District Court Awards Tory Burch $164 Million in Anti-Counterfeiting Litigation

Tory Burch LLC (“Tory Burch”), the makers of women’s apparel, designer shoes and fashion accessories, recently obtained a $164 million damages award against forty-one defendants accused of selling counterfeit versions of its products through numerous websites. This decision confers the largest award ever granted to a fashion company in a counterfeiting action.

In December 2010, Tory Burch brought this action before the United States District Court for the Southern District of New York, after conducting a lengthy investigation of China-based counterfeiters offering counterfeit TORY BURCH branded shoes, clothing and accessories for sale on-line to American consumers. Many of the websites used in this infringement scheme were posted at domain names that included the TORY BURCH mark, or marks of other luxury fashion brands. Among the numerous accused domain names were ToryBurchOutlets.com, DiscountToryBurch.com, CheapToryBurchs.com, Tory-Burch.us, ChristianLouboutinMy.com, The HouseofGucci.com and NikeJordanCenter.com.

The complaint included causes of action for trademark infringement, counterfeiting and cybersquatting and sought both monetary damages and permanent injunctive relief. At the time of filing, the company also sought and was granted a temporary restraining order enjoining the defendants from offering the counterfeit goods. In direct violation of the court-ordered temporary restraints, the defendants continued to operate by offering and selling the counterfeit Tory Burch goods as the lawsuit proceeded.

On May 13, 2011, the district court granted the company’s motion for a declaratory judgment against all forty-one defendants after none appeared in court to offer a defense. In doing so, the court held that all were liable and awarded Tory Burch money damages and a permanent injunction. The court also ordered that the defendants’ websites utilizing the Tory Burch mark in the domain name be shut down and transferred to the company. In addition, the court provided the Tory Burch LLC with an order permitting the company to shut down any other websites the defendants create in the future without having file a subsequent lawsuit.

The historic award of damages was calculated based on each of the forty-one defendants’ willful counterfeiting of the TORY BURCH® word mark and logo, awarding the maximum statutory damages of $2 million per mark for a total of $4 million per defendant. In an effort to assist the company to collect the award, the court ordered that funds in defendants’ PayPal accounts, among other accounts, be turned over to Tory Burch in partial payment of the damages awarded. The court also ordered that all of the domain names used for the infringing sites (including those containing third party trademarks) be transferred to Tory Burch, and it enjoined Internet Service Providers, domain name registrars and third party selling platforms from providing services to any Defendant for use in connection with its infringement of Tory Burch’s rights.

Like the Farouk decision handed down by the U.S. District Court for the Southern District of Texas last year, this decision is part of an increasing trend by U.S. courts to grant plaintiffs relief from counterfeiting by forcing third parties to shut down the defendants’ on-line sales and to turn over defendants’ assets located in the United States as partial payment of damages awards. This trend is particularly helpful to trademark owners dealing with on-line counterfeiting rings, since it can be very difficult to determine the true identity of the counterfeiters, and even more difficult to get the counterfeiters to take action directly, or to collect damages from them pursuant to a U.S. court’s order.

Owen J. McKeon and Catherine M.C. Farrelly, former Directors in the Gibbons Intellectual Property Department, co-authored this post.
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