Beats Goes After Chinese Counterfeiters With Multimillion-Dollar Lawsuit
Just over a month after Apple's acquisition of Beats Electronics, the headphone maker made its first major post-acquisition move by filing a lawsuit against Chinese counterfeiters.
The lawsuit, filed in the U.S. District Court for the Northern District of Illinois on July 9, names as defendants "individuals and business entities who, upon information and belief, reside in the People's Republic of China or other foreign jurisdictions."
"This action has been filed by Beats to combat online counterfeiters who trade upon Beats' reputation and goodwill by selling and/or offering for sale unlicensed and counterfeit products featuring Beats' trademarks," according to the lawsuit. "The Defendants create the Defendant Internet Stores by the hundreds or even thousands and design them to appear to be selling genuine Beats products, while actually selling low-quality Counterfeit Beats Products to unknowing consumers."
The lawsuit claims that websites selling counterfeit Beats headphones earn up to $135 billion in annual sales — a figure large enough to make pursuing even an elusive target like Chinese counterfeiters worth the effort.
The problem plaguing Beats Electronics is very real, with some sites offering presumably fake versions of the pricey headphones (which usually sell for as much as $300) for a mere $5 each. Other sites openly advertise their Beats headphones as "replicas," but still ask for prices in the $60 range.
Aside from the lawsuit's legal aspects, the document filing reads like marketing material, and mentions many of the big names associated with Beats, including LeBron James, Serena Williams, Lady Gaga, Nicki Minaj and Justin Beiber.
As for what Beats Electronics is hoping to get out of the suit, it is looking to capture all profits from the infringing websites. Alternatively, the suit says the company will also accept $2 million for every use of the Beats trademark and $100,000 for each infringing domain name.
However, within the legal filing, Beats appears to acknowledge the limitations of its lawsuit against the hard-to-pin-down Chinese counterfeiters.
"Tactics used by Defendants to conceal their identities and the full scope of their counterfeiting operation make it virtually impossible for Beats to learn Defendants' true identities and the exact interworking of their massive counterfeit network," according to the lawsuit. "In the event that Defendants and/or third party service providers provide additional credible information regarding the identities of Defendants, Beats will take appropriate steps to amend the Complaint."