Cashmere and Camel Hair Manufacturers Institute (CCMI) has filed a lawsuit against the global online marketplace, Etsy Inc. in the USA for allegedly advertising and marketing 3rd-party counterfeit cashmere products through its platform. CCMI claims Etsy violated the Lanham Act; Massachusetts’ false advertising law; common law prohibitions on unfair competition; and Massachusetts’ Anti-Dilution Statute. CCMI also claims that Etsy conspired with the fake cashmere suppliers, and alleges that Etsy’s website, adverts, and automated consumer marketing emails sometimes feature shops selling counterfeit cashmere products, implicating the website in the scheme. Etsy provides a 3rd-party global marketplace for an enormous number of products and is estimated to have approximately 96m active buyers, 7.5m sellers, over 100 million listings, and to have had a turnover of $2.32 bn in 2021.
This case represents a growing trend to hold online marketplaces liable for 3rd-party conduct. For instance in the USA, courts recently held against online marketplaces if they stored, packed, and/or shipped these products to customers, and a 2021 California bill proposed imposing strict liability on online marketplaces for defective goods, even if the marketplace provider never took possession of the goods. Now with CCMI v. Etsy, Inc., the Massachusetts court can either decide to reject the claim since Etsy cannot be held responsible for its 3rd-party sellers, or the court could rule that the marketplace plays a meaningful role in distributing these allegedly counterfeit products.
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