Purse stings: Coach Inc.

targets counterfeiters, files a dozen federal court cases in Missouri Heather Cole Immigration and FBI agents descended on the Frison Flea Market this summer to seize alleged knock-off designer purses and other goods. As news cameras rolled, the agents carted off boxes of merchandise from the windowless market. The agents seized, among other products, 385 items with Coach logos, according to court documents. A vendor, Soukeye Fox, was arrested the same day, June 22, on a federal charge of selling counterfeit goods at the North St. Louis County flea market and a store she owned. Investigators for Coach Inc. were right beside the agents. More than two years earlier, the luxury handbagmaker had started its own legal efforts against the flea market and vendors as part of a national anti-counterfeiting operation. So far, the operation has led to 12 lawsuits in Missouri. Coach started sending private investigators to the flea market in May 2010, according to court documents. The investigators bought purses bearing Coach logos and designs and covertly filmed transactions, building the foundation for a lawsuit filed that December in U.S. District Court in St. Louis. Bryan Cave attorneys working for Coach named as defendants the market, owner Jack Frison and four vendors, including Fox. Fox declined to be interviewed when a reporter approached her after a court hearing in the civil case. Her attorney in the civil case, Noel Sevastianos, declined to comment. Fox, also known as Soukeye Samb, pleaded not guilty to the criminal charge. In a phone interview, Frison said hes only the flea markets landlord - he doesnt sell Coach purses and doesnt carry them. They accuse us of that kind of stuff, but they havent won, Frison said. They havent got anything in over a year. But trademark owners including Coach argue that landlords engage in contributory trademark infringement by allowing sales of counterfeit goods on their property when they have reason to know that vendors leasing their space are selling fakes. Federal juries have agreed. In January, a jury in Texas delivered a $3.6 million verdict against a San Antonio flea market that Louis Vuitton sued. In March, a Memphis jury awarded Coach $5 million in a lawsuit against the owner of a flea market there. The standard is high for showing willful disregard of the sale of counterfeits, said Leah Grinvald, an assistant professor of law at Saint Louis University who specializes in intellectual property. The trademark owner needs to directly point out to the landlord that sellers are offering counterfeit goods on his property, such as through a letter. More plaintiffs like Coach are doing that before they file a lawsuit, Grinvald said. Theyve been savvy. Theyve been well-funded. They know what to do, Grinvald said. Theyre not newbies at fighting counterfeits. A Coach attorney sent a letter to the Frison Flea Market in June 2010 that said the companys investigators found counterfeit Coach merchandise in the market during May and June visits. The letter also said the market was the subject of a U.S. Immigration and Customs Agency seizure in 2006. While Coach will take direct action against your tenant(s), including serving them as a defendants in a civil law suit, you, as the owner of the premises, are responsible for the illegal use of your premises if you know that such activities are taking place, said the letter signed by counsel Tiffany Walden and included in court filings. Extraordinary fame The length of the Frison Flea Market case is the exception in Missouri. Attorneys for Coach filed two cases in federal court in Missouri last month. The remainder of the lawsuits in the state, excepting the one against the flea market, resulted in settlements or agreed and default judgments totaling more than $1.6 million. The judgments were coupled with injunctions banning the defendants from ever again selling products falsely labeled as Coach. All the concluded cases ended less than two years after they were filed. No federal charges have been filed against Frison, according to online federal court records. Foxs attorney, Adam Fein of Rosenblum, Schwartz, Rogers & Glass, said in an August court filing that Fox is not a citizen of the United States and that he was trying to determine the impact of the case on her status. At Foxs request, her criminal trial set for last week was pushed off until January. In May 2009, Coach launched the initiative intended to discourage the sale of counterfeit products. The company, which had $4.8 billion in net sales in fiscal 2012, dubbed the effort Operation Turnlock after the shape of a metal clasp on Coach bags. Since the inception of Operation Turnlock, Coach has filed over 600 lawsuits throughout the country, said Nancy Axilrod, vice president and deputy general counsel. Im pleased to say we have not lost one. Last month, a Chicago federal judge gave Coach one of its largest victories, a $257 million default judgment in a lawsuit filed against the operators of websites that sold counterfeit merchandise. The judgment also awarded the New York-based company ownership of 573 Internet domain names. The cases in Missouri have been against smaller fry: Purses For Her in Sikeston; Designs by Debbie in Cassville; Tropical Sun Tanning & Gifts in Kennett. But the awards Coach requests under federal copyright and counterfeiting trademark law are large: Federal anti-counterfeiting laws allow for hefty damages. In a lawsuit filed last month against Tropical Sun Tanning and its owners, Coach cited the Lanham Act in making its standard request for either statutory damages of $2 million for each counterfeit mark on each type of counterfeit product, or three times the profits the defendants got for allegedly selling counterfeit products. Defendants are well aware of the extraordinary fame and strength of the Coach brand, trademarks and design elements, said the filing signed by Jason Kempf, an attorney in Bryan Caves headquarters office in St. Louis. Kempf did not return two phone calls from a reporter. In five of the six resolved cases in Missouri where the dollar amount is available in court filings, retailers each agreed to pay $300,000. The sixth case ended with a default judgment of $100,000. Bigger fish The smaller fry also can lead to bigger fish. Tropical Sun Tanning operators Johnny Kristopher and Tiffany Higgins specifically deny that they engaged in any act other than selling goods from an internet distributor, in their answer to Coachs lawsuit, filed by John McMullan and Sharon Wright Morgan of Pelts, McMullan, Edgington & Morgan in Kennett. They then provided the name of the distributor, a man based out of Putian City in China, and all the websites

and email addresses through which he contacted them. McMullan didnt return two phone calls from a reporter by press time. The often swift resolution of litigation belies the amount of work put into counterfeiting cases, Matthew Braunel, a partner in Thompson Coburns intellectual property practice, said in an email. Braunel is not involved in the Coach cases. Counterfeiters often try to hide their true identities, including registering businesses, websites and bank accounts under false names and addresses, he said. The docket reports dont reflect the pre-filing work necessary to locate and identify the counterfeiter, Braunel said. The litigation over counterfeiting resembles a game of Whack-A-Mole. As lawsuits against retailers end, others start. More alleged knock-off sellers start up or are discovered. Both times investigators went into Frison Flea Market after Coach filed the lawsuit, they purchased more allegedly counterfeit Coach purses, usually brought out from a hidden stash by the vendor. Four vendors said they werent allowed to sell Coach products anymore, according to reports from Advanced Investigative Services Inc., of Nashville, Ill., included in court documents. When a reporter visited on a recent Friday afternoon, Fox manned a booth to the left of the door, dressed in a blue, green and yellow caftan, her hair in a matching head wrap. The tables in her booth were piled with colorful purses with no high-end brand names visible. One booth down, a vendor offered sunglasses with Polo, Gucci and Chanel insignias. The price? Only $10 a pair, $15 for two pairs or $20 for three. © 2012 Dolan Media Newswires. All Rights Reserved. ---- Index References ---Company: FOX NEWS NETWORK LLC; COACH INC; LVMH MOET HENNESSY LOUIS VUITTON SA News Subject: (Social Issues (1SO05); Intellectual Property (1IN75); Trademarks (1TR15); Counterfeit Consumer Goods (1CU07); Corporate Events (1CR05); Legal (1LE33); Business Litigation (1BU04); Crime (1CR87); Fraud (1FR30); Economics & Trade (1EC26); Business Management (1BU42); Business Lawsuits & Settlements (1BU19)) Region: (North America (1NO39); USA (1US73); U.S. Southeast Region (1SO88); U.S. Southwest Region (1SO89); Tennessee (1TE37); U.S. Midwest Region (1MI19); Missouri (1MI10); Americas (1AM92); Texas (1TE14)) Language: EN Other Indexing: (ADVANCED INVESTIGATIVE SERVICES INC) (Matthew Braunel; Johnny Kristopher; Turnlock; Tiffany Higgins; Nancy Axilrod; Adam Fein; Jason Kempf; Jack Frison; Tiffany Walden; Noel Sevastianos; John McMullan; Sharon Wright Morgan; Leah Grinvald; Fox)