Supreme is cracking down on counterfeiters in a couple of new lawsuits, alleging that dozens of “e-commerce store operators [are] trading upon [its] reputation and goodwill by selling … unauthorized and unlicensed products, including clothing, hats, accessories and other goods, using infringing and counterfeit versions of its federally registered Supreme trademarks,” and causing “irreparable damage” to the buzzy, $1 billion streetwear brand “through consumer confusion, dilution, and tarnishment of those valuable trademarks” as a result.
According to two new lawsuits that counsel for Supreme’s corporate entity Chapter 4 Corp. filed in a federal court in Illinois last week, an array of defendants – who are identified exclusively by e-commerce store urls – are on the hook for “advertising, offering for sale and selling counterfeit Supreme products to unknowing consumers, and/or [selling] counterfeit Supreme products advertised as ‘replica’ goods” to knowing purchasers, and giving rise to claims of trademark infringement and counterfeiting, as well as false designation of origin, in the process.
New York-headquartered Chapter 4 Corp. asserts in the two nearly identical complaints that the defendants’ counterfeiting stands in contrast to its longstanding practice of “carefully planning and curating design collections” – which it says are “inspired by youth culture and style that appeal not only to its traditional customer base, but also to the consuming public at large” – in order “to provide its customers with unique apparel and products.”
Supreme products “are of high quality and are produced in limited runs to ensure that quality,” Chapter 4 claims, and “have become enormously popular and even iconic, driven by the brand’s arduous quality standards and innovative design.” (Editorial note: It is also well-established that limiting supply is central to the success of the modern streetwear model. Streetwear brands, such as Supreme – which was valued at $1 billion in 2018 when it sold off a reported 50 percent stake in its business to private equity giant Carlyle for $500 million – strictly limit the quantity of their products in order to drive/maintain the hype surrounding the brand, which, in turn, has created a thriving resale marketplace in which prices are boosted significantly, thereby, furthering demand).
With such authentic – and to at least some extent, carefully calculated – demand in mind and given the cult nature of 26-year old Supreme’s following, Chapter 4 asserts that “among the purchasing public, genuine Supreme products are instantly recognizable as such,” and that the “widespread fame, outstanding reputation, and significant goodwill associated with the Supreme brand have made the Supreme trademarks valuable assets.”
And ultimately, Chapter 4 states, “The success of the Supreme brand has resulted in its significant counterfeiting,” which sees bad actors, such as the defendants, aiming to benefit from popularity of Supreme (and the demand that is intentionally left unfulfilled by Supreme) by “employing and benefitting from substantially similar advertising and marketing strategies” as Supreme and “deceiving unknowing consumers by using the Supreme trademarks without authorization within the content, text, and/or meta tags of their online stores in order to attract various search engines crawling the Internet looking for websites relevant to consumer searches for Supreme products.”
Turning to the sales of counterfeit Supreme wares on third-party marketplaces, such as Alibaba and Amazon, Chapter 4 says that these “third party service providers … do not adequately subject new sellers to verification and confirmation of their identities, allowing counterfeiters to ‘routinely use false or inaccurate names and addresses when registering with these Internet platforms’” to the detriment of rights holders, such as Supreme. Citing an article from business law professor Daniel C.K. Chow (and also pointing to the Department of Homeland Security’s recent “Combating Trafficking in Counterfeit and Pirated Goods” report), Chapter 4’s counsel states that in addition to enabling counterfeiters “to hedge against the risk of being caught and their websites taken down from an e-commerce platform by [letting them] preemptively establish multiple virtual store- fronts,” these e-commerce giants “create bureaucratic or technical hurdles in helping brand owners to locate or identify sources of counterfeits and counterfeiters.”
With all of the foregoing in mind, Chapter 4 claims that unless “the defendants’ actions are enjoined, [it] will continue to suffer irreparable harm to its reputation and the goodwill of the Supreme trademarks.” In addition to monetary damages and an order requiring the defendants to cease their sales of counterfeit or otherwise infringing Supreme products, Chapter 4 wants the court to require “those with notice of the injunction, including, without limitation, any online marketplace platforms such as eBay, AliExpress, Alibaba, Amazon, Wish.com, and Dhgate” – none of which are named as defendants – to “disable and cease displaying any advertisements used by or associated with the defendants in connection with the sale of counterfeit and infringing goods using the Supreme trademarks.”
*The cases are Chapter 4 Corp. v. The Partnerships and Unincorporated Associations Identified on Schedule “A”, 1:20-CV-01724 (N.D. Ill.) and Chapter 4 Corp. v. The Partnerships and Unincorporated Associations Identified on Schedule “A”, 1:20-CV-01725 (N.D. Ill.).