The Cost of Cheap Products – Amazon’s Race to the Bottom

With its easy-to-use interface and unparalleled convenience, Amazon has revolutionized the shopping experience. Its massive success has created concern over the abuse of the U.S. patent system. The company's policies regarding patents have led to a lot of abuse.

The Policy

To sell on Amazon, you must have a patent or patent license. This requirement was initially created to protect intellectual property and to ensure that Amazon did not sell counterfeit goods. However, the policy has created numerous problems. Sellers file patents with nonsense names. Some of which I found (for phone chargers) in about 5 minutes are ONLYTANG, APFEN, and etguuds.

The Problem

This has resulted in a flood of patents, making it difficult for legitimate sellers to enter the marketplace as there are so many garbage products. Often, the patent holder does not produce the product but pays a Chinese company to do it for them. This abuse has led to countless lawsuits, draining resources from the Patent Office and creating a nightmare for legitimate sellers.

The problem is compounded by the fact that the Patent Office is backlogged and understaffed, leading to a high rate of errors on patent applications.

The Solution

Amazon has taken small steps to address the problem. For example, it created a patent neutrality policy prohibiting its employees from filing patents for products already on Amazon. More must be done to prevent sellers from abusing the patent system.

Amazon could take a more active role in vetting patents before allowing sellers to list their products. This could include requiring proof of manufacture (this has inherent problems as most legitimate companies don’t manufacture their products) or checking for the same product across multiple sellers.

Conclusion

Ultimately, the responsibility for fixing this problem falls on Amazon. The problem will continue to compound until a solution is found, and the barrier for legitimate sellers to use Amazon lowers the overall quality of the platform.