Nike, Ramones Wage Fake Merchandise Fights in Empty Courtrooms

Judge John Robert Blakey wasted little time before deciding from the bench to fault a number of online store operators for allegedly selling fake Oakley sunglasses.

“Have you heard from the defendants?” Blakey asked at the hearing on June 28 as he granted a preliminary injunction to stop the sales.

“No, your honor,” responded Thomas Juettner, Oakley Inc.’s lawyer at Greer Burns & Crain Ltd.

For Blakey, the case is part of a growing pattern. Federal judges in Illinois have a full slate of these copyright and trademark infringement lawsuits from punk forefathers The Ramones, shoemakers Converse Inc. and Nike Inc., and other brands. They’re repeatedly handing courtroom victories to these labels with default judgments against defendants who never bother to show up at court.

And they’re not the only ones. In plaintiff-friendly federal jurisdictions in Illinois, Georgia, and Florida the lawsuits are piling up.

“Without these lawsuits, it’s a game of whack-a-mole. You can send complaint letters, but the defendants keep coming back with different names and maybe slightly alter a listing. It never ends, and there’s no real consequence to them,” said Greer Burns & Crain Ltd. lawyer Justin Gaudio, who represents brands Ralph Lauren Corp., Dyson Technology Ltd., SanDisk LLC, NBA Properties Inc., and others in the infringement cases.

Sophisticated pirates operating from jurisdictions with lax intellectual property-law enforcement such as China hide behind anonymous websites and rip off brands with impunity, selling knock-off products that deprive owners of iconic brands of global sales.

But the cases aren’t so straightforward. The lawsuits raise questions about how courts can ensure largely anonymous online stores are properly served with notice they’re being sued and given an adequate opportunity to defend themselves.

“That’s the question, is there fair due process? And the judges are finding that there has been,” copyright and internet marketing lawyer Mike Rodenbaugh said. “In a sense, their hands are tied; there’s no other way to deal with this problem. You just either let it go or you side with the brand owners that are spending good money trying to stop it.”

Court Action

In Chicago, no fewer than seven US District for the Northern District of Illinois judges are currently assigned cases with similar fact patterns: Anonymous sellers using sites operated by online marketplaces such as Amazon.com Inc., Alibaba Group Holding Inc., and Walmart Inc. are offering for sale alleged counterfeit items or items infringing on protected copyrights.

A favorable 2022 ruling by the US Court of Appeals for the Seventh Circuit involving professional and college baseball, basketball, football, and hockey licensing organizations made Chicago’s federal court system a popular jurisdiction for the infringement cases.

Lawyers representing copyright and trademark owners said the only meaningful way to combat the counterfeiting is through court action. If required by court order, the online marketplaces will take down an online store selling counterfeit goods. Federal judges can also order the marketplaces to essentially freeze accounts associated with the sellers, and if the plaintiffs prevail, those funds can attach to the judgment.

Online marketplaces are beginning to join the fray. In June Amazon announced it filed with Therabody Inc. a lawsuit in the US District Court for the Western District of Washington against an alleged crime syndicate that attempted to sell counterfeit Therabody massage devices on an Amazon online store.

The lawyers said two key elements that help Chicago federal judges clear their dockets are their district’s interpretation that many defendants can be named in a single complaint, even though the plaintiffs don’t know much if anything about their relationships to each other.

The other element is properly notifying defendants of the court proceedings. The Illinois judges generally will agree with plaintiffs that the defendants have been served if they were sent emails—no in-person service or confirmation the email was received required.

Little Choice

“An enormous body of case law” encourages judges to decide lawsuits based on each side’s arguments rather than through default judgments—cases where a judge rules against parties that neither make an appearance in court nor answer the compliant or ask for a dismissal—to properly administer justice, said Paul Grimm, a former Maryland federal judge and current Duke Law School professor.

“If we didn’t have default, then we would have no recourse. And that seems like an unfavorable outcome,” he said in an interview. Default decisions are “disfavored but necessary,” Grimm said.

That’s just how Judge Thomas Durkin handled a case in May involving Converse. He ruled Converse presented to the court “screenshot evidence confirming that each Defendant e-commerce store does stand ready, willing and able to ship its counterfeit goods to customers in Illinois bearing infringing and/or counterfeit versions of the Converse Trademarks.”

Durkin ruled plaintiffs reasonably tried to send notices of the court proceedings to the defendants and that the defendants didn’t answer the complaint or appear “in any way.” He ordered the marketplaces, including EBay Inc., to pull down the defendants’ stores on their sites, for the defendants to send all profits made on the counterfeit goods to the brand owners, and imposed a $200,000 fine on each defendant.

For some, the results speak for themselves. Gaudio said his firm’s successes against defendants is making a difference.

“After a few cases we see the marketplace cleaned up for many of our clients,” he said.