The courts are putting the digital world on notice when it comes to counterfeits.
Social media sites, search engines, ad-word providers and even blogs are increasingly being held accountable for hosting domain names selling counterfeit goods, following a string of high-profile judgments in favor of some of fashion’s most prominent brands.
The most splashy victories came this spring when both Hermès International and Burberry Ltd. won separate $100 million judgments against networks of cybersquatters. The latest, a $2.4 million win Thursday for Michael Kors LLC, is further evidence of the emerging trend in fashion law.
“Basically, as these cases have progressed, the defendants are consistently not cooperating with the courts. The courts have found that they are not participating in the process in any way,” said Joseph Gioconda, whose namesake firm is responsible for delivering victories in all three cases.
Gioconda, who tried the cases in New York federal court, explained that implicating search engines like Google and Yahoo, and social media sites such as Twitter and Facebook, is just one more way that brands can stem Internet counterfeiting. The rulings in the three cases meant that these sites are now responsible for getting rid of any counterfeit site found on their platforms and for delisting any infringing domain names from their Web searches.
The unyielding nature of Internet counterfeiting, which is often referred to as “Whac-A-Mole,” is nearly impossible to eradicate altogether. When one Web site is shut down, a slew of new ones tend to appear. As a result, trying to track down the responsible parties is extremely difficult. For brands to collect monetary judgments, they have looked to third-party payment processors like PayPal Inc. to fork over any assets frozen from the illegal transaction.
That is why the somewhat small $2.4 million judgment in the Michael Kors case is not what’s important.
“The damages award is largely a symbolic gesture,” Gioconda said, explaining that any brand is “lucky” if it can collect a million dollars.
In the Kors case, presiding Judge Shira Scheindlin, whose name has been in the news recently after she ruled in favor of Gucci America Inc. against Guess Inc. in a trademark infringement case last month, likely made monetary award based on her assessment of the defendants’ profits, legal experts said.
Filed in November, the case pitted Michael Kors against 35 infringing Web sites, including MichaelKors-Outlet.net, CheapMichaelKorsOutlet.com and MichaelKorsSale.com, all of which sold handbags, shoes, wallets, belts, eyewear, watches and jewelry bearing the brand’s trademarks.
In many instances, the counterfeits were priced between $350 and $800, which is comparable to the price range of genuine Kors product. The similar pricing likely caused “consumer confusion,” which is key to proving trademark infringement. In addition to awarding damages, Kors scored a permanent injunction against the sites, as well as the ability to work with the court to disable offending Web sites that have subsequently been launched by the defendants.
Like the majority of brands that win cybersquatting cases, Kors will also be able to collect damages from PayPal and other third-party payment processors.
While that may seem like a tertiary victory, lawyers agreed that by putting the onus on third parties like PayPal, counterfeiters are being forced to change their habits.
“The whole goal of the third-party payment processor is to get the PayPals and the credit card companies to the point where they won’t allow a counterfeiter to use their services to process transactions. So where do they go?” said Gibney Anthony & Flaherty partner Brian Brokate, who is an expert in anti-counterfeiting law.
According to Brokate, there’s a movement of counterfeiters “reverting” to using old payment methods such as bank transfers or Western Union, which is a sort of mini-victory, as most consumers won’t wire money to China.
At the same time, counterfeiters are developing more complex selling strategies. The best scammers are moving beyond creating a Web site or hawking their goods on eBay or Alibaba. Instead they are using Twitter, Pinterest, Facebook and RSS Feeds to publicize their products, in a move that also seems to legitimize what they are selling. Some are even creating style blogs and selling goods on those sites, a trend that is in full swing in the digital space.
By curating a sort of lifestyle brand, albeit a counterfeit one, these cybersquatters are “creating a veneer of legitimacy,” which is harder to dismantle in its entirety, said Gioconda, in explaining why he has chosen to implicate third parties.
Whether brands will be more effective in diminishing the numbers of their foes is yet to be seen, but the Kors ruling, taken in conjunction with the Hermès and Burberry ones, signals an evolution in how courts are slowly changing to adapt to counterfeiting today. Still, it’s a tough fight.
“The more stuff counterfeiters can throw up on the Web, the harder it is for the brand owner. They have more resources, more people and more time,” Gioconda offered. “The brand owner is in a very difficult position. It gets to the point where they throw up their hands and want to give up, but they can’t do that.”
“What he has done at Vuitton is really exceptional,” said @gameofthrones’ actress Gwendoline Christie on @mrkimjones’ final show for @louisvuitton. “He has rebooted luxury in terms of making it commercial, viable and contemporary. And most importantly artistic. He has never compromised his artistic vision for the sake of commodity.” (📷: @zefashioninsider)
After seeing a demand for men’s wear from its customers, British contemporary women’s wear label @ariesarise has added a men’s wear component and will launch a unisex collection with @mrporterlive. The 20-piece collection includes jackets, denim, logo T-shirts and more with deconstructed ‘90s vibes. Set to launch on January 18, you can shop the pieces on Aries’ website and on mrporter.com. #wwdfashion
“And so spending so much time with a character who thinks like that, inevitability you try and analyze yourself and go back and think about your own demons and dark chapters that you had in your life,” says @thedanielbruhl of his role in TNT’s “The Alienist.” The show, set in the Gilded Age of New York, also stars Dakota Fanning and Luke Evans. Head to WWD.com to read about how 39-year-old Brühl prepared for the role and why he thinks the show is so relevant to today #wwdeye ( 📷: @Eriktanner)
Now that Celine Dion’s collection has topped $10 million in sales, the pop superstar, fashion icon and newly-minted industry player is eyeing growth in Asia. Read the full report by @tiffanyap, link in bio. #wwdnews #celinedion
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
Among the familiar faces at @off____white’s show was a surprise figure: Japanese artist @takashipom, pictured here on Wednesday morning. Other show-goers included @jerrylorenzo, who spoke about his upcoming project: a @nike collaboration for back to school, with designs inspired by his childhood on the West Coast. Sitting in the front row were Future, Don Crawley, @miguel and more. See the rest of the photos on WWD.com #wwdeye (📷: Stephane Feugere)
According to @laurentsai, former “Terrace House: Aloha State” cast member, she didn’t know she was auditioning for the Japanese version of “Real World.” “I was telling a couple of my friends and someone’s like, ‘That sounds a lot like Terrace House.’ I was like, ’No it can’t be.’” Turns out, it was. But Tsai isn’t just a reality star — she’s an illustrator who has worked with Starbucks Japan and most recently, she’s dipping her toes into the fashion world. Head to WWD.com to read about her time on the show, modeling and her art. #wwdeye (📷: @danieldorsa)
More changes are coming to New York Fashion Week: Beginning with the spring 2019 collection, @alexanderwangny will move his New York show to June from September, adopting a biannual schedule with collections shown in June and December. Additionally, the @cfda is planning for an official summer/winter fashion season taking place as soon as June and December 2018. Read more about the upcoming changes on WWD.com. #wwdnews #wwdfashion (📷: @slovekinpics)