Dive Brief:

• Hip-hop legends Run-DMC filed suit in U.S. District Court in New York on Dec. 29, alleging Amazon, Infinity Fashion, Jet, SW Global Corp., Vision World and Wal-Mart Stores committed trademark infringement under the Lanham Act, which protects the owners of federally registered marks against the use of similar marks if they’re likely to confuse customers or dilute the original brand.

• Run-DMC Brand LLC (owned by the rap group's Darryl McDaniels) is seeking a minimum $50 million in damages over alleged sales of various items (including hats, patches and T-shirts) that it says infringes on the Run-DMC trademark that was registered in 2007, according to materials filed with the court.

• “The Run-DMC trademark is distinctive and is one of the most recognizable marks in all hip-hop industry,” the complaint states. “Run-DMC has entered several licensing agreements for use of the trademark RUNDMC, including a deal with Adidas for $1,600,000.00 to endorse a brand of sneakers. The brand is extremely valuable.”

Dive Insight:

This suit is pretty clear cut, with Run-DMC contending the actions of the defendants (none of whom have commented on the suit) have "diluted" and "caused harm" to its trademark, citing page after page of screenshots from Amazon’s Marketplace and other third-party sites that purportedly sell bogus Run-DMC merchandise.

As Amazon’s Marketplace has grown —  half of all merchandise sold on Amazon’s site now comes “from sellers, small businesses and entrepreneurs,” according to a November announcement — so has the problem of counterfeit sales, something that until recently the e-commerce giant had largely escaped. In July, Birkenstock USA said it threw in the towel trying to get a handle on which sales on Amazon's site featured legitimate goods, and notified its customers not to trust any seller claiming to offer its popular sandals because they were banning all sales from Amazon.

Amazon appears to be aware of the severity of the problem. It is reportedly developing sophisticated technology to discover counterfeits and so far has cooperated in court cases, as in one involving sales of counterfeit Apple products. Beyond that, for the first time ever, Amazon itself in November took offenders to court and is now requiring third-party sellers to pay a one-time, nonrefundable fee of up to $1,500 per brand. This “brand gating” effort, in addition to other requirements (like showing as evidence invoices or other paperwork from brands or manufacturers such as Nike and Adidas) will likely be prohibitive for many smaller Marketplace sellers.

In fact, if anything, Amazon is being so aggressive in the matter that in some cases, innocent sellers are getting caught up in its nets of scrutiny and requirements, Scot Wingo, executive chairman of e-commerce solutions provider ChannelAdvisor, recently told Retail Dive.

“Amazon has such a high quality bar that it sometimes misfires,” Wingo said. “The kinds of things we see are that they’re ‘Shoot first, verify later.’”