## Facts

- Gucci America, Inc. owned federally registered trademarks for the Gucci name, crest, and GG designs and alleged widespread recognition and substantial U.S. sales and advertising.
- A prior action resulted in judgment against The Laurette Company, Inc., operator of TheBagAddiction.com, which admitted selling counterfeit “replica” Gucci goods nationwide through its website.
- Gucci sued payment-industry entities allegedly enabling the infringing site’s sales: Frontline Processing Corp. (processor), Woodforest National Bank (acquiring bank), and Durango Merchant Services LLC (merchant-account broker), plus unidentified entities.
- Gucci alleged Durango marketed “high risk” merchant accounts and explicitly included “replica products,” and that Durango arranged merchant processing for the infringing website through Frontline and Woodforest.
- Gucci alleged defendants reviewed merchant applications referencing “replica” merchandise, reviewed the website displaying Gucci marks on non-authentic goods, and processed substantial sales volume while continuing service despite chargebacks and complaints.
- Gucci asserted defendants provided an essential mechanism for completing infringing transactions—credit-card processing—and could have suspended or terminated processing.

## Issues

1. Whether the court could exercise specific personal jurisdiction over the out-of-state payment-processing defendants based on their alleged role in processing infringing online sales into New York.
2. Whether the complaint plausibly stated contributory trademark infringement (and related theories) under the Lanham Act against payment intermediaries that did not directly sell the counterfeit goods.

## Decision

- The court denied defendants’ joint motion to dismiss.
- The court held Gucci sufficiently alleged facts supporting specific personal jurisdiction under New York’s long-arm statute and due process.
- The court held Gucci plausibly alleged contributory trademark infringement against the payment-processing defendants under the Lanham Act at the Rule 12(b)(6) stage.

## Legal Principles

- Specific personal jurisdiction may exist where defendants purposefully direct commercial activity into the forum and the claims arise from that forum-related conduct, consistent with due process.
- Contributory trademark infringement may be shown where a defendant (1) intentionally induces infringement, or (2) continues to supply a product or service to a party it knows or has reason to know is engaging in trademark infringement.
- The contributory-liability framework can apply to service providers when the service is an instrumentality that enables infringing transactions and the provider allegedly continues supplying it despite knowledge or willful blindness.
- At the pleading stage, allegations of knowledge may be supported by facts such as explicit “replica” representations in merchant onboarding materials, review of the infringing site, and continued processing amid chargebacks or complaints.

## Conclusion

The court allowed Gucci’s Lanham Act claims to proceed, concluding that the alleged processing of counterfeit-related transactions into New York supported specific jurisdiction and that the complaint plausibly alleged payment intermediaries knowingly (or with willful blindness) continued providing essential payment services enabling counterfeit sales.


Gucci Am., Inc. v. Frontline Processing Corp., 721 F. Supp. 2d 228 (S.D.N.Y. 2010)