How to stabilize billions of hard-earned money of cross-border e-commerce sellers? -The product is involved in infringement and is subject to legal proceedings by law firms such as GBC in the United States.

foreword

Since 2017, some American lawyers have filed malicious lawsuits against some China merchants on American e-commerce platforms such as Amazon, AliExpress, Ali International, eBay, wish and Independent Station, issued a TRO(Temporary Restraining Order) to freeze the funds in the e-commerce platform account, and used relevant American laws and regulations to circumvent the service rules of The Hague Convention on Service, so as to achieve the effect of obtaining a default judgment without the full knowledge of the merchants.

With the continuous development of cross-border e-commerce, infringement cases are also common. On the one hand, it is indeed due to the low vigilance of some e-commerce sellers. What should be paid more attention to is the suppression of major cross-border goods by law firms, especially the harsh suppression by American law firms. With GBC Law Firm as the representative, other law firms followed closely, and filed lawsuits against sellers in China round after round. Because sellers in China are not aware of intellectual property rights and have a large volume, they often become the “fat meat” of these law firms. The profits made by American law firms only by suing sellers of infringing goods should not be underestimated. According to the data:

According to GBC official website, in 2020, trademark lawsuits targeted 22,000 e-commerce sellers, including more than 5,900 independent e-commerce websites. According to the third-party information, the revenue of GBC Law Firm in 2020 is nearly USD 1 billion, equivalent to over RMB 6 billion, which is close to the first-tier sellers in China such as Anke (RMB 9.353 billion)!

In the face of such cruel cross-border e-commerce rules, if sellers want to develop continuously and stabilize their hard-earned money, they should not only abide by their duties, but also check whether the products they sell are infringing. More importantly, they need to always pay attention to the progress of the case and understand the information of cross-border e-commerce circles in various ways, so as to avoid risks as soon as possible and avoid becoming a new generation of “fat meat” of American law firms!

The following small series will introduce you in detail the basic situation of the current cross-border e-commerce infringement litigation, the seller’s dilemma, the solution to the lawsuit, and how to inquire about the status and progress of your own case, so as to be calm in case of trouble!

Basic situation of tort litigation

“Brand infringement” has always been a high-risk minefield operated by cross-border e-commerce sellers. Especially in the peak season, it is the battlefield of American law firms under the name of “safeguarding rights”, and every case has caused hundreds of infringing sellers to complain.

Litigation mode of brand entrustment. The mode of infringement litigation is mainly as follows: entrusted by major brands, the following American law firms/lawyers collect evidence on relevant intellectual property cases (including viewing screenshots of product details, using the buyer’s number to buy goods for fishing, etc.), and then conduct large-scale litigation in American courts. The list of some law firms/lawyers includes:

GBC（Greer Burns & Crain Ltd）

HSP（Hughes Socol Piers Resnick & Dym, Ltd.）

Keith A. Vogt

David Gulbransen

DBL（Dunlap Bennett & Ludwig, PLLC）

AMS（AM Sullivan Law, LLC）

ESP（Epstein Drangel LLP）

SMG（Stephen M. Gaffigan, P.A.）

At the same time, the way of “putting arrows” to collect money. The means of collecting money by these law firms is very simple. In most cases, initiating a lawsuit is a carnival between the brand and the law firm. These law firms usually sue hundreds of sellers at one time, and if someone contacts and negotiates, they will reach a settlement with each other and make quick money; If someone asks an American lawyer to initiate a lawsuit, they will go to court. If there is no response, when the 21-day deadline for responding to the lawsuit expires, you can apply to the court for a default judgment at any time and award compensation ranging from $100,000 to each seller, so that the funds frozen in the defendant’s account will be awarded to the prosecution. Batch operation of crawler grabbing data. Because the cost of prosecution in the United States is very low, most law firms use software to operate in batches. For example, if 1,000 sellers are sued at one time, each settlement is often not less than $2,000. As long as one lawsuit is filed, these law firms may earn millions of dollars. Therefore, these law firms can often make a fortune. According to the third-party information, the revenue of GBC Law Firm in 2020 alone is nearly 1 billion US dollars, equivalent to more than 6 billion RMB, which is close to the first-tier sellers in China such as Anker( 93.53 billion RMB).

The seller’s dilemma

Cross-border infringement cases continue to occur, and more and more sellers and friends suffer from it. Obviously, they are good citizens who abide by the law, but they are unconsciously involved in the infringement cases, resulting in the freezing of fund accounts and not being allowed to stop selling.

And American law firms have initiated lawsuits against China sellers round after round, introducing infringing sellers into the bottomless pit step by step. The plight of sellers:

Many sellers are experiencing this for the first time. Faced with transnational legal litigation cases, they are helpless and extremely flustered. The funds in their accounts are frozen, resulting in insufficient cash flow. The store can’t be suspended for further development (the only store of individual sellers is frozen). The time is very tight. It is very difficult to contact and hire local American lawyers. For example, language communication problems, trust problems, lawsuits are almost charged by the hour, and the total cost is incalculable. Faced with these difficulties, sellers But in the end, we still need to deal with litigation cases, otherwise we need to give up shops and shop funds.

Then, it is very important to handle cross-border infringement legal cases as efficiently and safely as possible, reduce losses (in terms of time and money), and choose appropriate case handling channels and litigation/settlement lawyers. Of course, no matter which way to handle them, it is very important to know the progress of the case in advance (temporary injunction/preliminary injunction/default motion/default judgment, etc.). Note: if the case has been judged by default, it may eventually.

Inquiry method of case status and progress

We can search for “Mai Jia Support” WeChat official account in WeChat for query. You can click the “Case Inquiry” button in the navigation bar for free self-inquiry. After registration, you can enter your own case number to check the case status/latest progress of your American case: whether there is a default judgment and the settlement/response/counterclaim/case withdrawal of other sellers [data source: real-time synchronization of American judicial case system data], and the query results are shown as follows:

(In order to facilitate the seller’s free self-inquiry, the QR code of “Maijia Support” WeChat WeChat official account is attached below)

Sellers know this information by themselves, or get the case information from American lawyers for a fee, and then choose the best way (settlement/lawsuit/counterclaim) after comprehensive analysis in combination with their own infringement freezing situation.

The ultimate goal, we believe, is how to deal with transnational litigation cases quickly and at low cost and restore the operation of the store.

Knowledge point: the service procedure of litigation initiated by American law firms

First of all, regarding the service procedure of American litigation, in general, American civil litigation needs to abide by The Hague Convention on Service, but the relevant laws of the United States stipulate that intellectual property cases can be served in other ways under certain circumstances and regarded as equal service. The types of documents served include subpoenas, judgments, rulings and so on. At the same time, the court for the Northern District of Illinois (IL) is often chosen because there are a large number of cases in the court that allow delivery by other means, such as e-mail. Judging from the American judicial system, the court has the right to serve it in other ways.

Secondly, if the defendant thinks that it is unreasonable to serve by other means, he needs to hire an American lawyer to make relevant comments to the court, including insufficient reasons for serving by other means and the court that accepts it has no jurisdiction. Otherwise, 21 days after the summons is issued, the court will regard the defendant as refusing to participate in the proceedings. Cases generally go through these processes: the plaintiff applies for a TRO(Temporary Restraining Order) extension motion > The plaintiff’s lawyer submitted a preliminary injunction order of PIO(Preliminary Injunction Order), also known as a permanent injunction motion >: The plaintiff filed a motion for default, and the court made a default judgment. Here, for each defendant seller, the judgment amount is more than 100 thousand dollars and above. According to the default judgment, the plaintiff’s lawyer can apply for Amazon and other e-commerce platforms to deduct the money from the defendant’s merchant account.

Countermeasures for Cross-border TRO Infringement Cases

When the merchant and the platform receive the TRO notice issued by the court, TRO often requires the platform as a third-party platform to restrict the account of the merchant. At this time, the merchant needs to take action to respond positively, so that the merchant can negotiate with the plaintiff and/or make a reasonable decision. In terms of time, if the plaintiff does not extend the limitation of TRO, the plaintiff will generally submit information to the court for a preliminary injunction 5-10 days before the expiration of TRO (the specific time depends on the progress of the case). In many cases, the absence time is basically about one month after PIO comes, depending on the progress of the plaintiff. So the calculated time is very urgent. Once absent, it may lead to an award amount higher than the amount that the merchant could have reached a settlement with the plaintiff. If the court makes a default judgment on the merchant, according to the law, the platform may permanently freeze the account and/or transfer all the funds contained in the merchant’s account to the plaintiff. (Except for Ali platform, which only freezes the current account funds, and subsequent sales funds can be withdrawn).

Detailed plan for responding to the lawsuit

Respond positively-hire an American lawyer with current state practice rights to conduct litigation.

Based on the past experience, we suggest that the defendant’s businesses actively respond to lawsuits and safeguard their own related rights and interests, otherwise, it will be impossible to curb the abuse of lawsuits by some American lawyers against China businesses, so that these American lawyers will always use this loophole to infringe on the interests of China businesses. In addition, according to the experience of cooperating with American lawyers, we roughly estimate that it will cost thousands of dollars to tens of thousands of dollars in legal fees to hire a responsible American lawyer to represent the lawsuit, and the time will range from more than ten days to several months.

Of course, not all cases are true infringement. There are generally businesses that have been wrongly sued here. It is completely feasible to analyze the case and their own situation and choose to respond to the lawsuit and claim the loss of the store during the freezing period from the plaintiff, and finally get compensation for “infringement”.

Other coping strategies

First, in the case of large-scale malicious lawsuits against domestic businesses, many sellers can be considered to jointly communicate with platforms such as Amazon. As an e-commerce platform in the United States, a large number of merchants on the same platform were maliciously sued. Wish hired an American law firm in October 2019 and December 2019 to formally respond to the lawsuit filed by HSP (Hughes Socol Piers Resnick & Dym, Ltd.), and all achieved certain results. Therefore, this is also a possible way to safeguard rights.

Second, negotiate the settlement amount. If the amount in the merchant’s account is not large, but he does not want to give up the account, then he can consider negotiating settlement with the other party out of court. In general cases, the settlement amount proposed by the other party is about 30%-70% of the remaining amount in the merchant’s account. According to the statistics of cases handled in the past, after negotiations between domestic and foreign lawyers, the proportion of settlement compensation can be reduced to 5%-20% of the amount at the time of freezing in some cases.

Written at the end, the seller encounters a cross-border infringement legal case, so don’t ignore it. Be sure to review and verify with the platform at the first time, find information and find a professional service organization. Because the current infringement lawsuit will continue to progress, the more backward it will be, the worse it will be for you. If you have been absent and deducted the store funds, it will be too late, and the store may be permanently closed and suffer heavy losses.

I hope that the seller’s friends will never encounter such legal cases. If they do, finding the right way to deal with them can effectively reduce the losses.

Thank you for reading, above.