Fashion company awarded $164 million against online counterfeiters

United States of America
Tory Burch LLC, the women's fashion company known for its signature ballet flats, has obtained a damage award of $164 million - perhaps the largest ever damage award in a fashion products counterfeiting case - against online retailers.
 
After conducting an investigation, Tory Burch brought suit against 41 defendants in the US District Court for the Southern District of New York based on the TORY BURCH word mark and logo. The defendants were believed to be based in China. The claims, which were first lodged in December of 2010, included trademark infringement, counterfeiting and cybersquatting resulting from the online offer and sale of counterfeit Tory Burch clothing and accessories under more than 200 domain names, including 'ToryBurchOutlets.com', 'ToryBurchOutletshop.com', 'DiscountToryBurch.com', 'CheapToryBurchs.com' and 'ToryBurch.us'. 

Tory Burch sought preliminary and permanent injunctive relief and money damages. In January 2011 Tory Burch moved for a temporary restraining order. None of the defendants appeared or responded. The clerk entered a default against each defendant. Tory Burch then moved for the court to enter a final default judgment against each defendant.
 
On May 13 2011 the district court ruled that the defendants had violated the temporary restraining order (by continuing to offer and sell counterfeit Tory Burch merchandise) and entered judgment for Tory Burch. Although no defendant ever answered any asserted claim, the court was impressed that the defendants had “gone to great lengths to conceal themselves and their ill-gotten proceeds”. The court found each defendant liable, and ordered that some 230 infringing domain names be disabled and transferred to Tory Burch. 

Importantly, the court also granted Tory Burch the “ongoing authority” to address any newly detected websites operated by any of these defendants utilising either TORY BURCH mark without having to file another lawsuit. The court also enjoined the relevant internet service providers and domain name registrars from providing services to any of these defendants for use in connection with the asserted infringement of Tory Burch's trademark rights.
 
The court found each defendant liable for wilful counterfeiting and awarded maximum statutory damages of $2 million per mark, which totalled $4 million per defendant. The court ordered that any monies paid into various defendants’ accounts with the well-known PayPal service were to be turned over to Tory Burch in order to partially satisfy the judgment. Further, in a manner similar to that regarding the discovery of any newly detected websites, the court provided Tory Burch with the ongoing authority to address any newly discovered monies or accounts. If found, Tory Burch need only serve a copy of the permanent injunction on the defendant and the account holder; if the defendant did not file a request that such monies be exempted, they would be transferred to Tory Burch. 
 
While the damages award is significant, the curative actions against such websites are even more so. The court’s order clearly reflects the trend to protect trademark owners vigorously, especially owners of well-known trademarks, from internet-based counterfeiting. In a single and relatively brief action, Tory Burch was able to obtain broad, forward-looking relief. 
 
Stephen M Schaetzel, King & Spalding LLP, Atlanta

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