Showing posts with label investigation. Show all posts
Showing posts with label investigation. Show all posts

Thursday, October 10, 2013

TradeKey Found Liable for Contributory Counterfeiting

In a strongly-worded decision issued by a California federal district court judge this week, the owners of were found liable for contributory counterfeiting and placed under a permanent injunction.

TradeKey is a multinational company with offices in Saudi Arabia, China and Pakistan, which claims to be one of the largest and fastest growing online business-to-business (B2B) marketplace that connects small and medium businesses across the globe for international trade.

For an annual fee of $519, wholesale sellers and distributors can set up customized accounts on TradeKey, offering thousands of items for sale to businesses in bulk quantities.  TradeKey also solicits its wholesale buyers and distributors worldwide to become "premium" members, which costs $3,000 annually.

TradeKey had garnered something of a reputation for being a retail counterfeiters' supermarket.

Undercover investigators working for Richemont became premium members, and were contacted by TradeKey's sales representatives.

When the undercover investigators (posing as wholesale distributors) asked TradeKey's sales representative if there was any problem with selling counterfeit luxury goods on the TradeKey website, the sales representative replied that it was "not a problem," and further said that "as far as the replica industry is concerned it's one of the businesses that we rely on to get us a whole lot revenue."

The investigators also were able to purchase numerous counterfeit goods from a variety of sellers on TradeKey.

Richemont filed suit in Los Angeles federal court against the individual sellers (who defaulted by not defending themselves), but also against TradeKey and its various corporate owners, alleging that they were contributorily liable for counterfeiting.

Essentially, Richemont's lawyers alleged that, by knowingly aiding and abetting the sale of counterfeit goods and receiving a direct financial gain from doing so, TradeKey's owners should be held liable for the sellers' conduct.  Richemont moved for summary judgment against TradeKey and won.

Notably, based on the written decision, it is clear that TradeKey's legal defense was an unmitigated disaster.

TradeKey's lawyers first tried to argue that the undercover investigation was "sloppy" and not credible, suggesting that technical defects in chain of custody forms injured the investigators' credibility.

The Court roundly rejected this criticism, finding that the goods that where purchased were clearly counterfeit and the results of the investigation was very persuasive.

Further, TradeKey alternatively tried to argue that the sales representative "clearly misunderstood the term replica."  The Court found this argument wholly unpersuasive, as it was "undermined by the plain language of his [own] statements, their context" and the fact that the investigators posted multiple listings for counterfeit goods using the term "replica," all with TradeKey's clear knowledge.

TradeKey also even tried to argue that counterfeit products don't cause any consumer confusion, because those consumers purchasing the spurious goods in bulk essentially knew the goods were fake.

Ultimately, the Court rejected all of these arguments, and found that TradeKey had known about widespread counterfeiting activity that was taking place on its website, and found that TradeKey had permitted it to continue in order to unlawfully profit.

Consequently, TradeKey was found legally responsible for the conduct of its counterfeit sellers, and a Court order was entered that permanently prohibits any seller on the site to sell goods bearing the Plaintiffs' counterfeit trademarks.

What lessons can be learned from this important decision?  

First, other trade boards similar to TradeKey should stop harboring counterfeiters.

Second, conducting a thorough undercover investigation before filing litigation is the paramount way to gather evidence.

Third, as a matter of legal strategy, if you are a lawyer defending a client with a difficult factual record, pick your best single legal argument and stick with it.

Attacking the credibility of reputable undercover investigators and simultaneously trying to claim that your client didn't know what the word "replica" means, is not likely to sustain your credibility with the Court, especially when combined with obviously silly arguments such "the sale of counterfeit goods doesn't cause consumer confusion."

Such a tactic will likely anger most judges and won't give you a very strong appellate record if you lose.

Tuesday, July 31, 2012

BlockShopper: Bona Fide News Reporting or an Invasion of Privacy?

Example of a BlockShopper "Local Real Estate News Story" from St. Louis
Beginning in 2011, law firms Gioconda Law Group PLLC and Balestriere Fariello began an in-depth investigation into BlockShopper LLC.  Collectively, we reviewed hundreds of pages of public documents, collected news articles, read blogs and newsgroups, printed out screenshots and researched applicable federal state and local laws.  The following represents a summary of our findings.  We have not been compensated by anyone for our investigation, nor have we included or considered any privileged or confidential communications in this discussion.  The following is presented solely for the public’s interest in this matter.

BlockShopper LLC owns and operates an interactive Internet website that was co-founded in 2006 by Brian Timpone, a brash one-time Chicago TV reporter turned entrepreneur.  The Chicago Tribune recently reported that the 39-year-old co-founder’s latest gambit Journatic LLC struck a deal in April of this year in which the Tribune Co. agreed to invest an undisclosed amount in his 6-year-old media content provider.  But less than three months later, the Chicago Tribune reports that the partnership has become an embarrassment after ethical breaches, including false bylines, plagiarism and fake quotations, were discovered.

The BlockShopper website has also been plagued by public criticism and even an intellectual property infringement lawsuit brought by a major law firm.  For those unfamiliar with the website, they may be shocked to discover that it offers an aggregate of detailed personal information about individuals, including their names, spouses’ and children’s names, street addresses, details of their residential real estate transactions including property taxes paid, home values, photographs of their home and/or neighborhood, maps and directions to their home, educational background, employer(s), and even photographs.  Some have characterized it as a stalker's dream come true, where personal information is gathered from multiple sources and presented in a comprehensive format.  Identity thieves might also find such helpful information handy.

BlockShopper has also displayed photographs that it has reproduced and copied from personal and business websites, seemingly without the prior authorization, permission or consent of the photographers’ and/or of the individuals depicted in many of the photographs.  BlockShopper has even copied and displayed images of individuals taken from their personal profiles on popular social networking sites such as Facebook®, MySpace® and LinkedIn®, seemingly without the prior approval or permission of those individuals or companies.

The BlockShopper website is profit-driven, although it styles itself as a “local real estate news” reporting tool and does not charge for general access.  Despite its controversial nature (or perhaps in part because of it), the BlockShopper website receives nearly 1 million hits per month.  BlockShopper uses this substantial traffic to woo advertisers and real estate agents, bragging that it is currently operating in many geographic markets across the United States, and that its audience and reach is rapidly growing.

However, not everyone whose information and images are displayed on BlockShopper becomes a fan of the unexpected notoriety.  Indeed, Timpone was personally named in a lawsuit brought by Jones Day, a large national law firm in Cleveland, Ohio for his conduct, but he chose to settle and remove numerous images of that law firm’s attorneys to avoid the expense of further litigation.  To settle that case, BlockShopper’s management team agreed that “it will not use photographs appearing on the Jones Day website without the prior written approval of Jones Day.”

But news articles reported that the Jones Day lawsuit had no meaningful long-term effect on addressing BlockShopper’s overall approach: “The Jones Day lawsuit is not slowing the [BlockShopper] site down from expanding into new markets.  Last weekend, BlockShopper launched in three new cities--Cleveland, Washington, and Phoenix.  That’s on top of the company's recent expansion into Seattle, Philadelphia, New York, Los Angeles, and additional neighborhoods in Illinois.”  Since then, BlockShopper covers even more geographic areas.

Numerous blogs, including and "BOOM" (the "BlockShopper Opt Out Movement"), Facebook pages and public newsgroups have sprung up, reporting that hundreds of individuals have repeatedly complained to BlockShopper and unsuccessfully demanded that their personal information be removed from the website. Complaints have flooded consumer complaint boards, and State Attorney Generals’ offices have gotten involved. BlockShopper has even received complaints about dangerous individuals viewing the aggregated personal information that BlockShopper provides, in order to violate restraining orders.

Specific law enforcement-related complaints seem to have forced BlockShopper to remove at least some listings.  But in many cases, Blockshopper has received numerous, repeated complaints from individuals demanding that their personal information be removed from the website, but adamantly refuses to remove such placement, claiming that its conduct is fully protected by the freedom of speech and of the press.  

The BlockShopper website defends its stance in its“Frequently Asked Questions” section:
Public records are public for a reason. That is, your name isn’t on the title of the property you own—for all to see—to facilitate neighbor nosiness but because it is in the collective public interest. The most important charge of a local government is to guarantee land title; to keep accurate, timely records of who owns what. If we couldn’t learn the “who,” uncertainty would reign and land transactions would slow to a crawl. This would be bad for everyone’s house value. Furthermore, the prices we pay for our homes are public as they serve as the basis for local property taxes. Keeping this information like a secret would result in a lucky few paying too little, while the rest of us pay too much. In the spirit of fairness, we report public records as they are reported to us. We do not eliminate records on, as doing so compromises the integrity of our data.
But BlockShopper goes even further than just reporting real estate data, like does.  BlockShopper’s display has included hundreds of photographs taken wholesale from hospitals’ and physicians’ websites, colleges and universities’ sites, small businesses’ sites as well as directly from private individuals’ websites.

160+ Complaints and Negative Reviews of BlockShopper Appear on
These people are not what the law would traditionally deem “public figures.”  In fact, BlockShopper has mostly appropriated images of otherwise private individuals such as secretaries, librarians, computer programmers, graphic designers, accountants, teachers, physicians, dentists, engineers, architects and photographers and others.  

Therefore, the core legal question presented by the BlockShopper model is whether the copying, reproduction and display of aggregated information about private individuals alongside their headshots are activities that constitute bona fide “news reporting” about real estate transactions that are protected by the First Amendment, or are really just an invasion of privacy cloaked in the guise of news.

For better or worse, from a precedential standpoint, BlockShopper may have the better of the legal argument when it comes to the legal standard of “newsworthiness.”  In the geographic markets where BlockShopper collects its data, the county clerks’ offices, the privacy statutes and the courts have consistently stated that the test for “news reporting” is liberally applied.  See, e.g., Illinois law (1075/§ 35 (b) (right to control one’s identity does not apply to “non-commercial purposes including any news, public affairs…”); see also Messenger ex rel. Messenger v. Gruner + Jahr Printing and Pub, 94 N.Y.2d 436, 727 N.E.2d 549 (New York Ct. of Appeals, 2000) (“where a plaintiff's picture is used to illustrate an article on a matter of public interest, there can be no liability … unless the picture has no real relationship to the article or the article is an advertisement in disguise”; Maheu v. CBS, 201 Cal. App. 3d 662, 675 (1988) (“even a tortious invasion of privacy is exempt from liability if the publication of private facts is truthful and newsworthy.”).

Nonetheless, many individuals and commentators have voiced concerns that a public policy that permits unrestricted and widespread conduct of the sort engaged in by BlockShopper would result in a substantially adverse impact on the actual and/or potential marketplace – but marketplace for what? 

Because the discrete information that BlockShopper aggregates is generally available from county clerk’s offices anyway, and Internet-posted headshots are not usually offered “for sale,” it is not clear what exact “marketplace” is being negatively affected.

In a broader sense, one could argue that BlockShopper’s unauthorized appropriation of images and information from social networking sites may serve to deter private individuals from engaging in socially productive interaction on the Internet.  In fact, Brian Timpone warned the public to this negative impact in a news interview:  If you don’t want to be on BlockShopper,don’t promote yourself on the Web.”  

But private individuals and copyright holders making images of themselves visible on the World Wide Web could theoretically argue that they have not legally consented to BlockShopper’s appropriation of those images for BlockShopper’s commercial gain.  

Therefore, there is at most an unresolved legal question as to whether BlockShopper’s display of headshots is a legally-permissible “fair use” of those particular images in connection with bona fide news reporting about those individuals.

Finally, many individuals sincerely believe that BlockShopper’s conduct violates their individual right to privacy.  However, they may be surprised to discover that laws regarding the privacy of truthful facts are not as restrictive as one might think.  If BlockShopper has accomplished nothing else, it has contributed to a collective legislative push by some to get real estate data privacy laws toughened up at the county and local levels.

In conclusion, the thorny legal issues surrounding BlockShopper’s website, and other identity aggregators like it, remain mostly unresolved at a national level.  Those who remain disturbed and disgusted by BlockShopper’s approach and question the bona fides of its “news reporting” may best be served writing their local legislators about making the data surrounding their local real estate transactions private.

Tuesday, July 3, 2012

When is Undercover Recording Legal?

Recording telephone calls and in-person conversations is a common practice of undercover private investigators as well as aggressive investigative journalists. Such recordings can make or break a case or investigation.  In fact, most private investigators view undercover recording as an indispensable tool in their arsenal. However, others don't use recordings because of the complex legal risks that it creates.

However, there are important questions of law that must be fully understood before developing a consistent policy about making and using undercover recordings. Both federal and state statutes govern the use of electronic recording equipment. The unlawful use of such equipment can give rise not only to civil lawsuits brought by the "harmed" parties, but also criminal prosecution is possible.
Accordingly, it is critical that investigators, lawyers and journalists fully understand all the laws that may apply to a given set of circumstances, and appreciate what their rights and responsibilities are when recording and disclosing communications.

Although many of the relevant statutes address wiretapping and eavesdropping (i.e., listening in on conversations of others without their knowledge), these same laws may apply to recording of any conversations, including phone calls and in-person discussions.
Federal law generally allows recording of telephone calls and other electronic communications with the consent of at least one party to the call. A majority of the states and territories have adopted wiretapping statutes based on this federal law, although most also have extended the law to cover in-person conversations.

Thirty-eight states and the District of Columbia permit individuals to record conversations to which they are a party, without expressly informing the other parties that they are doing so. These states are generally referred to as "one-party consent" states, and as long as the investigator (or the person doing the recording) is a party to the conversation, it is legal for him to record it.

Twelve other states require, under most circumstances, the consent of ALL parties to a conversation. Those jurisdictions are California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, Pennsylvania and Washington.

Regardless of the specific jurisdiction involved, it is almost always illegal to record a conversation to which you are NOT a party, do not have consent to tape, and could not naturally overhear in a public place.

Additionally, complex legal concerns can arise when interstate telephone calls are recorded by one of the parties to the call. For example, an investigator located in New York State who records a telephone conversation without the consent of a party located in Illinois would not violate New York State law, but could be civilly and even criminally liable under Illinois law.
A court located in New York State may even apply Illinois' laws, depending on its "conflict of laws" rules. Therefore, an aggrieved party may choose to file suit or a criminal complaint in either jurisdiction, depending on which law is ultimately more favorable to the party's claim (and where jurisdiction lies).

Additionally, federal law may apply when the conversation is between parties who are in different states, although it is unsettled whether a court will hold in a given case that federal law preempts state law.

Therefore, in light of the complex laws governing electronic recording of conversations between private parties, private investigators are strongly advised to err on the side of caution when recording or disclosing an interstate telephone call.

Forensic Clues Hidden on the Internet

The following explains some of the terms used in Internet forensics, and suggests where relevant clues about a domain name may be hiding:
"IP Address"
Each and every computer on the Internet has a unique address - just like a telephone number or street address - which is a rather long and complicated string of numbers. It is called its "IP address" (IP stands for "Internet Protocol"). IP Addresses are hard to remember, so the Domain Name System makes using the Internet far easier for humans by allowing words in the form of a "domain name" to be used instead of the arcane, numerical IP address. So instead of typing, you can just type that IP address' domain name, and you would then be directed to the website that you are seeking connected to that domain name.
It is possible to "geolocate" an IP address by using a variety of free services available on the Internet. Geolocation is the practice of determining the physical, real world location of a person or computer using digital information processed and collected on the Internet.
Geolocation can offer the city, ZIP code or region from which a person is or has connected to the World Wide Web by using their device's IP Address, or that of a nearby wireless access points, such as those offered by coffeeshops or internet cafes.
Determining the country of an Internet user based on his or her IP address is relatively simple and accurate (95%-99% percent) because a country is required information when an IP range is allocated and IP registrars supply that information.
Determining the specific physical location of an IP Address down to a city or ZIP code, however, is a little more difficult and slightly less accurate because there is no official source for the information. Further, users sometimes share IP addresses and Internet service providers often base IP addresses.
Even when not accurate, though, geolocation can place users in a bordering or nearby city, which may be good enough for the investigation.
Internet Corporation for Assigned Names and Numbers (ICANN)
The Internet Corporation for Assigned Names and Numbers (ICANN) is an internationally organized, non-profit corporation that has the ultimate responsibility for Internet Protocol address space allocation, generic (gTLD) and country code (ccTLD) Top Level Domain name system management, and root server system management functions. As a private-public partnership, ICANN is dedicated to preserving the operational stability of the Internet; to promoting healthy and lawful competition; to achieving broad representation of global Internet communities; and to developing policies to foster these goals.
Registrants are individuals or entities who register unique domain names through Internet Registrars. The Registrant is required to enter a registration contract with his Registrar, which sets forth the terms under which the registration is accepted and will be maintained. The Registrant's data is ultimately recorded in a number of locations: with the Registry, the Registrar, and, if applicable, with his webhosting provider.
Domain names are registered by individual Registrants through many different companies known as Internet "Registrars." GoDaddy, for example, is a major ICANN-accredited Registrar. There are currently approximately 430 accredited Internet Registrars. A complete listing of accredited Registrars is in the ICANN Accredited Registrar Directory. A Registrar asks individuals, or "Registrants", various contact and technical information that makes up the official registration record. The Registrar maintains detailed records of the Registrant's contact information and submits the information to a central directory known as the "Registry." The Registry provides other computers on the Internet the information necessary to send the Registrant e-mail or to find the Registrant's Website on the Internet.
The Registry is the authoritative, master database of all domain names registered in each Top Level Domain. The Registry operator keeps the master database and also generates the "Zone File" which allows computers to route Internet traffic to and from Top Level Domains (TLD's) anywhere in the world. Internet users don't interact directly with the Registry; users can register names in TLDs by using an ICANN-Accredited Registrar (see above). Two of the largest Registries are Verisign (with authority TLDs, among others), and the Public Interest Registry ("PIR")(with authority TLD's).
Top Level Domain (TLD)
Top Level Domains (TLDs) are the names at the top of the DNS naming hierarchy. They appear in domain names as the string of letters following the last (rightmost) ".", such as "net" in "". The administrator for a TLD controls what second-level names are recognized in that TLD. The administrators of the "root domain" or "Root Zone" control what TLDs are recognized by the DNS. Generally speaking, two types of TLDs exist: generic TLDs (such,.net,.edu) and country code TLDs (such,.de,
All domain name Registries operate a "Whois" server for the purpose of providing information about all the Internet domain names registered with them. In a Shared Registry System, where most information about a domain name is held by separate individual Registrars, the Registry's Whois server provides a referral to the Registrars own Whois server, which provides more complete information about the domain name. The Whois service contains Registrant, administrative, billing and technical contact information provided by Registrars for domain name registrations.
By collecting and analyzing the Whois data, the Registry data, the Registrar data, and other bits and pieces of data about any websites associated with the domain name(s) you are interested in, a forensic investigator can often reconstruct a Registrant's identity, location and other contact information (e-mail, etc.).