In a collaborative effort, Cartier, Chloe, Dunhill and Montblanc (plus a few others) filed a trademark lawsuit in 2011 against 18 individuals and a group of offshore internet companies, including those associated with business-to-business sites – tradekey.com, saudicommerce.com and b2bfreezone.com – that promoted and facilitated the sale of counterfeit luxury goods. While the defendants held that they are not liable for contributory trademark infringement without the luxury brands submitting a separate notice and take-down request for each listing, Judge Gary Allen Fees of the U.S. District Court for the Central District of California held otherwise.
In his October 8th decision, Judge Fees held that “counterfeit versions of the trademark owner’s goods were in fact sold through the defendant internet companies’ websites and that the defendant companies actively promoted and facilitated the sale of such goods.” According to the court documents, Plaintiffs hired investigator Rob Holmes to investigate possible counterfeiting of Plaintiffs’ trademarks on the Defendants’ websites.
Holmes found more than 2,400 sellers listing fake Chloe goods and 1,900 listing fake Cartier products, and both Chloe and Cartier (as well as the other plaintiffs) have confirmed that none of the sellers on the defendants’ websites were authorized to sell genuine goods bearing their trademarks. In addition, Holmes purchased eight Chloe handbags, two Montblanc watches, and four Cartier watches (among other goods) through sell offers posted by a variety of sellers on TradeKey.com; these goods were examined by the plaintiffs and confirmed to be counterfeits.
Judge Fees held that the Defendants are liable for contributory trademark infringement as they actively promoted and facilitated the sale of counterfeit goods. Trade Key had a sales division called “replica products” and produced keyword reports for counterfeit goods. It also operated a “virtual ‘swap meet'” where they knowingly allow their members to engage in wholesale counterfeiting.
He further held: “Particularly persuasive is the first declaration of Rob Holmes in which he recounts his conversations with a Trade Key employee, Farooq Khalil, who offered to assist Holmes in locating buyers for counterfeit goods through TradeKey.com. Holmes states that when he ‘asked if it was a problem with Trade Key that sell counterfeit luxury goods, [Khalil] replied that it was not.’ In fact, ‘[a]s far as the replica industry is concerned it’s one of the businesses that we rely on to get us a whole lot of revenue.’”
In addition to his contributory trademark infringement ruling, Judge Fees ruled in favor of the Plaintiffs on their claims of trademark infringement and unfair competition, granting summary judgment and awarding the Plaintiffs injunctive relief that prohibits Trade Key from allowing users to post or display listings to buy, sell, manufacture or distribute products bearing the plaintiffs’ marks or any “colourable imitation” of them. Further, the Defendants must “institute mechanisms or procedures to ensure compliance with this injunction within thirty days” and must also monitor its sites on an “on-going basis” for compliance and must remove any listing identified as infringing. That’s a major win for all of the brands involved!