Following on the heels of action by professional and collegiate sports organizations to stop online sales of counterfeit sports apparel, sporting good giants Adidas and Reebok have now brought suit against nearly 50 defendants they accuse of cybersquatting and/or fraudulently registering Internet domain names referencing their trademarks to facilitate the sale of counterfeit apparel. Adidas AG et al. v. Adidasjeremyscottitalia.eu et al., Case no. 0:13-cv-62712 (S.D. Fla.)

Like the sports organizations, Adidas and Reebok allege the defendants, who collectively operate nearly 100 websites bearing names such as “adidaslz2.com” and “reeboksnersus.com,” have created an “illegal marketplace enterprise for the purpose of diverting business from Plaintiff’s legitimate marketplace for its genuine goods.” The Complaint further notes that the explosion of counterfeiting over the Internet has created an environment which requires trademark owners to file a large number of lawsuits against the same individuals and groups. It is believed that many of the defendants reside in the People’s Republic of China or other foreign jurisdictions with lax trademark enforcement systems. Adidas and Reebok seek injunctive relief, the transfer of infringing domain names to the plaintiffs, and recovery of lost profits and damages, as well as an award of treble damages. The plaintiffs further ask the Court to order that all funds in payment accounts or money transfer systems used in connection with the domain names be surrendered to them in partial satisfaction of any monetary judgment awarded.

Commentary

If history is any guide, many of the defendants in this case will fail to answer the suit, resulting in a default judgment in favor of Adidas and Reebok. Although a default judgment against a foreign entity may seem like a hollow victory, Adidas and Reebok’s willingness to bring such an action signals that these companies take their brand images seriously. Whether the lawsuits will have long-term deterrent effects against counterfeiters is unknown, however, similar suits have provided short term benefits by causing the shutdown of offending websites and the transfer of infringing domain names to the trademark holder.

This article was prepared by Kathy Grant (Katharyn.grant@nortonrosefulbright.com / + 1 210 270 7182) of Norton Rose Fulbright’s United States’ Intellectual property group.