As more and more American consumers turn to buying products online instead of in person at brick-and-mortar stores, they become increasingly vulnerable to counterfeit goods and are unable to determine where the products have been made. Country of Origin information is missing from the major online platforms so consumers are unable to fellow Americans by choosing to “Buy American” for products sold online. Without knowing Country of Origin, they are not able to boycott buying products made in China by slave labor or protest the ethnic cleansing of the Uyghurs by the Chinese government.
Over the last two years, a few Congressional Representatives and Senators have introduced bills in Congress to address these problems and protect consumers. This year, H. R. 3429, the Shop Safe Act of 2021, was introduced on May 20, 2021 by House Judiciary Committee Chairman Jerrold Nadler (D-NY), Internet Chairman Henry C. “Hank” Johnson, Jr. (D-GA), Internet Ranking Member Darrell Issa (R-CA), and Representative Ben Cline (R-VA).
Senator Christopher Coons (D-DE) also introduced S. 1843, the Shop Safe Act of 2021, in the Senate on May 26, 2021. These bills would supposedly protect consumers by stopping the online sale of harmful counterfeit products.
The Press Release issued by the sponsors on May 20, 2021, states: “The SHOP SAFE Act will:
- Establish trademark liability for online marketplace platforms when a third-party sells a counterfeit product that poses a risk to consumer health or safety and that platform does not follow certain best practices;
- Incentivize online platforms to establish best practices such as vetting sellers to ensure their legitimacy, removing counterfeit listings, and removing sellers who repeatedly sell counterfeits; and
- Call for online marketplaces to take steps necessary to prevent the continued sale of counterfeits by the third-party seller or face contributory liability for their actions.”
This sounds good, but the online platform has to rely on the integrity of the distributor or manufacturer in stating that the product is not counterfeit. I don’t know about you, but I wouldn’t have any confidence in China companies adhering to the “honor system.” Other concerns I have: Does someone have to report a counterfeit product to the online platform? How are counterfeit products identified? Who investigates the charge? What proof has to be provided to prove a product is counterfeit?
Recently, the directors of US Inventor, Inc sent out an email to their supporters saying, “Big Tech is trying to pull a fast one again… This legislation grants immunity for trademark infringement to online selling platforms like Amazon, provided that their Chinese suppliers ‘attest’ that they ‘have taken reasonable steps to verify the authenticity of the goods’ and ‘agree not use a counterfeit mark’. Seriously…Congress is offering up a proposal to waive liability for Amazon based on their implementation of an “honor system” for their Chinese suppliers!”
I can understand the skepticism of US Inventors because one of the co-sponsors, Rep. Isa) was a co-sponsor of the America Invents Act of 2011 and two other co-sponsors voted in favor of the America Invents Act. Readers of my articles are familiar with the harm caused by this Act.
US Inventors urged supporters not to believe the hype, stating:
- “The SHOP SAFE Act of 2021 is HAZARDOUS to inventors, entrepreneurs, and small business.
- The SHOP SAFE Act HURTS, not helps, intellectual property owners.” The SHOP SAFE Act limits your ability to protect your IP online.
- The SHOP SAFE Act makes protecting your brand online harder not easier.
- The SHOP SAFE Act lets the platforms off the hook for their misdeeds.
- The SHOP SAFE Act hurts small business
They suggest asking yourself: “When was the last time you saw huge corporations and big special interests all support a bill containing MORE (not less) regulation? Why would the giant platforms who make more money from counterfeiting online like Amazon, eBay, Etsy, and Wish hail the SHOP SAFE Act as a cure?”
They conclude that the Shop Safe Act “does not fix the real problem” and “doesn’t close the loopholes.” Instead, “It adds a “safe harbor” for online marketplaces that lets them off the hook for legal liability.” They say “The SHOP SAFE Act gives the online platforms and the counterfeiters MORE LOOPHOLES! It’s “best practices” have already been tried and failed to stem the tide of pirated goods sold on sites like Amazon and eBay.”
A far better bill to protect consumers was S. 3707, the COOL Online Act, introduced by Senator Tammy Baldwin on May 13, 2020, and cosponsored by Rick Scott (R=FL), Kelly Loeffler (R-GA, and Christopher Murphy (D-CT). While it wasn’t voted on in the 116th Congress, the provisions were included in Section 2510 of the United States Innovation and Competition Act of 2021 (S. 1260) passed on June 8, 2021 by the Senate.
The National Law Review wrote: “The Act as passed by the Senate is virtually unchanged from the proposed legislation that we reported on. As a recap, the legislation would require that a wide variety of imported commodities sold online be accompanied by the following disclosures on the website ‘in a conspicuous place’:
- The country of origin of the product, consistent with U.S. Customs and Borders Protection (CBP) marking requirements; and
- The country of origin in which the seller is located (and, if applicable, the location of any parent corporation)
- Further, the online disclosures for certain categories of goods already subject to existing specialized COOL requirements would also be required to comply with these existing requirements. Importantly, products covered by USDA’s Agricultural Marketing Service (AMS) COOL would have to comply with AMS’s COOL requirements in the online disclosure.
- The legislation would be enforced by the Federal Trade Commission (FTC), but would require that FTC and CBP sign a memorandum of understanding to provide for consistent implementation of the legislation.”
This legislation will now move to the House of Representatives for consideration. We can only hope that the provisions of the COOL Online Act will be added to the House version of the United States Innovation and Competition Act of 2021.
The Coalition for a Prosperous America, of which I have been a member since 2011, supports the COOL Online Act. I have been a member of the Buy America committee since it was started two years ago. Recently, James A. Stuber, Co-Chair of the Buy America Committee and the author of What If Things Were Made in America Again, wrote “Congress must fight to ensure that America’s families know exactly what they’re buying online with their hard-earned money. Both the House and Senate should support country-of-origin labeling for all e-commerce transactions. Anything less could potentially put American lives at risk.”
We need the help of everyone who supports rebuilding American manufacturing by encouraging more people to Buy American. Here’s what you can do: Call the Capitol main number (202-224-3121) and ask to speak to the office of your Representative. Ask them to vote against the Shop Safe Act. Ask them to sponsor or co-sponsor the COOL Online Act. If you can’t get through on the main Capitol line, call the local office. I’ve called my Representative. Will you?
Tags: Buy American, Chinese counterfeit parts, Made in China