On Tuesday, Southern District of New York Judge Ronnie Abrams ruled in favor MAC Cosmetics and its parent company, the Estée Lauder, in their case against Tingting Chen, Limei Weng and Zhang Guithe, Chinese cybersquatters, who were selling counterfeit MAC products online. The defendants were not present in court, but were ordered to pay $90M and to immediately and permanently stop operating all of the infringing Web sites. According to MAC's complaint, which was filed in April, the defendants are responsible for 112 Web sites including, themaccosmetics.com, mac2wholesale.com, maccosmeticworld.com, wholesalemacmakeup.com and cheapmakeuppick.com. In accordance with this circuit's precedent and the Operation In Our Sites initiative, the $90 million judgment may be collected from the PayPal accounts associated with these websites, as well as any money transferred from these PayPal accounts to personal bank accounts.
This case also sheds light on third party liability, which is still very much still developing in most circuits. Under the theory of third party liability, internet service providers, payment processing companies (such as PayPal), online market places (Alibaba.com in this case), search engines, and domain name registrars, may be held liable for any wrongdoing in addition to the most immediate defendants. Judge Abrams ordered that the third parties at issue here be permanently enjoined from providing services to the defendants.