Learn the 3 common reasons people get sued on Amazon (and how to avoid them).
►► Free $10,000/Month ebook: http://wholesaleted.com/4-step
►► 7 Things to Do BEFORE Selling on Amazon: https://youtu.be/66eeFdjzsQU
►► How to Not Get Sued When Dropshipping: https://www.youtube.com/watch?v=DtEkAyKapds
When selling on Amazon, there a 3 common reasons that people find themselves getting sued. Here is how to avoid them:
#1: Your Product Hurts Someone (Or Property) & They Sue You For Damages
If your product hurts someone, then they could potentially sue you for damages. This is particularly relevant in the USA which doesn’t have a public healthcare system, and the USA is the biggest online marketplace for Amazon.
This is why Amazon requires that, if for 3 months, your sales exceed $10,000 in revenue, you are required to get insurance for at least $1,000,000 in coverage. Prior to this though, Amazon does not require you to get insurance.
The easiest way to safeguard yourself against getting sued for this is to avoid products that are a potential risk. Anything that includes blades, heating elements or sharp edges is going to have a higher risk over simple items (the example used in this video of a “simple item” is a headphone case).
This also has the advantage that insurance for “simple items” is going to cost less than for riskier items. If you start out with a simple, less risky item, you’ll also be able to lower the cost of insurance for future “riskier” items by consolidating insurance (the more items you have insured, the cheaper it usually is to insure them as there is a discount).
#2: Your Product Contains Trademarks or Copyrighted Images
When manufacturing and importing products from China, you are going to have access to a lot of products containing copyrights and trademarks. In the video, the example used is that on Alibaba there are a lot of different items containing Mickey Mouse (the character is protected under both copyright and trademark law).
Unfortunately, a lot of people make the mistake of thinking that because companies are producing and selling these items, that they have the right to do so. This is not the case. They aren’t producing/manufacturing because they have the right: they are doing it because they know that they can usually get away with it.
Internationally, copyrights are usually honoured. China has also agreed to honour them. However, they are rarely enforced which is why infringement is so rampant (despite being illegal). The reason it is so rarely enforced is because culturally in China, if something is easy to copy and distribute to the masses, this is considered a good thing to do. In the West, the cultural perspective is different: we view that the rights of the individual are more important.
So do not import items breaking copyrights/trademarks. Your products will be taken down off of Amazon, and you are risking having legal action taken against you.
#3: Your Products Violate Patents
Something interesting about patents is there is no such thing as an “international patent.” While countries will usually agree to honour copyrights, there is no protection for trademarks. You need to file your Patents in each individual country. This means that Chinese manufacturers regularly product items that are protected by patents in other countries like the USA.
In the video, an example of a product that is patented in the USA is one by Wigzi. It has patented dual dog leashes that contain the following features:
* Has the leashes attached to a rotating wheel that is separate from the handle (to stop the dogs getting tangled).
* Has individual triggers for each leash, so you can control the length for each one.
* Has the leashes colour-coded to match the colours of the triggers.
There are several manufacturers on Alibaba that are producing dual leashes that have these exact same features. And as there is no active patent for this style of dog leash in China, they are allowed to sell them. But if you were to import them to the USA and sell them on Amazon.com it would be a big mistake as Wigzi would get your listing taken down, and could potentially sue you.
When conducting product research, look to see if there are any other similar items on Amazon listed. If the item has unique features and there are no other products like it listed, there is a good chance that it is patented. You can then go to the website owned by the company listed as the seller and see if they have any patents on their site. Usually, they’ll have them listed very clearly. You can then go to Google patents and check to see if the patent is still active.