Class Action Lawsuit Filed Against Coach Over Bogus Takedowns, Trademark Bullying

from the nicely-done dept

Mon, Feb 14th 2011 7:24am — Mike Masnick

We've seen so many cases of trademark bullying, and it's so rare to see people fight back, that it's interesting to see it happening -- and even more surprising to see it done as a class action suit. Eric Goldman points us to the news that this class action lawsuit has been filed against luxury goods maker, Coach, for apparently issuing takedowns to eBay for perfectly legitimate second-hand sales, while also threatening those who put up those items. I'll let the lawsuit itself (the full filing is embedded below) explain the basics:

Without investigating the validity of its allegations, Coach wantonly accuses consumers of infringing its trademarks by selling counterfeit Coach products. Coach apparently monitors online retailers such as E-Bay, looking for ads from consumers selling second hand Coach products. In response to such ads, Coach delegates a New York law firm to launch a threatening letter to the consumer. These letters accuse the consumer of trademark infringement, threaten legal action, and demand the immediate payment of damages to Coach in "settlement" of Coach's threats. At the same time, Coach (or its New York law firm) informs the online retailer that infringing merchandise is being sold on its website. In many cases, this causes the online retailer to involuntarily remove the allegedly infringing ad, and to disable the consumer's online account. This destroys any chance the consumer had to sell the Coach product second hand, and otherwise damages the consumer.

In many cases (such as that of the lead plaintiff identified here), Coach's allegations of infringement are flatly false. It appears that Coach fails to conduct even a minimally reasonable investigation into its counterfeiting claims before threatening legal action. For example, the lead plaintiff identified in this Complaint is a former Coach employee, who owned, and tried to sell, genuine and legitimate Coach products It was entirely legal for her to do so. Coach's threats against her were false, reckless, and unwarranted.

We've definitely seen attempts to use trademark law to block the legitimate sale of secondhand goods. It's a bad trend that needs to be stopped, and hopefully lawsuits like this might do the trick. Unfortunately, in the past few years, we've seen some really underhanded tricks used by producers to effectively block secondhand sales and first sale rights through legal trickery. It's not clear if that kind of defense will be used here.

The lawsuit itself wants a declaratory judgment that selling legitimate Coach goods secondhand does not infringe... but also includes a defamation claim, pointing out that accusing someone of infringement when it's not true could be seen as libelous. That part seems like a stretch, but I'll be curious to see how the court rules.

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Filed Under: auctions, trademark, trademark bullying
Companies: coach, ebay

12 Comments

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Anonymous Coward, 14 Feb 2011 @ 7:49am

I think they are making a mistake going down this road, because I suspect that Coach will easily find sellers of counterfeit good in the "class", and render it meaningless.

For Coach, unless a seller is one of their approved sales agents, the vendor isn't selling real Coach products.

There is little other way for them to tell on the surface. Perhaps Ebay needs to be a little more strict on marking "Official Licensed Seller" and "Second Hand Products"?
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iceberg, 14 Feb 2011 @ 8:12am

Bose
A company called "IPAssure" does "Brand Protection Services" for Bose, demanding the take-down of eBay listings, accusing second-hand eBay sellers of selling counterfeit Bose equipment and threatening them with legal action unless they provide the invoice from the original seller, something which isn't always possible nor incumbent upon the seller to provide to anyone who comes asking.

But this legal strategy is a win-win for Bose- they want to control the Bose market, by ensuring that all Bose retailers are "authorized dealers" who are contractually limited and controlled by Bose. Even if Bose is wrong about the actual product not being counterfeits, in the course of legal discovery they will uncover which authorized seller was skirting their contractual duties and which the second-hand dealer would not want to happen since he may then be cut-off from his supplier.
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Richard (profile), 14 Feb 2011 @ 8:21am

Burden of Proof
Basically what has happened is that these takedown mechanisms have created a "guilty until proven innocent" situation.

The abuse of civil law that can happen when one party is much richer than the other has a similar effect. There is a case for applying criminal law standards here - since major corporations are as powerful (relative to the individual) as the state they should be made to obey the same rules.
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WDS (profile), 14 Feb 2011 @ 8:34am

Defining the Class
Am I missing something, or is the complaint saying that the lead plaintiff is a former employee of Coach, but later in the complaint when they define the class they specifically exclude any employee or former employee of the defendant.
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Josh in CharlotteNC (profile), 14 Feb 2011 @ 9:06am

Re:
For Coach, unless a seller is one of their approved sales agents, the vendor isn't selling real Coach products.

Right of first sale doctrine. If the product is genuine, Coach has no standing to dispute the sale. If I want to sell my car on Ebay, Chevrolet can't stop me by issuing a takedown notice.

There is little other way for them to tell on the surface. Perhaps Ebay needs to be a little more strict on marking "Official Licensed Seller" and "Second Hand Products"?

That sounds an awful lot like 'Youtube should automatically know which uploaded videos are authorized by Viacom' when Viacom can't even tell which are.
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Anonymous Coward, 14 Feb 2011 @ 9:40am

Re: Re:
That would be true if the product was clearly offered up as "used". Selling of a new product without being a dealer may be an issue (misappropriation of trade mark, example). Your Chevy example fails because it is clear you are not a Chevy dealer selling a new car, you are some dude selling his used El Camino.

That sounds an awful lot like 'Youtube should automatically know which uploaded videos are authorized by Viacom' when Viacom can't even tell which are

No, that would be more like asking companies to prove their dealer status, or have all of their products marked "USED / SECOND HAND / NOT OFFICIAL DEALER". It isn't a big deal, rather it's a good way to keep consumers informed.
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Anonymous Coward, 14 Feb 2011 @ 9:42am

Of course none of this would be an issue if people weren't so vain and had hundreds of dollars to spend on a stupid purse with a bunch of shinnies on it probably made by children in some third world country.
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Chronno S. Trigger (profile), 14 Feb 2011 @ 12:17pm

Re:
"I think they are making a mistake going down this road, because I suspect that Coach will easily find sellers of counterfeit good in the "class", and render it meaningless."

Shoot them all and let god sort it out? Any means are justifiable as long as we get some of the bad guys, doesn't matter how many innocent people get hit along the way?

Coach does not have a defense here. It doesn't matter if they do manage to turn up some truly illegal things here, they started accusing people without any research or evidence. Coach is in the wrong and they should be punished. If they would like to pursue legal recourse against those who are truly guilty, they are welcome to threw due process.
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Paul Keating, 15 Feb 2011 @ 3:59am

Anonymous Coward - logic lacking
Anonymous Coward, Feb 14th, 2011 @ 9:40am

Exactly where is the logic in your response?

"That would be true if the product was clearly offered up as "used". Selling of a new product without being a dealer may be an issue (misappropriation of trade mark, example). Your Chevy example fails because it is clear you are not a Chevy dealer selling a new car, you are some dude selling his used El Camino."

There is no legal obligation on the seller to identify him/herself at all here. Nor is there any legal authority for Coach attempting to control the resale. It is their obligation to determine if something is or is not infringing. There is a penalty for ready, fire, aim

That sounds an awful lot like 'Youtube should automatically know which uploaded videos are authorized by Viacom' when Viacom can't even tell which are

No, that would be more like asking companies to prove their dealer status, or have all of their products marked "USED / SECOND HAND / NOT OFFICIAL DEALER". It isn't a big deal, rather it's a good way to keep consumers informed.

Again, where is the legal basis or logic in such a statement? You really want everyone to do all of the work for brand owners don't you?

I hope this type of action persists. I also suggest that the plaintiff's counsel consider claims such as tortious interference and perhaps even a RICO claim based upon the "settlement" demand made to resolve claims that may be completely unsubstantiated.

PRK
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btr1701 (profile), 15 Feb 2011 @ 12:37pm

Re: Genuine
> For Coach, unless a seller is one of their
> approved sales agents, the vendor isn't
> selling real Coach products.

The it's a good thing Coach doesn't get to set the legal standard by which such things are judged, huh?
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ltlw0lf (profile), 15 Feb 2011 @ 1:47pm

Re: Re: Re:
No, that would be more like asking companies to prove their dealer status, or have all of their products marked "USED / SECOND HAND / NOT OFFICIAL DEALER". It isn't a big deal, rather it's a good way to keep consumers informed.

I don't know, maybe I am missing something, but when I want a new product from a dealer I can trust, I don't think ebay has ever entered my mind.

When I buy stuff off ebay, I expect they are used/second hand/not official dealer. I know I am not alone in this belief. I think the burden of proof should be the opposite, in that companies that are selling brand new merchandise, who are authorized dealers, should plaster that message all over their products on ebay, and then the company should go after those who are lying about their new/authorized dealer status.
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marlene, 23 Apr 2011 @ 2:48pm

Re: Burden of Proof
Thank you, some guy came into my salon with about 5 discontinued Coach bags, I could not tell the difference, but to be sure I paid him with a business check. Put the bags out only one sold to a coach guy, now my life has changed this year and last, they sued me without a conversation for millions, never came to talk to me,I am 61 years old working my butt off in this economy to survive, they sued the landlord, and tagged anybody they could. My business has suffered because I could not have the ambition to continue with this stress, they put me through a 6 hour deposition, asking me what I did since 1967, the year I graduated from Cardinal Dougherty, they covered my Divorce, tagged my assets, controled my life for a year and a half. Now I went to the doctors because I fell so many times this year crashed my car from stress only to find out I had over 5 mini strokes. Any money the store made this year went to a attorney, now I am behind in my rent...61 years old and they have stolen my life, if you know how to help please contact me, OH my daughter 40 yrs old is on chemo and I am now responsible for her 5 children...Do I have any rights? They found out I have a beach house of which I purchased 14 yrs ago, they need to know how, and I can't sell it touch it..truly Coach has hurt my business and my family and me..Help if you can..I did find out they were fake, but coach had to send them to check if they were real or not..you cannot tell?Excuse the spelling etc..hurt my hand in accident from stress...cannot type..
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