Brands win injunction in cyber counterfeiting case

Six brands under the Richemont Group umbrella recently scored a victory in what their attorney is calling a “landmark” case in the ongoing battle against an online sale of counterfeit luxury goods.

Michelle Graff michelle.graff@nationaljeweler.com

Los Angeles--Six brands under the Richemont Group umbrella recently scored a victory in what their attorney is calling a “landmark” case in the ongoing battle against the online sale of counterfeit luxury goods.

In a ruling dated Oct. 8, a judge in U.S. District Court for the Central District of California issued a summary judgment and permanent injunction against Saudi Arabia-based Sawabeh Information Services Co. (SISCOM) and Pakistan-based TradeKey (Pvt.) Ltd. effectively barring SISCOM-owned websites from selling merchandise bearing the Cartier, Montblanc, Panerai, A. Lange & Söhne, Chloè and Alfred Dunhill trademarks.

The brands’ attorney Susan M. Kayser, a partner at Jones Day in Washington, said the ruling is significant because, in the past, defendants in these types of cases argued that they couldn’t be held liable for counterfeit goods sold on their sites unless they received notice of a specific infringing listing.

One of the most well-known cases in this arena was the lengthy legal battle between Tiffany & Co. and online auction site eBay, a case in which the courts eventually ruled that eBay was not responsible for trademark violations when its users sold counterfeit Tiffany merchandise via the site.

“Our position was, you have knowledge,” Kayser said. “You have knowledge because you are aware of what’s going on on your website. You are allowing and facilitating these counterfeiters on this site and this can’t be allowed. You have to take responsibility for what’s on your website.”

“This is very different from Tiffany v. eBay. We think it’s a big victory for brand owners and consumers."

However, SISCOM’s attorney, Erik Syverson at Miller Barondess LLP in Los Angeles, said he and his clients completely disagree with the court’s ruling and, in their eyes, the case is not settled. He said they “considering all options” going forward.

“Followed to its logical conclusion, this ruling requires websites that permit user-generated advertising to proactively screen for infringing or counterfeit items listed for sale. That is not the law. The law has always required that trademark owners perform such a function,” he said.

According to court papers filed in the case, SISCOM owns TradeKey.com and the mirror sites SaudiCommerce.com and B2BFreeZone.com. These sites function as business-to-business websites that solicit wholesale buyers and sellers worldwide to become paying members and then help them to sell products en masse.

Tipped off by what Kayser described as the “pure magnitude” of

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the operation, the Richemont Group brands first filed suit against SISCOM and TradeKey in 2011, as well as against 18 individual TradeKey member sellers.

Though none of the 18 individual sellers ever answered the complaint or appeared in court, the court granted a default judgment against these sellers in April 2012, granting “very broad” injunctive relief that prevented them from using the trademarks in any listing, forcing them to turn over their domain names and granting the brands a monetary award, said Kayser.

From there, she said the Richemont labels pursued their case against SISCOM and TradeKey.

According to court papers, an investigator hired by the brands found more than 6,000 sellers offering branded products on TradeKey.com, including more than 850 offering Panerai-branded goods, 500 selling Montblanc, 1,900 offering Cartier and at least two premium members with A. Lange & Söhne-branded goods.

None of the sellers were authorized by these companies to sell genuine goods bearing their trademarks, court papers state. In addition, the investigator actually purchased five Panerai, two Montblanc and four Cartier watches from a variety of sellers on TradeKey.com, and each of the brands confirmed that these products were fakes.

As of Monday afternoon, watches and jewelry under the trademarks Cartier, A. Lange & Söhne, Montblanc and Panerai appeared to have been removed from the sites.

A search for products under those brand names pulled up either blank pages or a message that read “This page has been permanently removed!” and a link to a Product Posting Policy.

While the court issued a permanent injunction and summary judgment, the judge deferred issuing any kind of monetary award in the case.

Kayser said they plan to move separately for damages at a later time. “The big thing here is we got incredibly broad injunctive relief, which is what the client wants,” she said.

Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.