Understanding Schedule A Disputes
Putative intellectual property holders or licensors may initiate a Schedule A dispute in an IP lawsuit involving Amazon sellers. Sellers can help protect their rights and interests by understanding what a Schedule A dispute entails.
What Is Schedule A and Why It Matters for Amazon Sellers
“Schedule A” refers to a document frequently used in intellectual property lawsuits. An IP holder who files an infringement claim against alleged counterfeiters can use a Schedule A to list the defendants in the lawsuit rather than naming parties in the caption on the complaint. In IP lawsuits involving Amazon sellers, IP holders may use a Schedule A to claim that a large group of sellers has engaged in a conspiracy or scheme to sell gray market or counterfeit goods that violate the IP holder’s copyrights, trademarks, or patents.
Schedule A disputes frequently occur in Amazon IP disputes when IP holders wish to pursue claims against a large group of overseas or anonymous sellers. A Schedule A allows IP holders to name all the members in a group in a single lawsuit by alleging that each member has participated in a coordinated scheme to infringe upon the IP holder’s rights by selling gray market or counterfeit goods on Amazon.
The Schedule A document classifies the defendants’ identities at the outset of an intellectual property lawsuit. In theory, a Schedule A allows an IP holder to begin a lawsuit without alerting alleged IP infringers that the IP holder has become aware of the infringer’s activity and has initiated legal action. When pursuing a claim against a coordinated group of overseas or anonymous parties, Schedule A can prevent those overseas defendants from attempting to conceal or hide assets from confiscation.
Unfortunately, many Amazon sellers have found that IP holders – including both legitimate companies and IP “trolls” – have begun using Schedule A disputes to bring baseless claims against Amazon sellers. Sellers complain that some IP holders have inadvertently swept them up in Schedule A disputes, which can lead to freezes in sellers’ assets or ability to conduct business on Amazon until they can clear their names, while other IP holders have allegedly used Schedule A disputes to assert baseless IP claims to extract settlements from Amazon sellers or push them out of the marketplace. Sellers claim that some Schedule A disputes have used recycled or template court filings,
Common Causes of Schedule A Disputes
Some of the most common types of Schedule A disputes include:
- Selling unlicensed copies of copyrighted materials, such as books, music, movies, TV shows, and video games
- Selling counterfeit goods, such as “knock-off” copies of luxury clothing, footwear, accessories
- Selling products that violate a manufacturer’s patent(s)
- Advertising products through the unlicensed use of trademarks
- Selling legitimate but improperly acquired (“gray market”) goods (i.e., distributing goods without the manufacturer’s authorization)
Initial Steps When Facing a Schedule A Dispute
Amazon sellers who learn they’ve become a target in a Schedule A dispute can take prompt action to protect their rights and options and put themselves in the best position to seek an efficient, favorable resolution.
How to Response to an Allegation
First, sellers should understand how to respond to the allegations in a Schedule A dispute that will put up a robust defense while keeping the seller’s legal options open. Sellers should review the dispute documents carefully to understand the details of the allegations. Reviewing the claims can help sellers determine if an IP holder has inadvertently swept them up in a legitimate IP dispute or if the claimant has made baseless IP claims for some other motive, such as to secure settlements or default judgments or to push sellers out of the Amazon marketplace. Understanding the allegations of a Schedule A dispute can also help sellers begin to identify defenses they could pursue in the dispute, such as arguing that the seller’s products do not infringe upon the intellectual property, asserting that the claimant does not hold valid IP rights, or presenting evidence of the seller’s valid authorization from a manufacturer or IP holder to sell their goods.
Sellers and their legal counsel can also respond to allegations in a Schedule A dispute with Amazon when the company seeks to delist a seller’s products or suspend/terminate the seller’s account.
Documenting and Collecting Evidence
Defending against a Schedule A dispute will require compelling evidence to support the seller’s defenses to the claimant’s allegations. Evidence may refute claims that the seller’s products or advertising infringes upon the claimant’s intellectual property, prove that the seller has used the IP with the lawful owner’s authorization, or prove that the claimant does not own the IP rights they claim to hold. Examples of documentation and evidence your business might need to respond to a Schedule A dispute include:
- Copies of the advertising you used in your Amazon listings
- Records of where and from whom you acquired your inventory
- Examples of the products you sell on Amazon
- Copies of your IP registrations or license agreements from IP holders
Legal Strategies to Address Schedule A Allegations
Amazon sellers can pursue various avenues to address and fight back against Schedule A allegations claiming sellers’ infringement of claimants’ intellectual property rights. However, when claimants insist on pursuing their claims, sellers may have to defend their rights and interests in court to avoid potential judgments or recover assets or inventory confiscated or seized during the Schedule A dispute.
Negotiating Settlements with Claimants
Sometimes, sellers may negotiate settlements with claimants to resolve Schedule A disputes. A seller may seek to have a claimant withdraw their allegations if the claimant mistakenly included the seller in the Schedule A dispute or if the claimant has made baseless allegations. Sellers can fight against erroneous or baseless claims with compelling evidence of the seller’s right under IP laws to sell their products or proof that the claimant misidentified the seller as part of a conspiracy to infringe upon the claimant’s rights.
However, sellers may negotiate settlements to avoid further litigation or judgments when they face Schedule A claims that have some merit. Settlements of Schedule A disputes may include compensation to the claimant or license agreements that allow sellers to resume selling their products on Amazon.
Preventing Future Schedule A Disputes
Unfortunately, becoming the subject of a Schedule A dispute may place sellers on Amazon’s radar for future intellectual property violations. As a result, sellers can best protect their businesses by preventing future Schedule A disputes through best practices designed to avoid running afoul of other parties’ intellectual property rights. Sellers can ensure they obtain inventory from authorized sources, whether directly from manufacturers under distribution agreements or wholesalers authorized to distribute to resellers/retailers. Sellers can also ensure they have the licenses to use trademarks or other advertising materials.
Addressing Broader Intellectual Property Disputes
Schedule A disputes can involve a broad range of IP claims. Although IP claimants typically use Schedule A documents against a coordinated group of parties selling counterfeit copies of the claimant’s products, Schedule A disputes can also involve trademark and copyright claims.
Managing Trademark and Copyright Issues on Amazon
Sellers on Amazon can face trademark issues when purported trademark holders accuse sellers of unlicensed/unauthorized use of the holder’s trademarks in advertising on the seller’s listing.
Amazon sellers can also face copyright disputes involving claims that a seller offers copyrighted media without authorization to distribute that media. For example, a copyright holder may allege that an e-book seller offers a book that plagiarizes the copyright holder’s work.
Getting Back to Business After a Dispute
Unfortunately, a Schedule A dispute can prove incredibly disruptive for an Amazon seller’s business, even if the seller can favorably resolve the conflict. Getting back to business after a dispute may involve an extended administrative process with Amazon to get a seller’s challenged listing put back on the marketplace or to have a seller’s account reactivated if Amazon suspended it. Sellers may have to present substantial evidence to demonstrate that a Schedule A dispute lacked a valid legal claim or that the seller resolved the conflict with the claimant and can resume selling the challenged items, such as copies of a settlement or IP licensing agreement. Sometimes, sellers must pursue an appeal to challenge Amazon’s decision to delist a product or suspend/terminate a seller’s account.
Why an Amazon Seller Attorney Is Crucial
Becoming a defendant in a Schedule A dispute can become an expensive, time-consuming endeavor. You may face significant financial losses that jeopardize your business without a prompt resolution. Hiring an Amazon seller attorney can help you seek a fair, favorable outcome to a Schedule A dispute by:
- Reviewing the Schedule A dispute documents, including civil complaints and other court filings, to understand the specifics of the allegations against your business
- Thoroughly investigating your case to begin gathering evidence that can help support your defense
- Evaluating your legal rights and options, including whether you should contest the Schedule A allegations or pursue a negotiated resolution with the claimant
- Protecting your business’s rights and interests on Amazon, including challenging the delisting of your products or potential suspension/revocation of your seller’s account
- Vigorously pursuing the best possible resolution under the circumstances of your case, whether that involves negotiating a settlement with a claimant who has a viable claim or going to court to defend your company’s innocence
Protecting Your Business on Amazon
Sellers can protect their businesses on Amazon from becoming embroiled in a Schedule A dispute by implementing various best practices to reduce the risk of getting targeted by IP claimants. These best practices may include:
- Adopting more stringent product screening policies: Your company can develop more robust methods of examining products before listing them on Amazon to ensure you do not inadvertently sell counterfeit or gray market items that could subject your business to a Schedule A dispute.
- Conducting regular audits: Sellers should periodically review their listings to ensure their products comply with Amazon rules and IP laws.
- Obtaining IP licenses: Amazon sellers can protect themselves from IP disputes by obtaining the necessary copyright, trademark, or patent licenses from the rightful IP holders that authorize the sellers to sell their products on Amazon.
- Keeping detailed business and legal records: Sellers should have thorough business records to document their IP rights and licenses, where they acquire wholesale goods for sale, and their sales records.
- Having experienced legal counsel: An attorney who focuses on advising Amazon sellers in contractual and IP matters can help develop additional best practices to avoid future Schedule A disputes and advocate for clients’ rights and interests when they become the target of a dispute.
Contact Our Chicago Schedule A Dispute & Amazon Seller Lawyer
When you learn that you’ve become the target of a Schedule A dispute, you need experienced legal guidance and advocacy to protect your business’s interests, defend against IP infringement allegations, and get back to selling on Amazon after resolving the dispute. An experienced Chicago Amazon seller attorney from The Keleher Appellate Law Group can help protect the interests of Amazon businesses throughout the United States and globally. Contact our firm today for a confidential consultation to discuss your legal rights and options after receiving notice that a Schedule A document has named your business in an intellectual property infringement claim.
The Keleher Appellate Group, LLC, serves clients in Chicago, Denver, St. Louis, and the surrounding areas in Illinois, Indianapolis, Indiana, Missouri, Wisconsin, and Colorado. We also provide our services nationwide and internationally.