The Cupertino giant, Apple Inc. (NASDAQ:AAPL), with a valuation of $586 billion (as of May 2016) is one of the world’s most trusted premium brand. Recently, the company filed trademark infringement cases against Mobile Star LLC for selling counterfeit iPhone accessories such as power adapters and charging cables through Amazon.com, Inc. (NASDAQ: AMZN). Apple has claimed $150,000 each for infringement of copyrights and $200,000 each for trademark infringements. Moreover, they’ve demanded all the gains, profits and advantages derived by Star Mobile LLC from their unlawful acts, even after being contacted by Apple about its activities earlier.
Apple purchased over a hundred of iPhone devices, Apple power adapters, charging and Lighting cables that were directly sold by Amazon.com. After examining and testing these products internally, the company found that 90% of the products were counterfeit and possessed an immediate threat to consumer safety. The products failed to meet the industry safety standards and were poorly constructed with inferior or missing components and inadequate electrical insulation.
Under the ongoing brand protection efforts by Apple since last nine months, the company has been evaluating products that are being sold on online platforms. For a company like Apple, safety of customers is a priority. The company would not tolerate anything that affects the company’s reputation or safety of the customers. Recently news about iPhones exploding made to the headlines, which has raised Apple’s concern over counterfeit products. Moreover, no company wants to go through what Samsung is going through because of explosions in its Galaxy Note 7. Apple is doing everything it can to make sure that these products do not leave a smudge on its brand image.
How Effective is Amazon’s Quality Check
Amazon.com directly sold the products that Apple purchased, and there was no involvement of any third party seller during the transaction. On investigating it came out that the source of those counterfeit products was Defendant Mobile Star LLC. The question that has raised all eyebrows is – Did Amazon not ensure the authenticity and quality of the products?
Amazon is the world’s largest online retail platform with a valuation of $292.6 billion (as of May 2016). Moreover, the company claims that they are constantly working with manufacturers, content owners, vendors and sellers to improve the ways they detect and prevent counterfeit products from reaching their marketplace. They also back this with their A-to-z Guarantee. However, it looks like the company failed to do so in this case. Even after repeated complaints and negative reviews against the same seller, Amazon failed to take the necessary actions. For a company of Amazon’s stature, it will only hamper the trust of the customers.
Apple had earlier contacted Amazon and got Mobile Star’s selling privileges revoked, but the seller continued infringing the intellectual property rights by selling the counterfeit products. On the other hand, Amazon failed to act upon the issue!
“Amazon has zero tolerance for the sale of counterfeits on our site. We work closely with the manufacturers and brands, and pursue wrongdoers aggressively”, said the company.
When Apple alerted Amazon about the counterfeit products supplied to it by Mobile Star, the online retailer turned over its inventory purchased from the company. However, Amazon needs to work better towards ensuring that the products on their platform are authentic and as per the industry standards.
Apple’s Counterfeit iPhone Accessories Market
Apple is famous for its iPhones. Now, more than two-third of company’s revenue is generated by iPhone sales. Interestingly, the counterfeit market is doing well too. The major market falls in Shenzhen, China, which has more than 30 stores carrying Apple’s iconic logo, are peddling pre-orders for new iPhones. Even many of the Stores look significantly similar to Apple’s outlets, with their staff wearing t-shirts with Apple’s logo. These stores sample iPads and iWatches on display in the stores. Another interesting part is that Apple’s contract manufacturer in China is Foxconn, which is also located in the same city, Shenzhen which means a majority of the fake goods originate from the same place as the real ones.
Counterfeit products affect the reputation as well as sales of any company. Due to fault in these products, customers tend to believe that the brand is not effective enough to produce a quality product. However, it does not affect the counterfeit sellers in any manner. In fact, the products earn them a lot of money! Hence, even the consumers should be aware of such products.