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True Religion Wins $863.9M Cybersquatting Suit

Court rules against group of 106 defendants operating 282 Web sites.

The official True Religion Web site.

True Religion Apparel Inc. has scored a historic nine-digit victory in its battle against cybersquatting counterfeiters operating out of China.

This story first appeared in the March 30, 2012 issue of WWD.  Subscribe Today.

In a default judgment, Judge Harold Baer Jr. of the Southern District of New York awarded True Religion, the Vernon, Calif.-based domestic jeans marketer, a total of $863.9 million as 106 different defendants were hit with damages of $8.15 million each, with all held liable for four counts of willful trademark counterfeiting, carrying the maximum statutory penalty of $2 million each, and a fifth charge of copyright infringement, carrying the maximum statutory charge of $150,000. The 282 Web sites operated by the network, with names as varied as truereligionjeansweb.com and cheapjeansoutlet.com, were ordered disabled and their domain names transferred to True Religion.

The suit covered the company’s brand, as well as several design details, such as its pocket design.

Separately on Thursday, Louis Vuitton said that the chief administrative law judge of the International Trade Commission had issued a ruling recommending that U.S. Customs block the importation of all merchandise that infringes on the brand’s toile monogram. Although the True Religion judgment was historic in size and scope, more than 11 times the size of the award given in September 2010 to Ralph Lauren Corp. and VF Corp.’s The North Face brand over similar cybersquatting activities, True Religion is likely to face the same difficulties collecting. The court did provide for the plaintiff to collect money held in the defendants’ PayPal accounts.

“Defendants have gone to great lengths to conceal themselves and their ill-gotten proceeds from True Religion’s and this court’s detection,” Baer wrote earlier this month, “including by using multiple false identities and addresses associated with their operations, as well as purposely deceptive contact information.”

Deborah Greaves, secretary and general counsel of True Religion, conceded that the collection process was unlikely to yield substantial amounts of money but said there were other benefits.

“For one thing, we’re no longer chasing our tails over 282 bogus Web sites,” she said, “and we’re pleased that we were able to send a message to people operating on the fringes of the electronic frontier. And it’s also important to us that we don’t have U.S. consumers, who were the targets of these sites, being duped because they wanted our brand.

“People can go back and attempt to get started again, but with a judgment against them, it’s going to be a lot harder to find registries that are willing to touch them,” Greaves added.

She said that the company, which filed its suit in November, began its search for offending parties by searching for sites with all or part of the company’s name in their URLs (uniform resource locators). “But every site led to others,” she noted.

In addition to an investigative firm that assisted in “cybersleuthing” activity, True Religion retained outside counsel from the law firm of Greenberg Traurig, which represented Ralph Lauren and The North Face in their 2010 suit.

The Louis Vuitton determination follows a settlement last summer involving the Diophy group of companies and others offering infringing and counterfeiting products. If a general exclusion order is issued, U.S. Customs and Border Protection would be directed to seize and destroy all arriving products that infringe on the monogram mark, or counterfeit the monogram mark, to prevent them from entering the U.S. The ITC judge said: “Louis Vuitton has offered substantial evidence of a pattern of violation…and the near impossibility of accurately identifying the sources of the infringing products.”