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An Illinois federal court recently awarded the Canadian retailer Moose Knuckles a $52 million default judgment related to claims of trademark infringement, counterfeiting, and cybersquatting by 26 Chinese defendants. The case offers a useful roadmap for companies that are trying to crack down on anonymous foreign infringers.

The Case

Moose Knuckles’ claims relate to e-commerce websites that sold counterfeit Moose Knuckles’ products. According to the complaint, Moose Knuckles identified numerous sites in recent years that were selling counterfeit Moose Knuckles products to consumers in the U.S. and around the world. Although the identities of the site owners were concealed by fictitious domain registration information, Moose Knuckles was able to identify a number of similarities among the domains, suggesting that they were being operated by the same or related individuals or entities. Such similarities included virtually identical layouts, use of the same domain name registration patterns, shopping cart platforms, and payment and check-out methods, among others. In addition, Moose Knuckles noted that the counterfeit products bore similar irregularities, appearing to indicate that they were being manufactured by the same entity.

After the defendants failed to answer the complaint, the court issued the $52 million judgment a mere six weeks after Moose Knuckles filed the complaint. As part of the judgment, the judge ordered PayPal, the online payment services provider, to lock any accounts associated with the defendants or the subject websites and release any funds in those accounts to Moose Knuckles as partial payment of damages. The judge also ordered 33 of the subject domain names to be permanently locked and transferred to Moose Knuckles.

The Takeaway

As many retailers know, trying to combat anonymous foreign infringers can be a bit like a game of whack-a-mole: when one site goes down, another pops up. That said, cases like this – with claims based on trademark infringement, counterfeiting, and cybersquatting – offer a good road map for how to pursue a large number of infringing domains in a relatively efficient way, even when the identities of the defendants are unknown. Companies that are contemplating challenging a foreign entity for counterfeiting and IP infringement should consider the following:

  • Investigate and Record: Visit the applicable web sites and save date-stamped screen shots of the disputed products that are offered for sale; make anonymous purchases of the products; save packaging and all evidence associated with your investigation. Contemplate hiring an investigator to assist you with your efforts.
  • Contact: Consider making contact with the owner of the products to gain confidence of their location to ascertain the best venue for your filing.
  • Strategize: Consider contacting the host of the web site to determine if they can shut down portions of the site or the pages, in the event you do not want to file a law suit.
  • Select: Work with an attorney to select the venue for the case that will be most effective for your goal.