A federal judge has handed two apparel brands a powerful new weapon for their online anticounterfeiting efforts.
After a ring of Chinese cybersquatters failed to respond to a $78 million judgment in favor of Polo Ralph Lauren Corp. and VF Corp.’s The North Face unit handed down in September, Judge Alvin Hellerstein granted the companies the “ongoing authority” to obtain accounts, assets or information pertaining to the defendants from any party working with those same defendants. That compels Internet service providers and pay services, such as PayPal, to transfer money to the plaintiffs until the reward is paid in full or they file with the court.
The contempt filing against a large group of defendants, unsealed by federal court for the Southern District of New York Monday, goes further. As the plaintiffs “discover new domain names” registered by the defendants, domain name registries must “temporarily disable” the site two days after being served the order for contempt. They can contest the order, but if they don’t, after 10 business days the registries must transfer ownership of the site to the plaintiffs.
The move effectively allows Polo and The North Face to shut down any Web site run by the defendants without registering the names with the court. The ruling also puts pressure on any third parties, such auction sites or ISPs.
“Polo and The North Face are light years ahead of everyone else,” said Roxanne Elings, an attorney at the law firm Greenberg Traurig, which represented the plaintiffs. “We can shut down Web sites very quickly…it puts the burden on the defendants to contest it.”
The court’s order comes at a time when counterfeiting activities, amplified by the world of e-commerce, are believed to be at a record high.
“This particular action, I have never seen before. Shockingly, the $78 million is the smallest part of the judgment,” said Susan Scafidi, director of Fordham University’s Fashion Law Institute. “This is an enormous holiday gift for North Face, for Polo…and for similar retailers.”
Frustration among brands trying to protect both their customers and their businesses has been mounting for some time, said Scafidi, who noted that the courts are “tired of wasting their resources” on such cases.
Often described as a game of whack-a-mole, the plight to rid the Internet of counterfeit goods sold by cybersquatters is unending, but experts agreed that Monday’s order gave the whacker a much bigger mallet.
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