Recent Decision Provides Support in War Against Counterfeit Sports And Entertainment Merchandise
Days before Super Bowl XLVIII this past February, federal authorities and the NFL announced the seizure of $21.6 million worth of fake Super Bowl jerseys, hats and other items. Similarly, over a three-day period prior to the 2014 NBA All-Star Game in New Orleans, U.S. Immigration and Customs Enforcement (ICE) agents and investigators seized nearly $1 million dollars in counterfeit memorabilia and clothing from a local flea-market. Major League Baseball and the National Hockey League have also undertaken similar seizures of counterfeit paraphernalia during World Series and Stanley Cup Playoff events.
ICE estimates that counterfeiting alone costs U.S. businesses more than $200 million annually and is directly responsible for the loss of more than 750,000 American jobs per year. At the street-level, culprits of counterfeiting operations are often transient in nature. They follow live events, like sports leagues and entertainment productions, in order to poach on a trademark holder's popularity. Once discovered, they pack up and move, generally destroying evidence and ignoring court proceedings in the process.
Ex parte seizure orders are a vital tool for sports leagues and entertainment producers combatting the sale of counterfeit merchandise near event venues. Ex parte search and seizure orders give trademark holders the ability to identify "fly-by-night" counterfeiters and simultaneously remove them from the marketplace. Typically, plaintiffs apply for an ex parte seizure order against "john doe" defendants pursuant to 15 U.S.C. § 1116(d), which provides injunctive relief in civil actions arising out of the use of counterfeit marks. The practice is necessary because trademark holders rarely, if ever, can identify counterfeiters by name. However, a ruling from the Eastern District of Louisiana earlier this year in the case of World Wrestling Entm't, Inc. v. Various John Does threatened the viability of this practice in federal courts. No. CIV.A. 14-688, 2014 WL 1330037, at *1 (E.D. La. Apr. 1, 2014)
In World Wrestling Entertainment (WWE), the District Court denied WWE's application for an ex parte seizure order against various "John Doe" defendants, concluding that Section 1116(d)(4) requires that targets be specifically identified. The District Court certified its order for interlocutory appeal to the Fifth Circuit pursuant to 28 U.S.C. § 1292(b).
Earlier this month, the Fifth Circuit reversed the District Court, concluding that the WWE sufficiently identified the search's targets based on the fact that the WWE did not license its merchandise for sale by third-parties at events and could readily identify counterfeit merchandise. World Wrestling Entm't, Inc. v. Unidentified Parties, No. 14-30489, 2014 WL 5635359, at *1 (5th Cir. Nov. 4, 2014). Accordingly, the Fifth Circuit reasoned, the seizure and temporary restraining orders' targets were sufficiently identified as any non-WWE personnel selling WWE merchandise at WWE events.
The Fifth Circuit also commented on the enforcement of ex parte seizure orders. While noting the absence of any language in the statute prohibiting authorized representatives of trademark holders from accompanying law enforcement officials to determine what materials should be seized, the Court stated that the Act does not appear to authorize private citizens to carry out ex parte seizure orders themselves.
Circuit cases on this topic are rare. In the only other circuit case found on this issue, the Tenth Circuit upheld a search and seizure order obtained against unnamed parties in advance of the NBA finals. NBA Properties v. Does, 113 F.3d 1246 (10th Cir. 1997). Similarly, the decision in WWE appears to protect the use of ex parteorders in anti-counterfeiting efforts as long as the requesting entity provides some means of identifying the targets of the proposed order. One lesson for trademark holders interested in employing ex parte search and seizure efforts under 15 U.S.C. § 1116(d)(4) is to adhere carefully to the statute's requirements and include in the application a basis by which authorities may sufficiently identify the targets of the order.