In Nike Counterfeit Lawsuit, Sealed Order Freezes Defendants' Assets

The lawsuit alleges that the defendants are selling counterfeit Nike on sites like Amazon. Here's what the restraining order against the sellers says.

Fake Dior Jordan 1 Low

Department of Homeland Security agencies seized $37 million in counterfeit footwear last year. Image via Customs and Border Protection

Fake Dior Jordan 1 Low

Nike’s lawsuit against alleged sellers of counterfeit sportswear is set to move forward on Tuesday, when the brand’s lawyers will ask for a preliminary injunction. The sneaker company filed the complaint in Illinois district court in January, accusing a group of online marketplaces at sites like AliExpress and Amazon of trademark infringement and counterfeiting. After securing a temporary restraining order in February, Nike now wants a preliminary injunction that will continue to stop the defendants from selling fake Nike product, help its lawyers gather data on them, and freeze their assets. 

Portions of the lawsuit have been hidden from public view, but sealed documents viewed by Complex give detail on the long list of defendants and the court’s temporary restraining order against them.

When Nike first filed the lawsuit, it kept secret the list of 207 defendants, which it attached to the complaint in a sealed document. The company’s lawyers say that it has good cause to suspect the defendants are all residents of China and Hong Kong. They argue that making their names public before Nike secured a restraining order against them would have allowed the defendants to evade justice.

“Sealing this portion of the file is necessary to prevent the defendants from learning of these proceedings prior to the execution of the temporary restraining order,” the motion to leave the names of defendants under seal reads. “If defendants were to learn of these proceedings prematurely, the likely result would be the destruction of relevant documentary evidence and the hiding or transferring of assets to foreign jurisdictions.”

The sealed file contains a table of 207 online stores listed as defendants, with seller aliases and URLs for each. The defendants are grouped by the third-party platforms where they allegedly sell counterfeit goods—120 of them from AliExpress, 81 of them from Amazon, and six of them from eBay.

Nike’s lawyers also submitted last week an exhibit showing email addresses for each of the defendants. Complex exchanged email messages with two of the defendants, who both say they’ve never sold Nike items in their online stores. A lawyer representing Nike in the case did not respond to a request for comment.

Nike was granted a sealed temporary restraining order against the defendants in February. In that filing, which Complex has viewed, the court found that the alleged counterfeit sellers “could and likely would” move their assets to off-shore accounts without an order in place preventing them from doing so.

In addition to preventing the defendants from passing off fake Nike product as genuine, the temporary restraining order gives Nike access to detailed information about their business. It orders third-party marketplaces like AliExpress and Amazon to turn over expedited discovery on the sellers at Nike’s request. This includes documents relating to the defendants’ identities, contact information, sales data, listing history, and financial accounts.

The temporary restraining order forbids the defendants from transferring assets out of their financial accounts. It also orders the third-party marketplaces they operate on to locate all funds held by the sellers and restrain them from transferring any money out. 

“The defendants in this case hold most of their assets in off-shore accounts,” wrote one Nike lawyer in a memo supporting the order, “making it easy to hide or dispose of assets, which will render an accounting by Nike meaningless.”

In a memo submitted to the court last week, Nike’s lawyers said that financial accounts connected to the seller aliases have been frozen.

Now, Nike wants to extend the relief granted in its temporary restraining order with a preliminary injunction that it says is substantially identical. Nike’s proposed preliminary injunction would unseal the original list of defendants, the temporary restraining order, and another sealed exhibit in the case. The brand’s lawyers will present its motion for entry of the preliminary injunction in a hearing on Tuesday morning.