Polo Ralph Lauren Corp. and VF Corp.’s The North Face unit scored a major victory against Chinese cybersquatters, but collecting the damages may be another matter entirely.
A court in the Southern District of New York awarded the brands $78 million, which is believed to be the highest sum of damages ever awarded in an Internet counterfeiting case.
Initially filed in March, the lawsuit pitted the apparel brands against a network of more than 130 Chinese Web sites selling counterfeit goods to U.S. customers through up to 6,500 domain names such as laurenpolo.com and officialnorthface.com.
The defendants largely had their domain names traced to the Web site B2BSharing.com. They also sold merchandise bearing other trademarks, including Balenciaga, Louis Vuitton, Gucci, Coach, Ugg, Timberland, Nike and Ed Hardy.
According to the complaint, B2BSharing.com is operated by Fujian Sharing Import & Export Ltd. at an unknown address in China.
The company could not be reached for comment by press time.
“We are very pleased with the judge’s ruling and view the decision as a significant victory in our ongoing efforts to combat counterfeiting,” said Barbara Kaplan, senior counsel at VF Corp. and vice president of The North Face.
The court’s ruling, which was delivered last week, will serve to “disrupt the largest ring of apparel counterfeiters discovered operating over the Internet,” according to Roxanne Elings, an attorney at the law firm Greenberg Traurig, which represented Polo Ralph Lauren Corp. and The North Face.
“Almost 200 active Web sites were disabled and domain names were transferred to plaintiffs,” said Elings, who noted the defendants have “already opened other Web sites not selling the North Face or Polo Ralph Lauren goods, and, based on the judgment,” the plaintiffs can “attach those accounts as well.”
In essence, any domain name used by the defendants for the sale of counterfeit products will be disabled and transferred to the ownership and control of the plaintiffs. Some of these sites include goodgoodshop.com, ebayholder.com, uggcardy.org and cheapgoodssale.com.
While the ruling may be a “deterrent” for counterfeiters looking to peddle fakes, especially phony Polo and North Face gear, the “likelihood [of the brands] receiving the $78 million…is small,” the lawyer said.
On the bright side, more than 100 payment accounts used by the counterfeit ring were captured, and “should be released in the next few weeks,” Elings said, adding that even though she estimates the sum will be in the “high-six-figure range” — nowhere near $78 million payout — it “will more than cover their costs of bringing the action.”