Artificial Intelligence is transforming how brands protect themselves from counterfeits, but this technological revolution may fundamentally reshape platform liability in ways most companies haven't considered yet.
When Platforms Can Do More, Courts Expect More
Under traditional trademark law, platforms faced liability only when they had both the ability to control infringing activity and directly benefited from it. Courts historically set a high bar, not expecting manual policing of every listing.
But AI changes everything. When platforms possess advanced detection capabilities, such as tools that can scan millions of listings in real-time and flag counterfeits with over 95% accuracy, courts may reasonably conclude they have some "ability to control" counterfeiting activity. The question becomes: if you can prevent infringement, should you be legally required to do so?
Lessons from the Music Industry's Legal Battle
The U.S. Supreme Court case Cox Communications v. Sony Music Entertainment offers a potential preview of what's coming for brand protection. Record labels successfully argued that Cox, an internet service provider, had the technological means to stop massive music piracy but chose not to act, resulting in over $1 billion in damages.
This case establishes a crucial precedent: having the tools to prevent infringement may create a legal duty to use them. If the court endorses this broad view of vicarious liability, it could accelerate similar expectations for e-commerce platforms dealing with counterfeit goods.
What This Means for Businesses
As AI detection becomes standard, platforms without sophisticated monitoring systems may struggle to defend their inaction in court. Meanwhile, those leading in AI adoption face ever-higher expectations for perfect enforcement.
For brands, this evolution presents both opportunities and challenges. While AI gives you powerful new weapons against counterfeiters, the shifting legal landscape requires strategic thinking about enforcement priorities and platform relationships as the law catches up with technology.
Learn more in my article for IP Strategist.