Inkies Sports, Inc, doing business as Krystal’s NFL Shoppe of Albuquerque, NM, has brought a class- action lawsuit on the behalf of all officially licensed NFL wholesalers and retailers who have been harmed by counterfeiters advertising on Facebook.


The lawsuit, which is fiiled in the U.S. District Court for the District of New Mexico, alleges that on or before 2011, advertisements for counterfeit NFL merchandise began appearing in “Sponsored” advertisements on Facebook on the right-hand side of Faceboook pages. The ads, contained tag lines such as ”Jerseys for sale! Only $10. High Quality” and “Nike NFL Jerseys $21,” and were accompanied by photos of what appeared to be legitimate NFL merchandise.  The jerseys are often advertised at 80 to 90 percent below MSRP.


The ads connect to a website where consumers can buy the jerseys.
“Once an Internet user places an order and the goods are shipped, they receive what is immediately identifiable to any reasonable person as counterfeit goods in packaging bearing mailing addresses from locations within the mainland of the People’s Republic of China,” the suit alleges.
Krystal’s said that even though it began paying for its own sponsored links on Facebook in February, 2012, the offending ads were displaying on its Facebook page.


“As such, Krystal’s has inadvertently been placed in the untenable position of actually lending credence to the counterfeit ads,” the company’s complaint reads.


The suit alleges that the economic damages from the fraudulent ads for illegal goods likely runs into he many millions of dollars.


“In a world of low-price Internet retail, the lowest price will generally win over consumers, all else being equal,” the complaint states. “If consumers believe – albeit mistakenly – that they can order a genuine, NFL jersey for $22, as opposed to the MSRP of $100 to $300, they will understandably choose the cheaper jersey if both appear to be identical.”


When investigators at Krystal’s law firm received jersey’s they ordered through the site, they were able to immediately identify them as non-authentic because of incorrect stitching, the absence of an authentic NFL hologram and other flaws.


Because the government blocks access to Facebook in China, Kroger alleges the counterfeiters are working through adSage, an online advertising agency in Seattle that has implemented many data mining projects and software packages for more than 3,000 Chinese customers.

 

The suit also names DHgate.com, a Marietta, PA-based online marketplace that specializes in helping U.S. businesses source Chinese product, as a defendant. DHgate.com claims to offer 20 million product listing from more than 650,000 China-based suppliers.


“But for the assistance of companies like adSage and DHgate.com, it would be nearly impossible for the counterfeiters to access Facebook in order to advertise and sell merchandise,” the complaint states.
The suit alleges damages in excess of $5 million and violations of Title 15 of the Lanham Act.