The maker of the Rainbow Loom rubber band craft kit for children has filed a proposed class action in which it alleges ContextLogic, Inc.’s e-commerce platform Wish.com is rife with counterfeit products and thereby violates federal trademark and California competition laws with regard to the use of other companies’ intellectual property.
The 30-page complaint describes the defendant’s Wish.com as “a direct-from-China bargain hunting” retail website and smartphone app that sells a laundry list of consumer products. Wish.com had more than one million merchants on its marketplace in 2018, the case says, 94 percent of which are reportedly based in China. Wish.com charges merchants a 15-percent fee for each sale made through its website, which the lawsuit says the company’s CEO, Peter Szulczewski, has justified by claiming Wish “does a lot more” for merchants than competitor Alibaba with regard to exposure to a sizable smartphone-based audience of shoppers.
As the case tells it, Wish.com states on its site that the company has a zero-tolerance policy against intellectual property infringement, assuring its commitment to “staying counterfeit free” and protecting third parties’ intellectual property rights. The plaintiff company argues, however, that Wish.com’s assurances with regard to respecting intellectual property are false, as the site is rife with counterfeit goods the defendant claims to have vetted. From the lawsuit:
“In reality, however, a basic review of the Wish platforms and consumer reviews shows that Wish is not committed to staying counterfeit free, has thousands of counterfeit products throughout its platforms at any given time, and routinely allows the sale of counterfeit products, many of which Wish has affirmatively given its ‘Verified by Wish’ badge.”
According to the
Lanham Act lawsuit, Wish.com leads consumers to believe that it has vetted product suppliers to ensure their wares are authentic and genuine. In reality, the suit says, many products stamped with the “Verified by Wish” badge are counterfeit goods that infringe upon the intellectual property owned by companies such as the plaintiff. With regard to the “Verified by Wish” badge, the complaint alleges the descriptor makes matters worse by both facilitating the apparent infringement and causing confusion among consumers who may be getting less bang for their buck. More from the complaint:
“Consumers who visit Wish.com believe they will be getting products they see on the Wish platform as advertised, however that is not what they receive. Consumers repeatedly complain of Wish’s ‘false advertising,’ practice of selling counterfeit products, and receiving different items than are advertised. Oftentimes, when consumers complain to Wish that they received a counterfeit product or a different product than advertised, Wish simply allows the consumer to keep the counterfeit product and refunds their money. If the customer attempts to return a counterfeit product, Wish will not allow the return unless the consumer identifies some additional problem with the product.”
Wish.com, the lawsuit argues, would rather deal with its apparent counterfeit merchandise problem by refunding customers and allowing them to keep a product rather than actively work toward ensuring its marketplace is free from inauthentic goods.
The plaintiff company claims that although it does not sell nor has advertised its product, a winner of four Toy Institute Association Toy of the Year awards, on Wish.com, the defendant’s website hosts the product for sale anyway and purports that it is “Verified by Wish.”
The class proposed by the lawsuit covers all consumers and business entities in the United States who do not have distribution in China and had merchandise bearing their marks or names without their consent and/or authorization advertised for sale on Wish.com with the “Verified by Wish” badge in the five years preceding the filing of this complaint.