Aggressive Lawsuits Target Online Sellers Of Counterfeit And Infringing Products

Lawsuits target multiple sellers with devastating consequences.

July 20, 2023 - Los Angeles, CA – Online sellers offering counterfeit, fraudulent, or replica goods often manage to evade detection, account suspensions, and legal consequences. A growing trend known as "Schedule A Defendant" (SAD) lawsuits has emerged to combat the problem, causing distress and severe legal consequences for online sellers of infringing products

According to a report by popular blogger eCommerceBytes, these lawsuits specifically target multiple online sellers simultaneously for alleged trademark infringement, leaving them facing dire consequences for their actions. A single lawsuit targeting hundreds of sellers at a time for selling an infringing branded product can leave each seller owing tens of thousands of dollars through default judgments that obliterate their businesses.

The SAD lawsuits seek swift injunctions and monetary damages, catching defendants off guard, as their identities are often sealed in the initial complaint. Defendants don't immediately know they're being sued because judges grant the plaintiffs' requests that defendant lists be sealed. Online sellers face immense stress and exorbitant legal costs as they struggle to cope with this legal challenge from right-owners. Many defendants lack the means to mount a robust defense, leading them to consider settlement options to avoid prolonged legal battles.

Legal expert Professor Eric Goldman has expressed shock and outrage at the devastating impact of these lawsuits, which bypass marketplace programs like eBay's VeRO and instead sue numerous sellers simultaneously in federal court. According to Goldman, generic complaints cloned and revised for multiple cases highlight the abusive nature of these IP litigation schemes. Right owners are not going after the big players who are likely to fight back; they disproportionately target small players with no real means of defending themselves. Bigger players are left untouched.

However, the urgency and gravity of these cases are needed to target the tsunami of counterfeit, replica, and fraudulent goods sold online. The legal process moves rapidly, putting nefarious sellers at a disadvantage.

Sellers should, and appropriately have the burden of verifying their listed goods as authentic, a process that is often overlooked or deliberately ignored in the pursuit of profits. Interestingly, one seller noted that they had purchased the items being accused of infringing on the plaintiffs' trademarks from an Amazon Returns pallet.

The rise of SAD lawsuits requires greater awareness among sellers, and potential defendants should carefully consider their options when responding to such lawsuits. While some may choose to fight, others may opt for settlements due to resource limitations and fear of escalating legal troubles.

In addition to the SAD civil consequences to recover damages, profit losses, attorneys’ fees, and other injunctive relief, counterfeit sellers may also face criminal charges; imprisonment for the first offense of up to 10 years and up to 20 years for repeat offenders. If an offender knowingly or recklessly causes death due to the unlawful sale of goods or merchandise, they can face life imprisonment. Fines up to $15.0 million for corporations and $5.0 million for individuals who are repeat offenders may be levied, along with seizure and destruction of the counterfeit merchandise.