Fake Apple Stores In Queens Forced To Hand Over Knockoff Gadgets

(Reuters) - Two stores in Queens, New York, accused of peddling unauthorized Apple Inc (AAPL.O) accessories have agreed to hand over all products in their inventories bearing the word "Apple" or any of the company's ubiquitous trademarks.

The proposed settlement, lodged in Brooklyn federal court on Thursday, would resolve a trademark-infringement lawsuit filed last July against Apple Story Inc and Fun Zone Inc, two stores in the Chinatown section of Flushing, Queens, that sell cases, headsets and other accessories for Apple products such as the iPhone, iPad and iPod. The two stores maintain they have not violated any Apple trademarks.

If U.S. District Judge Kiyo Matsumoto approves the settlement, the stores will have five days to turn over any counterfeit products in their inventories, as well as any products, labels, packaging, promotional materials and other items that bear any Apple trademarks, including the well-known image of an apple and proprietary phrases such as "iPod" and "iPad."

According to a court filing from Apple, the design of the unauthorized iPhone and iPod cases sold by the two stores mimics the trademarked iPhone and iPod designs and includes the phrase: "Designed by Apple in California. Assembled in China."

As part of the proposed settlement, Apple Story has agreed to change its name, which Apple contends is too similar to its "Apple Store" trademark. It has also agreed to remove an oversize iPhone-shaped window display.

The defendants -- who include Apple Story owner Janice Po Chiang and Fun Zone manager Jimmy Kwok -- are also prohibited from destroying any records pertaining to the manufacture, distribution, sale or receipt of the cases or headsets identified as fakes by Apple.

TIDE OF COUNTERFEITING

Apple filed the suit under seal on July 25. Under U.S. trademark counterfeiting law, a company may file a trademark infringement action under seal so as not to tip off the accused before seizure orders are executed. The record was unsealed following a request from Reuters.

Apple said in court filings it sent private investigators to buy hundreds of dollars' worth of the alleged fakes from both stores multiple times over several weeks earlier this year.

On July 27, Apple seized goods bearing the Apple trademarks from both stores. It has also won a court order requiring the defendants to turn over access to their business email accounts, which could yield clues about their suppliers, distributors or customers.

The lawsuit comes as the California company tries to stem a tide of counterfeit products and even whole counterfeit Apple stores, in China.

A spokesperson for Apple declined to comment on the settlement.

Attorneys for both parties did not immediately return requests for comment.

The case is Apple Inc. v. Apple Story Inc et al., in the U.S. District Court for the Eastern District of New York, no. 11-3550.

For Apple: Mark Mutterperl and Todd Hambidge of Fulbright & Jaworski.

For the defendants: Samuel Chuang of the Law Offices of Samuel Chuang. (Reporting by Jessica Dye in New York; editing by Andre Grenon)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[jaredbrain]

07:17 AM on 09/17/2011

How and under what authority did Apple seize those goods from the stores? I'm not saying the stores aren't totally bogus lawbreakers, but I keep hearing reports of Apple going into peoples' homes and taking stuff with or without police help. Since when did corporate security get actual police powers?

[JohnTheMac]

01:23 PM on 09/17/2011

You keep "hearing reports" but also spread false reports.
They seized nothing.
They sent investigators in to PURCHASE the fake goods, since the sale of the goods is the crime, more than just possessing them in a store "for display". Then, their lawyers do the rest with injunctions, cease and desist letters, and getting emails and records.
Police can search a person's home with a warrant, which happened in a case last year, or they can ask to search, and if you let them, they can.
I had a police ask me to take a look in my trunk once. I told her to go f_ herself.

[LdyTyler]

12:13 AM on 09/17/2011

I love seeing stories like this. I believe schadenfreude is the most fitting word to describe my response to stories like this one (or the chain of fake Apple stores in China). It won't happen overnight, but eventually every company that believes it no longer needs the patronage of the American middleclass, because it can rely on serving the growing middleclass in China, will be usurped by local Chinese competitors that can knock-off their product design and sell it for a fraction of the cost. Some people believe this behavior to be dishonest, but they forget that morality isn't fixed. What is seen as unlawful or corrupt here, is woven into the very fiber of their culture, and viewed as perfectly acceptable. There, it's not about 'who made it first', it's about who can sell it for cheaper.

[Guy451]

04:35 PM on 09/16/2011

Boo to misleading headlines! I thought this was about the Chinese fake Apple stores. Apple Story Inc and Fun Zone Inc do not sounds like attempts to fool or dupe people into thinking they're legitimate Apple stores.

[jaredbrain]

07:30 AM on 09/17/2011

the stores are in china town. I bet they speak -perfect- english- and would never be fooled by something that's just a letter off.

[bryanzth]

12:49 PM on 09/16/2011

OH MY, MORE REGULATION OF COMPETITION!!!!

Hahaha, I can hear the protests now, from those who are angry that Apple is winning and that the crooks (they're in business, and after all, anything goes!!!) are closing.

Hah.

BZ.

[katwright]

12:45 PM on 09/16/2011

Only 2 stores? Hilarious.
Flushing is teeming with them. Heck even in Brooklyn it shouldnt be a problem to find fake accessories.
Or you close them down all or none! Fair is fair.

[I think therefore I am]

12:13 PM on 09/16/2011

With so many counterfeit merchandize out there why is Apple the only one allowed to go after people? I noticed a few articles on this here already. Special Treatment!

[JohnTheMac]

01:26 PM on 09/17/2011

"only one allowed"? Where did you get that?
Counterfeit stuff is busted all the time.

[Ann Delacy]

12:04 PM on 09/16/2011

I'm using an Apple iBook to post this message that was designed in California and manufactured in China. What's the difference, it's all about the money.

If Apple really cared about the U.S, they'd build at least one factory here in the United States. I know I digress but what's the difference?

[CaptainObvvious]

03:48 PM on 09/16/2011

You know they don't manufacture overseas cause they love Chinese people right? They do it because the cost of American labor would make them and any other tech company that manufactures here lose their competitive edge in pricing... Not only do they have to charge more they will have less money left for acquisitions, R&D, hiring more workers, expanding...

Manufacturing overseas is often not a choice but a necessary evil so they can compete.

[JohnTheMac]

10:12 PM on 09/16/2011

"If Apple really cared about the U.S, they'd build at least one factory here in the United States."

They don't have factories. They don't want to have factories.
They want other people to have the hassle of factories, so why don't YOU go and make this factory in the US and ask Apple to use it?

[Cael]

09:28 AM on 09/16/2011

Before even reading the article I knew the defendants would be asian. I hate that I thought that, but you can usually bet your life on it when dealing with fake electronics.

[Skeetshooter]

03:37 AM on 09/16/2011

Opening fake Apple stores right here in the U.S. took a lot of balls! It's as if America is no longer a sovereign country, but just a free fire zone for corporate crooks. Oh, wait..

[bryanzth]

12:54 PM on 09/16/2011

Haha, "oh wait" exactly! :D

You're right on Target errr I mean tarzhay.

BZ.

[ddanimal]

02:49 AM on 09/16/2011

This IP infringement is an outrage. Send these criminals to jail.

[mxytsplyk]

02:44 AM on 09/16/2011

Were they forced to hand over the Steve Jobs Action Figures?

[MichaelMcKLA]

01:08 AM on 09/16/2011

They should just open a Lemon Store.

[bryanzth]

12:55 PM on 09/16/2011

Clarify. Surely you can put a few more words on that Zuen tablet of yours? They still make those?

BZ.

[MichaelMcKLA]

03:01 PM on 09/16/2011

Create computers under the Lemon brand name and sell them in Lemon stores. :)

[JohnTheMac]

01:29 PM on 09/17/2011

The lemon store, where you can buy Blackberry Playbooks, HP Touchpads, Dell Ditties, and Zunes!
Good plan!

[Fido0311]

01:00 AM on 09/16/2011

Wow the Chinese did this in Chinatown, I'm amazed. F*** China

[llibsetag]

12:26 AM on 09/16/2011

Hello....
You've just been Steve'd!
Buh Bye.

[Johnnyrotten5]

11:32 PM on 09/15/2011

the people from china are worse than americans,I have no idea why we do any business at all with them.They kill our dogs,poison our children with lead in toys,counterfit,and steal our technology.We have lost millions of jobs because americans think its more important to pay a buck less for underwear than protect jobs here,and look where we are now,20% unemployment.I don't know who I hate more us or them

[Worrierking]

12:01 AM on 09/16/2011

Wait until we remove all of the troublesome regulations and labor laws we unfairly placed on corporations. We'll be killing our own dogs and poisoning our kids with products made right here in the good ol' US of A.

[Ann Delacy]

12:08 PM on 09/16/2011

Apple is one of those business and, guess who get to serve as advisers to the U.S. on business and refuses to release the number of jobs outsourced overseas? You guessed it: Apple!

What kind of tax breaks did Apple receive last year from U.S. taxpayers?

[JohnTheMac]

10:16 PM on 09/16/2011

" refuses to release the number of jobs outsourced overseas?"

Those jobs never existed here in the US, and why would Apple care how many people their contractors used to screw in a lightbulb?
They're contracted to make so many products for some agreed price. How many people the contractor uses is irrelevant. How many people made your car? Have any idea?