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Client Alerts

Fighting Online Counterfeiters at Internet Speed

December 28, 2010

Client Alerts

Fighting Online Counterfeiters at Internet Speed

December 28, 2010

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Fighting Online Counterfeiters at Internet Speed
CLIENT ALERT: Fighting Online Counterfeiters at Internet Speed
In an aggressive attempt to put a stop to prolific online counterfeiting by foreign companies, a district court in the Southern District of New York provided the owners of the clothing brands North Face and Polo Ralph Lauren unyielding authority to shut down new websites established by defendants selling counterfeit goods and to seize proceeds from counterfeit sales without seeking further court approval.In The North Face Apparel Corp. et al. v. Fujian Sharing Import & Export Ltd. et al., plaintiffs North Face and Polo Ralph Lauren brought a federal trademark counterfeiting, infringement, and cybersquatting action against numerous Chinese defendants that are part of an online counterfeiting ring. The counterfeiting ring operates a large, fluid network of websites whereby they sell counterfeit North Face and Polo Ralph Lauren products to consumers in the United States. The defendants held multiple domain names that were either identical and/or confusingly similar to the plaintiffs’ marks.

In September 2010, the court entered a default judgment in the sum of $78 million in favor of the plaintiffs, along with a permanent injunction. In its judgment, the court ordered that all the infringing domain names be transferred to the plaintiffs and that all the money that resided in the defendants’ online payment processing accounts, such as PayPal, be released to the plaintiffs to satisfy part of the default judgment.

After entry of the judgment, however, the defendants continued to register new infringing domain names, email accounts, and online payment processing accounts. In light of this continuing infringement, the plaintiffs sought a contempt order from the court to allow them to continue to shut down the new infringing websites and domain names as well as collect the money that resided in the defendants’ new online payment processing accounts, without seeking further approval from the court.

After finding what the court called “flagrant noncompliance” with its initial injunction, the judge issued the contempt order giving the plaintiffs “on-going authority” to provide notice of the order to domain name registries when the plaintiffs find additional infringing domains. The registries will then have two days to temporarily disable those newly detected domains and ten days to transfer ownership of those domain names to the plaintiffs. ISPs hosting any infringing websites, after being given notice of the order, will have three days to deny access to the IP addresses used by those websites.

In an even broader provision, third parties providing services in connection with any of the defendants must discontinue providing those services within two days of being served with the order. These third parties include, without limitation, ISPs, back-end service providers, Web designers, search engines, and ad-word providers.

Additionally, solely upon notice of the order, any payment processor or merchant account providers must seize and transfer all monies in any new accounts opened by any of the defendants until the full $78 million judgment has been satisfied.

This order should send a strong message to prolific online counterfeiters, including foreign defendants, that such conduct will be aggressively enforced by U.S. courts. Of course, whether the S.D.N.Y. court’s strong actions in this case will succeed remains to be seen.

For more information on anti-counterfeiting issues, please contact your Fish attorney or the following:

Victor C. Johnson
Principal
Dallas office
vjohnson@fr.com
214-292-4070
Natalie L. Arbaugh
Principal
Dallas office
arbaugh@fr.com
214-292-4076
© Copyright 2010 Fish & Richardson P.C. These materials may be considered advertising for legal services under the laws and rules of professional conduct of the jurisdictions in which we practice. The material contained in this newsletter has been gathered by the lawyers at Fish & Richardson P.C. for informational purposes only and is not intended to be legal advice. Transmission is not intended to create and receipt does not establish an attorney-client relationship. Legal advice of any nature should be sought from legal counsel. For more information about Fish & Richardson P.C. and our practices, please visit www.fr.com.

 

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