Court penalizes website firm that helped sell knock-offs
A Utah company that builds and hosts websites has been ordered to pay more than $700,000 in damages to an Orange County golf club manufacturer for helping create and promote a website that sold counterfeit clubs.
Attorneys for Roger Cleveland Golf Co. said the verdict marked the first time that a website support company has been held liable for aiding in the sale of counterfeit merchandise.
According to the lawsuit, Bright Builders Inc. of Orem, Utah, was paid $10,000 by South Carolina importer Prince Distribution to help it set up and host several websites, including one called copycatclubs.com, which sold knock-off Cleveland golf clubs. Bright Builders used a search-engine optimization strategy that would lead consumers searching for Cleveland clubs to the website that sold counterfeits, the lawsuit said.
Bright Builders was liable because it knew, or should have known, that copycatclubs.com was selling illegal merchandise, Cleveland Golf attorneys said in the lawsuit. An attorney for Bright Builders argued in court that the company was not aware of Prince’s illegal conduct and should not be held liable for it.
A federal jury in South Carolina disagreed, ordering Bright Builders this month to pay $770,750 to Cleveland Golf. Prince was ordered to pay $28,250. A federal judge entered the judgment March 14.
Cleveland Golf, launched in 1979 and based in Huntington Beach, is one of the top-selling club brands in the United States, with about $600 million in sales in 2010, said Donald Reino, the company’s vice president of legal operations. The company said it manufactures the game’s top-selling wedge, a club used for short-distance shots.
Owned by Japan-based SRI Sports, Cleveland Golf spends significant money advertising and marketing its clubs and loses “hundreds of thousands of dollars” a year to counterfeiting, Reino said.
The verdict should encourage companies that build and support websites to make sure they’re not aiding in the sale of counterfeit goods, Reino said.
“They can no longer say, ‘It’s out of our hands. We just create the site,’” Reino said. “We think it sends a big message.”
Paul J. Doolittle, an attorney for Bright Builders, did not respond to a telephone message left at his South Carolina office. Officials with Bright Builders declined to comment.
Cleveland Golf discovered the counterfeiting when one of its employees, a “mystery shopper,” bought several clubs from copycatclubs.com and discovered that they were fakes manufactured in China, the lawsuit said.
“It was so blatant, we thought it was the perfect case to pursue,” Reino said. “With a name like ‘copycat,’ a red flag should go up immediately.”
