New York Broker Agrees to POA Verification Requirements to Settle Nike Trademark Lawsuit

The settlement is one of a handful with POA verification provisions that have been entered into by customs brokers to settle lawsuits from Nike (see 1702140037 and 1703160043). Filed in February 2020, the lawsuit breaks years of silence from Nike after actively pursuing customs brokers with trademark lawsuits in the early part of the last decade.

Nike says B&H, along with freight forwarders Shine Shipping and Hana Freight, ignored several red flags on shipments of counterfeit Nike shoes described on shipping and entry documents as lamps. Beginning in 2017 with the first bill of lading for shipment from the Chinese factory, documentation for each of the four shipments identified “Artiva” as the recipient, and a “Tom Lee,” with an email address of tom@artivallc.com, as the contact party.

Artiva had been an operating name of the California company E-Ko image, which does import lamps and furniture. But a review of California’s online corporate records would have revealed that the name Artiva had been forfeited by E-Ko two years earlier, in 2015, and Artiva’s operations suspended. Nor did any corporate records mention any Tom Lee. The real shippers were using a stolen identity.

Nike’s complaint says Shine, the Chinese forwarder that arranged for transportation, would have found E-Ko had no knowledge of the shipment had it contacted E-Ko. Hana, a licensed Ocean Transportation Intermediary (OTI) that acted as Shine’s U.S. receiving agent, should have noticed several strange discrepancies on emails related to the power of attorney it would send to Tom Lee -- they variously listed Artiva’s location as “China, California” and “Chino, California,” Nike said.

Then, according to Nike, B&H used the EIN provided on the power of attorney -- that of E-Ko -- to file the entry with CBP. “Once B&H used the EIN provided on the POA to complete the Entry Summary, which showed the EIN was for E-Ko, B&H was on actual notice that the EIN did not belong to the company for which it had an executed POA,” that it wasn’t authorized to file entries for Artiva, and that it had filed entry in E-Ko’s name without a valid POA for E-Ko, Nike said.

Each of the companies, rather than investigate the discrepancies, instead provided invoices to the appropriate parties for payment, Nike said. The pattern continued on three more shipments. It wasn’t until the fourth shipment that CBP opened a container and found shoes instead of lamps. As it seized the container, CBP found it to be carrying 9,024 pairs of counterfeit Nikes worth $977,414.

Under the settlement, the Southern New York U.S. District Court, which heard the case, issued an injunction May 5 that says B&H must take steps to confirm the authenticity of all POAs it receives prior to filing entry or otherwise conducting customs business. That includes either an in-person verification of the POA grantor’s government-issued ID, an in-person visit to the importer, or a review of the grantor’s government-issued ID and of publicly available company information on the importer. B&H must also retain all records of its verification activities, and update its verifications every two years for active clients, the injunction says.

Shine and Hana remain defendants in the lawsuit, Nike said in a filing. B&H and Nike didn't comment.

Email ITTNews@warren-news.com for copies of the settlement and the complaint.