Negotiations With The Right’s Holder Who Made an IP Complaint Against You on Amazon

Hi everyone!

Today we will talk about a pretty complicated case: when Amazon keeps your funds on hold when the party that complained about you infringing their IP rights sued you. In this post, we will raise the issue of what you need to pay attention to in case of a similar problem.

Situation in practice

You bought a product from a Chinese supplier and started selling. Things are going well, and sales are going uphill, but one fine day you received a message that you were sued and your funds were frozen. The situation sounds ominous, and the first thing our clients often do in such a case is to try to contact a lawyer or a complaining party and discuss further actions.

What are you doing wrong? 

Our clients are driven by fear and haste because nobody needs an Amazon account if you can`t earn money from it. In this case, the person is very vulnerable and may make the wrong decision to accept the settlement amount offered by the complainant’s lawyer, which is usually not the most pleasant amount.

What do you need to know about this case?

1. You need to determine the reason behind the complainant’s decision to go to court. Are you guilty or not? In this way, we will build a defense strategy with you.
2. You need to examine the product and website of the complainant or their lawyer to make sure the complaint is not fake. But unfortunately, there are times when your competitors may use this strategic move to capitalize on your fear.
3. You need to know how much product you sold and how much money you earned, as AMZ often transfers this information to the complaining party.

Possible scenarios

1. The most attractive option is to solve the problem quickly and without cost, but only 1% of cases are lucky enough to go down this path. You write a letter  – explain the situation – the complaining party withdraws the complaint.
2. The most popular option is to contact an opposing party lawyer and negotiate the price of the Settlement agreement. In any case, you have to pay – the question is the price. In this case, they will rush you and send you court documentation that you have a court in the state of California in three hours. If you do not appear in person at the meeting, then everything is lost, and you urgently need to pay 50k $ (a conditional amount to scare you). I call this method of legal struggle – Fear effect. The goal of the lawyer is to scare us, but we are not from a timid dozen.
3. The worst option is that the lawyer will stand his ground and, at some point, they may simply stop responding to messages. But you should not immediately bury your account – there is always a way out! Although there are hopeless cases – you must be prepared for such an outcome. The percentage of such cases is small, but it exists.

For our part, as lawyers, we can give you some practical advice:

• First, don’t drag out time. In our practice, there was a case where a client was sued in 2020, and we started to work only in 2022. We did save the funds, but it was much harder than it would’ve been if we had started earlier.
• Submit information carefully. There were cases when clients revealed the facts that complicated their defense to the opposing lawyer, which exacerbated their situation.
• Often we also meet clients’ requests – Can I sell the remaining goods after unfreezing the balance? Answer – If you want to repeat this preliminary settlement procedure, then yes. For the complaining party – YOU are the fellows! Better not to do it.

As a result, our friends – time and money! So be prepared to wait and pay for your mistakes.