September 22, 2011, 4:54 PM

Chanel accuses hundreds of e-retailers of selling counterfeit goods

The luxury goods retailer claims damage to Chanel’s reputation.

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Chanel Inc. went on the attack against counterfeiting this week, naming more than 400 e-commerce operations as defendants in a lawsuit filed in U.S. District Court in Las Vegas. The luxury goods manufacturer and retailer alleges the web sites—many of them engaged in e-commerce and based in foreign countries—are cashing in on Chanel’s reputation by producing and counterfeit Chanel products and selling them online.

Chanel wants the court to issue an injunction stopping the defendants and their associates from manufacturing, marketing and distributing lookalikes that bear Chanel’s trademarks. The suit says the defendants wrongfully reproduce and counterfeit Chanel’s trademarks for the purposes of duping and confusing consumers and, of course, to make money. “Defendants’ Internet-based web site businesses amount to nothing more than massive illegal operations, infringing on the intellectual property rights of Chanel and others,” Chanel says in the suit. Other makers of luxury goods, including Louis Vuitton and Tiffany & Co., have filed similar suits.

The suit also asks the court to make the Internet Corporation for Assigned Names and Numbers, or ICANN, turn over to Chanel or permanently disable the web site domain names that Chanel says infringe on its trademarks, calling them essential components of the defendants’ counterfeiting and trademark-infringing activities. ICANN oversees the Internet address system. The group had no immediate comment.

The suit says the counterfeiters illegally use Chanel’s trademarks to achieve good rankings in search engine results, which helps to draw consumers to their sites. Because the sites named in the suit appear in natural search results on search engines like Google and Bing, Chanel is also asking the court to give notice to search engines to stop sending traffic to those sites. Chanel says the defendants’ search engine activities raise the cost for Chanel to legitimately market its own products online. “The defendants are, upon information and belief, all employing substantially similar, and oftentimes coordinated, SEO strategies based, in large measure, upon an illegal use of counterfeits and infringements of the Chanel marks,” the company says in the suit. “By their actions, the defendants are depriving Chanel and other third parties of the ability to fairly compete for space within search engine results.”

A number of the About Us and Contact Us pages on a selection of the e-retail web sites named in the suit say the businesses are based in China. TheFirstBag.com, for example, shows images of designer handbags, including Chanel designs, on its home page and sells a knockoff of the brand’s Caviar Kelly handbag for $120. A legitimate Caviar Kelly retails for about $1,500. A Google search for TheFirstBag.com reveals that the e-retailer uses the Chanel name in its header text and as a featured subcategory viewable on the Google search results page.

An analysis from brand protection firm MarkMonitor early this year of 21 e-commerce sites selling counterfeit luxury goods said those 21 sites combined receive an average of 98,000 visits each day, or almost 36 million per year.

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