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From the court file, an example of the alleged Milo & Gabby knockoffs, sold on Amazon by third parties.

A federal judge has refused to dismiss patent infringement claims against Amazon in a lawsuit filed by Seattle-based novelty pillowcase maker Milo & Gabby, which is seeking to hold the e-commerce giant liable for knockoff pillowcases sold by third-party merchants on the Amazon site.

Milo & Gabby vs. Amazon
From the court file: Examples of third-party resellers using Milo & Gabby photos to sell counterfeit versions on Amazon.

The case could set a precedent and open the legal floodgates if the courts ultimately decide Amazon is on the hook for counterfeit products listed on its site.

Amazon argues in court filings that it’s not liable for the sale of counterfeit goods because it’s only providing a platform for the sale and, in some cases, fulfilling orders for the vendors — technically not selling the products itself.  Amazon has removed the counterfeit products, but Milo & Gabby still says Amazon committed patent infringement when it listed the products.

In his July 16 ruling, U.S. District Judge Ricardo Martinez sided with Amazon on several issues related to trademark and copyright infringement. However, the judge declined to dismiss Milo & Gabby’s patent infringement claims against Amazon. The fact that Amazon.com lists items, prices and lets shoppers checkout “could be regarded as an offer for sale,” the judge wrote.

The case was originally filed in 2013 and revolves around Milo & Gabby-brand animal shaped pillows.

The company says a Chinese manufacturer copied their designs and began selling indistinguishable pillows on Amazon. The third party seller even used Milo & Gabby’s own product photos in the description on Amazon.com. Other third-party sellers have used similar tactics with the pillowcases, and Amazon says it has removed those, as well.

Milo & Gabby, founded by the husband-and-wife team of Karen and Steve Keller, explains on its site, “Milo & Gabby made a decision, early on, not to sell to Amazon, they felt the on-line retailer was not a good fit for their product line.  But their unique designs made it to Amazon’s warehouse and website anyway. It was mid 2013 when Karen first saw the ad.  It popped up on her screen when she was searching the internet.  There it was, the image (she took) of her 15 year old daughter, who was 11 at the time, sleeping on the animal-shaped pillowcase she designed. The Amazon logo was boldly written in the advertisement.”

GeekWire has contacted Milo & Gabby for comment on the ruling. Amazon declined to comment for this story, citing a policy against making statements on active litigation. The matter is scheduled to go to trial in September, although that’s subject to change.

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