The lawsuit filed by the two companies at the US District Court for Southern Florida in mid-April is directed against 53 online retailers of potential counterfeits. Apart from internet trading platforms such as eBay, Bonanza and iOffer, it focuses especially on alleged counterfeits on the Facebook-owned social media service Instagram.
According to the legal complaint, the 53 retailers not only sold unlicensed imitations of Adidas and Reebok products; they also used unfair competition methods to lure customers away from the original manufacturers’ offers and towards the counterfeits. The suit alleges that, in addition to offering fake goods for sale, the sellers are “employing and benefiting from substantially similar, paid advertising and marketing strategies based, in large measure, upon an illegal use of counterfeits and infringements of [the] plaintiffs’ marks”.
Adidas and Reebok consider this a misuse of their brands that directs streams of internet buyers to the online shops and social media accounts of the alleged counterfeiters. This technique also creates a direct disadvantage for the online presence of the original manufacturers by “increasing the value of the seller IDs and decreasing the size and value of [the] plaintiffs’ legitimate marketplace.”
In the joint action, Adidas and Reebok seek an injunction against the alleged counterfeiters as well as the deactivation of all of their illegally used sales profiles. The compensation claims of the sporting goods manufacturers amount to $2 million each per defendant, for a total of approximately $106 million. According to their complaint, Adidas and Reebok assume that the locations of the alleged counterfeiters are unknown and that they are likely to keep their profits secret or transfer them in order to avoid paying any damages. Therefore, they also call for the assets of the alleged counterfeiters, up to and including the amount claimed, to be frozen in all financial accounts related to the illegal sales and to be directed toward the settlement.
According to the magazine The Fashion Law, the complaint by Adidas and Reebok sheds light on a widespread problem on Instagram and social media in general (cf. our report). “Counterfeit-selling accounts are able to pay for sponsored posts to promote their illegal goods,” criticizes the industry magazine. This is done intentionally and in gross disregard of the rights of the trademark owners.