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Will Amazon Kill Trademarks?

“There is this erosion of what it means to be a traditional consumer product brand…In a way, Amazon is providing all this information that replaces what you’d normally get from a brand, like reputation and trust. Amazon is becoming something like the umbrella brand, the only brand that matters.”

Yesterday Farhad Manjoo published an article in the New York Times titled “The Hidden Player Spurring a Wave of Cheap Consumer Devices: Amazon.” What caught my eye was the concept that Amazon is replacing some of the traditional functions of a brand – or what an IP lawyer like me would call a “trademark.”

Need a refresher on what a trademark is? Click here for a slide show and podcast on trademarks 101

The article describes a few startups that are thriving in the Amazon ecosystem. These companies create high-quality, low-cost consumer products that directly compete with established, long-standing brands. Manjoo provides examples including home internet cameras, lamps, humidifiers, and night lights. From the article:

We’re going to get better products for ludicrously low prices, and big brands across a range of categories — the Nests and Netgears of the world — are going to find it harder than ever to get us to shell out big money for their wares.

We think of trademarks as one of the most important ways for consumers to learn about and decide between competing goods and services. A brand creates trust and an expectation of quality, all of which are wrapped up into the concept of “goodwill,” which is indivisible from the trademark itself.

But what if you no longer need to build goodwill in your brand in order to successfully reach consumers? I know that my experience shopping on Amazon reflects this evolution. If I’m looking for a product that I’ve bought before, or one where I know a certain manufacturer has a good reputation, I’ll search for the brand name. But if I just need a good, reasonably-priced travel adapter, I tend to search for the product category and go with the one that has the best combination of price, features, and positive reviews.

Buying Brand X

Back in my day, these were called “knockoffs” – if you couldn’t afford the real thing, you’d buy the cheap, unknown-brand or generic version. Manjoo suggests that this is changing:

…knockoffs get a bad rap because they are of indeterminate quality: Even if it’s selling at a good price, who wants to risk buying a no-name portable smartphone charger if it might blow up in your face? Allen Fung, the general manager of Sunvalley’s American division, said that what was unique about Amazon was that its store encouraged low prices while heavily penalizing companies that made shoddy products…

“As this takes off, it really makes you start to question, you know, what is a brand in the Amazon age?” said Scot Wingo, executive chairman of ChannelAdvisor, an e-commerce consulting firm.

So should I just retire from practicing trademark law and go write that novel I’ve always wanted to write? (Editorial note: I don’t actually want to write a novel; that’s just the kind of thing people tend to say in these types of articles.)

Well, let’s not all panic and quit our jobs just yet.

Even if Amazon’s market power eventually erodes some of the value from everyday consumer product trademarks, there are still a lot of sectors where trademarks will likely retain their value, such as services (which comprise somewhere around 80% of the U.S. economy), business-to-business products, and higher-end/luxury goods. Not to mention that, for the time being, lots of people still buy physical goods in real-world stores, and they’re going to continue to make purchasing decisions based on the familiar brand names and logos they see on the shelves.

These trends are worth watching for trademark practitioners and owners, but, to paraphrase Mark Twain*, reports of the death of trademark were an exaggeration.

* “Mark Twain,” of course, was a pen name and a trademark itself – so that’s another kind of trademark that would retain its value in the forthcoming Era of Amazonian Omnipotence.

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