SHOP SAFE Act
Bill: H.R.5374 | Sponsor: Rep. Nadler, Jerrold (D-NY)
Policy area: Commerce

Summary:
Stopping Harmful Offers on Platforms by Screening Against Fakes in E-commerce Act or the SHOP SAFE Act
This bill makes an electronic commerce platform liable for infringement of a registered trademark by a third-party seller of goods that implicate health and safety unless the platform takes certain actions.
Specifically, the platform may be contributorily liable if the seller uses a counterfeit mark in connection with selling, offering, or advertising such goods on the platform. The platform may avoid such liability by taking certain actions before the infringing act, including (1) requiring the seller to have a registered agent or a verified address for service of process in the United States, (2) verifying the seller's identity and contact information, (3) requiring the seller to agree to not use counterfeit marks with goods sold on the platform, (4) implementing procedures for trademark owners to request the removal of listings for counterfeit goods, and (5) implementing policies to remove and ban repeat offenders.
A person who knowingly makes a material misrepresentation in a request to a platform to take down a seller listing (because the listing allegedly uses a counterfeit mark and implicates health and safety concerns) shall be civilly liable to the seller injured by the resulting improper takedown. If a person makes 10 or more such improper takedown requests, the platform may sue on behalf of the sellers who consent to the platform's lawsuit. A party suing under this bill may choose to receive statutory damages (as opposed to actual damages) of $2,500-$75,000 for each improper request, depending on the circumstances of the case.

To amend the Trademark Act of 1946 to provide for contributory 
   liability for certain electronic commerce platforms for use of a 
  counterfeit mark by a third party on such platforms, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Stopping Harmful Offers on Platforms 
by Screening Against Fakes in E-commerce Act'' or the ``SHOP SAFE 
Act''.

SEC. 2. CONTRIBUTORY LIABILITY FOR ELECTRONIC COMMERCE PLATFORMS.

    Section 32 of the Act entitled ``An Act to provide for the 
registration and protection of trademarks used in commerce, to carry 
out the provisions of certain international conventions, and for other 
purposes'', approved July 5, 1946 (commonly known as the ``Trademark 
Act of 1946'') (15 U.S.C. 1114), is amended by adding at the end the 
following:
            ``(4)(A) An electronic commerce platform shall be 
        contributorily liable in a civil action under paragraph (1) for 
        a case in which a third-party seller uses in commerce a 
        counterfeit mark in connection with the sale, offering for 
        sale, distribution, or advertising of goods that implicate 
        health and safety on the platform, unless the platform 
        demonstrates that the platform took each of the following steps 
        to prevent such use on the platform before any infringing act 
        by the third-party seller:
                    ``(i) Determined after a reasonable investigation, 
                and reasonably periodically confirmed--
                            ``(I) that the third-party seller 
                        designated a registered agent in the United 
                        States for service of process; or
                            ``(II) in the case of third-party seller 
                        located in the United States that has not 
                        designated a registered agent under subclause 
                        (I), that the third-party seller has designated 
                        a verified address for service of process in 
                        the United States.
                    ``(ii) Verified through reliable documentation, 
                including to the extent possible some form of 
                government-issued identification, the identity, 
                principal place of business, and contact information of 
                the third-party seller.
                    ``(iii) Except as provided for in subparagraph (C), 
                required the third-party seller to--
                            ``(I) take reasonable steps to verify the 
                        authenticity of goods on or in connection with 
                        which a registered mark is used; and
                            ``(II) attest to the platform that the 
                        third-party seller has taken reasonable steps 
                        under subclause (I) to verify the authenticity 
                        of the goods.
                    ``(iv) Imposed on the third-party seller as a 
                condition of participating on the platform contractual 
                requirements that--
                            ``(I) the third-party seller agrees not to 
                        use a counterfeit mark in connection with the 
                        sale, offering for sale, distribution, or 
                        advertising of goods on the platform;
                            ``(II) the third-party seller consents to 
                        the jurisdiction of United States courts with 
                        respect to claims related to participation by 
                        the third-party seller on the platform; and
                            ``(III) the third-party seller designates 
                        an agent for service of process in the United 
                        States, or, in the case of third-party seller 
                        located in the United States, the third-party 
                        seller designates a verified address for 
                        service of process in the United States.
                    ``(v) Displayed conspicuously on the platform the 
                verified principal place of business, contact 
                information, and identity of the third-party seller, 
                and the country from which the goods were originally 
                shipped from the third-party seller, except the 
                platform shall not be required to display any such 
                information that constitutes the personal identity of 
                an individual, a residential street address, or 
                personal contact information of an individual, and in 
                such cases shall instead provide alternative, verified 
                means of contacting the third-party seller.
                    ``(vi) Except as provided for in subparagraph (C), 
                displayed conspicuously in each listing the country of 
                origin and manufacture of the goods as identified by 
                the third-party seller, unless such information was not 
                reasonably available to the third-party seller and the 
                third-party seller has identified to the platform the 
                steps it undertook to identify the country of origin 
                and manufacture of the goods and the reasons it was 
                unable to identify the same.
                    ``(vii) Required each third-party seller to use 
                images that accurately depict the goods sold, offered 
                for sale, distributed, or advertised on the platform.
                    ``(viii) Implemented at no charge from the platform 
                to the registrant reasonable proactive measures for 
                screening goods before displaying the goods to the 
                public to prevent the use by any third-party seller of 
                a counterfeit mark in connection with the sale, 
                offering for sale, distribution, or advertising of 
                goods on the platform. The determination of whether 
                proactive measures are reasonable shall consider the 
                size and resources of a platform, the available 
                technological and non-technological solutions at the 
                time of screening, the information provided by the 
                registrant to the platform, and any other factor 
                considered relevant by a court.
                    ``(ix) Provided reasonably accessible electronic 
                means by which a registrant and consumer can notify the 
                platform of suspected use of a counterfeit mark.
                    ``(x) Implemented at no charge from the platform to 
                the registrant a program to expeditiously disable or 
                remove from the platform any listing for which a 
                platform has reasonable awareness of use of a 
                counterfeit mark in connection with the sale, offering 
                for sale, distribution, or advertising of goods. 
                Reasonable awareness of use of a counterfeit mark may 
                be inferred based on information regarding the use of a 
                counterfeit mark on the platform generally, general 
                information about the third-party seller, identifying 
                characteristics of a particular listing, or other 
                circumstances as appropriate. A platform may reinstate 
                a listing disabled or removed under this clause if, 
                after an investigation, the platform reasonably 
                determines that a counterfeit mark was not used in the 
                listing. A reasonable decision to reinstate a listing 
                shall not be a basis for finding that a platform failed 
                to comply with this clause.
                    ``(xi) Implemented a publicly available, written 
                policy that requires termination of a third-party 
                seller that reasonably has been determined to have 
                engaged in repeated use of a counterfeit mark in 
                connection with the sale, offering for sale, 
                distribution, or advertising of goods on the platform. 
                Use of a counterfeit mark by a third-party seller in 3 
                separate listings within 1 year typically shall be 
                considered repeated use, but a platform may allow a 
                third-party seller to remain active after repeated use 
                of a counterfeit mark when reasonable mitigating 
                circumstances exist. The determination of whether 
                reasonable mitigating circumstances exist shall 
                consider the overall activity of the third-party 
                seller, efforts the third-party seller has taken to 
                cure supply-chain concerns, efforts the third party 
                takes to resolve disputes once notified of a concern, 
                and any other factor considered relevant by a court. A 
                platform may reinstate a third-party seller if, after 
                an investigation, the platform reasonably determines 
                that the third-party seller did not engage in repeated 
                use of a counterfeit mark or that reasonable mitigating 
                circumstances existed. A reasonable decision to 
                reinstate a third-party seller shall not be a basis for 
                finding that a platform failed to comply with this 
                clause.
                    ``(xii) Implemented at no charge from the platform 
                to the registrant reasonable measures for screening 
                third-party sellers to ensure that sellers who have 
                been terminated do not rejoin or remain on the platform 
                under a different seller identity or alias. The 
                determination of whether screening measures are 
                reasonable shall consider the size and resources of a 
                platform, the available technological and non-
                technological solutions at the time of screening, and 
                any other factor considered relevant by a court.
                    ``(xiii) Provided a verified basis to contact a 
                third-party seller upon request by a registrant that 
                has a bona fide belief that the seller has used a 
                counterfeit mark in connection with the sale, offering 
                for sale, distribution, or advertising of goods on the 
                platform except that the platform is not required to 
                provide information that constitutes the personal 
                identity of an individual, a residential street 
                address, or personal contact information of an 
                individual (in such case, the provider shall provide an 
                alternative means of contacting the third-party 
                seller).
            ``(B)(i) This paragraph shall apply--
                    ``(I) to an electronic commerce platform that has 
                sales on the platform in the previous calendar year of 
                not less than $500,000; or
                    ``(II) to an electronic commerce platform with less 
                than $500,000 in sales in the previous calendar year, 6 
                months after the platform has received 10 notices, in 
                aggregate, that qualify under clause (ii).
            ``(ii) To count toward the aggregate 10-notice threshold 
        under clause (i)(II), a notice shall--
                    ``(I) include a reference to this paragraph;
                    ``(II) include an explicit notification of the 10-
                notice limit and the requirement of the platform to 
                publish the information in clause (iii); and
                    ``(III) identify a listing on the platform that 
                reasonably could be determined to have used a 
                counterfeit mark in connection with the sale, offering 
                for sale, distribution, or advertising of goods that 
                implicate health and safety.
            ``(iii) Within 1 month of receiving the first notice under 
        clause (ii), a platform with less than $500,000 in sales in the 
        previous calendar year shall publish publicly an attestation 
        that the sales on the platform in the previous calendar year 
        were less than $500,000, and an aggregate count of notices that 
        qualify under clause (ii). The aggregate count of notices 
        should be updated as additional notices are received.
            ``(C) Notwithstanding clauses (iii) and (vi) of 
        subparagraph (A), a platform is exempt from the requirements of 
        such clauses for goods, on or in connection with which a 
        registered mark is used, sold, offered for sale, or advertised 
        by a third-party seller for less than $5,000 if the third-party 
        seller sells, offers for sale, or advertises on the platform 5 
        or fewer goods of the same type in connection with the same 
        mark in a 1-year period.
            ``(D) This paragraph may not be construed to limit 
        liability in contexts other than those described in this 
        paragraph, including any cause of action available under any 
        other provision of this Act, notwithstanding that the same 
        facts may give rise to a claim under this paragraph.
            ``(E) For each fiscal year commencing after December 31, 
        2023, the amounts in subparagraphs (B) and (C) shall be 
        increased each year by an amount equal to the percentage 
        increase, if any, in the Consumer Price Index.
            ``(F) In this paragraph:
                    ``(i) The term `counterfeit mark' has the meaning 
                given that term in section 34(d)(1)(B).
                    ``(ii) The term `electronic commerce platform' 
                means any electronically accessed platform that 
                includes publicly interactive features that allow for 
                arranging the sale or purchase of goods, or that 
                enables a person other than an operator of the platform 
                to sell or offer to sell physical goods to consumers 
                located in the United States.
                    ``(iii) The term `goods that implicate health and 
                safety' means goods the use of which can lead to 
                illness, disease, injury, serious adverse event, 
                allergic reaction, or death if produced without 
                compliance with all applicable Federal, State, and 
                local health and safety regulations and industry-
                designated testing, safety, quality, certification, 
                manufacturing, packaging, and labeling standards.
                    ``(iv) The term `third-party seller' means a person 
                other than the electronic commerce platform that uses 
                the platform to arrange for the sale, purchase, 
                payment, or shipping of goods.''.

SEC. 3. MATERIAL MISREPRESENTATIONS IN TAKE-DOWN NOTICES.

    (a) Amendment.--The Trademark Act of 1946 is amended by inserting 
after section 32 (15 U.S.C. 1114), the following new section:

``SEC. 32A. MATERIAL MISREPRESENTATIONS IN TAKE-DOWN NOTICES.

    ``(a) Civil Liability.--Any person who knowingly makes any material 
misrepresentation in a notice to an electronic commerce platform that a 
counterfeit mark was used in a listing by a third-party seller for 
goods that implicate health and safety shall be liable in a civil 
action for damages by the third-party seller that is injured by such 
misrepresentation, as the result of the electronic commerce platform 
relying upon such misrepresentation to remove or disable access to the 
listing, including temporary removal or disablement.
    ``(b) Action by Electronic Commerce Platform.--
            ``(1) Authority to bring action.--If a third-party seller 
        who otherwise could bring an action under subsection (a), 
        consents and declines to file suit, an electronic commerce 
        platform may bring an action under subsection (a) against a 
        person who knowingly made a material misrepresentation in 10 or 
        more notices to the platform alleging that a counterfeit mark 
        was used in a listing by a third-party seller for goods that 
        implicate health and safety.
            ``(2) Consent by third-party seller required.--Consent 
        shall be obtained in writing from each third-party seller to 
        which the notices covered by the civil action were directed.
            ``(3) Contents of consent.--The consent by a third-party 
        seller shall be made in specific reference to a particular 
        notice after the notice has been filed with the electronic 
        commerce platform and removal or disablement has occurred.
    ``(c) Statutory Damages.--Any person who brings a claim under this 
section may elect, at any time before final judgment is rendered by the 
trial court, to recover, instead of actual damages, statutory damages 
in the amount of--
            ``(1) not less than $2,500 or more than $15,000 per notice 
        containing a knowing, material misrepresentation; or
            ``(2) if aggravating circumstances exist, not less than 
        $15,000 or more than $75,000 per notice containing a knowing, 
        material misrepresentation.
    ``(d) Definitions.--In this section:
            ``(1) Counterfeit mark.--The term `counterfeit mark' has 
        the meaning given that term in section 34(d)(1)(B).
            ``(2) Electronic commerce platform; goods that implicate 
        health and safety; third-party seller.--The terms `electronic 
        commerce platform', `goods that implicate health and safety', 
        and `third-party seller' have the meaning given those terms in 
        section 32(4)(F).''.
    (b) Technical and Conforming Amendment.--Section 35(a) of The 
Trademark Act of 1946 (15 U.S.C. 1117(a)) is amended by inserting after 
``under section 43(a) or (d),'' the following: ``a violation under 
subsection (a) or (b) of section 32A,''.

SEC. 4. EFFECTIVE DATE.

    This Act, and the amendments made by this Act, shall take effect on 
the date that is 1 year after the date of the enactment of this Act.
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