The California outdoors brand recently filed a lawsuit against an Amazon seller named Kimberly McHugh, whose shop, Our Little Corner, carries Patagonia-brand jackets, sweaters and hats alongside products from labels including Clarks, Columbia and Fila.
While Patagonia isn’t questioning the authenticity of the wares, it is claiming that the shop infringes on its trademarks and copyrights and uses “several tactics to portray itself as an authorized Patagonia dealer,” when, in fact, none of the brand’s authorized retailers or dealers are permitted to sell on e-commerce marketplaces such as Amazon. Further, because of these stipulations, “such sales cause authorized dealers to breach their contracts and agreements with Patagonia,” it claims.
The lawsuit represents a crackdown by Patagonia on the gray market, the unauthorized secondary channels through which consumers can buy genuine branded goods. Gray market sales are generally protected in the U.S. by the “first sale doctrine,” which limits the right of intellectual property rights holders to exert control over their products after someone has bought them, explained Shira Marcus, an attorney at the intellectual property and e-commerce law firm Cabilly & Co. “At some point, the public interest of being able to have free commerce trumps the brand’s wish to control every aspect of their trademark and product after they’ve already received profit from it.”
This protection doesn’t extend to products that are deemed “materially different” from those that were originally sold, however, and Patagonia claims that the absence of its lifetime warranty — otherwise known as its “Ironclad Guarantee” — puts Our Little Corner’s wares in this category. (FN has reached out to Patagonia and Amazon for comment.)
As the U.S.’s biggest marketplace, Amazon is a natural target for gray market disputes — last year, millions of third-party vendors did an estimated $175 billion in sales, accounting for up to 68% of the retail giant’s total sales, according to the e-commerce intelligence firm Marketplace Pulse.
Patagonia is hardly the only brand to take issue with Amazon: Birkenstock has been embroiled in an ongoing dispute with the company since at least 2016, when it announced that it was pulling its products from the site and would no longer authorize any vendors to sell on the marketplace.
“The Amazon marketplace, which operates as an ‘open market,’ creates an environment where we experience unacceptable business practices which we believe jeopardize our brand,” Birkenstock Americas CEO David Kahan said in a statement that July, citing both purported counterfeit products and gray market goods.
The fight became more heated the following summer, when Amazon reportedly approached authorized merchants offering to buy their inventory at full price to sell on the site. In an email to FN and others, Kahan called the practice “modern-day piracy” and said, “This action they have taken is a ‘middle finger’ to all brands, not just Birkenstock, but all brands who value the consumer experience and exercise discipline to distribute in a manner that maintains brand equity.”
That description undoubtedly applies to Patagonia as well, with its stalwart commitment to environmental issues and best-in-class customer loyalty.
“Patagonia has spent nearly five decades building its iconic brand and Mount Fitz Roy logo, and also has built a well-deserved reputation for their dedication to environmental activism and causes,” said Jordan Cohen, chief marketing officer at North 6th Agency, a brand communications firm. “Therefore, it is no surprise that they would be fiercely protective of their brand and take aggressive measures to do so.”
Where consumers discover and purchase its products is integral to this, he said. “Patagonia has a vested interest in only selling through channel partners that align with their brand — sporting goods and outdoor adventure stores, stores that share their commitment to the environment, etcetera — as part of their ongoing investment in and protection of their brand equity.”
Amazon, in particular, is seen by many brands as a threat because it is believed to exert an abundance of control over the customer experience as well as horde invaluable customer data. “Brands are increasingly learning the importance of owning their customers’ data in order to communicate with them more effectively,” said Joe Yakuel, CEO and founder of Agency Within, a full-service digital marketing firm whose clients include Nike and Hugo Boss. “Selling through channels like Amazon limits the amount of data that the retailer receives, which can hurt their ability to provide personalized messaging down the line and, in turn, decrease the likelihood of a repeat purchase.”
Whether Patagonia will emerge victorious remains to be seen — Marcus said most of these cases settle out of court with confidential agreements — but similar disputes are underway in numerous jurisdictions throughout the country, and are likely to continue as brands try to wrangle control of their reputations in the ever-evolving e-commerce space. On Amazon today, you can still find several pages with Patagonia products from various sellers who don’t appear to have been hit with lawsuits.
“More and more, consumers are looking to connect with the brands they associate themselves with,” he said. “The more competitive a particular space is, the more critical the personal connection with the customer becomes in maintaining long-term loyalty.”