Court Ruling Helps The North Face Recover Costs of Fighting Rogue Websites

Sep 8, 2011

Topic: Business

Thanks to a recent court victory, The North Face Apparel Corp. and Polo Ralph Lauren Corp. have shut down hundreds of websites selling counterfeit goods and seized enough illicit proceeds to pay legal costs.

A December 2010 ruling in The North Face Apparel Corp. v Fujian Sharing Import & Export Ltd, et al, greatly expedited what had been a frustrating whack-a-mole approach to fighting the growing scourge of counterfeit websites.

The North Face brought the case in the Southern District of New York after discovering 9,000 websites selling counterfeit versions of its products, including over 700 sites that used a form of “northface” in their domain name, said G. Roxanne Elings, an attorney with Greenburg Traurig who represented The North Face in the case. But every time The North Face used the court’s temporary restraining order to shut down infringing websites and seize profits from their sale of counterfeit merchandise, the Chinese-based counterfeiters would merely roll over their operation to a new domain name not covered by the order. To combat this, the judge issued a contempt order that essentially enables The North Face to shut down any infringing website and collect monies from payment provider accounts connected to the websites within ten days of notifying their domain name registrar, Internet service provider and online payment provider of the standing court order. The monies obtained through service of this order supports the companies’ enforcement program, said Elings. She also added that, in addition to shutting down the websites and collecting monies from the counterfeiters, the companies have used the Order to gather intelligence into the ultimate source of the goods and their methods of operation.

The North Face has since received a further order from the same Court finding that Registries could be held in contempt of the court for aiding and abetting the rogue websites if — once they receive notice — they don’t take action to block customers’ connections to defendant counterfeiters’ websites, and/or permit registration and renewal of the domain names. This is the first third-party liability decision concerning rogue websites.

While The North Face® is among the most counterfeited apparel brands, its experience is far from isolated. Deckers Outdoor Corp. has identified as many as 11,000 sites selling counterfeit versions of its UGG® boots since 2007, including 5,000 in 2011 alone, said Leah Evert-Burks, director of brand protection for Decker Outdoors Corp. and co-chair of the OIA Internet Counterfeit Task Force. In a single raid of one Chinese company that was taking orders via its own website, authorities seized 244,648 pairs of counterfeit UGGs. (For a stunning list of the company’s anti-counterfeiting efforts in 2010, read this release.)

“You need to be flexible in structuring counterfeiting programs,” said Evert-Burks. “Don’t get hung up on procedure as counterfeiters are very flexible and will out maneuver you.”

In just the last 18 months, Canada Goose has removed an estimated 1.3 million units of counterfeit merchandise from business-to-consumer auction sites and approximately another one million units from business-to-business sites, said Kevin Spreekmeester, vice president of global markets and co-chair of the OIA Internet Counterfeit Task Force. The company is now spending in excess of six figures annually combating counterfeiting.

“Consumers trust our brand to keep them warm on the streets of New York or to go to the North Pole,” said Spreekmeester. “We had four seized jackets tested and three had no down in them at all. They were using waste material that had no loft at all. We use coyote fur around our hoods because it won’t freeze or hold water and it creates a pocket of warm air around the face. We found raccoon and German shepherd were being used, which have no functional properties at all.”