Within this role, Shine International “contracted with and paid” the shipping companies to transport the goods from China to the U.S. (those companies are not named as defendants) and designated New York-based Hana International Logistics as the receiving agent of the goods since “Shine has no U.S.-based operations.” Further perpetuating the scheme, Hana International – just like its fellow defendants – allegedly issued “fraudulent and facially inadequate” documentation in connection with the large-scale shipments, ultimately enabling three of them to “make it past U.S. Customs,” and thereafter, be “delivered somewhere in the United States.”
All the while, New York-based B&H Customs Services – the customs broker enlisted by Hana – was responsible for filing documentation of its own, including an Import Security Filing, for each of the shipments. In the process of doing so, Nike claims that B&H “was put on actual notice of discrepancies in the documents it had received and utilized to file entry in the name of Artiva,” including inaccuracies in connection with the importer of record, among other things, but failed to exercise the required level of “due diligence” to verify the validity of the documentation provided to it by the other defendants.
“B&H was also required” – but allegedly failed – “to use reasonable care in determining the nature of the goods covered by [the documentation it filed with U.S. Customs] to determine, among other things, whether the goods bore the trademarks of any U.S. company before filing” that documentation in order to assist Customs in weeding out counterfeit or otherwise infringing goods. In lieu of doing so, Nike claims that B&H turned a blind eye to the nature of the thousands of counterfeit sneakers, and instead, “looked to get paid.”
Ultimately, over the nearly one-year period between July 2017 and September 2018, the defendants were able to successfully import three containers of thousands of counterfeit Nike sneakers into the U.S. But while “the first three containers [shipped out of ports in China] passed through U.S. Customs undetected,” the fourth container, for which “the transportation records stated that it was carrying lamps,” was seized by U.S. Customs.
In early February 2019, Nike’s North America Brand Protection head received a letter from U.S. Customs alerting him to the fact that on November 29, 2018, the government agency had seized thousands of articles “which bear marks that constitute counterfeit copies” of Nike’s marks at the Port of Newark. The appraised value of the sneakers, according to Customs? $977,414.00. That total, which is calculated used the retail price of the goods had they been authentic, would be exponentially higher had Customs taken into account the sky-high resale values of some of the styles of sneakers that were inside of those vast metal containers.
Among the sneakers seized by Customs were ones from Virgil Abloh’s coveted collaboration with the brand to similarly in-demand Air Max 98 models, complete with Nike’s name and similarly-protected swoosh logo. Also in the mix were exact replicas of Nike’s Jordan 11 sneakers, albeit without any explicit Nike branding at all. The company asserts in its suit that this is a common – and particiarly telling – move, as “counterfeiters often import footwear that copies [its] Jordan 11 trade dress without any identifying trademarks, and then after those products clear U.S. Customs, they attach counterfeit trademarks.”
“The commingling of counterfeit Nike sneakers bearing the Nike trademarks with those bearing the Jordan 11 trade dress but no identifying marks shows that the defendants were determined to continue their counterfeiting operations within the U.S.,” Nike argues. In other words, the scheme is far from over once the sneakers pass through Customs. It continues on once the products are in the U.S., with other individuals working in conjunction with the defendants further down the line.
After linking the defendants to at least three shipments that predated the one that was seized in November 2019, Nike filed a lengthy and strongly-worded suit, one that mirrors some of the cases it has filed against customs brokers in the past. In the 200 page-plus filing, Nike sets forth a handful of counterfeiting and trademark infringement and dilution claims, as well as a claiming violations of a trademark statute that legally outlaws “the importation of goods bearing infringing marks or names forbidden,” against all of the defendants, arguing, among other things that are “responsible for the importation of the counterfeit Nike sneakers because they filed, or assisted in the filing of, the entry documentation for the four shipments.”
More than that, Nike claims that the defendants each “willfully disregarded their duties as a customs broker, overseas transportation intermediary, and/or non-vessel operating common carrier in facilitating the transportation and importation of the four shipments, which consisted of the counterfeit Nike sneakers.”
With the foregoing in mind, Nike is seeking injunctive relief to permanently bar the defendants and “all those in active concert or participation with them” from importing or assisting in the importation counterfeit or otherwise infringing Nike products. The sportswear titan also claims that it is entitled to “damages for all of the defendants’ profits derived from their past unlawful conduct, trebled,” plus “reasonable attorney fees … given the defendants’ willful and bad faith acts.”
*The case is Nike, Inc. v. B&H Customs Services, Inc. et al, 1:20-cv-01214 (SDNY).
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