Counterfeiting Litigation Targets Online Marketplaces

The landscape of counterfeiting litigation is shifting in ways that place online marketplace operators at the center of disputes from two directions. Brand owners are escalating efforts to hold platforms liable for counterfeit goods sold through their sites, while some marketplace operators have begun joining brand owners as co-plaintiffs to pursue counterfeiters directly. This dual role has significant implications for how platforms manage their legal exposure and their relationships with brand owners.

Implications for Online Marketplaces With Third-Party Sellers

Shift From Schedule A Cases

For many years, brand owners have filed “Schedule A” cases against infringing storefronts and sellers and then sought injunctive relief to have those storefronts and listings frozen, along with their assets. However, over the past several years, courts have started to more strictly review these cases, and plaintiffs have shifted their focus to the sites themselves, arguing that the platforms and marketplaces can and should do more to remove counterfeit products and their sellers from their sites.

The "Mere Platform" Defense Continues to Erode

A growing body of litigation is challenging the notion that a marketplace operator bears no responsibility for third-party listings simply because it does not hold title to the goods. When consumers use an online marketplace to purchase from a third-party seller and the marketplace exerts some form of control over which businesses can sell or how they sell on its platform, a court may conclude that the platform, along with the seller, is effectively making the sale.

Vicarious and Contributory Liability Are Central Theories

Brand owners increasingly assert that a marketplace and its third-party sellers are in an apparent or actual partnership with joint ownership or control over counterfeit products. They point to marketplace search functions that lead consumers directly to infringing and counterfeit goods, as well as the marketplace’s control over which products sellers can list or remove. Platforms that can demonstrate active monitoring, prompt removal of counterfeit products, and good-faith enforcement will be best positioned to defend against these theories.

Marketplaces as Co-Plaintiffs: A New Enforcement Paradigm

Some marketplace operators have moved proactively to align themselves with brand owners, joining as co-plaintiffs in counterfeiting suits against third-party sellers. By framing themselves as victims of counterfeit goods, rather than as passive facilitators, these platforms aim to demonstrate good faith, recover direct damages such as refunds issued to affected customers, and reduce the risk of being named as defendants in future brand enforcement actions.

This co-plaintiff model represents a meaningful strategic shift. Platforms that maintain dedicated anti-counterfeiting units, actively investigate fraudulent seller conduct, and pursue bad actors through litigation and criminal referrals are positioned not only to deter counterfeiting, but also to reframe their role in the ecosystem from potential defendant to partner in enforcement.

How These Trends Are Reshaping Marketplaces

The convergence of escalating brand owner liability claims and the emergence of the co-plaintiff model presents marketplace operators with a complex but manageable set of strategic choices.

Platforms face genuine legal exposure when their seller onboarding, monitoring, and takedown procedures are inadequate. At the same time, those that invest in robust enforcement infrastructure can use that infrastructure both as a defense against brand owner claims and as a basis for affirmative action against counterfeiters.

The evolution of secondary liability doctrine, vicarious and contributory trademark infringement in particular, means that platforms must assess not just whether they have anti-counterfeiting policies in place, but also whether those policies are operationally effective. Courts and brand owners alike will scrutinize the degree of control a marketplace exercises over its sellers as a proxy for responsibility. Platforms that are seen as active participants in the commercial relationship between seller and consumer will find it increasingly difficult to disclaim liability for what those sellers do.

Taken together, these developments suggest that the question for marketplace operators is no longer whether to engage with brand protection, but how proactively and visibly to do so.

Recommended Actions for Marketplace Operators

• Audit seller agreements to ensure robust anti-counterfeiting warranties, indemnification provisions, and clear rights to terminate accounts and withhold payments.
• Review search and algorithmic functions to confirm that third-party sellers are not using brand trademarks to direct consumers to infringing goods.
• Strengthen seller onboarding and documentation review, including supply chain invoices, to prevent fraudulent sellers from entering the platform.
• Assess takedown and monitoring procedures for speed and reliability.
• Proactively engage with brand owners to establish brand registry programs and reporting channels.
• Consider whether a co-plaintiff enforcement strategy — joining brand owners in litigation against counterfeit sellers — aligns with the platform's long-term interests and relationships.
• Consult legal counsel on secondary liability exposure in light of the degree of control the platform exercises over third-party sellers.