A trademark lawsuit that could have had some striking implications for influencers and other famous endorsers has come to a close. In an order on July 28, the Judge Cormac J. Carney of the U.S. District Court for the Central District of California granted the joint stipulation filed by Petunia Products, Rodan & Fields, LLC, and Molly Sims, dismissing the case that Billion Dollar Brows-owner Petunia Products waged against the multi-level marketing skincare company and model-slash-beauty/wellness figure last year, accusing them of trademark infringement and dilution, unfair competition, and false advertising in connection with the marketing of a Rodan & Fields product called “Brow Defining Boost.” 

In the complaint that it filed in April, Petunia Products alleged that by releasing a “Brow Defining Boost” eyebrow gel product, Rodan & Fields had infringed the “Brow Boost” trademark that it has been “extensively, exclusively, and continuously” using in connection with its Billion Dollar Brows brow primer and conditioner for nearly 20 years. To make matters worse, Petunia alleged in the lawsuit that Rodan & Fields enlisted Sims as an influencer to endorse the “Brow Defining Boost” product, including by “blogging about and promoting the infringing [Rodan & Fields] product” on her website. Petunia named Sims as a defendant, accusing her of engaging in trademark infringement for promoting the allegedly infringing product. 

Sims unsuccessfully sought to escape liability, arguing in a motion to dismiss in July 2021 that (as summarized by Judge Carney) “liability for trademark infringement should not cover third parties, like her, that author sponsored blogs about a product without confirming that the product does not violate trademark rights.” She also asserted that Petunia failed to sufficiently show that consumers are likely to be confused about the source of Rodan & Fields’ product as a result of her blog post, or that she used the “Brow Boost” mark in commerce when she published a blog post about the product, and that if a court finds otherwise, “legitimate commentary” is likely to be stifled. 

Influencer lawsuit

Unpersuaded, Judge Carney refused to dismiss Petunia’s trademark infringement and unfair competition claims in the lawsuit against influencer Sims in an August 2021 order. (He tossed out the contributory trademark infringement and Cal. Bus. & Prof. Code § 17500 claims, but gave Petunia the opportunity to amend its complaint in connection with the latter causes of action, thereby, leaving room for Petunia to try to plausibly allege those claims for a second time.) According to the court, Sims’ blog post was a paid advertisement, thereby, crossing the line “from protected consumer commentary to commercial use.” 

The parties’ undisclosed settlement and subsequent dismissal, as first reported by Law360, brings the lawsuit to an early end and while it proves positive for the defendants, Northeastern University School of Law professor Alexandra Roberts says that it leaves “content creators with ongoing uncertainty about potential liability after the court initially denied Sims’ motion to dismiss.” Roberts previously stated that she was “surprised and troubled” that the judge declined to dismiss Petunia’s claims against Sims, particularly as it “seemed like a weak infringement claim to begin with.” 

As for what made the lawsuit an especially notable one (compared to routine trademark cases), it is largely that, in addition to suing the manufacturer of the competing product, Petunia also asserted claims against an influencer, Sims. “This is noteworthy,” Buchalter attorneys Matthew Seror and Michael Worth stated in connection with the court’s order last year, “as brands have historically launched legal battles against each other for claims of infringement – not the celebrities or social media influencers who sponsor the products.” They note that  if an influencer is big enough, asserting claims against him/her could prove attractive for plaintiffs by “provid[ing] them with another potential source from which to collect monetary damages.” 

While it “may be too early to tell whether adding influencers as defendants in trademark lawsuits will become the norm,” Seror and Worth asserted that such a potential shift “could carry with it a number of implications for both influencers and brands.” For one thing, it may call on influencers “to perform more due diligence on the products or brands they are agreeing to endorse,” and may require them “to insist on strong indemnity provisions in their sponsorship agreements” if they are not doing so already. Finally, it may even encourage more sophisticated influencers and/or their management “to explore whether this type of liability may be subject to – and covered by – business insurance.” 

The case is Petunia Products, Inc. v. Rodan & Fields, et. al., 8:21-cv-00630 (C.D. Cal.).

The Federal Trade Commission (“FTC”) is on the receiving end of a new complaint urging it to take action over Roblox, the wildly popular metaverse/gaming platform. In a complaint lodged with the FTC this month, Truth in Advertising (“TINA”), a Connecticut-based advertising watchdog, alleges that Roblox Corporation, “a multibillion-dollar public company,” is on the hook for failing to “establish any meaningful guardrails to ensure compliance with truth in advertising laws, effectively allowing marketers, including but not limited to Alo Yoga, DC Entertainment, Forever 21, Hasbro, Hyundai Motor America, Mattel, Netflix, NFL Enterprises LLC, Nike, Paramount, and VF Corp., to manipulate millions of consumers in one of the largest and most captivating virtual platforms on the internet today.” 

Setting the stage in its 44-page complaint, which is addressed to FTC Bureau of Consumer Protection Direct Samuel A.A. Levine and Division of Advertising Practices Associate Director Serena Viswanathan, TINA asserts that in furtherance of its operation of a closed platform metaverse, Roblox “pushes [advertising] in front of millions of consumers, including more than 25 million children and adolescents, by a multitude of companies and their avatar influencers.” The problem, it argues, is that in “jump[ing] into the Roblox metaverse” in order to connect with young consumers, Roblox and these big-name companies are allegedly “exploiting children’s inability to distinguish organic content from marketing, and manipulating them and other Roblox users with undisclosed promotions that are nearly identical to organic virtual items and experiences on the platform.” 

Specifically, TINA claims that companies re able to market to consumers in a variety of ways on Roblox, including using: (1) branded worlds (also known as “advergames”); (2) sponsored content placed within organic worlds; and (3) AI-controlled, as well as human-created, avatar brand influencers. Regardless of the marketing format, TINA alleges that the distinction between marketing and organic content is “almost always missing – undisclosed advertisements disguised as games are sprinkled in and among regular games, sponsored brands and items are mixed in with non-sponsored items in organic worlds, and undisclosed bots and avatar brand influencers are walking among, communicating with and playing with other Roblox users.” 

Roblox

Diving into each of these marketing models, TINA states that “most of the sponsored worlds currently on Roblox are advergames, which combine advertisements and gaming in virtual experiences that are always accessible but beyond the control of any one user.” The watchdog points to Vans World, for instance, which it says “has had more than 61 million visits since its April 2021 launch.” Part of the problem, per TINA, is that “because there are more than a dozen different Vans Worlds in the Roblox metaverse, determining which one is the advergame is almost impossible.”  

“Because Roblox advergames, including Nikeland, Vans World, and Hot Wheels Open World, lack clear and conspicuous disclosures informing players that the content with which they are about to engage is marketing material, millions of Roblox users are deceived and unwittingly manipulated into playing within advertisements on a regular basis,” TINA contends. “In fact, the commercial content is so covert in these ad formats that even after adults enter sponsored worlds, they can have trouble accurately identifying them as advergames.” 

In addition to branded worlds, companies are allegedly making use of undisclosed sponsored content within organic worlds. According to TINA, Roblox “highlights ‘events’ on its platform but does not disclose when these events are sponsored.” Popular game Jailbreak, for example, which was developed on Roblox in 2017, hosted a limited-time sponsored event called the “OFFICIAL McLaren F1 Event” that was timed to coincide with the real-world reveal of the new McLaren MCL36. However, TINA claims that “there was no disclosure informing Roblox users of the promotional nature of this marketing event.” Despite being required by law “to clearly and conspicuously disclose the presence of sponsored content within their games and world” (just like how “real” life brands and influencers are legally obligated to disclose material connections), Roblox “does not disclose when these events are sponsored.” It also does not abide by its own terms, TINA argues, which “preclude children under the age of 13 from seeing and/or interacting with such marketing.” 

Finally, in addition to “undisclosed sponsored brand content,” TINA claims that Roblox and other companies “employ undisclosed brand avatar influencers – both human-created and AI-generated – who are playing, communicating and socializing with uninformed users.” With respect to human-created avatar influencers, Roblox and various other brands have enlisted “hundreds of social media influencers, who have built their avatars in this digital metaverse, to promote brands, games and worlds,” per TINA, which states that “it appears that none of these avatar influencers are or have disclosed their material connections to the applicable brands inside the Roblox metaverse.” This means that “potentially millions of users are seeing and interacting with brand endorsers in the Roblox metaverse without ever knowing it.” 

Roblox

TINA points to Nike, which it claims has “enlisted at least a dozen influencers who have not only promoted Nikeland on social media platforms, but also promoted Nikeland in the Roblox metaverse through their avatars.” These Nike gear-wearing avatar influencers “spend time in Nikeland and interact with other avatars – playing games, building mini-games, ‘buying’ Nike gear and communicating with fans – yet none of them appear to have disclosed their material connection to Nike in the advergame.” 

Another key takeaway point from TINA’s complaint is its emphasis on Roblox’s failure to secure the assets of its users, namely, the digital goods that they acquire for use in the Roblox metaverse. In a corresponding release, TINA states that “on its website, Roblox assures parents that its platform is ‘a safe and fun space for players,’” and yet, “in complaints to the FTC, many parents accuse Roblox of failing to protect their children in a variety of ways, including failing to protect their digital assets.” TINA cites a complaint that one parent lodged with the FTC, asserting that “their 12-year-old daughter was ‘heartbroken over her digital loss’ after hackers gained access to her Roblox account and stole valuable items including rare and legendary pets from her inventory in Adopt Me! a pet-raising game” on Roblox. 

Unlike other metaverse platforms, TINA contends that “Roblox virtual items and its currency are not created or secured using blockchain technology, which means Roblox objects are not NFTs (non-fungible tokens) and Robux is not a cryptocurrency.” As a result, when Roblox users lose their accounts for whatever reason, “they also lose every asset that was in the account, an occurrence that appears to happen with some frequency according to complaints filed with the FTC.” 

With the foregoing and other issues in mind, TINA “strongly urges the FTC to commence an investigation into the deceptive marketing on and by Roblox and take appropriate enforcement action,” arguing that “little has been done, and legislative efforts to stop manipulative online marketing that threatens children and teens have not yet come to fruition.” 

A spokesperson for Roblox told TFL on Monday, “Roblox is committed to ensuring our users and developers have a positive and safe experience on our platform. We have strict guidelines for developers that want to promote or use ads within their experiences, including specific rules to protect users under 13, expectations that all developers adhere to Community Standards we strictly enforce, and no tolerance for fraud or scams. We have stringent rules and monitoring processes aimed at combating content to exploit or trick users. We also make significant investments in new ways to allow creators to be compensated for their efforts while ensuring ad experiences are transparent and comply with applicable laws and regulations.”

Reps for Nike and Vans-owner VF Corp. were not immediately available for comment.

“Purchasing is very often more than just a simple transaction between buyer and supplier,” with consumption being a social experience in many cases, and the influence of others playing a role in what we buy. That same goes for the consumption and sale of counterfeit goods, according to a recent report from the United Kingdom Intellectual Property Office, which surveyed 1,000 female consumers (“as the social media endorsements of counterfeit products are dominated by female influencers and a female audience,” the research population was limited to female consumers), to gauge the state of the market for counterfeits and determine the extent to which social media influencers facilitate the purchasing of such goods. 

The United Kingdom Intellectual Property Office (“UKIPO”)’s top-line finding in connection with its survey was that 17 percent of participants (70 percent of whom were between ages 16 and 33) reported that they had knowingly purchased counterfeits in the prior year – and 13.3 percent revealed that their purchasing behavior relating to counterfeit products has, in fact, been influenced by social media endorsements. In other words, that 13.3 percent of respondents reported that they had “purchased counterfeits either deliberately or by mistake following social media influencers’ endorsements,” which the UKIPO contends “clearly demonstrates” that influencers are an noteworthy force in endorsing counterfeits and an “important channel to market for counterfeit suppliers on the other side of the world.” 

In line with previously-reported figures, the UKIPO found that fashion and related accessories are top drivers of counterfeit consumption, with this category of goods being “particularly attractive” for younger consumers (i.e., those in the 16-33 age group), with 1 in 5 (20 percent) of survey participants admitted to buying counterfeit clothing or accessories in the prior year compared to 4 percent of older consumers.” (The UKIPO notes that it defined counterfeits to participants as “items that look identical to a genuine product with or without the official branding/logo, but are not made by the brand and may be of lower quality, for example, a handbag of identical design to a “Chanel” with or without the Chanel logo.”)

Aside from fashion apparel and accessories, which was the most popular product category when it comes to counterfeit consumption, according to the UKIPO, fake jewelry and watches, and beauty products were also noted as frequently purchased. 

Another interesting takeaway about the mindset of consumers when it comes to counterfeit goods from the UKIPO’s findings is that 18 percent of survey respondents “believe counterfeits do not harm businesses and jobs,” 22 percent “believe counterfeits are not a health and safety threat,” and finally, a larger 33 percent (or one-third of survey participants) revealed that the trade in counterfeits is actually “the manufacturers’ fault for overpricing high brand products.” 

The Rise of “Dupes,” as Platforms Eye Luxury

The timing of the UKIPO’s survey seems appropriate given the overarching rise of “dupes” both in terms of Google searches and on social media sites, including Instagram and TikTok, and influencers who have built sizable followings thanks, in many cases, to their posts on this topic. As TFL reported this past summer, while recent Google Trends data indicates that searches for the word “replica,” for instance, are steadily declining overall, searches for “dupes” have been on the rise in recent years.

“A browse through YouTube reveals innumerable videos presented by young, mainly female content creators that promote counterfeit clothing, accessories and beauty products to followers,” the UK IP body stated, pointing to one British influencer with 4.4 million subscribers on her YouTube channel, who “posted a video promoting counterfeit goods in May 2021 entitled, ‘I Bought Fake Designer Bags on Wish.’” The video – which features counterfeit Louis Vuitton, Jacquemus, Dior, and Balenciaga bags – has since been viewed 221,326 times. 

At the same time, brands and marketplace sites are coming together to send public messages to influencers (and the public at large) in connection with their role endorsing counterfeit goods. Amazon, for instance, filed a counterfeit-centric lawsuit in November 2020, accusing influencers Kelly Fitzpatrick and Sabrina Kelly-Krejci of “engaging in a sophisticated campaign of false advertising” in connection with which they have “conspired” with sellers on Amazon’s marketplace to evade Amazon’s anti-counterfeiting protections by promoting counterfeit luxury goods – from Gucci belts to Dior handbags – on Instagram, Facebook, TikTok, and their own websites. That case settled in September, with the terms of the largely confidential agreement putting in place a prohibition against Fitzpatrick and Kelly-Krejci from “marketing, advertising, linking to, promoting or selling any products on Amazon,” and in terms of monetary damages being paid by the defendants, Amazon revealed that it would donate the sum to various non-profit organizations, including an anti-counterfeiting initiative of the International Trademark Association.

Not to be outdone, Facebook, Inc. (now Meta) partnered with Gucci in April 2021 to file suit against a single defendant – a woman named Natalia Kokhtenko –for operating “an international online business, trafficking in illegal counterfeit goods,” which has seen her use the “Facebook and Instagram [platforms] to promote the sale of [luxury brand] counterfeit goods,” such as Gucci handbags, shoes, clothing, and accessories, and running afoul of trademark law and “Facebook and Instagram’s terms and policies” in the process. That case is still underway in the U.S. District Court for the Northern District of California. 

Given the strikingly limited scope of both cases (there are far more than marketplace sellers and influencers hawking counterfeits on Instagram and Amazon), the cases are almost certainly part of a larger trust-building exercise aimed to luring consumers and brands onto these platforms, and enabling them to be viewed as a source of legitimate fashion. In much the same vein as Amazon, which has not been quiet about its ambitions in the fashion and luxury space, Reuters reported last year that “groups like Facebook, Inc. are keen to make a bigger push into the luxury market and ‘social commerce,’ but to do so they need to show that their platforms are not a conduit for counterfeiting and are safe for brands, some of which are reluctant to sell their products through third-party players.” Targeting counterfeit-peddling influencers is one part of that effort.

L’Oréal has been going through a massive retail row in China after two leading social media influencers sold large quantities of the French cosmetics company’s beauty face masks to consumers while inaccurately claiming it was the cheapest deal available anywhere. Influencers Austin Li Jiaqi and Wei Ya regularly reach tens of millions of shoppers on their two e-commerce livestreams, and the November 11 “Singles Day” festival has become one of their most eagerly anticipated broadcasts. 

This year, among the many products that Jiaqi and Ya were each selling on Singles Day was the supposedly special offer of batches of 50 L’Oréal masks for ¥429 ($66.30). But it emerged shortly after that the same deal was available direct from L’Oréal for ¥258. Li, known as China’s “lipstick king” for his ability to sell masses of product online, and Wei, a former pop star who rose to fame as the winner of China’s equivalent of Pop Idol, started receiving large volumes of complaints from furious shoppers. Both influencers issued apologies. After L’Oréal did not immediately say it would compensate those who had bought the masks, the influencers said they would no longer showcase the company’s products. 

Now L’Oréal has apologized and confirmed it will provide compensation. In a statement, the company blamed its “overly complicated sales mechanism” and said it had “found a constructive and satisfactory solution to address the recent customers complaints in relation with singles day promotion.” The row has not been pleasant for anyone involved, but it shows how important influencers have become as endorsers of luxury goods in China. So how has the market changed, and what does it mean for customers?

Changing face of luxury retail

China is the most important market in the world for luxury goods, with Chanel, Dior, Cartier and Hermès among the leading brands in the country. The market has been doing strong business during COVID. For example, major Hong Kong-based luxuries retailer Chow Tai Fook has reported an annual revenue increase of nearly 24 percent in its 2021 financial year, mostly from mainland China. 

Luxury brands have traditionally relied on flagship stores in the best shopping districts to connect with their customers. The number and size of stores has continued increasing in leading malls like Plaza 66 in Shanghai and SKP Beijing, where all the top luxury brands have large external facades and dazzling logo displays. They also use historical buildings, such as the ones situated at the north of the Shanghai Bund waterfront district. 

But while physical stores are still important, most brands seek to extend their reach online. A major part of this is through using the internet as a way to communicate their relationships with celebrities. Cartier, for example, invites Chinese movie stars to attend its promotional events. These would include star actors like Tony Leung, and more recently actor Chang Chen and actor/singer Lu Han, who would be described as “good friends of Cartier” to highlight the brand’s prestige through these connections.

But when Cartier has tried to use social media to promote these celebrity attachments, consumers have reacted badly. I have read thousands of comments (in Chinese) from people ridiculing the watchmaker for referring to its endorsers as “friends”, claiming that this detracts from the importance of their favourite stars. Most Chinese people would say that “guest” is a more respectful choice of word than “friend.” 

Perhaps partly because of such experiences, luxury brands have turned to social media influencers to help communicate their messages. For example, Dior hired Angelababy, a famous actor and internet celebrity from Hong Kong, as a brand ambassador in 2017. The relationship has continued to the present day, with the actor appearing in virtual form at Shanghai Fashion Week in April. Yet, using Angelababy in this way was questioned by Dior’s customers online, as she is an agent of the brand rather than an independent influencer. This means she is seen as not being in a position to speak on behalf of Dior’s customers and fans in the way that she might otherwise have done. 

Unpredictable behavior

Just like celebrities, influencers come with the additional problem that brands have no direct control over their behavior. Whatever exactly happened in the case of L’Oréal and its influencers, for instance, they have not been speaking in unison since the debacle with the face masks. 

When it comes to the dangers of individual behavior, the only consolation is that it can sometimes work in the brand’s favor. This happened to Dior, for instance, when footage surfaced in which Angelababy was perceived as speaking up for an actress in an encounter with pop star Kris Wu, who was subsequently arrested on suspicion of rape in relation to a separate incident.

At any rate, L’Oréal’s recent problems show that while influencers are potentially more objective moderators than traditional celebrities (particularly if you don’t use them as brand ambassadors), online marketing still presents great risks. In an era where millennials engage mainly online, an incident like the one with Li and Wei can spread quickly and stick in consumers’ minds much more than the glitzy marketing narratives that are pushed by the luxury brands. A fan exposed to a debacle like L’Oréal’s can turn hostile overnight to the brand they loved.

Perhaps the ideal relationship between brands and influencers arises from Vogue China’s decision earlier this year to appoint famous 27-year-old blogger Margaret Zhang as editor-in-chief. Even though she never trained in journalism, she is well accepted by consumers of high fashion, and her endorsement is now arguably one of the most valuable to brands in the business.

Samuel Kwok is an Associate Professor of Transdisciplinary Studies at Xi’an Jiaotong Liverpool University. (This article was initially published by The conversation.)

Influencer Danielle Bernstein, her brand WeWoreWhat, and a handful of retailers have been handed a mixed decision in the latest round of the case that has seen them facing off against Great Eros over a pattern that Bernstein and WeWoreWhat allegedly copied and passed off as their own. In a declaratory judgment action filed in October 2020, WeWoreWhat and Bernstein asked a New York federal court to formally declare that they did not run afoul of the indie intimates brand’s rights by using a lookalike “Silhouettes Design.” A month later, Great Eros filed a copyright infringement and unfair competition complaint against Bernstein, WeWoreWhat, their manufacturing partner Onia, and retailers Saks Fifth Avenue, ShopBop, and Carbon 38 (the “defendants”) in a California federal court, arguing that the WeWoreWhat pattern is a direct rip-off of one that it began using several years ago. 

Fast forward to May 2021, and following a combination of the two cases before the U.S. District Court for the Southern District of New York, something that the defendants argued was proper in light of the fact that the defendants filed their case first, and that “nearly all of the parties in this action are residents of New York,” the defendants sought to have one of the causes of action set out against them dismissed. Specifically, Bernstein and co. asked the court to toss out Great Eros’ California unfair competition claim, arguing that the Brooklyn, New York-based brand failed to show how their alleged violations of law occurred within California, and for the most part, the court agreed. 

In an Opinion & Order dated October 22, Judge Paul Engelmayer of the U.S. District Court for the Southern District of New York determined that Great Eros pleaded a “sufficient connection between [Carbon 38’s] alleged misconduct and California” – but failed to do so in connection with the other defendants. 

The problem, according to the court, is that Great Eros only cites one reference to misconduct that occurred in California when it alleged that Carbon 38 “sold the infringing goods to consumers in its brick-and-mortar store in Pacific Palisades, California.” Because none of the alleged infringement by the other defendants has “any nexus to California,” the court dismissed the plaintiff’s California unfair competition claim with respect to all of the defendants except for Carbon 38. Not a total loss for WeWoreWhat and co., the court has given Great Eros the opportunity to replead its California unfair competition claim to show that the other defendants also sold and marketed the infringing goods in California. (And, of course, Great Eros’ copyright infringement and Lanham Act claims against all of the defendants remain in place.)

WeWoreWhat pattern

No Sanctions for the Defendants

After addressing the defendants’ aim to have Great Eros’ California unfair competition claim tossed out, Judge Engelmayer turned his attention to the defendants’ motion in which they sought to have him levy sanctions – both in the form of monetary damages, as well as dismissal of Great Eros’ complaint – against Great Eros’ counsel on the basis that Great Eros filed a “baseless complaint, and has refused to withdraw [that] complaint after purportedly learning that its claims were without merit.”

As summarized by the court, the defendants argued in their previously-lodged motion for sanctions that a number of the key allegations that Great Eros made in connection with its complaint “lack factual support.” Among such allegations is Great Eros’ claim that Bernstein visited its PR showroom before making the allegedly infringing products, and that she and WWW “inquired about obtaining [Great Eros] products in exchange for promoting [the brand] on her social media channels.” Also at issue is Great Eros’ claim that Bernstein and Onia “purchased [Great Eros] goods and instructed their designers to copy the pattern at issue,” and that they infringed Great Eros’ copyright in the pattern by “reproducing” it for their own goods, including swimwear, athleisure garments, yoga mats, and wallpaper, among other things.

(The primary reason that these claims lack factual support, according to the defendants, is that Bernstein and WWW allegedly created their version of the pattern independently, as evidenced by an email asserting that Bernstein “does not recall specifically being introduced to” the Great Eros brand at any point. Among some of the other pieces of “clear” evidence that the defendants claim rebuts Great Eros’ claims is an inspiration deck for WWW’s collection that does not include Great Eros designs, “original” hand sketches of the design, and declarations from the defendants’ employees (that are not under oath) that WWW and Bernstein did not copy Great Eros’ design.)

The defendants further argue that Great Eros is also at fault – and sanctions are appropriate – for opting to file its case in California federal court after the defendants had already filed suit in New York, and thus, did so “with the improper purposes of harassing, causing unnecessary delay, and needlessly increasing litigation costs.” 

Reflecting on the defendants’ motion for sanctions, the court held that it is “entirely without merit” and held that sanctions are “unwarranted” across the board. In terms of the defendants’ independent creation arguments, the court sided with Great Eros, asserting that even with the aforementioned evidence at play (which is no substitute for discovery, per Judge Engelmayer), the defendants have fallen short of showing that Great Eros’ allegations are “so meritless as to warrant a finding of bad faith” and thus, to warrant sanctions. In fact, the court held that Great Eros can actually point to evidence that is “consistent with possible copying,” including that the defendants’ admission that “Bernstein may have visited a showroom in which [Great Eros’] products were shown, and Dalia Cunow, Onia’s creative director, admits that she actually purchased [Great Eros’] goods.” 

These facts “may prove to be building blocks for [Great Eros’] claim that the defendants knew of its design, and then copied it.” 

(And it is worth noting, as the court did, that even if the defendants can successfully show that they independently created the lookalike print, that will not shield them from potential liability when it comes to Great Eros’ Lanham Act claims, which do not require proof of deliberate copying,” and instead, hinge on whether the parties’ prints serve as trademarks and whether consumers are likely to be confused by the defendants’ use of the similar print.)

As for the defendants’ claim that Great Eros engaged in bad faith “forum shopping” by filing suit in California and should be subjected to sanctions as a result, the court sided with Great Eros again, holding that actually … “Onia and WWW filed the New York action only after receiving a draft copy of [Great Eros’] California complaint, and after the [defendants’] counsel after Great Eros to hold off filing that complaint while [they] conferred with their clients.” Against this background, the court stated that Great Eros’ decision to file suit in California “is no more sanctionable than the defendants’ decision to front-run the California lawsuit that [Great Eros] had notified [them] it planned to bring.” 

With all of this in mind, the court dismissed Great Eros’ California unfair competition claim with respect to all of the defendants by Carbon 38, and also dismissed the motion for sanctions without prejudice meaning that it could be filed again at a later point in the case.

In the complaint that initiated the case, WWW and co. asserted that despite what the Great Eros argued in cease-and-desist letters that it began sending to them in August 2020 (and then in its complaint), the two parties’ prints are not “substantially similar,” and in fact, the WWW “silhouettes design is substantially different from” the design that appears on the Great Eros’s tissue paper.” WWW further alleged that “no one, including [the Great Eros], owns the concept of silhouettes of the human form,” pointing to “widely accessible and similar designs in the marketplace.” 

In its own complaint a month later, Great Eros pointed to Bernstein’s “history of copying others’ designs and passing them off as her own,” and argued that Bernstein had, in fact, “visited the showroom of [its] sales representative prior to producing the infringing goods, and inquired about obtaining [Great Eros’] products in exchange for promoting [the company] through her social media channels.” Great Eros asserted that it “believes that Ms. Bernstein, WWW, and/or Onia subsequently purchased [its] products that were wrapped in [its] trademark tissue paper … and instructed their pattern makers to copy the [design] for use on the infringing goods.” 

The case is CV Collection, LLC, v. WEWOREWHAT, LLC, et al, 1:21-cv-01623 (SDNY).