Fighting counterfeit products on marketplace sites continues to be a burden for brands as they gain popularity online.
According to MarqVision, an AI-driven brand protection company, beauty tech is a growing focus for counterfeiters, often based in China, who copy popular products to sell on marketplace sites like Amazon, eBay, Temu, Alibaba and Wish, among others.
“Beauty tech devices like red light and LED therapy machines … are increasingly targeted by counterfeiters, posing significant risks not just to brands but also to consumer health,” said Mark Lee, co-founder and CEO of MarqVision. For consumers, determining what’s real, and what’s fake, is getting more challenging, according to the firm. In a survey of 500 people who purchased fake beauty products, 71.6% did so unknowingly.
“I knew that if we had any kind of success, we would likely be ripped off, so I started obsessively checking Alibaba [where Amazon sellers often source their goods] pretty regularly early on, just waiting for that day,” Andrew Silberstein, founder and CEO of beauty tech company Solawave, told Glossy.
Solawave launched in 2020 with its now-hero product, a $149 Red Light Wand. The device is FDA-cleared and designed to treat acne and fine lines with red light and microcurrent technology.
Solawave has since expanded to other devices, including a full face mask for $349, a neck and chest mask for $299, an eye mask for $199 and a 2-in-1 mini tool for $89. The brand currently sells DTC and on Amazon, as well as through retailers like Nordstrom and Neiman Marcus.
Within a few months of launching, Silberstein started seeing dupes, the colloquial term for products that look almost identical but lack the trademarked brand name and logo, as well as near-identical copies with Solawave branding. Both types infringed upon Solawave’s many U.S. and Chinese design patents for the Red Light Wand.
Silberstein’s many internet searches, as well as reverse Google and Alibaba image searches, led him to discover that many brands had copy-and-pasted his brand’s exact copy and messaging, as well as stolen imagery and graphics.
“I posed as a buyer; I had a burner account [I’d use] to ask them questions to gather information to understand who was making these products and where they were based,” Silberstein told Glossy. “That’s really how this started.”
Silberstein told Glossy that, anecdotally, he’s heard horror stories from founders about manufacturers who, after going into business with a U.S. brand, make additional products to sell on marketplace sites without the client knowing. To ensure this wasn’t happening, Silberstein hired a third-party lab to dissect several fakes he purchased online to be sure the microchips were different — and they were.
Six months after he spotted the first Alibaba fake, he found a flood of these products for sale on American marketplace sites like Amazon and eBay. Silberstein said he suspects it took about this long to manufacture and import the dupes and counterfeit products, each selling for a fraction of the MSRP of the original.
“What keeps me up at night is safety,” Silberstein told Glossy. “In some cases, we have to, and in other cases, we opt to go through an FDA clearance process — and with that comes a lot of third-party testing and validation. … But, if someone has a bad reaction or issue with a product that’s a knockoff of ours, will we somehow be viewed as the party to blame?”
Unlike fake sneakers or accessories — two other popular counterfeit categories — topical products and technologies present unique challenges.
“Counterfeit devices often lack proper safety certifications, exposing users to potential dangers such as faulty wiring, unregulated light wavelengths or excessive heat, which can lead to skin irritation, burns or more severe complications,” said MarqVision’s Lee.
“We started getting inquiries from customers, either alerting us of knockoffs or [expressing] concern that they were seeing these [similar] products around — they assumed that we were behind it,” Silberstein said. Quickly after the counterfeits showed up on Amazon, the brand’s Amazon rating dropped thanks to a flood of one-star, poor reviews from buyers who claimed they had bought obvious counterfeits sold on the brand’s listing page. For context, anyone can sell on a brand’s listing page until the brand joins Amazon’s Premium Beauty program.
To combat this, Solawave joined the Amazon Premium Beauty program. It then gained control of all listings under the brand name in exchange for giving Amazon an extra 15% commission on top of other fees.
Fakes sold on Amazon without Solawave branding, however, continued.
“Playing whack-a-mole” is perhaps the most common analogy in the beauty industry when discussing attempts to combat the proliferation and persistence of counterfeits coming from China. For Silberstein, this looked like submitting numerous patent inquiries to Amazon to have fakes removed.
“I finally got a call from Amazon — and I [hoping] to pick up and hear [about the results of the] patent submission issues,” Silberstein said. “But the call I received was actually to warn me that, if I report any additional violations, my account could be terminated. [They said], ‘Stop reporting patent issues. This will be a problem [if you don’t]’. … I think we were referred to as being ‘an abusive seller.’ I was shocked and livid to be told that I am being viewed as an abusive seller because I reported the fact that dozens of people are violating our intellectual property and infringing on our rights.”
A representative from Amazon did not immediately reply to Glossy for comment.
As previously reported by Glossy, the number of infringement violations for the beauty, personal care and beauty device categories across marketplace sites has increased in the last few years with a compound annual growth rate of 62% between 2018 and 2023, according to Red Points, an AI-powered platform that aids brands in IP infringement.
Realizing he would not likely receive help from Amazon, Silberstein began to look for alternatives, which led him to a new type of legal option called ‘Schedule A’ litigation, which resembles class action suits in some ways but is very different.
“Schedule A lawsuits are a suit in which an intellectual property rights holder sues a large group, which can be anywhere from 50-500 defendants, all in one lawsuit,” said Christopher Keleher, founder of Keleher Appellate Law Group, LLC. in Illinois. The lawsuits are appealing because prosecution can get injunctive relief almost immediately.
That is, “a defendant may have $100,000 in their Amazon account, and once this suit gets filed and the court grants this injunctive relief, the plaintiffs go right to the platform [with the] court order and the platform must freeze their account.”
This leads to communication between the seller and brand, or their attorneys, and often leads to fast settlements so the seller can regain access to their account.
This type of suit is growing in popularity. According to Keleher, the number of design patent infringement cases filed against Schedule A defendants in the Northern District of Illinois increased from 38 in 2020 to 54 in 2021 to 63 in 2022. Then, in the first nine months of 2023, 59 design patent infringement cases were filed against Schedule A defendants in the Northern District of Illinois, Keleher said, citing the latest data available to him. These cases focus on products sold Amazon, eBay and other marketplace sites.
Keleher’s firm often represents defendants in Schedule A suits, some of whom he says were unaware of the infringement tied to the goods they’ve purchased and resold on marketplace sites. Around 80% of his clients settle quickly and agree to be more careful about the merchandise they’re selling.
Keleher noted that these suits mean that “any money coming in from legitimate sales can’t be accessed.” Some sellers’ accounts have been frozen for a single infringement, leaving six figures worth of income frozen in their accounts.
These types of suits have been nicknamed “the Northern District of Illinois versus the internet” in legal journals, coined by litigation reporter Alex Anteau.
So why Illinois? “The short answer is that it’s not limited to Illinois,” Keleher said. “These cases can be filed anywhere in federal court in the country, and they are, to some degree. But it’s basically 90% in Chicago, and then the other 10% are broken down into three other states, New York, Florida and Georgia.”
Keleher told Glossy that the “Northern District of Illinois has historically been considered a good court for intellectual property cases and the judges became familiar with [the type of suit]. … It was a snowball effect.”
For the case, Silberstein worked with Illinois-based intellectual property-focused law firm Greer, Burns & Crain on contingency. According to the firm, it has represented over 100 different brands in Schedule A lawsuits with thousands of cases filed against hundreds of thousands of online sellers. It is the top filer of this type of suit, according to the firm.
Silberstein has several suits going on now and has already won compensation for some. A hidden benefit has been the ripple effect he has seen online with fewer fakes hitting marketplace sites after the first suit. Silberstein credited this to the many legal bloggers who alert Chinese manufacturers to brands taking legal action against counterfeiters.
“The bloggers are scanning court records and then alerting sellers and manufacturers of pending cases,” Silberstein said. “They’re warning people, like, ‘Hey, if you sell a product like this, take it offline. They’re coming for you’.”
Beyond schedule A lawsuits, Silberstein also recommends that brands experiencing this issue invest in Chinese legal councils, ideally in the same city where their counterfeits are being manufactured. For Solawave, that was manufacturing hub Shenzhen — Silberstein has found success in challenging manufacturers infringing upon Solawave’s Chinese patents there.
As for the future, Silberstein is plotting a takeback initiative for the new year to collect fakes in exchange for a discount on a new, authentic Solawave product. This technique has been implemented by brands including Lululemon and Jolie showerheads.
“We want to do right by consumers,” Silberstein told Glossy. “I applaud anyone that jumps into the world of light therapy and gives it a shot, and we really want people to have a positive experience — even if they got sucked into an ineffective product to start.”
