The Los Angeles Times reported that luxury jeans designer and manufacturer, True Religion, won an $864 million judgment against 282 websites reportedly selling fake True Religion products from China through various websites such as TrueReligion4Cheap.com. None of the defendants appeared in court and the District Court awarded a default judgment to True Religion. In addition to monetary damages, all 282 websites were shut down.
An $864 million judgment certainly sounds impressive, but it seems highly unlikely that True Religion will be able to collect on the judgment or ensure that the counterfeiters do not strike again. As reported by the Los Angeles Times, True Religion’s general counsel, Deborah Greaves, noted that, “It’s not unusual to give false names and addresses when registering these sites, …. They can hide behind the Internet and open up new accounts somewhere else.” Consequently, it appears that True Religion was simply trying to serve a warning to counterfeiters because it could not otherwise shut them down permanently.
It is debatable whether such a “warning” is an effective part of an anti-counterfeiting strategy. While True Religion successfully shut down the counterfeiters’ websites, the litigation likely did not reveal any identifying information about the counterfeiters because they never appeared in the case (thus, they truly are able to “hide behind the Internet”). Consequently, it will be difficult, if not impossible, for True Religion to ensure that the counterfeiters do not pick up their operations and move elsewhere. Indeed, True Religion will likely need to take action against these same counterfeiters in the future. Moreover, even if True Religion knew the identity of the counterfeiters, it would likely be prohibitively expensive and difficult to enforce the judgment in China.
As a hugely popular luxury brand, True Religion is no doubt familiar with the tremendous costs and damage caused by counterfeiters and likely employs numerous different methods to combat counterfeiters. Nevertheless, it is difficult to understand the logic behind its case against the 282 Chinese websites as there are other means — besides potentially expensive federal litigation — to successfully investigate and stem the flow of infringing merchandise into the U.S. from counterfeiters. Grimes LLC’s Managing Partner and Founder Chuck Grimes recently published an article discussing the need to develop sound and effective anti-counterfeiting strategies by, among other things, working closely with federal and state authorities to detect, investigate and, ultimately, prosecute counterfeiters civilly and criminally.
