My sad tale of woe…

You risk thousands of dollars to design, prototype, test, and market your product, which becomes a commercial success.

Imagine your surprise – and anger – when you find a knock-off copy-cat item being offered via the same sales outlet where you are experiencing success.

This is not a new development.

In the late sixties, I experienced this exact situation when a sizeable mailorder house curtailed purchases from my company and offered a seemingly similar product. Not only did lost revenue cause financial hardship, but it introduced legal complications arising from a lawsuit filed against the mailorder house citing damages from the use of our competitor’s product.

Since our purchase order included a “hold harmless” clause, we were automatically added to the lawsuit. The legal matter was resolved in our favor when we pointed out that we were not the defective product’s manufacturer, who used cheap polystyrene plastic instead of heat-tolerant polypropylene.

However, the most shocking revelation was that the manufacturer of the bogus competing product was a Chinese company that specialized in knocking-off plastic products – and was acting on behalf of our seller, who had even provided a minimum order guarantee. They used our sales data to drive their knock-off decision.

Even though we had a patent, we fronted thousands of dollars in legal fees to find out that we couldn’t touch the foreign manufacturer. We could only proceed against our customer who turned over the plastic injection molds and all remaining products, which we promptly destroyed.

 Nothing new under the sun…

PRIVATE-LABELThat is why we were not surprised to read this Wall Street Journal article describing an Amazon investigation.

SEC Is Investigating How Amazon Disclosed Business Practices
Tech giant’s use of third-party sellers’ data is a focus of regulator’s probe, a person familiar with the matter says

Federal securities regulators are investigating how Inc. has disclosed some details of its business practices, including how it uses third-party-seller data for its private-label business, according to people familiar with the matter.

The Securities and Exchange Commission is probing how the technology giant—the largest U.S. e-commerce retailer and cloud-computing company—handled disclosures of its employees’ use of data from sellers on its e-commerce platform, the people said. The SEC’s enforcement division has asked for emails and communications from several senior Amazon executives, according to one of the people.

A spokesman for Amazon declined to comment.

In April 2020, a Wall Street Journal investigation, citing internal documents and interviews with former Amazon staffers, found the company’s employees routinely used individual third-party-seller data to develop products for its own brands. A company spokesman denied that such actions were taken, echoing an Amazon lawyer’s congressional testimony a year earlier, saying the company does “not use their individual data when we’re making decisions to launch private brands.”

Amazon has since launched an internal investigation of its private-label division but has declined to provide a copy of its report to a congressional committee that earlier investigated Amazon and other technology companies’ size and power, the Journal has reported. <Source>

I am, however, surprised that the Securities and Exchange Commission (SEC) is investigating the matter instead of the Federal Trade Commission, which protects consumers from unfair and deceptive business practices.

A cautionary tale?

Fast forward to today’s computerized environment and the use of cloud computing. Not only are the intermediaries to the transaction, including browser and app vendors and your Internet Service Provider, harvesting your personal and transactional data, but computer vendors are also reaching deep into your system to grab usage data with the stated purpose of “improving the user experience.”

Even worse, cloud storage companies assert their rights to scan your data for unstated purposes, sometimes citing the need to protect against illegal activities such as child porn or other dangerous behaviors. And, you have absolutely no recourse if you read the mandatory, unilateral terms of service agreement and the accompanying privacy statement. But worst of all, additional separate agreements come into play with every followed link or other services you access.

Bottom line…

Unfair competition can be devastating for small companies with limited resources or a single product. Even larger companies cannot effectively wage war with a billion-dollar enterprise with a legion of in-house attorneys who will use the company’s abundant resources to bankrupt you or force a settlement.

The answer is a “declaration of digital rights” that starts with defining the data you own, data controls you can legally exert, and limitations on those onerous, one-sided unilateral service agreements. All backed by penalties and even jail time for egregious offenses. Plus, the ability to hold company executives responsible for their behavior. No more bullpucky agencies that impose “record fines” (which are often quietly reduced) along with a statement where the evildoer neither admits nor denies the allegations in the complaint. Corporate executives skate because corporations cannot go to jail.

We are so screwed, and it is getting worse as digital currencies and tracking are introduced into daily life.

-- steve

“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS