SAD suits aren’t really against small businesses and most damages are never collected

SAD scheme suits refer to Schedule A Defendants, meaning large numbers of defendants sued as a group because their specific identities could not be established

Mass counterfeiting cases developed as a reaction to the Tiffany ruling, as a way to potentially reach the entities responsible for infringing listings, and mass counterfeiting litigation has proliferated during the past ten years. 337 Mass counterfeiting cases allege trademark counterfeiting against a large number of defendants who are typically listed on an attached "Schedule A." 338 Schedule A, and therefore the identity of the defendants, may be held under seal for at least part of the case's pendency. In some instances, the plaintiffs themselves remain anonymous for some amount of time.339 The defendants are usually websites, Paypal accounts, store I.D. numbers, and other aliases and anonymous entities; in many cases, their identities overlap to an extent that may be difficult to determine 340 Often the individuals responsible for these websites and accounts are located in another country, but they are subject to personal jurisdiction in the filing district because they target the U.S. as a market for their counterfeit products. 34

Currently, the vast majority of mass counterfeiting cases are filed in the Northern District of Illinois (approximately 62%).342 A large number of cases are also brought in the Southern District of Florida (approximately 19%), with a smaller group being filed in the Southern District of New York (9%).343 The high concentration of cases in these jurisdictions may be due to permissive joinder rules. Federal Rule of Civil Procedure 20(a)(2) allows joinder of defendants in one action if

(A) Any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and

(B) Any question of law or fact common to all defendants will arise in the action.344

Some courts have interpreted "transaction or occurrence" broadly and have allowed multiple defendants selling the same counterfeit products online in a coordinated fashion to be joined in one action. For example, the Northern District of Illinois observed that counterfeiters take advantage of the anonymity and mass reach of the internet, along with the cover afforded by international borders, to violate companies' trademarks "with impunity."345 The court also recognized that the defendants may even understand that "their ability to profit through anonymous internet stores is enhanced as their numbers increase, even though they do not engage in direct communication or coordination."3 46 Since most defendants in mass counterfeiting cases do not make an appearance and the cases end in default judgment, joinder becomes a practical and efficient solution. 347

Courts have the power to enter injunctions seizing control of various assets of the defendants, including internet sites and financial accounts. In one case in Florida, Louis Vuitton alleged that a named defendant and numerous unknown associates residing in the People's Republic of China were engaged in counterfeiting activities over the internet, involving the sale of handbags, wallets and other items bearing counterfeit Louis Vuitton marks.3 48 The court granted a preliminary injunction restraining defendants from further use of the marks; it also placed domain names in trust and ordered Western Union to hold all money transfers to the named defendant from U.S. consumers. 349 In another situation, the court initially entered an asset restraint as part of a preliminary injunction; after entering a default judgment, it then ordered that defendants' online marketplace accounts, web hosts, sponsored search engine and ad-word providers, credit cards, banks, merchant account providers, payment processing service providers, and internet search engines were required to disable and cease providing services to the defendants. 350 The court also awarded statutory damages in the amount of $1 million per defendant, and it ordered that any third party providers holding funds for the defendants (such as PayPal, Alipay, and Amazon Pay) should restrain funds held in defendants' accounts and transfer them to the plaintiff3 5

Litigation data analyzed by Lex Machina confirms that most mass counterfeiting cases end in default judgments with large damage awards. 35 2 The damages are "awarded as a rate (e.g., $2,000,000 per defendant, where each defendant is separately liable) instead of as a lump sum (e.g., $10,000,000 against all defendants, where defendants are jointly and severally liable)."353 However, the data also shows that even though the amount of damages awarded in a mass counterfeiting case is often very high, those damages are almost never collected. 354 Instead, the plaintiff must be satisfied with an injunction. Even if the defendants never appear and the plaintiff is awarded a default judgment, a mass counterfeiting action is expensive to prepare and prosecute, and it is an ongoing distraction that diverts the plaintiff's attention from its real business of running a company and producing innovative technologies. It is unclear whether the costs justify the results.