Chanel v. Does: District Judge Seems to Pilot Test SOPA in a Temporary Restraining Order

Chanel, Inc. v. Does, et al., 11-cv-01508-KJD-PAL (D. Nev. 2011) Order

On November 14, 2011, the U.S. District Court for the District of Nevada issued a far-reaching temporary restraining order (TRO) in response to luxury goods company Chanel’s allegations that 288 defendants were selling counterfeit goods online. In addition to ordering the seizure of the defendants’ domain names, the ruling requires that domain registries transfer the domain names to GoDaddy.com, that GoDaddy.com redirect incoming traffic to a separate website, and that search engines and social networks remove the domain names from search results.

Commentators note that the remedy bears an uncanny resemblance to the remedies available under the recently proposed Stop Online Piracy Act (SOPA). As explained by Information Today, SOPA would give the government the expanded ability to obtain injunctions to seize domains that appear to be hosting infringing material. The injunctions may also direct certain actions by third parties, such as service providers and search engines. JOLT Digest has covered the proposed bill and the surrounding controversy.

CBS News summarizes the Nevada judge’s ruling and comments on its comparison to SOPA. Technology and Marketing Law Blog, Ars Technica, TechNewsWorld and TechDirt offer critical commentary. In particular, Technology and Marketing Law Blog argues that the ruling raises issues about due process, and questions the enforceability of the broad order.Chanel brought this second ex parte motion for a TRO against numerous defendants for alleged violations of the Lanham Act. Based on evidence from Chanel’s investigation, the judge concluded that Chanel had a “very strong probability” of proving the requisite facts at trial and that it would suffer “immediate and irreparable” injury without the TRO. These findings were based on Chanel’s investigation, which involved ordering products from 3 websites and visually inspecting items on the other 225 websites.

The TRO prohibits defendants from selling counterfeit goods branded with Chanel trademarks and orders transfer of their domain names. It also requires top-level domain registries to re-register the names under GoDaddy.com. In turn, GoDaddy.com must redirect any incoming traffic to a site that houses the court documents, whether by changing the DNS data or initiating automatic forwarding. All search engines and social media websites, such as Google, Facebook, and Twitter, must de-index and remove the domain names from their search results. Chanel can add domain names to this list by alleging that defendants are using them to sell counterfeit goods or “unfairly compet[e] with Chanel in connection with search engine results pages.”

The Nevada judge’s order on allegedly counterfeit purses and watches sparked online commentary for several reasons. Technology and Marketing Law Blog argues that it raises “due process red flags,” as it orders transfer of the defendants’ property with little or no notice to many of them. TechNewsWorld similarly raises the concern that the defendants did not have the opportunity to present a defense at a hearing. It also notes that the order should not technically be enforceable against the parties not named in the lawsuit, such as Google and Facebook, and claims that the order raises other jurisdictional concerns, as the search engines and social networks operate globally and some of the defendants are apparently foreign-based.

The ruling also raises the concerns surrounding SOPA. Quoting attorney Rich Santalesa, TechNewsWorld notes that an “order to transfer domains at this stage is highly unusual” but is something that “the very controversial SOPA” would permit. In fact, the remedies are so similar to those made available by SOPA that Technology and Marketing Law Blog suggests much of SOPA might not even be necessary. With or without SOPA, such remedies are highly controversial; critics of SOPA claim that the government could too easily seize domain names and require reinforcing actions by third parties. Some fear that this expanded power may allow the government to censor content in the name of intellectual property protection. See, for example, Information Today.

On the other hand, proponents argue that the outlined steps are necessary to protect IP rights online. The judge in this case claimed that the order was necessary because the defendants could otherwise “transfer the registrations…or modify registration data and content, change hosts, and redirect traffic to other websites.” Accordingly, the ruling highlights an important question that underlies the current SOPA debate: whether the federal government can effectively enforce IP rights online without infringing the rights of online entities across the globe.

Julie Dorais is a 3L at Harvard Law School.