Jeanne Fromer discusses how Amazon is changing the US trademark system
This month, during Amazon’s Prime Day—the annual shopping bonanza that offers exclusive discounts to subscribers of the company’s premium shipping services—shoppers faced a problem familiar to anyone who has browsed Amazon for just about any item. They’re likely to encounter hundreds of nearly-identical products, whether window curtains, clear acrylic bins, desk organizers, or dishwashing racks. Many individual product listings have a string of unpronounceable letters and numbers used as the title of the item, like EKDOG97 or SLEEKTORP. When used in this way, these are referred to as “nonsense marks” in the legal world.
Searching through dozens of products that use nonsense marks to find the best item—or simply the only legitimate one—can exhaust and overwhelm shoppers. Instead, they often stick to the first page of their search query rather than trying to sort through them all. This behavior has resulted in Amazon sellers jockeying for better search positioning using practices like adding as many commonly used search terms to their listing titles as possible; sending users free products in exchange for positive reviews or paying users for reviews outright; and legitimizing their storefronts by registering with Amazon’s Brand Registry system.
Amazon’s Brand Registry system relies on a business’s trademark being registered federally—or having proof of an application for registration—through the US Patent and Trademark Office (PTO). Prior to the creation of the Amazon Brand Registry, businesses typically only filed trademark registrations with the PTO if they wanted certain legal advantages that came with registration. Smaller businesses that did not anticipate ever scaling up their operations to a national platform often instead used unregistered trademarks, which are treated similarly to registered trademarks under federal law.
Amazon’s Brand Registry system drastically changed that—incentivizing all sellers, no matter how small, to apply for a trademark registration to boost their search positioning. The registry also provides an alternative platform for trademark holders to resolve trademark disputes that would have traditionally gone through the more expensive and time-consuming legal system. This unexpected behavior has overwhelmed the PTO and caused delays for everyone registering a trademark—for Amazon sales or not. Applications from small businesses are estimated to have almost doubled from about 100,000 to 200,000 since the Brand Registry opened, according to research by NYU Law’s Jeanne Fromer, the Walter J. Derenberg Professor of Intellectual Property Law.
In anticipation of Prime Day, NYU News spoke with Fromer—who coauthored the 2024 article “Amazon's Quiet Overhaul of the Trademark System” with UCLA’s Mark McKenna—to better understand the company’s relationship with the US trademark system and just why users of the site now have to sift through so many product listings.
In your paper, you refer to Amazon’s Brand Registry as a “shadow trademark system.” Tell us more about its impact on businesses seeking to file a trademark.
By “shadow trademark system,” we mean a trademark system existing outside the realm of the traditional system established by law, as with shadow banking. Specifically, in response to worries by third-party sellers, consumers, and the US government about the possibility of counterfeit goods being sold on the site, Amazon established a Brand Registry for businesses to make it easier to locate and remove listings of counterfeit goods. The Brand Registry also offers registered businesses higher visibility in consumer search results on Amazon, brand analytic tools, and the ability to give one’s products to credible buyers for reviews.
A business could qualify for Amazon‘s Brand Registry in the United States if it has a trademark that it was using on its products or packaging that was registered in the US PTO on the Principal Register—though more recently, a business also qualifies merely as soon as it has a pending application to register a trademark in the PTO.
The reason we think Amazon‘s Brand Registry is acting as a shadow trademark system is because it not only gives parties a cheaper and more efficient way to resolve disputes, but it also creates incentives for parties to use the trademark system differently than they otherwise would, and in ways that were not anticipated in the design of that system.
In particular, it dramatically affects businesses’ incentives to seek legal registration of their marks. The result has been a dramatic increase in the number of applications to register, which has swamped the PTO and created delays for all applicants, even those that previously would have registered their marks. And the increased value of federal registration has drawn in bad actors who fraudulently register marks that are in use by others on the Amazon platform and use those registrations to extort the true owners.
How are Amazon’s incentives different from those of the US Patent and Trademark Office?
US trademark law has long protected trademarks as long as they are being used in commerce, whether or not they are registered. Registration of a trademark with the PTO merely provides a set of advantages rather than being a requirement. For many small and mid-sized businesses, those advantages were not significant enough to justify the time and expense of registration, which means that registration has traditionally been more the province of larger, established companies.
Amazon is changing that dynamic. Because the Brand Registry requires PTO registration—or, now, at least a pending application to register—the incentives for small and medium-sized businesses are a lot different. Most of those smaller businesses want to be on Amazon and in the Brand Registry, and as a result, they are much more likely to register than they once were.
But why are so many of the names of products on Amazon listed as strings of letters and numbers?
The Brand Registry is available only for trademarks that contain alphanumeric characters, even if they also contain an image or the characters are stylized. A qualifying business can register the word or words in its trademark with Amazon as long as the word or words identically match the spelling, spacing, and punctuation found in the US trademark registration.
Amazon’s policies significantly increase incentives to register descriptive and generic terms. Trademark law categorically refuses protection—and registration—of generic terms like “apple” for a company selling apples; it does so to prevent businesses from monopolizing those terms to the detriment of competition. And descriptive terms like “American Airlines” for an American airline are protectable only if consumers sufficiently associate such terms with the particular provider of the goods or services. The value of choosing a descriptive or generic term as a mark has increased sharply because businesses can capitalize on consumers using descriptive or generic terms in Amazon‘s search engine, even when those consumers are not specifically looking for any particular provider of the goods or services they are seeking.
How does it work exactly?
Businesses can get the PTO trademark registration they need for the Brand Registry—despite trademark law making it impossible or hard to register such a term—by putting the term in stylized form or accompanying it with an image and then disclaiming rights to the term itself.
Armed with this registration, and despite having disclaimed rights to the word or words in the trademark registration, the business can now take part in Amazon’s Brand Registry, claiming, as per Amazon’s rules, the exact wording in its trademark registration. In this way, a trademark registrant can bootstrap its trademark registration disclaiming protection for an unprotectable term into protection—at least on Amazon—of exactly that term. An example of that happening is a business selling fake mustaches on Amazon that is able to claim the term MUSTACHE on the registry after registering the term in stylized form with a picture, but disclaiming the word “mustache” itself.
Businesses can also seek registration, as is reflected in the new phenomenon of nonsense marks. Precisely because nonsense marks are not comprehensible, they are extremely unlikely to be memorable as marks. For that reason, there was never previously much incentive to use nonsense marks. But they are easily registrable with the PTO because they are considered to be the same as coined terms, which are readily protectable, and are unlikely to be confusingly similar to already existing marks. And businesses can then use these easily obtained registrations of nonsense marks on the Brand Registry. While nonsense marks do not on their face contravene trademark laws or policies, they run counter to everything trademark law is about: encouraging businesses to establish a trademark for their goods or services that consumers will find distinctive and helpful in the marketplace.
How has the US Patent and Trademark Office responded to these changes?
One of the biggest and most immediate problems the PTO faces is its backlog of applications and the accompanying delays in registration. In 2023, the PTO announced that it planned to hire 86 more trademark examiners before the end of 2023 and up to 60 more in 2024, as well as considering incentives to encourage speedier examination of trademark applications.
The PTO has also already begun to address issues that it faces with fraudulent filing, including filings from trademark extortionists capitalizing on Amazon’s system, who blackmail legitimate businesses selling on Amazon by deploying these fraudulent registrations to get the legitimate businesses de-listed from Amazon. In particular, the PTO has announced that it will seek to identify scams and other untoward filings and shuttle them to its newly created Register Protection Unit. Moreover, the PTO is working cooperatively with Amazon to identify fraudulent filings.
Does it seem that Amazon created the Brand Registry with the intention to have these effects on the trademark system?
No, we do not claim that Amazon specifically intended to affect the trademark system in any of the ways we describe, or even that Amazon has fully understood the extent of its impact. It seems very likely that Amazon adopted policies that it thought were sensible for its business and that it created the Brand Registry in part to address actual concerns about counterfeit goods and product liability—and, not incidentally, to avoid regulation. In that regard, it may be that Amazon’s policies and practices have simply had the unintended, though not necessarily unforeseeable, consequences that we describe on the trademark system.
How do you anticipate these policies will impact US trademark law in the future?
Amazon’s considerable impact on the trademark system raises important rule-of-law questions. The practices of a single company have dramatically changed the functioning of the legal system, and those changes have not been the result of any public process with legislative or regulatory legitimacy. And any time that Amazon shifts its policies in the future, it might continue to cause other significant changes to the operation of the trademark system.
If it is true that trademarks are less important for conveying product-related information because algorithmic tools can provide that information equally or better, then we should not worry if Amazon’s practices lead more companies away from source-indicating marks. But it is not clear to us that we are yet at a point where the alternatives to trademarks are better. Empirical evidence suggests that Amazon consumer reviews are inaccurate in important ways. For those reasons, one might reasonably be concerned that trademark law’s emphasis on source designation remains important, and that Amazon’s policies are undermining the incentives trademark law properly creates.
How does all of this affect the shopper who sits down today to look for a pair of running sneakers?
Nonsense marks get in the way of consumers who would like to remember the marks of products they’ve purchased—and enjoyed or hated. Moreover, studies show that consumers are more likely to buy from the first few Amazon search results offered to them. If businesses register descriptive or generic terms with the PTO as trademarks that they can then leverage into the Brand Registry, then their goods sold under those marks are more likely to appear earlier in search results, making consumers more likely to purchase them regardless of the goods’ quality. Consumers might want to take care to look further into search results before purchase to ensure that they are getting a good that meets their needs.