Nike Gets Personal Over Counterfeit Shoes

Matt Lonsdale is a JD candidate at Dalhousie University

In late 2009, the UK Border Agency (UKBA) seized several shipments of counterfeit Nike athletic shoes originating from an unknown source within China and destined for customers within the UK. The UKBA notified Nike of the seized shipments, and Nike brought an action for trademark infringement against the UK customers. The majority of the claims were either settled out of court or went undefended. The sole case in which a defence was entered was resolved in October by summary judgment in favour of Nike. The court held that the defendant’s defence that he did not know the shoes were counterfeit had no real chance of succeeding at trial. The language of the Trademarks Act makes it clear that “[W]hether or not the defendant believed the goods were authentic is irrelevant to the question of trade mark infringement”.

The case is interesting because of the relatively small financial value of the infringement:  the defendant was an individual who had ordered a single pair of shoes over the Internet. The goods had been seized upon entry to the UK and had never reached the defendant. Nike defended their decision to bring the suit by noting that there were no viable alternative methods for them to enforce their rights. Judge Birss accepted this, though he noted that “[I]t may be questioned whether the sledge hammer of these proceedings is necessary in order to crack this nut of this magnitude”.

While he acknowledged their right to bring the suit, the relatively small amount at stake did play a part in the judge’s decision not to make any order as to costs. A settlement had been offered by Nike’s solicitors, the terms of which were that the defendant must “give an undertaking not to infringe in future, consent to destruction of the goods held by the UKBA and to provide details of where the goods had been purchased”. Nike’s solicitors also indicated that if this settlement was refused, they would seek a summary judgment and costs in court. It is unclear at what point the defendant replied to the letter indicating his acceptance of the offer, but as Nike did indeed seek a summary judgment with costs, it was apparently not within the deadline that their solicitors had in mind. Judge Birss held that the defendant had attempted to satisfy all the terms of the settlement and that even if the defendant’s letter indicating acceptance of the settlement arrived after the application for summary judgment was served, “it still seems to me that some sort of engagement with the Defendant would have been preferable in the circumstances”.

As one of the world’s largest manufacturers of athletic apparel and equipment, Nike is no stranger to the problem of dealing with counterfeit goods. Trade groups have placed the cost of counterfeiting operations to the Canadian economy in the billions, although figures like this have also been met with some criticism.

  1. I just returned my recently purchased gift of a pair of Nike shoes, my child nor any member of my family will ever wear a product with the Nike symbol on it again.

    Way to go Nike, attack innocent people and internet shopping in one disgusting shot.

  2. I think it needs to be made clear here that Nike didn’t sue him for monetary damages.

    The settlement they offered was the destruction of the goods, information on the site used and a promise not to re-offend. The judge, it seems, ordered just that.

    No costs were awarded. Each side paid their own legal fees, and the plaintiff represented himself so it’s only really an issue of his time and travel costs.

    Nike never attacked him. The trainers would have been destroyed by customs regardless. Nike basically sued for information so they could go after the sellers, and for the defendant’s word that he wouldn’t just buy a second pair. It’s now down to him to get his credit card company to refund the cost of the trainers.

  3. They could have turned this into positive PR by just offering him a pair of real Nike trainers in return for the same info, which is the approach many software companies take when people are ripped off by bogus Chinese sites.

  4. well, put it this way.

    Nike had no way of knowing whether Mr Bateman was an unfortunate individual who ended up having paid for a knock-off he never got, or maybe he was a counterfeit goods reseller, having an illegal business in his basement.

    Nike did what they had to do to defend their trademark, offered a ‘reasonable’ settlement to Mr Bateman. Yes, so they lost, for good, a customer. Not a very good customer, mind you, as he was looking for the lowest prices anyway.

    The alternative is for Nike to be seen as not actively defending their registered trademark, something that might be used against them, at least in some countries.

    I can only side with Nike here, as in doing the smart thing and taking care of their own brand, and as so of their shareholders.

  5. Even if Nike didn’t receive damages from the defendant, they are still bringing legal action against a consumer that was scammed and forced the scam victim to go through trial proceedings.

    The judge only allowed the trial to go on because no actual damages were being paid, but even he recognized the excessively expensive nature of the choice Nike made in the face of a much simpler alternative: talking to the scam victim directly in order to get any information/agreement not to re-infringe again.

  6. He should sue Nike for the counterfeit shoes! Can’t they do a better job of catching the “manufacturers” of the counterfeit shoes?

  7. @John. I bet the defendant feels as though Nike attacked him. Being sued is very unpleasant, and representing yourself takes a huge amount of time to research the issues.

    I’ve been been hit by a car – taking about a year to heal fully, and separately sued unfairly, and I would prefer the traffic accident to the lawsuit every time.

  8. Looks to me like the same thing the MPAA are doing about movie piracy. They can’t touch the originator, and in this case that would mean taking a law suit to China, and shut it down at the source, so they kick in the door of the consumer instead. And in this particular case it is more than believable that the defendant felt they were the genuine article becuase the internet is rife with this kind of thing.

    No, Nike may have the legal right but they also have the moral obligation not to do what they did but they did it anyway. Nike are in the wrong here, legalities aside.

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