Brands, Platforms Have Taken to Suing Individual Sellers, Teaming up to Fight Fakes

While it is completely common for design houses to file trademark claims against large networks of websites and their operators in connection with the sale of counterfeit goods, it has not been quite as regular an occurrence for these owners of valuable intellectual property rights to file lawsuits against individual marketplace users. But that is swiftly changing.

In their un-ending fights against the sale of counterfeit and other infringing goods, luxury and high fashion brands have commonly taken to filing lawsuits against a handful of defendants, who are many times identified exclusively by their infringing domain names, as their real identities have been meticulously hidden and thereby, indeterminable to the lawsuit-filing party.

For instance, in 2015, Alexander Wang filed suit against the operators of over 460 websites, which were, according to the New York-based brand’s complaint were making use of the Alexander Wang brand name in their website URLs and/or offering counterfeit versions of the brand’s goods for sale.

Alexander Wang was handed a favorable ruling in the U.S. District Court for the Southern District of New York, a federal court in Manhattan, in 2016. Since none of the 45 defendants in the case appeared in court, Wang has handed a default judgment, including $90 million in damages, as well as ownership of 459 domain names that were either offering counterfeit goods for sale and using the Alexander Wang brand name in their domains, such as cheapalexanderwangbags.com.

Fighting Fakes One Marketplace Seller at a Time

A different – or better yet, additional – approach has come about in recent years. In July 2013, Louis Vuitton filed suit against individual iOffer users. iOffer is a San Francisco-based online marketplace community that consists almost entirely of China-based sellers hawking fake designer goods.

Other brands have swiftly followed suit. Lacoste and Gucci, for instance, filed suits against an array of iOffer sellers shortly thereafter. Both Chanel and adidas have since filed suits against a handful of individual Amazon.com and iOffer sellers for offering counterfeit Chanel jewelry and iPhone cases, and fake Adidas wares.

More recently, Richemont – parent to Chloe, Alaia, and Cartier – sued a network of sellers over counterfeit goods being offered on individual sites, as well as on Alibaba and Amazon. And still yet, the platforms, themselves, have taken to legally pursuing individual sellers. Amazon filed two lawsuits against individual sellers of counterfeit products as part of a broader crackdown on fakes sold on the internet retailer’s platform. The lawsuits, which were filed in a Washington state court in November, claim that more than 20 companies and individuals were involved in selling counterfeit exercise and furniture moving equipment.

Early this year, China's Alibaba sued two of the sellers of counterfeit Swarovski watches on its Taobao e-commerce platform, in what the Chinese e-commerce giant is declaring as "breaking new ground" in China. The lawsuit, which was filed in Shenzhen Longgang People’s District Court against Liu Huajun and Wang Shenyi in January, marks Alibaba's first legal action against counterfeiters amid persistent allegations that fake goods are widely available on its sites. 

But not only are brands suing individual marketplace sellers, they appear – at least as of late –  to have stopped suing the marketplaces, themselves. While Kering – parent to Gucci, Yves Saint Laurent, Balenciaga, and Bottega Veneta – filed two lawsuits against Alibaba within the past several years alone, the parties managed to settle the latest suit out of court and have teamed up to fight fakes, together.  

LVMH, the Paris-based conglomerate that owns Louis Vuitton, Dior, Givenchy, and Marc Jacons, among others, opted for a peaceful solution to the lawsuit it filed in Beijing's Haidian District early last year, over the sale of on Alibaba's TaoBao platform. Not only did the parties manage to settle that suit out of court, they partnered not once but twice – the first time as part of a confidential settlement agreement and then again early this year when Alibaba announced the launch of its “Alibaba Big Data Anticounterfeiting Alliance.”

In furtherance of that alliance, Alibaba has teamed up with a handful of brands to fight fakes – and at least in theory, to keep those brands from suing Alibaba for the counterfeit goods being offered for sale on its site.

As for whether brands truly find this to be a meaningful way to fight fakes, or whether they have been deterred by the unfavorable outcome in previous cases - such as Tiffany & Co. v. eBay, which resulted in a loss for Tiffany in federal court in New York in 2010 - is very much up for debate.