Gucci Awarded $144.2M Against Online Counterfeiters

A federal court has also ordered the immediate surrender to Gucci of 155 domain names used in the counterfeiting operation.

Gucci America Inc. on Wednesday was awarded $144.2 million in damages by a federal district court in Fort Lauderdale, Fla., against several organizations engaged in an online counterfeiting scheme.

This story first appeared in the October 18, 2013 issue of WWD.  Subscribe Today.

The federal court also ordered the immediate surrender to Gucci of 155 domain names used in the counterfeiting operation. According to Gucci, the targeted domain names “employed such tactics as copying campaign advertisements, product images and descriptions from official Web sites, as well as using ‘Gucci’ in the domain name,” all designed to “deceive online consumers.”

The district court order also granted Gucci a permanent injunction barring the defendants from manufacturing or selling any more of the counterfeit goods, from using the Gucci marks in connection with unauthorized sale of goods, as well as falsely representing themselves as being connected with the luxury brand, among other protections.

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The award of $144.2 million includes the accrual of interest from the date of the action, according to U.S. District Court Judge William P. Dimitrouleas.

The lawsuit was filed by Gucci in May, alleging trademark counterfeiting and cybersquatting. Other claims in the lawsuit include false designation of origin and common law unfair competition. Wednesday’s award was based on a default judgment against the defendants, and it’s unlikely Gucci will collect a significant amount of the damages awarded.

Patrizio di Marco, Gucci’s president and chief executive officer, said, “We are extremely pleased that the court clearly understood the dangers to consumers posed by online counterfeiting organizations and has sent a strong message that counterfeiters can expect to receive severe sanctions when caught.”

Di Marco said the company is fully committed to maintaining and protecting its intellectual property rights throughout the world, and that it “will continue to take the initiative in combating counterfeiting wherever and whenever it is found in order to ensure its customers are not deceived and that its unique heritage be strongly preserved and fully respected.”

The lawsuit said the defendants — partnerships or unincorporated associations doing business as bestoreol.com, boutiqueguccipascher.com and designerguccibags.com, as well as between 1-1,000 entities whose names are unknown — offered for sale goods bearing alleged counterfeit or similarly confusing imitations of Gucci’s trademarks through various fully interactive Web sites operating under multiple domain names. Those trademarks include the Gucci name, its green-red-green stripe design and the various forms of interlocking Gs.

According to the complaint, the defendants offered at least 21 of Gucci’s registered trademarks on a minimum of 32 different types of items, including handbags, clutch bags, tote bags, suitcases, wallets, key cases, neckties, scarves and footwear.

The legal document said the counterfeit goods “are of a quality substantially different than that of Gucci’s genuine goods,” and were offered for sale with the knowledge and intent that the “goods will be mistaken for the genuine high-quality goods offered for sale by Gucci, despite defendants’ knowledge that they were without authority to use the Gucci marks.” It went on to say that the “net effect of defendants’ actions will cause confusion of consumers” who believe the counterfeit goods originate from or are associated with Gucci.

The luxury brand said it was harmed because the defendants’ actions deprived Gucci of its right to fairly compete for space within search engine results, caused overall degradation of the value of the goodwill associated with the Gucci marks and increased the company’s overall cost to market its goods and educate consumers about its brand via the Internet.

Gucci said the dot-com defendants each have registered various infringing domain names, and that the Gucci marks have never been assigned or licensed to be used on any of the Web sites operating under the infringing domain names.

The company sought a permanent injunction and profits and damages resulting from the alleged infringing activities, which included statutory damages from each defendant in the amount of $2 million per each counterfeit trademark use and product sold.