Hey guys.
Today I'm going to talk about how to protect yourself from being sued when selling on Amazon
and private labeling.
As an Amazon seller there are three major risks and vulnerabilities that could lead
you to potentially being sued and these are, one, selling items that result in either property
damage or on someone getting hurt.
Two, selling items that contain either copyrights or trademarks.
Three, selling items that are patented.
To find out how to avoid these mistakes and stop yourself from getting slapped with a
$100,000 lawsuit keep watching this video.
Quick disclaimer, I am not a lawyer and I am not qualified to give legal advice but
if you're still interested in watching this video let's go.
What if my product hurts someone?
I was once told a story about a new seller who was selling a spring loaded garlic press.
Things were going well, he was plenty of money until one day he gets an email and caps lock.
Low and behold inside this email was a very unhappy customer who attached a photo of herself
and her injured hand claiming that it got injured through the garlic press.
The customer was furious and they made it super clear that they were going to pursue
this.
The new seller?
Well he was terrified.
He had no insurance and he hadn't even formed an LLC so if he was going to be sued all of
the damages would be applicable to him.
Forming an LLC, IE a company, is something that I've talked about before on this channel
and I do strongly recommend it.
The reason being that if you get sued it's not you that is personally liable, it is your
company as you long as you were negligent.
That way they can't come and take your house, your car and your savings.
Anyway, back to our friend new seller who did not have foresight.
What did he do?
Well he quickly emailed her back apologizing profusely, offering her a full refund including
shipping cost and she accepted.
Get this, she even left a positive review.
Luckily for him when she said that she was going to pursue this she just meant until
she got her refund, not in court but it was a very good wake up call.
This is particularity relevant if you are selling products to customers based in the
USA and most Amazon sellers are because of the fact that amazon.com is easily the biggest
marketplace.
See, in a lot of other countries like New Zealand, if you get hurt due to an accident
your health bills and your recovery costs are covered by the government.
In New Zealand this program is called ACC and as a consequence you can't sue for accidental
injuries.
Obviously this is not the same in the USA so there are more opportunities to open yourself
up to potential lawsuits.
This may sound scary, but let's bring it back down to earth for a moment.
The easiest way to stop this from potential happening to you is by picking items that
aren't dangerous from the start.
Alright so see this toaster here?
It has hot elements inside that can burn you.
If you stick a fork inside of it it could electrocute you and potentially even kill
you.
Now let's go and compare it to this headphone case.
While there are no hot elements inside, just little compartments to hold head phone accessories
and cords and there is no electricity flowing through this.
It's just material.
While you could still potentially hurt yourself with it it would be very difficult to do so.
Now quite honestly, the chances of getting sued with the toaster are still incredibly
tiny, but your chances of getting sued with the headphone case are basically nonexistent
so being smart with your product choices upfront goes a long way.
Notice that I said the chances weren't completely nonexistent, they were just almost nonexistent.
The truth is, in life you never know quite what will happen.
That is why if for three consecutive months you make $10,000 in sales with your product
Amazon requires that you have liability insurance that covers you for at least a million dollars.
While that may sound annoying, frankly it's just the cost of being successful.
You could have far[inaudible 00:04:14] problems in life than that.
Once again, if you've gone ahead and picked a very safe product to manufacture to start
with then you're going to find this process a lot easier and you should be able to insure
yourself for well under $1000 a year.
Items that are riskier will cost you more to insure, which is another good reason why
it's better to start out with a simpler product.
That way when you get more experience and you want to move on to other items that are
potentially more risky but have higher profit margins, you'll be able to consolidate your
insurance with your other FBA items.
It will make the insurance cost for your riskier items cheaper.
Do not sell products that contain trademarks or copyrighted images.
Copyright and trademark infringement is rampant in China.
Absolutely rampant.
As I've explained on this channel before, the reason why it's so rampant in China isn't
that it isn't illegal, it is illegal to use copyrights and trademarks, but frankly no
one cares.
In China the cultural idea is that if something is easy to copy and distribute to the masses
then it is a good thing to do so.
The rights of the individual are not as strong as they are in the West and that is why if
you go to Alibaba you will regularly find items that you could private label that contain
copyrighted images and trademarks.
When importing from China you have the choice to purchase these generic animal slippers
from a manufacturer or you could purchase these Mickey Mouse slippers instead.
You could choose to import the generic duvet case or you could choose this Mickey Mouse
one instead.
Now let's be very clear about this, it is illegal to import these Mickey Mouse slippers
or these Mickey Mouse bedspread.
Mickey Mouse is currently protected by copyright law and he will continue to be so until 2023
when Disney will have to come up with another way to continue to protect him and stop him
from entering the public domain.
Given how much legal wrangling that Disney had gone through to protect Mickey Mouse's
copyright status and extend it I suspect that they will find a way to do so and as a back
up plan, he's protected by a trademark as well.
Nevertheless, do not make the mistake of thinking that just because Chinese companies are producing
and manufacturing products that contain copyrighted images and trademarks that they have the right
to do so because they don't.
They aren't selling them because they have the right to do so, that's selling them because
they know that they can probably get away with it and if you try to sell them on Amazon
you aren't going to be so lucky.
Do not sell products that are patented.
Let's quickly clarify the differences between copyrights, trademarks and patents.
Copyrights are a legal protection of artwork like Mickey Mouse is so you cannot replicate
it without the copyright holders permission, as in Disney's permission.
Trademarks may seem similar but actually they were refer specifically to artworks, signs
and symbols related to brands.
Because of the fact that Mickey Mouse is both a piece of artwork and a symbol of the Disney
brand, he gets the honor of being both copyrighted and trademarked.
Patents are different.
They are a legal protection of a particular feature or design of the product itself.
While the Mickey Mouse duvet is illegal to sell because it contains a copyrighted image
of Mickey, duvets themselves are fine to sell as they have no act of patency protecting
the design.
On the other hand, here it is an item that is patented that I have highlighted in a previous
video.
It is a dog leash that has been uniquely designed to walk two dogs at once.
It has three defining feature, firstly it has a rotating wheel separate from the handle
which stops leashes from getting tangled.
Next, the two leashes have their own trigger and they operate separately so you can control
the leash length for both dogs.
Finally, each leash is color coded to match the button that it corresponds to.
Yes, all of these unique features have been outlined in the patent from the company that
owns it, Wigzy.
What that means is you're not allowed to manufacture or sell a product that has these features
in the USA.
That hasn't stopped multiple Chinese manufacturers from producing their own version of this dog
leash and selling it to whoever will buy it because here is the thing and it is good to
know, patents that are filed in the USA don't just apply to other countries.
You need to apply for patents in those specific regions which makes it quite unique from copyrights
because most countries have agreed to protect all forms of artwork including foreign artowrk.
China has technically agreed to do this as well, even though it is rarely pursued by
the authorities.
There is no legal protection for foreign patents so that means then that unless you have applied
for a patent in China they are perfectly within their rights to copy it, but and this is a
big but, you are not allowed to go and sell an item that violates that patent in the USA
because the patent for it was applied for it in the USA.
If you went ahead and listed a Chinese knock off of this dog leash on Amazon firstly Wigzy
would almost certainly immediately get your product listing taken down and secondly, you
would be risking them suing you for patent infringement.
How do you avoid selling products that violate patents?
Well, it's actually a lot easier than you might think.
Consider this, there are several dual dog leashes on Amazon.
They are all quite simple designs, two leashes attached to a handle but hello.
Look there is one leash that is different from the rest with it's cool looking unique
design.
I wonder why there's only one seller on Amazon selling such a cool unique design.
I wonder why.
Well when you see a product like this it should set off alarm bells in your head that this
item is most likely patented.
If you go to the website for the company selling it they will almost always list their patent
on it.
You can then go to a free site like Google patents and look it up.
Sure enough it has an active patent.
In less than a minute we've figured out that this product is a no go.
There you go, it turns out that if you apply a bit of common sense and do a bit of due
diligence, you can stop yourself from being sued on Amazon.
If you like this video then we know that you will love our other videos that teach you
how to make money selling online.
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Before you run away, I've got some more free information I'd love to give you.
Here at wholesale [inaudible 00:10:44] we have a free ebook, "How to Make $10,000 a
Month Online with Drop Shipping".
You'll find a link on how to download this free ebook in the video description below.
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