Hermes Wins $100 Million Damages From Counterfeit Websites

Hermes International SCA (RMS), maker of Birkin handbags and silk scarves, won a judgment that includes $100 million in damages against 34 websites that sold fake copies of its luxury goods.

U.S. District Judge Denise Cote in New York ruled the sites, which didn’t defend themselves in court, sold items that infringed upon at least nine Hermes products including Birkin and Kelly handbags, wallets, watches, belts and jewelry.

Cote said the websites, with names such as HermesBags- Outlet.net, HermesBirkin-Bags.org and HermesOutletStore.Com, were liable for federal trademark counterfeiting and infringement. They had also disregarded her previous temporary orders restraining them from selling counterfeit Hermes items, Cote said.

“Collectively, the defendants sold and offered for sale at least nine distinct types of goods, each bearing numerous counterfeits of the Hermes trademarks and designs,” Cote said in the ruling made public today.

“If plaintiffs discover new domain names registered by the defendants containing one or more of the Hermes trademarks or marks confusingly similar thereto plaintiffs may bring the additional infringing domain names to the court’s attention,” Cote said.

Accounts for Payment

Liquidated accounts of websites held by PayPal Inc. will be tapped to award Hermes the damages, Cote ruled. She said Internet service providers and merchant account providers, as well as third-party processors and search engines including Google Inc., Microsoft Corp.’s Bing and Yahoo! Inc., must immediately stop providing services to the defendants or links to their sites.

The judge also directed social media companies including Facebook Inc. (FB) and Twitter Inc. to “de-index” and remove from any search pages links to the infringing defendants.

The online sale of counterfeit clothes, bags and jewelry costs luxury goods makers about $30 billion a year, Tiffany & Co. and other retailers claimed in a U.S. lawsuit.

Hermes won a lawsuit in 2008 claiming EBay Inc. hadn’t done enough to stop a vendor from selling fakes of its handbags. The same year, a Paris court ruled against EBay, awarding LVMH Moet Hennessy Louis Vuitton SA (MC), the world’s largest luxury-goods maker, 40 million euros ($51.3 million) in damages for trademark violations and harm to its brands’ image. The court halted the sale of some perfumes and cosmetics to French buyers.

A French appeals court in September 2010 slashed the fines to 5.6 million euros while upholding the lower court’s findings. That ruling, part of a continuing dispute between EBay and French brand owners over online sales, has been appealed.

The case is Hermes International v. John Doe, 12-CV-1623, Southern District of New York (Manhattan).

To contact the reporter on this story: Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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