Dior has filed a strongly-worded lawsuit against a “network” of online counterfeit sellers, according to WWD. According to its complaint, which was filed last week in the U.S. District Court for the Northern District of Illinois, a federal court in Chicago, against the owners of an array of “interrelated” websites peddling counterfeit Dior bags, apparel and jewelry, Dior alleges that the defendants “unlawfully used its registered trademarks in connection with the advertisement, distribution, and sale of infringing and counterfeiting Dior products, which caused confusion among customers and irreparably harmed Christian Dior.”
Moreover, the Paris-based brand alleges that the “defendants facilitate sales by designing the defendant Internet stores so that they appear to unknowing consumers to be authorized online retailers, outlet stores or wholesalers.” In addition to asking the court to immediately and permanently bar the defendants from using its trademarks and from partaking in the sale of counterfeit goods, Dior is seeking up $2 million for “each counterfeit trademark used and product sold,” in accordance with the Lanham Act (the federal law governing trademark rights and infringement), and $100,000 for each cybersquatted domain.
This case – which is a straightforward one that luxury brands routinely file in connection with their intellectual property – will almost certainly be a fast and easy win for Dior, not because its trademark rights are so strong (although they are) but because how the case will work procedurally given who the defendants are.
As Dior notes in its own suit, the defendant website owners represent the classic defendants in online sale of counterfeits scenario: “Defendants attempt to avoid liability by going to great lengths to conceal both their identities and the full scope and interworking of their counterfeiting operation.” In short: the defendants are unknown entities – based in china, according to Dior – hiding behind fictitious identities and falsified contact information, making it virtually impossible for Dior or the court to actually locate them.
As such, they will not show up to any of the court proceedings and the court will ultimately award Dior a victory by way of a default judgement. Dior will walk away with ownership of any of the defendants’ domain names that make use its trademarks, as law enforcement is able to seize them, but will almost certainly not see much – if any – of the monetary damages it is seeking, as the defendants will have never been located to be held accountable.
Given the improbability of any significant amount of monetary damages, the monetary award that is part of online trademark counterfeiting rulings is often more symbolic than anything else. It is worth noting, however, that as a result of “Operation In Our Sites,” a U.S. government initiative, the Department of Justice may recover funds that defendants collected via PayPal. Money transferred from PayPal accounts to other bank accounts may also be collected. This is important because otherwise, the money would be nearly impossible to recover as the defendants are almost always based overseas.
This is not to say, however, that this will prove an entirely effective way for Dior to recover $100 million or so. In fact, counterfeiters have become increasing able to out-smart the court’s ability to access their PayPal accounts, as well as their traditional cybersquatting websites.
With all of this in mind, what companies often deem to be the reward in these types of cases is the discontinued use of the websites offering the counterfeit goods for sale and their subsequent ownership of the sites. Additionally, in order for a brand to continue to claim rights in its trademarks, it must police unauthorized uses of those marks, which is largely why such lawsuits are filed.
The ongoing and difficult landscape for fighting online counterfeiters is something that Marc Jacobs addressed in a similar lawsuit that the brand filed in 2015 (and subsequently won by way of a default judgment). According to its complaint:
“In order to combat the indivisible harm caused by the combined actions of Defendants and others engaging in similar conduct, each year Marc Jacobs expends significant monetary resources in connection with trademark enforcement efforts, including legal fees, investigative fees, and support mechanisms for law enforcement, such as field training guides and seminars. The recent explosion of counterfeiting over the Internet has created an environment that requires companies such as Marc Jacobs to file a large number of lawsuits, often it later turns out, against the same individuals and groups, in order to protect both consumers and itself from the ill effects of confusion and the erosion of the goodwill connected to the Marc Jacobs brand.”