District Court Orders Seizure of Foreign Domain Names Associated with the Sale of Counterfeit Cigarettes; Subjects Third Parties GoDaddy and Western Union to Order
Ashok Chandra | Bloomberg Law
In a trademark infringement and counterfeiting action, the U.S. District Court for the Southern District of Florida issued a preliminary injunction enjoining foreign defendants from using plaintiff’s trademarks in domain names, metatags, websites, links to other websites, and search engine databases. The court also ordered other broad remedies, including directing Western Union Financial Services, Inc. to divert money transfers made by U.S. consumers to three of the named defendants and ordering the domain name registrar GoDaddy.com, Inc. to hold the domain names in trust during the action and to redirect the domain names to a website containing a copy of the complaint, summons, and other court documents. This decision follows a recent case in which the U.S. District Court for the District of Nevada seized domain names associated with websites that sold counterfeit Chanel goods and ordered other relief similar to the instant case. See District of Nevada Orders Search Engines and Social Media Sites to De-Index Domain Names Linked to Sites That Sell Counterfeit Chanel Goods, Bloomberg Law Reports – Technology Law, Vol. 3, No. 25 (Dec. 12, 2011). Based on these decisions, it is likely that more and more companies will attempt to seek broad preliminary injunctions or other such relief in cases involving the sale of infringing items on foreign websites.
Websites Allegedly Sell Counterfeit Cigarettes
Plaintiff Philip Morris USA, Inc. owns several trademarks in connection with the sale and manufacture of cigarettes. Defendants allegedly include individuals located in the People’s Republic of China who operate commercial websites under domain names including marlborocigarette.biz, marlboro-gold.biz, and marlborowholesale.com, among others.
Plaintiff hired a private investigator to investigate counterfeit products sold on the websites associated with defendants’ domain names. The private investigator ordered cigarettes from the websites, and a Philip Morris representative examined the products and determined that they were not genuine Philip Morris cigarettes. Plaintiff then filed a complaint alleging trademark counterfeiting and infringement, and also filed an ex parte application for Entry of a Temporary Restraining Order, Preliminary Injunction, and Order Restraining Transfer of Assets Tied to the Counterfeiting Operation.
Court Orders Seizure of Domain Names
To obtain a preliminary injunction, a plaintiff must demonstrate: “(1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury if the injunction were not granted; (3) that the threatened injury to the plaintiff outweighs the harm an injunction may cause the defendant; and (4) that granting the injunction would not disserve the public interest.” Levi Strauss & Co. v. Sunrise Int’l Trading Inc., 51 F.3d 982, 985 (11th Cir. 1995).
The court found that plaintiff had a strong probability of proving at trial that potential customers could be confused by defendants’ “advertisement, promotion, sale, offer for sale, and/or distribution of cigarettes bearing counterfeits, reproductions, and/or colorable imitations of the Philip Morris USA Marks.” Philip Morrisat 5. “Given the ease with which Defendants may transfer and/or redirect commercial activity from one Internet Domain Name to another,” the court observed, “there is good cause to believe that unless the preliminary injunction is granted, Plaintiffs ability to obtain meaningful relief will be thwarted.” Id.
The court thus ordered that each defendant and their agents be enjoined from manufacturing and selling products bearing the Philip Morris marks or from destroying any existing inventory bearing the fraudulent marks. Defendants were also enjoined from using the Philip Morris marks “within domain name extensions, metatags or other markers within website source code, from use on any webpage . . ., any advertising links to other websites, from search engines’ databases or cache memory, and any other form of use of such terms which is visible to a computer user or serves to direct computer searches to websites” registered, owned, or operated by the defendants. Id. at 6. Pursuant to the order, domain name registrars must transfer the subject domain name certificates to plaintiff’s counsel for deposit with the court, and must transfer the domain names to GoDaddy, which must “hold the registrations for the Subject Domain Names in trust for the Court during the pendency” of the action. Id. at 9. Additionally, GoDaddy must redirect the domain names to a website featuring the complaint, summons, and other documents associated with the present dispute. Plaintiff must maintain a bond of $100,000 as payment for damages to which defendants may be entitled in the event of a wrongful injunction. Finally, the order directs Western Union to divert all money transfers sent by U.S. consumers to three named defendants and to hold such transfers until otherwise directed by the court.
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