When a small business on Amazon experiences fraudulent or illegal activities from a brand, the motive to sue might come to mind as the first or only option for addressing the problem. However, having the ability and the right to sue someone doesn’t necessarily mean that you should pursue it. Instead of jumping right into a lawsuit, educate yourself first.
Weigh costs and benefits of litigation.
Generally speaking, pursuing litigation might sound like the best option, but it might not ultimately make financial sense. If you are considering seeking litigation, weigh the costs versus the expected earnings.
Start by identifying how much money you are losing, and how much money you hope to regain in court. In order for litigation to make sense, the amount of money you may win in court should be significantly more than what it costs to even go to court in the first place. At our firm, we consider earning five times the amount spent on litigation to be a bare minimum for taking a case to court.
Litigations should be considered a business matter.
Hiring a lawyer for your business, for whatever reason, should result in a profit, just like any other investment.
Taking the emotional reaction out of pursuing litigation and seeing it as a business matter instead is a good perspective to maintain. For that matter, don’t let any lawyer rush you into court. They may be benefiting from your emotional reaction, and some are trained to know the likelihood of snagging a client who may be making a rash decision instead of an educated one.
Understanding what warrants litigation.
As we mentioned in a previous post, brands that file false counterfeit complaints, or false complaints of any matter, could potentially be liable for several things. The first is defamation. When a brand makes a false statement and they publish it to a third party without your authorization, especially if they allege you engage in the trafficking of counterfeit goods, which under the U.S. Code could constitute a serious crime, this can amount to defamation.
Furthermore, by doing this, they’re trying to take you off of the Amazon platform in most cases to enforce exclusivity or to be the only seller on the listing. When they get your contract terminated with Amazon, you could potentially have a case against them for tortious interference with a contract.
Where will the money go once it is collected?
As mentioned above, one final, yet important consideration in pursuing litigation is knowing how you’ll collect winnings, if you do win. If you’re suing for money damages & there’s no agreed-upon person/account/owner of the rights to the winnings to collect, there was ultimately no point in bringing the case to court. Consider where your earnings will go should your case be successful & have that info. at the forefront of your litigation process.