Apple moves against knockoffs in New York

NEW YORK Thu Aug 18, 2011 7:04pm EDT

NEW YORK Aug 18 (Reuters) - Apple Inc (AAPL.O) has moved swiftly and, until now, secretly to crack down on stores in the Chinatown section of Queens, New York, accused of selling knock-off Apple gear emblazoned with the company's distinctive logo, according to documents unsealed Thursday in Brooklyn federal court.

Court records reveal that Apple has already seized unauthorized iPod, iPhone and iPad accessories sold by two stores in the Flushing neighborhood of the New York City borough of Queens, and is now demanding the names of its customers and suppliers. It is also asking one of the defendants -- Apple Story -- to change its name to keep consumers from confusing the unauthorized gear with Apple-sanctioned products.

The trademark infringement lawsuit was first filed on July 25 against Apple Story and Fun Zone Inc., both owned by New York resident Janie Po Chiang, who is named as a co-defendant in the suit, along with Fun Zone manager Jimmy Kwok.

But the case remained under seal until Thursday, when U.S. District Judge Kiyo Matsumoto ordered the record to be made public following a request from Reuters.

Under the U.S. trademark counterfeiting law, a company can file a trademark infringement action under seal initially, so as not to tip off the accused counterfeiters before seizure orders are executed.

The unsealed documents show how seriously Apple is responding to threats by pirated goods to its brand, one of the best-known and most valuable. The lawsuit also comes amid increasing reports of fake Apple products -- and even whole counterfeit Apple stores -- popping up in China. [ID:nL3E7IM1GV] [ID:nL3E7IP18Q]

'NEARLY AN EXACT DUPLICATE'

According to a court filing from Apple, the company sent representatives to Apple Story and Fun Zone in Flushing on "multiple occasions over several weeks," where they bought an assortment of iPod, iPhone and iPad cases, as well as stereo headsets designed for use with iPhones.

All of the purchased goods carried an Apple trademark, according to the amended complaint. They were also marked with the phrase "Designed by Apple in California. Assembled in China," and included markings similar to those found on genuine Apple goods.

The headsets came with packaging that was "nearly an exact duplicate" of that for genuine Apple goods, the lawsuit said.

"Defendants are trading on and receiving the benefit of the goodwill Apple has established in the Apple trademarks through considerable labor and expense over many years," Apple said in its amended complaint.

On July 27, Apple executed several ex parte seizure warrants -- allowing the company to seize the items -- that swept up goods from both stores that bore the Apple logo. Matsumoto granted Apple's request for a preliminary injunction to stop both stores from selling knockoff goods, but has yet to rule on whether Apple Story must change its name.

The parties are moving toward an agreement to settle the case, court records show, but nothing has been finalized. In addition to an agreement to stop counterfeiting goods, Apple is seeking a complete list of all individuals or entities who either purchased or sold counterfeit products, an order to destroy any remaining counterfeit products and triple monetary damages.

CRUSADE MAY CONTINUE

Even if both sides reach a deal, Apple's crusade against the counterfeiters may continue. The lawsuit includes an undisclosed number of individuals and businesses who made, sold or distributed the alleged counterfeit goods.

Their identities are not yet known, but could include entities higher up on the suspected counterfeit chain. Apple has won a court order requiring the defendants to turn over access to their business email accounts, which could yield clues about other defendants to be named at a later date.

Samuel Chuang, an attorney for the defendants, declined to comment on the case. Attorneys and a spokesperson for Apple did not immediately return a request for comment.

The case is Apple Inc. v. Apple Story Inc et al, in the U.S. District Court for the Eastern District of New York, no. 11-3550.

For Apple: Mark Mutterperl and Todd Hambidge of Fulbright & Jaworski.

For the defendants: Samuel Chuang of the Law Offices of Samuel Chuang.

(Reporting by Jessica Dye; Editing by Phil Berlowitz)

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Comments (4)
Canuckyoga wrote:
I guess we should bring all the manufacturing back to NA this is the only way to stop the Chinese from ruining the world. They have risen to power not through ingenuity but through sheer piracy. Corrupt and Lawless is the everyday way of life there.

Aug 18, 2011 7:56pm EDT  --  Report as abuse
footbag wrote:
Not only did the products have the Apple logo and appear identical, but they were produced in the same factories by the same workers. In other words, Apple has a problem with their vendors.

Produce it in the US and this won’t happen.

Aug 19, 2011 12:59pm EDT  --  Report as abuse
brandon6339 wrote:
why is apple up in arms all their product are made in China anyway

Aug 19, 2011 1:48pm EDT  --  Report as abuse
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