A New York federal court handed down a victory this past week for Diesel in connection with a trademark counterfeiting lawsuit the brand initiated in July 2014 against nine different defendants, who were believed to own upwards of 80 different websites charged with selling counterfeit products under the name of the Italian design house. In addition to ruling in Diesel’s favor, the Southern District of New York Court awarded the company $2 million in damages and ordered that the 83 websites be disabled and their domain names, all of which included the Diesel name, be transferred to the brand. The house, which has been revamped under the creative direction of Nicola Formichetti, also recently made headlines after announcing that it will advertise on gay dating app, Grinder and porn website, Porn Hub.
According to the brand’s owner, Renzo Rosso, who launched Diesel over 40 years ago, “This is another great battle we won.” The legal victory comes of the initiation of a several-years old task force that Diesel set up to protect consumers from the unlawful use of its trademarks. As Rosso told WWD: “The online market is an exciting opportunity for all brands. But it also brings huge trade risks. It takes continuous efforts to counteract the attacks we are receiving, and each day there is a new challenge. But we owe this to our brand and our consumers.”
While $2 million may seem like a relatively big win for Diesel, the brand, which is owned by OTB, parent also to Maison Margiela, Marni, Viktor & Rolf, and Staff International (manufacturer and distributor of DSquared², Just Cavalli, Vivienne Westwood, etc.), will likely not walk away from the litigation with much of that sum for a couple of reasons. This is primarily because none of the nine defendants showed up in court; hence, the default judgment. With this in mind, there is no one to necessarily hold accountable. Quite often, websites hawking counterfeit goods are registered under fake names and with fictitious information, and as a result, when lawsuits are filed, default judgments are awarded because very few, if any, of the defendants actually show up in court. Second, while the U.S. has Operation in Our Sites on its side, that isn't actually proving to be of significant aid anymore.
Operation in Our Sites, a government initiative that was launched in 2010, allows U.S. Immigration and Customs Enforcement to work with PayPal to seize funds in the accounts associated with the defendants and the websites selling counterfeit goods. However, it seems the individuals who run these websites, many of which are owned and run by the same individuals/companies, seem to have caught on and now tend to remove any large sums of money from their accounts. As a result, only small amounts of money, say $200, are often seized from these accounts. So, that $2 million dollars that Diesel was awarded, it is likely not even going to see $1 million of it.
It seems that Rosso is well versed in the fight against counterfeits. He noted in connection with the litigation, “It’s not the end of the war. We will keep fighting to protect our brand by implementing state-of the art technologies, and we hope that this victory will set an example for other brands. We cannot have any tolerance for fraudsters, on and offline.”
One very real takeaway for Diesel here, however, is the domain names. As a result of such court proceedings, legitimate trademark holders, such as Diesel, are able to obtain ownership of the domain names, and also prevent these sites from operating on that specific domain. At the same time, however, these individuals often have many, many more counterfeit-selling sites up and running already and if not, will have more in a very short time. So, while these lawsuits are a win for fashion brands, don't be fooled by the big judgment awards.