A federal court in Philadelphia ruled Wednesday that Amazon.com Inc. can be held liable for defective products that have been sold by outside vendors.

Such a ruling could have profound consequences for Amazon, given that a huge part of its business is other companies selling products through its Marketplace. They can use Amazon’s warehouses for storage, ship straight to the customer and use Amazon as a place to list items.

It’s thought that around 50 percent of all products sold on Amazon come from those third-party companies, and Amazon makes a tidy profit from the cut it takes. As reported by Reuters, for the quarter ended in March, Amazon took in about $11 billion in revenue from third-party sellers.

In the past when a person has tried to sue Amazon for defective products sold by third parties, courts have ruled in favor of Amazon because the company didn’t directly sell the product. This new ruling might mean that could change, which could be damaging for Amazon.

The case in question goes back to 2014 when Heather Oberdorf bought a dog collar from the Marketplace. In 2016 she sued Amazon after that retractable leash snapped and hit her in the eye, leading the loss of sight in that eye.

That leash was sold to her by a Nevada-based seller under the name of “Furry Gang,” but that seller hasn’t been active since 2016 and Amazon hasn’t been able to locate anyone behind the seller name.

On Wednesday a three-person panel at the 3rd U.S. Circuit Court of Appeals in Philadelphia voted 2-1 that Amazon could be held liable because it “enables third-party vendors to conceal themselves from the customer, leaving customers injured by defective products with no direct recourse to the third-party vendor.” The case will now go to the lower court and it will decide if the leash was actually faulty.

“It’s gratifying that the 3rd Circuit agreed with our argument and recognized that the existing interpretation of product liability law in Pennsylvania was not addressing the reality, the dominance that Amazon has in the marketplace,” Oberdorf’s lawyer told Reuters.

Photo: Carl Malamud/Flickr