Intellectual Property

Counterfeit Litigation Comb(s)over

IP owners concerned about finding themselves in a situation where they are lambasted as IP bullies should insist on signing off on each and every defendant that their counsel recommends suing.

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Intellectual PropertyIn a world still filled with too much pain, the power of music to unite and uplift should never be underestimated. My suggestion, therefore, is to watch this performance before, or even as, you read this column. Then watch it again. One of the most haunting songs of all time, covered and performed live in front of an adoring crowd by an artist at the peak of his powers — a ray of beauty in the dark of winter. Fortified by that wonderful diversion, we can now talk about the most-recent example of the interesting things that happen when IP litigation intersects with celebrity. I am referring, of course, to the widely reported apology by country music superstar, Luke Combs, to a fan named Nicol Harness. Why? Because — unbeknownst to Combs — she had been ensnared in a mass-defendant anti-counterfeiting lawsuit filed by Combs’s legal team, which had resulted in a default judgment of $250,000 against her based on the sale of some home-made mugs that she sold on Amazon to other Combs fans.

As is common in these types of anti-counterfeiting cases, things moved very quickly. Combs was represented by Vogt IP, which claims a “100% success rate; injunction issued in every case” on its website. The case was filed, naming 45 defendants, all by their online storefront “handles,” in early October of this year. By November 15, the district court judge had entered default final judgment, including “statutory damages from each of the Defaulting Defendants in the amount of two hundred fifty thousand dollars ($250,000) for willful use of counterfeit Luke Combs Trademarks on products sold through at least the Defendant Internet Stores.” The default order also instructed the online storefronts on which the accused products were sold, (e.g. Amazon and Walmart’s third-party selling platforms), to permanently enjoin the sellers and to release the funds they had previously seized from those sellers to Combs in satisfaction of the judgment.

For a home-based seller like Harness, the consequences of the judgment were devastating. Local news media began reporting on her plight, including the fact that the purported emailed notice of the lawsuit had gone into a spam folder. It was only her attempts to get her $5,500 seized by Amazon released that revealed the fact that she was litigating against one of the most popular musicians in the United States. To his credit, Combs found out about her last week and took immediate action. First, he released an Instagram apology to Harness to his nearly 6 million followers. That same day, a notice of dismissal was entered against Harness’ storefront and two other defendants. Lastly, Combs took it upon himself to help Harness financially, by sending her double what Amazon seized ($11,000) and also putting up for sale an official tumbler on his website, with a promise that “NET PROCEEDS FROM THIS PRODUCT WILL BE DONATED TO NICOL HARNESS AND HER FAMILY.” (Yes, I ordered one. I am a sucker for IP memorabilia and for the victims of IP bullying, even when it was fixed in good spirit and form by the perpetrator.)

All in all, plenty of elements of a feel-good holiday story have been reported on in connection with these events. At the same time, I am in agreement with the exhortation on X by Northeastern Professor Alexandra Roberts that this saga should inspire us as IP professionals to “fix some of the other probs that got us here too tho.” Those problems include the question of whether courts are applying enough rigor into ensuring that service is properly made in mass anti-counterfeiting actions, for one. There is also the question of whether we as an IP community should be doing more to help, whether on a pro bono basis or otherwise, accused storefront owners who get caught up in these types of cases. These are not easy questions to answer, of course, especially for someone like myself that has written extensively on the scourge of counterfeiting and the need for effective policing of this global problem. But perhaps we should be doing more to consider the due process rights, particularly of Americans that are not causing significant material harm to the IP owner, in these situations.

What may bother certain folks the most about this situation, especially in light of the extensive coverage of a similar problem in the patent context recently, is Combs’s admission that he was unaware that he had sued Harness in the first place. I am not sure that hysterics about this fact are warranted, considering the challenge of policing sophisticated counterfeiters. Nor am I suggesting that anyone did anything wrong in this situation, especially where the legal process was entrusted by the client to counsel with significant experience and a track record of success in these types of cases. Yet, some will perhaps be critical of the approach that led to the outcome, as we saw with the recent statements by Judge Connolly in the patent context. On the one hand, there should be nothing wrong with an IP owner instructing his counsel to police infringement wherever counsel finds it and develops a good-faith basis for taking legal action against that infringement. Under that line of thought, we wouldn’t expect a busy business owner, or a celebrity, to become a private investigator reviewing all evidence of counterfeiting — more so when that counterfeiting is happening over anonymous online storefronts.

On the other hand, it is distasteful in the eyes of some when you have a situation where lawyers are acting on behalf of less-than-fully informed clients, as apparently happened here and in the IP Edge situation. While it may be hard to find the correct balance on this point, I think that IP owners concerned about finding themselves in a situation where they are lambasted as IP bullies should insist on signing off on each and every defendant that their counsel recommends suing. And counsel in these types of matters should also make sure that their clients understand the risk that certain defendants may end up being sympathetic targets — where the cost of going after them, particularly from a reputational end, exceeds the value of what there is to recover from them.

Ultimately, my biggest hope in these situations is that the media coverage leads interested readers down the path of increasing their IP literacy. It does not matter whether you favor IP owners like Combs taking aggressive action against counterfeiters or are sympathetic to under-resourced defendants like Harness. In fact, you could feel for both sides in this situation, while taking comfort in the fact that all seems to have ended well. (Maybe as you take a sip of a warm beverage from your Luke Combs tumbler.) Either way, we should all be rooting for increased IP literacy, as well as the publicity leading to more discussion of common-sense improvements to the way mass anti-counterfeiting claims are pursued.

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Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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