Individual sellers of fakes on online marketplaces, beware. After Alibaba made headlines last week for filing suit against individual sellers of fake Swarovski watches on Taobao, Chanel filed its latest lawsuit against individual sellers on Amazon for offering infringing and counterfeit goods for sale.
Meanwhile, both Louis Vuitton and Harley-Davidson initiated proceedings to get back to court. Following another unfavorable ruling in its fight against what two courts are calling “parody” tote bags, Vuitton is seeking a hearing en banc. Harley-Davidson, on the other hand, is reigniting an old battle, alleging that Urban Outfitters has breached a settlement agreement by selling goods bearing its famed trademarks.
And design patent infringement cases are proving business as usual following the potentially damaging Supreme Court ruling in favor of Samsung in Apple vs. Samsung in December.
Chanel vs. Amazon Sellers #1-87
In a market filled with low-cost fakes and sophisticated schemes to dupe consumers, luxury brands are increasingly initiating legal action against the individual sellers of infringing and counterfeit goods, bypassing the online marketplace platforms that host such sellers entirely. Chanel is the latest to file suit against sellers of fakes, naming 87 Amazon sellers in a recent trademark infringement and counterfeiting complaint filed in the U.S. District Court for the Southern District of Florida.
The suit — in which Chanel is seeking injunctive relief and statutory damages of $2 million per counterfeit trademark used — comes on the heels of a larger legal movement by luxury brands and online marketplaces themselves. Just last week, Chinese e-commerce giant Alibaba made headlines for filing suit against two of its sellers for offering fake goods for sale, a tactic that Amazon first took in November.
Brands, including Louis Vuitton and Adidas, among others, have also opted to target individual sellers, shying away from the old tactic of filing suit against the marketplace host. Such a move proved fruitless for Tiffany & Co., which sued eBay for contributory trademark liability in 2010 only to lose when the court found that eBay had an effective program to remove the listings of counterfeit goods upon request by the brand owner, thereby shielding it from liability.
Louis Vuitton Still Fighting “Parody” Ruling in My Other Base Case
Following an unfavorable decision from the Second Circuit Court of Appeals last month, Louis Vuitton has filed a request for a hearing en banc, arguing that the court erroneously held that My Other Bag, the maker of inexpensive canvas tote bags bearing cartoon imagery of its own copyright and trademark protected bags, is shielded from liability thanks to the parody doctrine.
Per Vuitton, a hearing en banc — an unordinary hearing reserved to “secure or maintain uniformity of the court’s decisions” and/or consider “questions of exceptional importance” that takes place in front of the full court of appeals judges — is warranted as the Second Circuit not only disregarded circuit and Supreme Court precedent, but the current ruling stands to “eviscerate [the Trademark Dilution Revision Act] and its associated trademark and copyright statutes” if left uncorrected.
Harley-Davidson and Urban Outfitters Face Off…Again
Urban Outfitters is back in court and the case is part trademark counterfeiting, part déjà vu. Harley-Davidson Motorcycles filed suit against the Philadelphia-based retailer, alleging that on the heels of a settlement between the parties stemming from an earlier trademark suit, Urban Outfitters is back at it. In particular, Harley-Davidson claims that Urban Outfitters is using an array of authentic Harley-Davidson T-shirts to make “new products,” including bodysuits and vintage-inspired tees, which the motorcycle brand claims is in violation of its trademark rights and the parties’ settlement in which Urban Outfitters agreed to refrain from selling infringing goods.
The takeaway here: While the “First Sale” doctrine — which enables the purchaser of an authorized copy of a copyright protected work, such as book or film, to resell that work without infringing the copyright owner’s exclusive right to sell copies of the work — may apply in the trademark context, there are some exceptions to the rule. For instance, a seller will not be immune from trademark liability for the subsequent sale if the goods have been altered to the point that they are “materially different” than the originals.
While courts have debated the meaning of “materially different,” H-D argues that Urban Outfitters’ act of “cutting through or mutilating Harley-Davidson’s trademarks, cutting off the sleeves, shredding the bottom of the shirts, cutting open the side seams of the shirts, cutting the necklines,” etc. fits neatly within this exception, leaving Urban Outfitters on the hook for infringement.
Design Patent Infringement on the Heels of Apple vs. Samsung
The U.S. Supreme Court’s unanimous ruling in December in favor of Samsung in the longstanding Apple v. Samsung case — a battle over Apple’s iPhone, which consists of an array of design patent protected elements – sent shock waves through the fashion industry. It left some speculating that it will lead to a larger movement to devalue design patents as a whole by allowing infringing parties to pay smaller monetary sums in connection with infringement. Such insecurity has not halted Ugg Australia’s parent company, Deckers, from fighting against parties allegedly infringing its design patent protected boots.
Over the past several months, Deckers has filed an array of multimillion-dollar lawsuits in connection with its Bailey Button style, among others, with defendants ranging from J.C. Penney and Target to Gina Shoes, which is the footwear licensee for Rampage, RocaWear and Nicole Miller.
In light of its narrow ruling, the Supreme Court sent the Apple vs. Samsung case back to a lower court, which will determine how the damages amount will be calculated for the infringing elements at issue. More broadly, the court will fashion a new test upon which judges can rely in future cases to determine pay outs in connection with the infringement of design patents. Until then, fashion brands that enjoy patent protection in the U.S. can arguably rest easy, and judging by Deckers’ recently filed lawsuits, litigation will continue as usual.
Julie Zerbo is the founder of The Fashion Law.