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SAD scheme

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This is an old revision of this page, as edited by Bayoustarwatch (talk | contribs) at 05:06, 5 February 2024 (→Criticism: adding note <ref name=Sham>[http://dx.doi.org/10.2139/ssrn.4549909 Burstein, Sarah, The Counterfeit Sham (January 28, 2024)]</ref>). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

SAD (Schedule "A" Defendant) Scheme is a controversial tool in Intellectual property enforcement which exploits logistical technicalities of federal copyright law regarding counterfeit goods, and in particular the Federal Rules of Civil Procedure, such that the putative defendants have their funds frozen before having been notified of service of process. The defendants are typically small on-line businesses, enough of whom settle for the scheme to be profitable; the scheme has been described as having "weaponized the legal system".[1]

Background

"SAD” is an acronym standing for “the Schedule A Defendants scheme,” [2] The acronym is something of a misnomer inasmuch as the (typically numerous) businesses in each case are not listed as Defendants, but rather as "Exhibit 1", "Exhibit 2", and so on. "Schedule A" refers to this list, which the putative rights-owner plaintiffs file not only separately from the complaint, but have sealed, and with a different docket number. The plaintiffs then request an ex parte temporary restraining order (TRO) against the defendants’ allegedly infringing behavior, which is procedurally granted and which on-line marketplaces typically automatically obey. Thus the merchant may only learn of the (spurious) litigation once their on-line marketplace account has been frozen. Enough settle, or simply lose by default, for the sophisticated scheme to be profitable. It admits of several variations.[3][4]

Criticism

The scheme has attracted scholary legal analysis.[5][6][7] [8] Whilst at least one plaintiff has been charged with perpetuating fraud on the court, the SAD is so novel, and relies so much on the automatic machinery of the courts, that institutional knowledge of it is not widespread. The defendants are most often on-line merchants based in China, and most of the "litigation" has to date taken place in the Northern District of Illinois,[9][10] with most of the remainder in the Southern District of Florida (a species of forum shopping).[11]

See also

References

  1. ^ "Small Sellers Are Getting Swept up as Brands 'Weaponize' the Legal System". 16 July 2023.
  2. ^ How Does a Mom Get Slapped With a $250,000 Judgment Over $380 of Homemade Luke Combs Merch? Experts Cite ‘Cottage Industry’ of Mass Counterfeit Suits in Illinois By Chris Willman
  3. ^ "You searched for Schedule A".
  4. ^ "The counterfeit lawsuits that scoop up hundreds of Chinese Amazon sellers at once".
  5. ^ "A Sad Scheme of Abusive Intellectual Property Litigation".
  6. ^ Goldman, Eric (January 2023). "Ning Zhang interview with Eric Goldman regarding Schedule a Defendants". Historical and Topical Legal Documents.
  7. ^ The Fine Line Between Battling Online Counterfeiters & Engaging in IP Trolling by Prof. Eric Goldman
  8. ^ Burstein, Sarah, The Counterfeit Sham (January 28, 2024)
  9. ^ "Brands Flock to Chicago Court in War on Internet Counterfeiters".
  10. ^ "'Schedule A' Cases: A Powerful Tool for Enforcing Design Patents".
  11. ^ "Are Some Plaintiffs Firms Becoming 'Trademark Trolls'?".
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