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On Friday August 28th, 2009 a jury in the Northern District of California found ISP/web hosts Akanoc Solutions, Inc., Managed Solutions Group, Inc. and Steven Chen liable for contributory trademark counterfeiting and awarded Plaintiff Louis Vuitton Malletier $32 Million.
This story is not only the first you will likely read on this case, but its author was the primary investigator and a witness for the Plaintiff.
I first observed this group a few years ago doing business as Managed Solutions Group (MSG) when they were popping up as a US-based web host for China-based sellers of counterfeit goods.
A couple of my luxury brand clients asked me to look into this entity and I did. I asked a colleague who is a higher-up at a major anti-spamming organization if he had ever heard of them. His immediate response was, “Yeah. They are spammers.” He later clarified stating that they had positioned themselves as bulletproof hosts for spammers for some time. He told me they had straightened their act in that industry after the CAN-SPAM Act was passed and made it a criminal act to facilitate such activity.
Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc. et al was a bold case and a years-long battle fueled by the passion of Vuitton’s in-house legal wizard Nikolay Livadkin and outside counsel Andy Coombs and Annie Wang of J. Andrew Coombs a P.C. A brilliant case was laid out that illustrated Akanoc, MSG & Chen’s non-compliance despite diligent efforts by Vuitton.
Laughably, Akanoc admitted that they complied with the requests of big companies like eBay and Microsoft but not with smaller companies such as my client. I don’t know which part of that statement is more moronic: The Defendant sneezing at a 100 year-old company that made $24 Billion last year (triple eBay but less than Microsoft); or that they looked a federal judge in the eye and sneezed at the rights of all companies they did not perceive to be ‘big’.
The verdict is below and many interesting stories will arise. There are many things to learn from this. A few of which are:
- Web hosts must not ignore the violation of anyone’s rights on their watch.
- Don’t mess with Louis Vuitton.
- Evidence produced by my office is far better than our competition and can help you win cases like this one.
For more information please contact me by phone at (972) 422-2100 or by email at firstname.lastname@example.org.
Now, I’m going to finish my coffee.
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On Tuesday, an Illinois district court ordered a vast international spam network to shut down, stopping what the Federal Trade Commission (FTC) says was one of the most prolific spam gangs on the Internet. The group, which used names like HerbalKings, Inet Ventures, Tango Pay, Click Fusion, and TwoBucks Trading Limited, sent billions of unsolicited messages to Internet users over the last 18 months touting luxury goods, counterfeit pharmaceuticals and pornography, according to the commission.
“These people have been a thorn in my clients’ sides for a couple of years now,” said Rob Holmes, CEO of IPCybercrime.com, an investigative firm retained by two of the world’s largest luxury brands to curtail their spam problem. It is Holmes’ common practice to network outside the anti-counterfeiting community for collaboration. “Sometimes, what is sawdust on my floor is the last piece of a puzzle for another investigation.” Holmes says that at times up to one-third of all of the unsolicited emails are promoting replica watches.
To pummel Internet users with its solicitations, the spammers used the Mega-D/Ozdok botnet to peddle the replica luxury items, as well as penile enhancement pills, according to FTC filings. To make matters worse, the spammers also claimed to provide secure connections for transactions on their websites, when in actuality none of the sites provided encrypted sessions with SSL as asserted, according to the FTC.
The investigation provides a clear window into the business of modern spam, which by some estimates accounts for 90 percent of all email messages sent over the Internet. Investigators also said they monitored the group’s finances closely and that it cleared $400,000 in Visa charges in one month alone. “They were sending extraordinary amounts of spam,” said Jon Leibowitz, an FTC commissioner. “We are hoping at some level that this will help make a small dent in the amount of spam coming into consumer’s in-boxes.”
The FTC has brought over a hundred cases against spammers over the last ten years, but officials said this was perhaps the most extensive spam operation it has ever encountered with ties to New Zealand, India, China, Australia, and the United States. The commission asked the court to freeze the gang’s finances under the CAN-SPAM Act of 2003, a U.S. law that provides civil penalties for spammers who falsify data in emails and fail to offer ways for recipients to refuse future messages.
The U.S. government is also pursuing criminal charges against the group. FBI investigators in Chicago and St. Louis have executed search warrants against people they believe to have been members of the spam gang, including Jody Smith, 29, of McKinney, TX. U.S. officials are also working with New Zealand authorities in the case against Lance Atkinson, 26, a New Zealand native now living in Australia.
As with other criminal groups online, the activities of this replica watch spam group were remarkably international in scope. The group was illegally selling counterfeit watches and shipping them out of China. The commission also said the group was basing its websites in China where bullet-proof hosting is common, fulfilling credit cards from the Republic of Georgia and the Mediterranean island of Cyprus, and transferring funds between members using ePassporte, an electronic money network.
Steve Wernikoff, an attorney with the FTC, issued personal thanks to many individuals, including Mr. Holmes, for their organized efforts during the investigation. “Valuable information and resources assisted this effort,” Mr. Wernikoff stated.