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Third Party Payment Agencies: Beware!

13 June 2011 No Comment

Tory Burch, LLC has been awarded a $164 million judgment against online counterfeiters. In the suit, the fashion label named 41 cybersquatters, primarily of Chinese origin, which it discovered were linked to 232 domain names, including Web sites like “ToryBurchOutletShop.com.” Cybersquatting is registering or using a domain name in bad faith to profit from the goodwill of a trademark belonging to someone else (according to the United States Anticybersquatting Consumer Protection Act).

A New York federal court awarded the firm damages against operators of Web sites selling fake Tory Burch ballet flats and other footwear, handbags and accessories. While there is almost no chance of getting the money from the sites, the award is believed to be the largest sum of damages ever issued to a fashion firm in the battle against online counterfeiters.

In addition to monetary damages, the court ordered that 232 domain names used to sell Tory Burch fakes be permanently disabled and turned over to the New York-based fashion label. More importantly, the ruling allows the brand to disable any additional offending sites created by the defendants in the future without needing a new lawsuit.

While it is extremely difficult to locate and collect from cybersquatters, companies are instead relying on third party liability when seeking to hold online counterfeiters responsible. This trend is likely to continue, as brands like Tory Burch have been permitted by courts to disable defendants’ web sites and solicit money from involved third parties (i.e. third-party payment agencies like PayPal) until they collect their full sum of damages.

 

Danielle Phillips

Fashion Law Contributor

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