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Web Sale of Fake Uggs Yields Likely Harm, Warrants Domains Transfer, PayPal Seizure

Tuesday, January 22, 2013

One hundred anonymous entities' sale of counterfeit Ugg products through domain names incorporating the mark is likely to cause consumer confusion and irreparable harm to the brand, supporting the brand's request for a preliminary injunction, the U.S. District Court for the Northern District of Illinois ruled Jan. 16 (Deckers Outdoor Corp. v. Doe, N.D. Ill., No. 1:12-cv-10006, 1/16/13).

The court, building upon its Dec. 20 temporary restraining order, concluded that the defendants likely infringed the plaintiff's Ugg mark and registered and used domains containing the mark in bad faith.

Ugg Maker Sues for Infringement

Deckers Outdoor Corp. manufactures and sells Ugg branded footwear. Deckers sells Ugg products through brick and mortar retail outlets, and through its website. Deckers has registered the Ugg trademark in the United States and in more than 100 other countries.

Deckers filed a complaint against the anonymous defendants whom it alleged were foreign nationals that were offering to sell counterfeit Ugg products on the internet.

Deckers was granted a TRO in December. Deckers then sought a preliminary injunction.

Counterfeit Sites Likely to Cause Confusion

Deckers bore the burden of demonstrating that it was likely to succeed on the merits of its trademark infringement claim in order to entitle it to a preliminary injunction, the court said.

The court turned to the likelihood of confusion test set forth in AutoZone Inc. v. Strick, 543 F.3d 923, 88 U.S.P.Q.2d 1225 (7th Cir. 2008), in order to determine if Deckers was likely to prevail on its trademark infringement claim.

Because the evidence indicated that the defendants were in fact selling counterfeit products, the court applied a truncated confusion test before determining that Deckers was likely to succeed on its infringement claim. Deckers and the defendants advertise and sell their products online, targeting consumers looking for Ugg merchandise, the court said.

“Those consumers are diverse with varying degrees of sophistication, and they are likely to have difficulty distinguishing authentic UGG merchandise from counterfeit products,” Magistrate Judge Maria Valdez said.

The court did not require Deckers to demonstrate actual consumer confusion. Such evidence was not required to demonstrate that a likelihood of confusion exists, given the compelling evidence that the defendants attempted to palm off their goods as genuine Ugg products, the court said.

The defendants' use of the well-known mark with the apparent intent to divert consumers also supported the plaintiff's claim under the Anticybersquatting Consumer Protection Act, 15 U.S.C. §1125(d).

Use of 'Ugg' in URLs Demonstrates Bad Faith

Many of the defendants' domain names incorporated the word “Ugg” and the defendants used copyrighted photographs of Ugg products and logos to sell counterfeit versions of Ugg footwear and other products. Those facts demonstrated the defendants' bad faith intent to profit, the court held.

The likelihood of irreparable harm required to support a preliminary injunction is generally presumed in trademark infringement cases, said. But the court went on to find a probability of irreparable harm in the significant resources the brand has expended in promoting its products.

The court found that the unauthorized use of the Ugg trademark was likely to result in irreparable harm to Ugg. The court noted the brand's popularity, and extensive media coverage of the brand in popular magazines like Time, Vogue, and Elle.

The court thus enjoined the defendants from manufacturing, importing, or offering to sell products bearing counterfeit UGG marks. It also granted the plaintiff's request for the continued freezing of the defendants' PayPay accounts, and continued control of the defendants' domain names.

Deckers was represented by Kevin W. Guynn of Greer Burns & Crain, Chicago.

By Amy E. Bivins


Text is available at /uploadedFiles/Content/News/Legal_and_Business/Bloomberg_Law/Legal_Reports/12cv10006_11612(1).pdf.

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