Houston, TX (October 22, 2010) -- A
federal court in Houston, Texas has awarded Farouk Systems, Inc., the producer
of CHI ceramic hair styling irons and other beauty products, a $300 million
default judgment against a group of Internet counterfeiters in what is believed
to be the largest judgment ever issued against on-line counterfeiters. The
lawsuit filed in July 2010 alleged that defendants, operating under a series of
fake names and addresses, were selling counterfeit CHI hair tools at wholesale
on popular B2B sites like Tradekey.com and DIYTrade.com as well as at retail on
'rogue' web sites like chihaironline.com and chiretailsite.com purporting to be
authorized sellers of CHI hair tools.
As part of the judgment, Farouk Systems was awarded control of 35
Internet domain names used to sell counterfeit CHI hair tools. Also as part of the judgment, third parties
like B2B sites and payment processing services are permanently enjoined from
providing services to these defendants in relation to their counterfeiting
activities. The default judgment awarded
maximum statutory damages of $2 million per counterfeited trademark against
each of the 75 defendants.
At the outset of the case, Farouk was
able to obtain an injunction freezing counterfeiters' financial accounts
and immediately disabling dozens of
infringing web sites before the counterfeiters could hide their assets or
change their operations. "Nothing gets a
counterfeiter's attention like freezing their bank accounts and having their
web stores suddenly shut down," says Farouk Systems' General Counsel Wisam
Ghuneim. "We trust they will think twice
before knocking off our products again."
These counterfeiters used a series of
fake names and addresses in connection with their businesses, making them
virtually impossible to identify. "Brand owners often feel powerless to stop
Internet counterfeiting because they don't know who they are pursuing. But in this case, we were able to show that
defendants' use of false identities was precisely why this kind of injunctive
relief was necessary," said Scott Gelin of Greenberg Traurig LLP, counsel for
Farouk Systems.
Counterfeiting is a multi-billion
dollar enterprise, and it's not just luxury goods that are being knocked
off. Every imaginable product from car
parts to pharmaceuticals to home electronics like CHI hair styling irons is being
counterfeited. U.S. Customs and Border
Protection reported that counterfeit consumer electronics was the second
largest category of fake goods it seized in fiscal year 2009. "While the sale of counterfeit products is
irresponsible for any company, it is worse for counterfeit home electronics
like hairstyling irons, since these fakes have not passed regulatory safety
standards," says Farouk Systems' founder
and chairman Farouk Shami. "People think that by buying over the Internet, they
are getting a deal, but in reality, they are buying a fake, inferior products
that could cause them harm."
Information about these defendants
obtained through expedited discovery shows that many of these wholesaler and
retail operations were bringing in tens of thousands of dollars in revenue each
month from the sale of counterfeit CHI products and other goods.
Farouk Systems Inc. was represented
by Greenberg Traurig LLP. The case
is Farouk
Systems, Inc. v. EYOU International
Trading Co, et al., 4:10-cv-2672 (KMH)
About
Farouk Systems, Inc.
Farouk Systems,
Inc. is a Houston based company that manufactures the world-renowned brands CHI
and BioSilk. The company's mission statement is Education, Environment
and Ethics. With over 2,500 employees, the company sells its products in
over 100 countries. The inception of the company was due to a major
breakthrough, and it eventually created a revolution in the beauty
industry. Farouk Systems went from inventing ammonia-free color,
incorporating silk into hair care products, pioneering CHI thermal tool technology,
and hiring a former NASA Senior Scientist. For more information log onto www.farouk.com.