image: Gucci

image: Gucci

Gucci’s American arm is the latest brand to be handed a $9 million victory in its largest counterfeiting case to date. On Tuesday, Gucci America Inc. was awarded $9 million in damages by the U.S. District Court Southern District of Florida, in connection with nearly 100 sites, most of which were registered in China and which bore Gucci campaign advertisements, logos, product images and descriptions from official websites, and many of which also used Gucci’s trademark-protected name in their domain names. 

The court’s ruling comes on the heels of similarly eye-popping judgment awards for fashion brands, including Louis Vuitton, Chanel, Dior, and Alexander Wang, among others. These types of cases are common, and they all tend to play out in the exact same way. 

According to the court’s decision, a total of 89 domain names, whose operators did not show up in court (as is customary in cases like this), have been ordered cease all operations within 30 days. Gucci has been granted ownership of those domains, and the operators of the sites have been ordered to pay $100,000 per site (or $110,000 if the Gucci trademark was used in the url), for a total of $9 million dollars.

As for the $9 million damages amount, Gucci will not see even a fraction of that for a couple reasons. One: None of the defendants showed up in court (hence, the default judgment), and so, there is no one to necessarily hold accountable. Quite often, websites hawking counterfeit goods are registered under fake names and fictitious contact information, and as a result, when lawsuits are filed, default judgments are awarded because very few, if any, of the defendants have incentive to actually show up in court.

Second: While the U.S. has put Operation in Our Sites into effect, that is not actually much help anymore. Operation in Our Sites is a government initiative that allows U.S. Immigration and Customs Enforcement to work with PayPal to seize funds in the accounts associated with the individuals and the websites selling counterfeit goods. However, the individuals who run these websites, many of which are owned and run by the same individuals/companies, seem to have caught on and 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. As a result, that $9 million dollars that Gucci was awarded is likely not even going to amount to $1 million.

As such, the big reward in cases like this are the domain names (it is worth noting that a World Intellectual Property Organization Uniform Domain Name Dispute Resolution Policy proceeding would have the same effect). As a result of such court battles, legitimate trademark holders, such as Gucci, which files these types of lawsuit quite regularly (it was awarded $144 million in connection with a similar suit in 2013) are able to obtain ownership of the domain names, many of which include the word “Gucci,” and also prevent these sites from operating on that specific domain.

At the same time, however, the operators of these individual sites often maintain huge networks of counterfeit-selling sites already up and running and if not, will have new sites to replace the court-seized ones in a very short time. So, while these lawsuits are a win for fashion brands, at least in theory, do not be fooled by the big judgment awards.