Alexander Wang was handed a favorable ruling in a trademark counterfeiting and cybersquatting case this past week in the U.S. District Court for the Southern District of New York, a federal court in Manhattan. 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. Moreover, the sites were designed to appear as though they were legitimate fashion retailers, including the design of Wang’s own e-commerce site.
[Note: Cybersquatting is the registering, trafficking in, or using of an Internet domain name with the bad faith intent to profit from the goodwill of a trademark belonging to someone else. For us, this is demonstrated by the registration and use of http://alexanderwangshoessale.com – just one of the domains at issue in the case – by a party that does not hold rights in the Alexander Wang brand name].
While $90 million certainly seems like a big win for Wang, the brand, 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, in terms of the $90 million dollars that Wang was awarded, the brand is likely not even going to see $1 million of it.
And Wang knows this. A spokesman for the brand told WWD, “The court system regularly awards very large amounts for the symbolic significance, as a means of deterring other individuals and parties. In other words, Alexander Wang is unlikely to receive $90 million.”
In light of the ruling, Dennis Wang, chief principal officer of Alexander Wang Inc., told WWD, “The company takes its intellectual property rights very seriously. Protecting our brand requires maintaining constant vigilance on a global scale as well as taking proactive measures such as sending cease and desist orders directly to domestic and foreign counterfeiters as well as contacting web site servers that host counterfeit sites. The creativity and originality of our designs are the foundation upon which the company is based.”
“Since the launch of the brand in 2005, we have collectively devoted an incalculable amount of resources — time, money, and hard work — toward creating a trademark that is distinctive and uniquely our own. I am very pleased that the court recognized this and decided in our favor,” he added.