Deckers Outdoor Corp. racked up a $686 million victory in two lawsuits filed in the Northern District of Illinois against 3,007 China-based counterfeit Web sites selling fake Ugg Australia products.
This story first appeared in the May 2, 2012 issue of WWD. Subscribe Today.
In addition to the monetary damages, Judge Ronald Guzman granted Ugg parent company Deckers a permanent injunction last month, as well as funds seized from hundreds of financial accounts linked to the counterfeit Web sites, including funds held by PayPal Inc.
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Awarding damages held by third-party sites and payment processors is part of a growing trend, as it is almost impossible for brands to collect from Web operators located overseas. On Monday, Hermès International won a $100 million judgment in a similar case against 34 counterfeit Web sites. In that case, Federal District Court Judge Denise Cote in Manhattan acknowledged the difficulty in collecting from the counterfeiters, and ordered payment processors, social media sites, third-party hosts and search engines such as Google and Yahoo be held accountable. This includes no longer providing their services to the infringing parties or eliminating their sites from Web searches.
In the Deckers case, the judge said that, following his verdict, the footwear company may send notices of contempt to the defendants via e-mail should they find additional infringing domain names. Attached to the order was a list of thousands of fraudulent Web sites, such as “uggs-forsales.com” and “sparkleuggsboots.com,” along with the defendant’s name and corresponding e-mail address.
Prior to the judgment, the court granted a temporary restraining order in each case, granting Deckers control of the Web site’s domain. Each domain was then redirected to a Web site alerting consumers that the domain was previously used for counterfeit sales.
“Web sites selling counterfeit Ugg products look very convincing because they use Deckers images and offer products at believable sale prices,” said Leah Evert-Burks, director of brand protection at Deckers.
According to Deckers, the lawsuits are part of an “aggressive effort” to combat online counterfeiting, particularly against “rogue Chinese-based Web sites.” Since 2011, Deckers has filed six lawsuits that have resulted in the transfer of more than 6,000 domains and the freezing of over $1 million in linked financial accounts. Deckers also sends take-down letters to Web site servers hosting counterfeit sites, removes links to sites from search engines and shuts down payment processing services. In total, Deckers said it has taken action against more than 23,000 sites and has had 19,000 links removed from search engines.
Last year alone, more than 834,000 counterfeit Ugg products were seized worldwide.