November 5, 2012, 4:46 PM

Coach wins a $257 million judgment against web counterfeiters

The consumer brand manufacturer sued nearly 600 companies and individuals.

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A federal court in Chicago has awarded consumer brand manufacturer Coach Inc. a $257 million judgment in a lawsuit against nearly 600 companies and individuals that Coach alleged were selling counterfeit merchandise with its trademark.

On Friday Judge Robert M. Dow Jr., for the United States District Court for Northern District of Illinois, Eastern division, signed the final paperwork that awarded Coach, No. 158 in the 2012 Internet Retailer Top 500 $200 million in statutory damages against the owners of 573 companies or individuals with web sites that Coach alleged was selling knock-off Coach merchandise. Coach was awarded $2 million for each web site that sold merchandise with a counterfeit Coach trademark and $57 million in additional damages.

The judge also awarded Coach ownership of all of the domain names alleged to be selling counterfeit Coach merchandise and gave the nearly 600 companies named in the final judgment 10 days to send Coach a partial payment of any money held in a PayPal, Western Union or related account. In addition to the award, obtaining the domain names used by defendants in this case is a tremendous achievement,” says Coach vice president and deputy general counsel Nancy Axilrod. “All the illegal web sites operated by defendants include the word ‘Coach’ in the domain name which potentially confuses consumers into believing that they are purchasing genuine Coach merchandise.”

Coach filed suit in 2009 and considered the Illinois litigation a key component of its “Operation Turnlock,” a program the manufacturer says is designed to make business increasingly more difficult for those involved in any aspect of trafficking in counterfeit goods. “The magnitude of this judgment underscores the severity and illegality of counterfeiting, and sends a clear message that our courts will enforce the law,” says Coach executive vice president and general counsel Todd Kahn. “This judgment should serve as a warning to everyone involved in any aspect of trafficking in counterfeit goods that Coach will find you and will seek to impose the harshest penalties available against you.”

In papers filed in federal court the final documents list the URLs, company names, individual names, e-mail addresses and addresses of the 573 violators Coach alleges sold counterfeit merchandise online. Legal analysts who follow e-commerce litigation say the judgment sends a strong “beware” message to any entity selling counterfeit merchandise. But even with definitive contact information, it may still be difficult for Coach to track down and collect all of the money awarded by the court. “Winning a default judgment is one thing and collecting on the judgment is quite another,” says Peter Brann, a partner with Lewiston, ME-based law firm Brann & Isaacson. “The judgment says just how seriously Coach takes this issues and what the consequences are for counterfeiters, but there can be difficulties in collecting.”

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