Earlier in October 2019, Amazon Inc. officially launched its global ‘IP Accelerator’, a platform that will provide intellectual property services through discounted access to law firms.
This announcement marks the official entry of Amazon into the legal industry, a move that has been speculated by pundits for some time now. The initiative has kicked-off on a global scale and is restricted neither to any jurisdiction nor to its third-party sellers.
Why does Amazon’s IP Accelerator exist?
The IP Accelerator is Amazon’s response to the problem of counterfeit products and fraudulent practices — a ghost Amazon has failed to exorcize due to the sheer volume of third-party sellers on its online retail platforms. The Accelerator is a natural progression of Project Zero, which was announced in Feb 2019 with the aim of combating counterfeit products and paid reviews.
Through this program, Amazon will act as a legal service provider that connects brands to a trusted pool of IP law firms and avail quick and cost-effective legal help. Services such as copyright and trademark registrations, filings, IP protection strategies will make ease it convenient for sellers to get personalized solutions for their brands.
There are compelling reasons for a seller to get legal assistance through Amazon. For starters, the rates are fixed: $500 for a trademark search, $600 for a trademark application, and $1,800 for a comprehensive brand review. The seller deals directly with the law firm and pays nothing to Amazon.
The standardized fixed-fee model will significantly reduce transaction costs of availing legal services directly through a lawyer and take the guesswork out of the registration process.
Moreover, applications made via the IP Accelerator will earn additional benefits from Amazon. This includes automated brand protection on its market to combat fraud, proactive elimination of bad-faith or paid reviews, as well as sellers can report a violation of their IP.
“We’re very excited Amazon has a list of legal firms that can advise us in our trademark needs. We have struggled finding counsel for trademark specific questions as we are a small company and work with limited budgets. Having the peace of mind that Amazon has vetted these firms and negotiated pricing for us lets us focus on what matters — building our brand.”
– Sonali Nayak, owner, Indigo Paisley
One can see how all of these directly play into Amazon’s own values and mission, making their own brand reliable and trustworthy.
What is Amazon’s long game?
For Amazon, its IP accelerator fits perfectly into its Service Provider Network. Usually, one would go to Amazon to browse for products. For a small or medium seller with a limited budget and limited knowledge of his legal rights, it is not feasible to take up the tedious process of searching for quality lawyers who fall within their budgets. The aim of the IP accelerator seems to be to eliminate these inconveniences that its vendors experience all over the world.
There are at least three categories of inconveniences that Amazon is able to immediately eliminate:
(1) Search and information costs
Time and money that a buyer has to spend to look for relevant information, meeting and communicating with potential sellers.
(2) Bargaining costs
Time and money that a buyer has to spend to come to a final agreement agreeable to the parties, accounting for risks and contingencies, and drawing up a contract.
(3) Policing and enforcement costs
Time and money that a buyer has to spend to ensure that the transaction proceeds as planned, that parties do not default on the terms of the contract. In case they do, there are additional costs to legally enforce the contract, which in many cases can end up exceeding the original value of the service in question.
It is obvious how Amazon is leveraging its customers’ trust and its massive market share to allay the above pain-points by providing an easy way to shop for legal services, in a manner that’s already familiar to brands and the public at large.
For sellers, it is an additional service they now have access to (alongside other related services such as compliance and accounting that Amazon currently offers through its trusted local service providers). This facility will allow Amazon to harness the data it generates to launch new business models, whether based on productization of essential legal services or providing brand safeguards.
Few companies in the world are better placed than Amazon to seize the massive latent market demand in the legal industry. Its incursion into the legal territory can be trend-setting, and it may not be surprising if global giants soon start including legal services into their “customer happiness” prerogative.