Will Trump’s Presidency Crush The Ecommerce Market?

picture of word TAX on computer to accompany a blog post about possible ecommerce tariff from TrumpA 45% tariff on all Chinese imports; that’s what Donald Trump promised supporters. Subsequently, U.S. ecommerce entrepreneurs who use Chinese manufacturers may be wondering: Are we about to be thumped by Trump?

What’s the answer? Will the ecommerce sector suffer under Trump’s administration?

(Can we be blunt? Good. Thanks.) Look, if you voted for the Republican candidate, you’re probably thinking, “Everything will be great, including ecommerce markets! Sellers have nothing to worry about!” If you didn’t cast your ballot for the real estate scion, your thoughts probably veer somewhere near, “It’s the end of the world as we know it, especially for ecommerce entrepreneurs!”

The truth, history consistently proves, likely rests between the two extremes. So, in that spirit, let’s chuck partisan rhetoric into the recycling bin and take a few minutes to dispassionately assess whether or not a Trump presidency will have a destabilizing effect on ecommerce businesses.

First things First: What’s A Tariff?

Are tariffs the same as taxes? Technically, a tariff is a type of tax; specifically, a tax on imported goods and services (in rare instances). According to Investopedia:

“Tariffs are used to restrict trade, as they increase the price of imported goods and services, making them more expensive to consumers. They are one of several tools available to shape trade policy.”

Tariffs are typically a per unit charge, remitted during international custom inspections, and have three primary purposes:

  • Increase the cost of imports, to stimulate domestic demand for the same product;
  • Shift currency appreciation values; and
  • Create government revenue.

Tariffs are not one-size-fits-all measures and have far-reaching financial effects.

(Housekeeping Note: Since we’re talking about the possible effects of Trump’s presidency on ecommerce businesses, the discussion will focus on issues related to imported goods.)

Second things Second: The Current State of the Ecommerce Scene

According to the U.S. Commerce Department, for the sixth year in a row, the ecommerce sector is skyrocketing. 2015 figures show that online product sales accounted for a third of the country’s retail growth — and that number jumps significantly if fuel and automobile acquisitions (which aren’t readily available to buy online) are struck from the calculation.

Last year, online sales totaled $341.7 billion, a 14.6% increase from the previous year.

In 2015, alone, Fulfillment by Amazon sellers shipped over a billion items to more than 185 countries. As such, traditional big-box retailers, like Wal-Mart, are beefing up their ecommerce offerings to compete with established third-party retail platforms like Amazon and Jet.

Ecommerce Exploding

Why is the online retail sector growing like bamboo? In a word: globalization. Anybody who is willing to roll up their sleeves, do the research, pick the right product, and exert some elbow grease can build an online retail operation.

Some people may ask, “But how? Doesn’t it cost a fortune to get products manufactured? Isn’t significant startup capital required?”

Not anymore, thanks to websites like Alibaba.com.

Alibaba.com: The Chinese Ecommerce Site Loved By U.S. Sellers

What’s Alibaba.com?

An online marketplace of out China, Alibaba is a popular supply chain stop used by throngs of U.S. ecommerce businesses. Think of Alibaba as an online Costco; users can purchase products, in bulk, for less.

Even more enticing? People with product invention ideas can shop for Chinese manufacturing services on Alibaba. Why use overseas fabricators? Cost. Items commissioned from Asian manufacturers are significantly less expensive than stateside alternatives.

The Catch-22 of Today’s Ecommerce Environment

So, as you’ve probably already surmised, the current ecommerce setup is a classic catch-22.

Globalization, technology, and the implementation of free trade principals have fueled entrepreneurism by lowering startup costs — which, in turn, has bolstered the economy.

But then there’s the flip side.

All those manufacturing jobs, which were once manna for a stable middle class, sailed overseas, leaving economically devastated regions in their wake.

So now, as a nation, we find ourselves saddled with a Sophie’s choice: Do we hamstring the aborning ecommerce market — and subsequently small business growth — by keeping import fees to an absolute minimum? Or do we hike tariff prices in an attempt to save traditional manufacturing jobs, in an increasingly competitive global market?

The President’s Tariff Power

What’s the next piece of this puzzle? Presidential privilege. Does the U.S. President have the power to impose tariffs without legislative oversight or approval?

If this were a shock jock podcast, we’d ominously answer, “Yes.” Because technically, yes, both the 1965 Trade Expansion Act and the 1974 Trade Act give POTUS significant leeway to negotiate import-export agreements, including tariff rate hikes.

But what, exactly, constitutes “significant leeway?”

How The Trans-Pacific Partnership Plays A Role

Enter the TPP, or Trans-Pacific Partnership. During the campaign we heard it mentioned — a lot — though typically in passing.

And it’s no wonder that the candidates didn’t dig deep into TPP on the trail.

An excruciatingly complex treaty, the agreement particulars don’t lend themselves well to stump speeches. But for this discussion, let’s turn our attention to the Trade Preferences Extension Act — a provision tucked away in the TPP. Passed in 2015, the statute allows sitting Presidents to draft and present trade bills to Congress. According to the edict, Congress can then either approve or disapprove the President’s measure, but not amend or filibuster it.

Which Way Will Representatives Role?

With a majority Republican Congress, the likelihood of legislators waving through a tariff increase, in the name of job stimulation, is high.

HOWEVER — and it’s a big however — representatives of both the Republican and Democratic persuasions are beholden to donors — donors with serious commerce interests. And a sizable portion of corporate America is more concerned about keeping free trade avenues open than bringing manufacturing jobs back to the U.S.

But at this point, all we can do is speculate. It’ll certainly be interesting to see how the Congressional vote breaks if the new administration does present a trade agreement early on.

War, Emergencies, and National Security Issues Give POTUS More Tariff Negotiating Powers

Section 122 of the 1974 Trade Act also allows for a 150-day (5 month) window wherein the sitting President can enact an “across-the-board” tariff, on all imported goods, for national security purposes. After the 150 days, however, Congress must approve the measure or it becomes unenforceable.

The ’64 trade act is also teeming with executive trade privilege. Under the statute, presidents can:

  • Unilaterally impose any tariffs “during time of war.” And no, “war,” in this context, doesn’t mean a widely recognized world war. In fact, in 1971, nearly 20 years after the Korean conflict had ended, Richard Nixon evoked the privilege, on a flimsy administrative thread, to enact a blanket 10% tariff hike. Pundits seem confident that Trump could cite U.S. Special Forces in Lybia and Syria to warrant the “war tariff.”

 

  • Levy tariffs, on specific goods, during a “national emergency.” And again, in this context, an issue of national security could be something as simple as “we’re losing jobs.” These types of tariffs usually target specific goods. For example, President Obama enacted a 35% tariff on Chinese tire imports after taking office, and China countered with its own tariffs.

So while Trump’s ability to impose economic measures, unilaterally, may be limited, circumstances allowing, he could impose tariffs (as high as 45%) by arguing that China’s actions were causing economic harm in the U.S.

But if Trump did do that, would the impact be disastrous?

Trump’s Potential Tariffs: Possible Impact

So now that we know what can and can’t happen, let’s look at the potential impact.

If Trump imposed a 45% tariff on certain goods, like electronics or steel, then the price of imported electronics or steel from China would likely rise.  Importers would then be faced with a choice: produce the goods domestically or look elsewhere. And depending on the product’s makeup, reproducing it domestically may not be possible.

Regardless, if the cost of any given product rises, consumers will be forced to choose between a) spending more on the product and less on other things, b) not buying the product at all, or c) finding an alternative.

But remember, it works both ways; if the U.S. imposes levies on a product from a specific country, and said country responds with their own tariffs, their citizens will also be faced with the same dilemma as stateside consumers. It’s the ultimate game of chicken.

It All Depends On Your Product

Bottom line: for ecommerce sellers, the potential impact of a Trump tariff really depends on the product and where its manufactured.  Targeted goods could see a hike in customs fees, which would likely be passed on to customers in the form of a price increase, and depending on the good, could lead to a drop in demand.  The scenario may be a bit nerve wracking for Amazon sellers that have private label products produced overseas and imported from China.

Diversify To Survive

In the event of a tariff hike on goods imported from China, Sellers in countries not saddled with the tariff (for arguments sake, let’s choose Malaysia) could — and would — swoop in and undercut American sellers.  Because of this, we always recommend having back up manufacturing plans in other countries (or at least get the balls rolling).

To further gird against potential fee hikes, ecommerce sellers should consider stocking up on products before the tariff lands or finding a tariff-free substitute.  Unfortunately, predicting replacement goods may require swami-like skills.

Lastly, look to expand sales in other countries.  If Brits and Canadians aren’t burdened with tariff cost concerns, they may just prove to be the perfect new sales stream.

Tying It All Together

Let’s recap.

  • Trump vowed to slap a 45% tariff on all Chinese imports as part of an economic stimulus plan.
  • Many U.S.-based ecommerce businesses use Chinese suppliers for cost-saving reasons.
  • The Executive Branch does enjoy significant trade privileges, which Trump could, conceivably, use to make good on campaign promises.
  • The only obstacle to a White House imposed tariff hike is Congress. And at this point, it’s anybody’s guess as to which way it will swing. Lest we not forget, Trump’s road to the Oval Office involved a lot of anti-establishment threats; rank and file representatives could prove to be less than enthusiastic about flying the Executive Branch’s banner.
  • Politicians must also answer to donors. And in many cases, those donors have a vested interest in keeping Sino-American trade avenues wide open.

Will Trump’s administration likely brandish its trade privileges during negotiations? Sure. They’re bargaining chips. In a way, he’d be a fool not to. But at some point, restraint will probably prevail, because neither the Executive or Legislative bodies want to be responsible for hurling the country into a Great Recession on account of an ill-considered, quickly implemented tariff hike.

Final Thoughts: Best Tactics

So, what’s the best tact for ecommerce entrepreneurs at this juncture? If you want to play it safe, consider moving monies to your shipping / import budget, regionally diversify your production, and start targeting buyers in other countries.

In the short term, the worst case scenario is a 45% tariff on specific goods from specific countries. In the coming months, as Trump continues to build his transition team and Cabinet, we’ll all have a clearer picture of the administration’s ethos and its likely impact on the ecommerce industry.

Holiday FBA Legal News: Projections, Prime, and Pirates

computer festooned in garland to accompany blog post about holiday FBA sellers newsHoliday shopping season is upon us. So, let’s take a minute to dissect a bit of ecommerce industry news…using a lawyer’s scalpel.

Holiday Prognosis For FBA Sellers = Less Than Ideal

Unfortunately, this holiday season may be a rocky one for some FBA sellers — especially neophytes.

Why?

Amazon is restricting warehouse services until December 19th. In past years, the online retailer implemented a handful of category-specific cutoffs to ensure sufficient processing time for the holidays, but this year’s blanket mandate is a first.

Why is Amazon doing it? The online retailer explained:

We are restricting shipments from new-to-FBA sellers to ensure we have the capacity necessary to quickly receive and store inventory and ship products to customers. If new FBA sellers have not completed their first shipment to Amazon before October 10, 2016, we encourage them to start shipping to Amazon after December 19, 2016. If the situation changes before December 19, we will notify them by email. We encourage sellers to continue selling on Amazon and fulfilling orders directly to customers.

In short, it’s all about warehouse capacity; unpopular products clog floors and hamstring the distribution process, which has the potential to create a perfect customer service storm, and ultimately cause a complaint tsunami to crash down on Amazon.

The announcement shocked some folks. But should it have? Perhaps not. Earlier in the year, Amazon began forcing certain sellers to reclaim unsold inventory. Hindsight being 20/20, pundits are now wondering: Did we all ignore an important bellwether?

A market analyst further explained:

Looking at the last couple holiday seasons, Amazon realized one thing that can help is better management or optimization of inventory on hand for holiday purchases. They’re looking at available capacity in terms of both third-party and first-party inventory, and clearly being more aggressive in managing what additional products are going to be sent to those DCs before the end of the year.

Source

Amazon Prime In China

Prime finally arrived in a giant country obsessed with overseas products — China. The expansion could be an opportunity boon for savvy U.S. sellers.

Cheaper than its stateside counterpart, China’s Prime costs $57. Amazon cut the price to lure users in an already saturated market. But some pundits are skeptical because regional e-commerce competitors already offer free shipping packages, for less.

So, why push Prime onto an already crowded pitch? Ben Cavender, a senior analyst at China Market Research Group in Shanghai, explained:

If they can offer products and brands the other guys aren’t, this could really work for them. They have so much data about what goods are popular overseas, they may be able to anticipate what products will be popular … in China.

Source

Alibaba Is Still Fighting To Avoid The Infamous Pirates List

Dubbed “the bad boys of retail” by a U.S. executive, trade groups, like the AAFA, are practically begging officials to slap Alibaba back on the “notorious markets list” — an index of online and offline piracy souks. The threat has been lingering for several months, and Alibaba made the latest move by sending a statement to the U.S. Trade Representative, which, in part, read:

We routinely collaborate with brands, associations, and regulators to maintain the integrity of our marketplaces. Our recent USTR [United States Trade Representative] submissions describe our steadfast efforts to fight counterfeiters online and the sources of such production offline. It also reflects our very strong commitment towards intellectual property rights protection.

Source

Need Help With An E-commerce Business Issue?

Our firm, Kelly / Warner, regularly assists ecommerce entrepreneurs with routine business issues and aberrant legal matters. What do we do? Things like (but not limited to):

  1. Help people form asset-protecting businesses to avoid personal liability.
  2. Negotiate with websites, like Amazon, on account reinstatement issues.
  3. Act as counsel for enterprises involved in overseas shipping and marketing.
  4. Perform advertising and marketing compliance reviews.
  5. Handle payment processing setbacks and setups.

To learn more about us, click here. If you’re ready to talk, schedule a conversation.

China’s New Online Marketing Law

China online marketing law
Quick question: Do you market or advertise on Chinese websites? Did you know a new Chinese online marketing law went into effect on September 1, 2016?

According to Eugene Low, a partner at the Hong Kong office of Hogan Lovells, the previous regulations were “a bit piecemeal” and not precisely defined. This law changes all that.

A Short List Of China’s Digital Promotion Rules

Here’s a snapshot of China’s online marketing laws (some are old, others new):

  1. Acts of “online marketing” include electronic advertising, promotional emails, paid search results, links, and embedded media “with the purpose of promoting goods or services.”
  2. All paid and native advertising must be conspicuously marked as such.
  3. The Chinese government reserves the right to“guard against false and misleading practices.”
  4. Online ads for prescription medication and tobacco are prohibited.
  5. Sellers need government approval to run digital ads for medical supplies, pesticides, vet meds, and other categories of health products.
  6. All paid advertising must be clearly marked in search results.

Additionally, the Chinese government expects businesses to hire new employees to fulfill online marketing requirements and monitoring.

The Roots Of China’s New Online Marketing Law

Earlier in the year, a man suffering from a rare type of cancer died after participating in a hospital drug study advertised on the search engine Baidu. His death stirred controversy, and many citizens “accused Baidu of taking money to promote less proven treatments.” Even the Communist Party’s main newspaper, People’s Daily, tossed some shade Baidu’s way by publishing an article entitled Commentary: Death of college student raises questions on Baidu’s ethics. Here’s an excerpt:

“Companies that were involved in services that deal with human life should be particularly conscientious of their duties when conducting their businesses. Billions of net users trusted Baidu for their search engine and online forum services, the company is hence responsible for the trust and is obligated to taking up their social responsibilities.”

On account of the incident, search engines operating in China must now make sure SERP ad returns don’t exceed 30% of a page’s content.

Who Will Be Affected By China’s New Online Marketing Rules?

Are China’s new promotional laws going to disrupt the market? Probably not. Will they have AN impact? Sure. But a giant one? Unlikely.

China already enforces strict Internet regulations; this latest statute is simply the cherry-on-top — a finishing detail on the country’s longstanding conservative approach to mass media.
Will the online promotion standards impact profits? Maybe. Maybe not. This WSJ article explained:

[New] policies most likely won’t diminish businesses’ bottom lines because pay-for-click ads often run on a bidding system for a limited amount of space. Other analysts, however, said taxes for businesses may increase because the new rules clearly define paid-search results as advertisements.

Major Chinese Websites That Will Probably Be Affected By The New Online Marketing Laws

Chinese Website Revenue Private or Public Closest U.S. Equivalent (in focus, not valuation)
Baidu $9.9 billion – Dec 2015 Public – BIDU Google
Alibaba $15.1 billion – 2016 Public – BABA Amazon
Sina Weibo $482 million – 2011 (Entire Conglomerate) Public – WB Twitter
58.com $297.8 million – 2nd Quarter 2016 Public – WUBA Craigslist
Sohu $852 million – 2011 Public – SOHU Mix of Google and Twitch
Tencent Weibo $15.4 billion – 2015 (Entire Conglomerate) Public – TCEHY Twitter

Need assistance with a Chinese Internet law issue? Visit our friends at Harris / Moure.

International Defamation: China’s Strict Internet Publication Law

International defamation Law
A new Chinese law could affect international defamation cases.

Chinese officials adopted a new online publication law. When asked about the statute, President Xi Jinping opined:

“China must improve management of cyberspace and work to ensure high-quality content with positive voices creating a healthy, positive culture that is a force for good.”

What You Need To Know About China’s New Internet Publication Law

  • Called the Online Publishing Service Administrative Rules, the new law went into effect on March 10, 2016.
  • “Internet publication” is vaguely defined; anything posted online could, theoretically, fall under the statute’s reach.
  • The law established a departmental hierarchy for monitoring and reporting on “publishing service providers.”
  • The country’s media industry will likely be encouraged to participate in “professional training and evaluation.”
  • Under the law, content providers may have to obtain a Publishing Service License, for which the application process is expected to be long and nuanced.
  • The new Internet publication law forbids online content that “opposes the principles of the Constitution, threatens national unity, sovereignty or territorial integrity or security, divulges state secrets, damages the reputation or interests of the state, incites ethnic hostility or discrimination, endangers social morals or ethnic cultural traditions, advocates heresy or feudal superstition, disseminates rumors, disturbs social order and stability, disseminates obscenity, pornography, gambling, violence, or incites crime or insults others or infringes on their legal rights and interests.

Who Will Be Affected By China’s New Internet Publication Law?

China’s new regulation will mainly affect online media outlets and businesses in Asia. To be safe, any American outfit with Sino-marketing appendages should familiarize themselves with the PRC’s new publication standards.

Western bloggers that cover Asian politics and business should also be on alert.

China Is Crystal Clear: Bye, Felicia Foreign Media

China’s latest move reinforces its efforts to limit “foreign investment into the country’s online publication’s industry.” Apparently, both iTunes and Disney have already been affected by the recent statute.

Contact An International Defamation & Internet Law Attorney

Since opening our doors, the lawyers at Kelly Warner have worked with clients and firms from around the world. Internet law is an international matter, and we always keep the global picture in mind.

To learn more about our international defamation and Internet law practice, click here. If you’re ready to talk, let’s do it.

Article Sources

Shira, D., & Associates. (2016, May 17). Internet Censorship and China’s New Online Publication Law – China Briefing News. Retrieved July 21, 2016, from http://www.china-briefing.com/news/2016/05/17/internet-censorship-chinas-new-online-publication-law.html

IoT Startup City Spotlight: Shenzhen, China

Is Shenzhen poised to become another international startup stronghold?Every so often, we take a minute to highlight a city or country gaining popularity in the startup community. Last time, we discussed Estonia. Today, let’s take a look at Shenzhen — China’s booming IoT haven.

Where is it?

A short 40km north of Hong Kong, Shenzhen was the first city to be declared a Chinese Special Economic Zone.

Generally Speaking, What Drives Shenzhen’s Economy?

The city’s population has steadily grown since 1980. In 2015, Shenzhen’s GDP weighed in at nearly $270 billion.

The city is home to the Shenzhen Stock Exchange (SZSE) and one of the busiest container ports on the planet.

Who Is Flocking To Shenzhen?

Shenzhen is considered the “darling of IoT entrepreneurs from around the world.”

Several big names already landed in the Chinese city. Famously, Zach Smith of Makerbot moved there a few years back. An executive at IoT accelerator Brinc explained why Shenzhen has become an attractive option for the niche:

“Time and time again, IoT startups aren’t able to successfully manufacture their product and nothing beats in-person, hands-on experience and knowledge working with the manufacturer.”

Drone manufacturers are also converging on the city.

Shenzhen-based companies have begun to “westernize” working environments by establishing “campus style” facilities, like Google.

Best Non-Work-Related Benefit of Shenzhen

The climate. It’s never too hot or too cold; typically, the mercury lands between 60 and 84 degrees.

Worst Aspects Of Shenzhen

Oddly enough, Internet access isn’t the best; decent, but not the highest-end. Plus, some people aren’t impressed — or even satisfied — by the cultural and dining offerings. That said, world-class Hong Kong is a short ride away.

Shenzhen In A Nutshell

A manufacturing mecca, Shenzhen is emerging as a hub for the Internet of Things community. For IoT startups, a contact in Shenzhen may be worth considering.

Connect With A Startup Lawyer

Internet law firm Kelly Warner works with tech and online startups. To learn more about our top-rated practice, head here. Ready to talk? Great, so are we. Get in touch today.

Article Sources

Desai, F. (2016, May 7). Innovators Find Internet of Things Paradise in Shenzhen. Retrieved June 16, 2016, from http://www.forbes.com/sites/falgunidesai/2016/05/07/innovators-find-internet-of-things-paradise-in-shenzhen/#7a2854f2552d

Alibaba E-commerce Update: 5 Things To Consider When Strategizing

Picture of Alibaba banners outside new york stock exchange to accompany article about Alibaba e-commerceAlibaba is at a crossroad. The path it picks could profoundly affect the company’s future. Why should sellers and marketers care? Well, if Alibaba’s *health* declines, it could impact the e-commerce ecosystem.

Alibaba E-commerce Update: Counterfeits and Government Skepticism

What should you know about Alibaba’s current position?

  • Many U.S. officials want Alibaba on the Notorious Markets List because of alleged counterfeit goods on the site. This latest warning isn’t the first time a counterfeit outbreak has hurt the platform. Before its IPO, Alibaba was on the List; but cleaned up its act, and got removed in 2012.
  • Ostensibly in response to U.S. concerns, Jack Ma — the Mark Zuckerberg of Alibaba — has promised to scrub the site of scammers and insists he’s never “missed any meetings relating to [Alibaba’s] anti-counterfeit team.” Another show of commitment? The company hired a slew of new employees to work on the Alibaba e-commerce counterfeit problem.
  • Ma hinted at an Internet-wide strategy, specifically mentioning JD.com and WeChat. Choosing rodents as an allegorical vehicle, Ma explained, “If before we were huffing and puffing to chase down and kill mice, now what we’re going to do is annihilating [sic] the environment the mice need to survive.”
  • Alibaba allegedly partnered with law enforcement officials to arrest 75 suspected *e-commerce criminals.* In other words, the platform isn’t necessarily a privacy stronghold. Be aware.
  • Another interesting tidbit? Whispers indicate that Chinese officials could be “turning against” Alibaba over some tension between Ma and China’s President Xi Jinping. You can read about it here. Will the beef affect Alibaba’s platform? Believe it or not, there is a chance — albeit slim. But, China’s current administration has shown a Napoleonic appetite for Internet control. Watch this space.

We Solve E-commerce, Marketing & Private Label Business Problems

Do you sell things online?

  • Are you dealing with an account suspension at Amazon, Etsy, eBay or another e-commerce portal?
  • Has someone hijacked your listing on Amazon or another open catalog website?
  • Have counterfeiters latched onto one (or more) of your products?
  • Is it time to formally protect your products with intellectual property protections?

If you answered yes to any of these questions, we can help.

Our firm has carried many sellers and marketers over professional obstacles. We also handle mundane — but critical — corporate governance, business, and intellectual property legalities.

Our goal is to ensure that the people with whom we work are profitable, protected, and compliant.

If you want to read more Alibaba e-commerce updates and other online retail legal news, head here.

Article Sources

Lopez, L. (2016, March 21). There are signs that China is turning against Alibaba. Retrieved April 18, 2016, from http://www.businessinsider.in/There-are-signs-that-China-is-turning-against-Alibaba/articleshow/51502849.cms

Custer, C. (2016, March 14). Tech in Asia – Connecting Asia’s startup ecosystem. Retrieved April 18, 2016, from https://www.techinasia.com/jack-ma-lays-alibabas-brutal-strategy-war-fake-counterfeit-goods

Will FBA Marketers Be Hurt By Amazon’s Move Into International Cargo Shipping?

FBA marketers cargo shippingAmazon is super-sizing, as the company’s Chinese arm entered into the freight forwarding business.

What does it all mean for FBA marketers and sellers?

Maybe nothing, maybe something; let’s take a snapshot of the situation and discuss.

Amazon Registered As A Freight Forwarder (Which Isn’t What You May Assume)

When news broke, some folks assumed Amazon bought a fleet of cargo ships to better facilitate overseas shipments. But that’s not quite accurate because Amazon registered as a freight forwarder, not an ocean liner.

Is the difference between ocean liners and freight forwarders significant? Sure is. In the simplest terms, ocean liners can operate fleets of ships. Freight forwarders, however, are considered “non-vessel operating common carriers” – meaning they can buy space on cargo boats at wholesale costs, but not run boats.

Will Amazon’s Move Into Freight Forwarding Hurt Stateside FBA Marketers? (Some People Think So)

Why did Amazon make the move? We can only speculate, but it seems like a long-term, cost-cutting maneuver. The change will likely accelerate the buy-to-delivery pipeline, which is ideal for both Amazon and its users.

Some people worry, however, that an insular, Amazon-run, Sino-U.S. supply chain has the potential to pummel stateside FBA marketers and sellers. How? Since foreign shipping times would decrease, the number of Chinese manufacturers marketing directly to U.S. buyers would probably increase, competition would stiffen, margins would narrow – and profits would be harder fought.

Are the concerns justified? It’s too early to tell. Right now, the freight forwarding registration is just another indicator that the private label selling and online marketing industries are on the rise.

Get An FBA Lawyer On Your Side

The FBA business can be lucrative; many FBA marketers make an excellent living; but beware: pitfalls abound. To avoid costly setbacks, consult with an Amazon private label lawyer. Attorney Aaron Kelly has been in the space for nearly a decade and understands the legal opportunities that may help your business flourish.

Get your FBA questions answered today.

Article Sources

Rey, J. D. (2016, January 14). Amazon Can Now Ship Packages From China to the U.S. by Sea. Retrieved February 28, 2016, from http://recode.net/2016/01/14/amazon-receives-ocean-freight-license-to-ship-packages-from-china-by-sea/

New Alibaba Counterfeit Crew Hopes To Curtail Phony Products Problem

Alibaba counterfeit crackdown
Alibaba Counterfeit Crackdown

Is counterfeit activity on Alibaba.com about to diminish? Alibaba hopes so.

Headquartered in China, Alibaba.com is an online souq of product sourcing, selling, and negotiating – and it’s an essential cog in many e-commerce operations.

Recently, Alibaba announced plans to fatten its fraud department. Perhaps to keep U.S. officials at bay? Probably.
Alibaba announced plans to fatten its fraud department.

Alibaba’s Piracy Past

In 1999, Jack Ma had an idea: connect Chinese manufacturers with overseas buyers – online. And abracadabra, Alibaba.com was born. By 2012, financial analysts were valuing the company at about $150 billion.

But everything wasn’t red dragons and lucky koi. Though profitable, Alibaba was also morphing into a piracy bazaar.

The counterfeit crisis reached critical mass in the late noughties when U.S. trade officials granted Alibaba and its eBay-esque component, Taobao Marketplace, a spot on the “Notorious Markets” list.

Legitimizing Alibaba

About ten years ago, Alibaba kicked some pirates off the ship, so officials scrubbed the company from a blacklist.

Now a seasoned, publicly traded Wall Street player, today’s Alibaba is a far cry from its earliest iterations.

Sure, Alibaba’s stock fluctuated in 2015, but pundits aren’t surprised, predicting that Alibaba – like Google, Facebook, Amazon, and eBay – is still a formidable online business force.

Why Are U.S. Officials Once Again On Alibaba’s Case? And, What Is Alibaba Doing About It?

Perhaps at the behest of the MPAA and RIAA, some U.S. lawmakers are apoplectic about piracy. For years, they’ve tried to lard federal law books with draconian, outdated intellectual property statutes. It’s yet to work; but not for lack of effort – nor lobbying dollars.

The Government’s Online Piracy Blacklist

To buoy anti-piracy efforts, in 2006, the Office of the United States Trade Representative (USTR) created an official “naughty pirate” list. Called the Notorious Markets Blacklist, the report adumbrates communities – both online and off – where *pirates* congregate and flourish — and being listed can lead to financial hardship.

The USTR is throwing a skeptical side-eye towards Alibaba and threatening to pin a scarlet “P” on the company.

In fact, Alibaba once held a sport on the Notorious Markets Blacklist, but redeemed itself in time for a 2014 IPO. However, the USTR is once again throwing a skeptical side-eye towards Alibaba and threatening to pin a scarlet “P” on the company. Presumably in response, Alibaba executives hired 200 new employees – including a department head honcho – to slash and burn Alibaba counterfeit problem accounts.

Got Alibaba Counterfeit Problems? Speak To An e-Commerce Lawyer

Do you need to speak with an e-commerce attorney? The top-rated lawyers at Kelly / Warner have helped hundreds of entrepreneurs overcome legal challenges. We craft fresh solutions to common problems and help keep our clients on top.

Our private label lawyers can answer Alibaba counterfeit questions and help solve issues related to:

  • Trademark, patent or copyright;
  • Piggybacking or hijacking;
  • Account suspensions and reinstatements;
  • Forming and e-Commerce or Internet business;
  • FTC marketing compliance;
  • Telemarketing and SPAM restrictions;
  • Importing and exporting legalities; or
  • Anything that has to do with marketing, selling or promoting products or services.

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Article Sources

Davis, K. (2015, December 29). Alibaba Hires Hundreds To Combat Counterfeit Products In The Face Of Blacklist Threat. Retrieved February 08, 2016, from http://www.fastcompany.com/3055011/fast-feed/in-face-of-blacklist-threat-alibaba-hires-hundreds-to-combat-counterfeit-products

R. (2015, December 21). Alibaba names new head of anti-counterfeiting, IP unit. Retrieved February 08, 2016, from http://www.businessinsider.com/r-alibaba-names-new-head-of-anti-counterfeiting-ip-unit-2015-12

Google Defamation: Will The Search Giant Survive Down Under?

Google defamation case
Google Defamation: Will Google have to shutter its doors down under after an unfavorable online defamation ruling against the search engine?

Has anybody in the United States successfully sued Google for defamation? Attempts have been waged, but the plaintiffs’ crusades usually fail. Sure, folks win defamation lawsuits against authors of defamatory statements. But against Google? Nah. Google almost always walks away unscathed – fresh as a Mentos factory.

Why?

Stateside statutes make it very difficult for claimants to win “Google defamation” lawsuits. After all, Big G doesn’t create 95% of the content it displays; it simply acts as an aggregator of third-party information.

But not every country has laws that protect Internet service providers and user-content platforms. Recently, an Australian court ruled against the mega-search-engine in what has quickly become a high-profile online libel lawsuit, which, theoretically, has the power to decimate Google down under.

Doctor Defamation Lawsuits: The Usual Story

It happens a lot. A medical professional treats a petulant “Mr. Patient.” Things don’t go well. Mr. Patient isn’t thrilled with the doctor’s work or bedside manner or billing practices or bad breath. So, good ole’ Patient takes to the Internet and shout-types his woes to the world.

Sometimes, in online patient v. doctor brawls, the digital diatribes are legitimate complaints; sometimes they’re exaggerations, and sometimes they’re bold-faced lies. No matter the category, online reviews have the power to demolish practices and ruin careers. Which is why many doctors move forward with Internet defamation lawsuits in the face of hyperbolic, inaccurate and damaging Internet rants.

And believe it or not, the case jurisdiction has a huge effect on the likelihood if its success.

Defamation Laws Vary, Greatly, By Nation

Nearly every country in the world has defamation laws, but the terms of those laws are as varied as humanity itself. For example, in countries that still recognize a monarchy (not all), the crime of lese majeste (in today’s parlance, trash talking royals) can get you thrown in the clink – for years. In some non-secular countries, profanity and blasphemy can land you six feet under.

And believe it or not, British Commonwealth countries and the United States – though similar in many ways – are on arguably opposite ends of the defamation scale. In short, countries like Great Britain, Australia and Canada are primarily plaintiff-friendly when it comes to slander and libel laws, whereas the U.S. is decidedly defendant-friendly.

Australian Doctor Disparaged on U.S.-Based Ripoff Report Goes After Google for Defamation

The contracts between U.S. and Australian defamation laws recently took center stage in a shocking ruling by the South Australian Supreme Court – and the decision may have Google a shaking in its bytes.

Here’s the story:

A peeved Australian medical patient blasted a doctor on infamous consumer review website RipoffReport.com. Clearly, the doctor wasn’t pleased – so she initiated legal action. Interestingly, the doctor opted to include Google as a defendant. Interesting because it’s almost unheard of to win an indexing defamation lawsuit against the Mighty G (especially in the United States). Nevertheless, our intrepid doctor went for it. Why?

Well, when the disparaging and damaging content appeared on RipoffReport.com, the doctor alerted Google of its defamatory nature. But Google did nothing. The hyperlink remained front and center in the index. She felt the search engine ought to be held liable, too.

Doctor Wins Google Defamation Lawsuit

And guess what? She WON! Against Google! The Teflon Google! A court held the search engine accountable for content published on Ripoffreport.com!

“How!?” You might ask.

The court reasoned:

“If a search of Dr Duffy’s name had merely returned the URL of the first Ripoff Report webpage without functioning as a hyperlink and without accompanying text, it could not be said that Google was a publisher of the content of that material. To access the first Ripoff Report webpage, the user would need to enter the URL into the address box of the internet browser.”

A U.S. court would not have returned this verdict. No way, no how. Because there’s a law in the United States – commonly known as Section 230 of the Communications Decency Act – which effectively frees internet service providers – and many social media platforms – from defamation liability over third-party content. Or, to put it more simply: many websites are not held legally accountable for user content and posts.

Read more about Section 230 of the CDA

Google Defamation Rules: What Happens If A Country Doesn’t Protect ISPs From Third-Party Liability?

But what happens when an international online behemoth, like Google, is slapped by a ‘foreign’ court? Does it affect the rest of the world? After all, the Internet has smudged the line between nation states. And even though there is a Google for each one, thanks to VPNs, cross-border networks and, heck, even easily available travel options, people aren’t necessarily relegated to their hometown Google.

The Law Is Nebulous

So, must the search engine apply an Australian court’s ruling across the global board? Is the mighty G responsible for thwarting an Australian online rant-typer on “Google, America”?

To be sure, no definitive answer exists. Like the Internet itself, international Internet laws are complex and in constant flux. Countries try to do their parts by limiting the amount of “online libel tourism” (Internet defamation plaintiffs who shop for the friendliest jurisdiction). But government statutes aren’t airtight. In fact, a few years ago, the U.K. tried to put a stop to libel tourism by revising their defamation laws, but people are still finding loopholes to use England’s ostensibly pro-plaintiff slander and libel laws.

The Inevitable Upcoming Fight Against Australia’s Google Defamation Ruling

The Australian defamation ruling against Google has tech and legal tongues wagging. Pundits are concerned about the possible (and largely theoretical) censorship implications. The decision, arguably, also sets a bad precedence for continued online innovation.

Every pundit and lawyer expects Google to appeal. It’s sure as done. If a higher Australian court doesn’t overturn the current mandate, Google may morph into a very different search animal down under. Until then, expect a metric ton of amicus briefs to be written, by independent watch groups and attorneys, on behalf of Google.

Canadians May Need U.S. Lawyer To Get Content Removed From Google

Get content removed from Google
How can Canadians get content removed from Google.com?

Here’s a question: When Google is faced with a court order compelling the removal of a defamatory webpage from its index, do you think Google should:

  1. Not remove the link at all, because doing so is sliding down a slippery anti-free-speech slope?
  2. Remove the link, but only from the national index of the country from which the court order originates? Or,
  3. Remove the link from every Google index worldwide?

This is the dilemma the Supreme Court of British Columbia had to consider in Niemela v. Malamas, 2015 BCSC 2014 (“Niemela”). The justices’ final decision: Choice B – only remove links from Google.ca, which means the pages can still be included and visible on google.com.

What Does This Ruling Mean For Canadians Who Want To Get Content Removed From Google?

What does this ruling mean in practical terms? Canadians who’ve successfully obtained an online defamation removal order in Canada may need to file another motion, in a U.S. court, to get the material removed from Google’s main index, Google.com. And even then, it may not be a sure thing since Canadian and U.S. defamation laws differ greatly.

Niemela v. Malamas: Online Defamation Case Summary

Negative Online Reviews Posted About Lawyer

In 2012, someone started posting negative online reviews about Vancouver attorney Glenn Niemela. Confident the posts were the work of a former “biker gang” client, Niemela informed the police of the situation but declined to take legal action. By 2014, though, he’d concluded that the reviews were hurting his business and filed a pair of lawsuits in an effort to get the content removed from the Web.

Lawyer Files Lawsuit Against Alleged Defamer and Google

Instead of just suing the suspected culprit, Niemela also filed a claim against Google over the “snippets” the search engine’s algorithm grabs to display in results.

In his legal pursuit of the actual defamer, Niemela succeeded. A Canadian court declared the statements on ripoffreport.com and reviewstalk.com defamatory. As a courtesy, the search engine offered to remove the offending pages from its Google.ca index, where 95% of search is done in Canada.

Kelly Warner Law helps Canadians who want to get content removed from Google.com.
Kelly Warner Law helps Canadians who want to get content removed from Google.com.

“Remove the links worldwide, Not just in Canada!”

But Niemela wanted more from Google. To secure his good name, he sought removal of the defamatory pages from Google’s worldwide index, especially Google.com. “[A]ny person’s honour, reputation and personal privacy ought [not] to be marginalized or compartmentalized to solely one jurisdiction, being Canada, by solely blocking the offending URLs from google.ca,” Niemela rationalized in his lawsuit.

Court Ruling: Only Remove From Canada’s Search Index

The British Columbian court, however, didn’t think Niemela’s argument satisfied the necessary legal tests. Specifically, the bench didn’t think Niemela demonstrated how his life or career would be irreparably harmed if the contested webpages weren’t de-indexed across all of Google’s properties.

The judges also disagreed with Niemela’s lawsuit against the search giant, in which he argued that search engine text snippets amounted to defamation. But the judges disagreed since Google’s algorithm is a “passive instrument” that does “not authorize the appearance of the snippets on the user’s screen ‘in any meaningful sense’.”

International Internet Law Attorneys

Kelly Warner’s online defamation lawyers frequently work with clients in Canada and enjoy professional relationships with attorneys in British Columbia, Quebec, Alberta and Ontario. Solving cross-border Internet law cases is one of our strengths.

Contact Kelly Warner’s top AV-rated international Internet law attorneys about  how to get content removed from Google.

Australian Defamation Case Study: The Hockey Incident

Australian defamation law
A surprising decision in an Australian Twitter defamation case further defines Internet libel laws in the Antipodes.

An Australian defamation ruling will probably affect how Australians’ tweets from here on out.

In this post, we’ll review the case, and then examine the likelihood of a U.S. court delivering the same verdict. If you’ve landed on this page in search of an international online defamation lawyer, click here.

The Tweets That Launched an Australian Defamation Lawsuit

In May of last year, Fairfax Media (an Aussie media outlet) ran a story about Australian Treasurer Joe Hockey’s alleged complicity with, what sounds like, a modern-day political simony scheme. According to Fairfax Media, a Sydney business group supposedly bestowed inappropriate “access” on Hockey, presumably in exchange for political favors.

As part of efforts to promote the story, Fairfax released two tweets. One said, “Treasurer Hockey for sale,” followed by a link; the second tweet, which also included a micro-summary of the story, read, “Treasurer for Sale: Joe Hockey offers privileged access.”

In response, Hockey filed an online defamation lawsuit.

Both sides presented their arguments, and Justice Richard White ultimately decided:

“There would have been a large number of persons, perhaps in the tens of thousands, who read the bare tweets and who did not read further.”

After the ruling, a Fairfax Media spokesperson explained to the press:

“The Court upheld Fairfax’s defense of the articles and found them not to be defamatory. Mr Hockey’s claims were only upheld in respect to the publication of the SMH [Sydney Morning Herald] poster and two tweets by The Age because they lacked the context of the full articles.”

So, what does this all mean? In the Fairfax Media Twitter defamation case, the court ruled that the investigative article, about Hockey, wasn’t defamatory, but the tweets were libelous because they lacked clarifying context.

Would Hockey Have Won This Twitter Defamation Case In A U.S. Court?

Two win a defamation lawsuit in the United States, at the very least, plaintiffs must meet the following requirements.

Falsity: A statement isn’t defamatory if it’s true. Claimants must prove that the defendants made false declarations of fact.

Harm: It’s not enough to demonstrate that a statement was false. Typically, plaintiffs must show that the speech caused material or reputational damage. (The exception to this rule is defamation per se, which you can read more about here, in the sidebar.)

Negligence or Actual Malice: Intention is a big part of defamation law. To win a case, plaintiffs must prove that the defendants either acted negligently or intentionally released the inaccurate information.

So, taking the parameters of U.S. defamation law into consideration, would Hockey have won this Twitter legal battle on American soil? Probably not. Especially since the court found that the article, which the tweets referenced, was not defamatory.

Differences Between U.S. and Australian Defamation Law

Slander and libel laws in the United States and Australia are a lot different than some people may think. Like other British Commonwealth nations, Australian defamation laws are more plaintiff-friendly than those in the United States,  which is why some stateside clients choose to file overseas, circumstances permitting. That said, so-called libel tourism is universally frowned upon; and though it has been done, getting any court to accept a foreign defamation case is no easy task, especially since the 2013 libel reforms.

Speak With An International Online Defamation Attorney

Our firm has successfully handled hundreds of Internet defamation and trade libel cases. A top firm with Av-rated attorneys, Kelly Warner lawyers are known for their attention to detail and creative solutions.

Pick up the phone – or Skype – to begin the conversation.

 

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Internet Law Case: Android App Developer Lawsuit Example

Below is a summary of an app developer v. app developer lawsuit. Anyone interested in tech lawsuits will find it informative. If you’ve landed here in search of an app developer lawyer, head here.

App developer lawsuit and lawyer

APUS Group is an app development startup. Cheetah Mobile Inc. is an established app development firm. The two companies are going head-to-head in a legal battle. Why? Because they’re pushing similar products, and aggressive marketing may have morphed into illegal, unfair competition.

Why is one App Company Suing Another App Company?

Cheetah Mobile Inc. (“Cheetah”) and APUS Group (“APUS”) have competing apps, Clean Master and Launcher respectively. Both are “optimizer” apps that improve device functionality.

Cheetah launched this app developer lawsuit against APUS because the latter believes the former committed intellectual property infringement and an egregious act of defamation by telling users that Clean Master is “stealing your data.”

Press Release Informs Defendants of App Developer Lawsuit

Cheetah announced the suit with a splashy press release. Apparently, APUS may have learned of the lawsuit along with the rest of us, via the press release.

International App Developer Using U.S. Courts For Unfair Competition Grievances; Is It A Smart Move?

Somewhat curiously, Cheetah filed this app developer lawsuit in a California court. Why California? Speculation is that:

  • Higher U.S. litigation costs may encourage APUS to settle out of court;
  • If Cheetah wins in a U.S. court, the possible award damages, for the cited claims, are higher in the U.S. than China;

Justifying a Jurisdiction

How did Cheetah justify filing in a U.S. court? Since the Google Play store distributes APUS’ Launcher in California, California residents are affected by the alleged violations.

Sure, it’s a valid argument, technically, but tenuous. It wouldn’t be surprising if the plaintiff first moves for a change in venue.

App Developer Claims Unfair Competition Kitchen Sink

Cheetah’s list of claims was longer than a theme park line. The tech firm sued its competitor for:

  • Defamation,
  • Trade libel,
  • Copyright infringement,
  • Federal and State trademark dilution,
  • False advertising,
  • Unfair competition,
  • Intentional interference with prospective economic advantage, and
  • Intentional interference with contracts.

Time will tell if this app developer v. app developer lawsuit proves to be a brilliant stroke of strategy or an misstep.

Kelly / Warner is a tech law firm that works with developers. Contact us with any questions related to app development law.

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