Don’t Blame Paypal for Account Freeze

 

In U.S. trademark violation cases, the online merchant payment processor Paypal is often ordered by the U.S. court to freeze the accounts of online merchants. The account freeze takes place without prior notice to the Paypal account owner. Both Paypal and the Plaintiffs’ attorneys will contact the account owner to inform them of the lawsuit against them in the U.S. and will advise them to obtain U.S. legal counsel. Many account owners mistakenly blame Paypal for the account freeze. In fact, Paypal, banks and other online payment processing companies are completely innocent. Paypal is simply required to follow the order of the U.S. court and is powerless to either resist the order or to advocate on behalf of the account owners. Those who insist on blaming Paypal for their account freeze or who seek remuneration from Paypal waste valuable time and energy that should be devoted to defending the trademark violation lawsuit that is the cause of the account freeze. Don’t blame Paypal. Defend your case.

 

Trademark violation cases against foreign online retailers are unique in that personal service and delivery of the lawsuit are not required. The Plaintiffs request and are granted special permission to serve the Defendants by email or by posting a notice on the domain that has been seized. The rationale behind use of this extraordinary procedure will be explored in a separate blog post. When Paypal receives an order from a federal district court, Paypal must comply. Paypal does not receive any part of the frozen funds. In fact, Paypal incurs the cost of implementing the Court’s order, suffers loss of business revenue due to the account freeze and also becomes the target of their customer’s anger.

 

First, let us consider the ability of Paypal to resist the court order. Federal district courts are U.S. national courts with the ability to enforce their orders. If Paypal failed to comply with any order, the company could be held in contempt. This means that a U.S. court could fine Paypal or, if resistance continued and in extreme cases, arrest and hold responsible company officers in jail until the Court’s order is implemented. An attempt by the U.S. subsidiary of Bank of China to defy a similar order is illustrative of the futility of resistance. In November, 2015, Bank of China was held in contempt by a U.S. district judge in New York due to its refusal to turn over account records on the grounds that, as a state owned Chinese bank, following the order of the U.S. court would require it to violate Chinese privacy laws. The District Court fined Bank of China $50,000 per day while the bank appealed the decision to a higher court. By January, 2016, Bank of China turned over the requested records, acceding to the Court’s order.

 

Second, while Paypal does not have the legal ability to resist the Court order, there are also other powerful legal and business reasons that require Paypal to comply. Consider that eBay and Paypal are now themselves defendants in a lawsuit alleging that the companies knowingly provide a platform for and facilitate the sale of counterfeit goods. The lawsuit is Wimo Labs, LLC, v. eBay, Inc, et al., Case number 8:15-cv-01330, in U.S. District Court, Central District of California. The Plaintiffs argue that eBay and Paypal do not sincerely enforce their policy against the sale of counterfeit goods. The Plaintiffs allege that eBay and Paypal simply allow counterfeiters to utilize their platforms so that they can profit without consideration for the damage done to the businesses of legitimate retailers and trademark owners. The refusal or failure of Paypal to comply with the order of a U.S. district court order against an alleged counterfeiter would certainly be used as evidence against eBay and Paypal in this and future lawsuits.

 

The third and final reason that Paypal must comply with the order of the U.S. court is that legitimate online merchants and customers overwhelmingly support efforts to end online counterfeiting. Merchants that have worked on eBay for years and established substantial businesses often find that new stores appear which are exact duplicates of their own, complete with precisely copied captions on photos of merchandise. The only difference is that prices are substantially lower and the goods offered for sale are fakes. Likewise, consumers who purchase counterfeit goods often blame eBay and Paypal for the fraud that was perpetrated upon them. Whenever a consumer is sold counterfeit goods via these platforms, it is apparent that anti-counterfeiting efforts have failed. Any appearance of collusion with online counterfeiters, proven or otherwise, would greatly harm eBay and Paypal’s business among both buyers and sellers who utilize their services.

 

Trademark litigation is stressful and bewildering for most defendants. This is especially true for online merchants who operate outside the U.S. These defendants are usually not familiar with U.S. law or how to respond to a lawsuit. It is natural to blame the one organization that they know, the online payment processor Paypal. It is also wasteful and incorrect. Paypal lacks the legal ability to defy the U.S. government nor should it. As Patrick Foo, PayPal’s head of cross border business in China, explained in a February, 2015 PYMNTS.com article, Paypal simply follows the order of the U.S. court as every bank and third party payment processor is required to do. This policy is not only consistent with U.S. law but with the wishes of the vast majority of eBay and Paypal customers. Defendants who wish to protect their interests and recover frozen funds cannot do so through Paypal alone. They must defend the lawsuit that has been filed against them.

 

A myth has been established on the internet that those who have had their Paypal account funds frozen can sue Paypal and recover their funds. This is completely false. I will address this fully in a separate blog post. For now, I urge anyone who is told or reads that a lawsuit against Paypal is a viable means of recovery to ask or attempt to discover on their own whether such a lawsuit has ever been successfully prosecuted in any country. The answer is a resounding NO! U.S. trademark violation cases have now been litigated in this way for many years. If a lawsuit against Paypal was a viable means of recovery, would it not have already happened at least once? Any defendant who chooses not to defend their interests in the lawsuit that has been filed against them based on this hope will forever lose all of the frozen funds and may suffer other serious legal and financial consequences.

 

If you are a defendant in a U.S. trademark violation lawsuit, don’t blame Paypal. Contact The Law Office of L. Ford Banister, II immediately for a case review and U.S. legal representation. Delays in responding to a U.S. lawsuit may result in loss of rights and/or greater costs of defense. Click here for answers to Frequently Asked Questions about U.S. trademark violation defense.

 

 应该怪Paypal吗?

 

在美国商标侵权案中,商户在线支付商Paypal经常被美国法院下令冻结网上商户的账户。帐户经常在并未提前通知Paypal账户所有者的情况下就被冻结了。Paypla和原告的律师将通知账户所有者在美国有一个针对他们的诉讼并建议他们获得美国法律咨询服务。账户被冻结,很多账户所有者错误地归咎于Paypal。事实上,Paypal,银行和其他在线支付处理公司完全是无辜的。Paypal只是遵循美国法庭的命令,无力代表账户所有者抗令或拥护法庭命令。那些坚持将账户冻结归咎于Paypal或寻求从Paypal拿到补偿的人浪费了宝贵的时间和精力,这本应投入在账户冻结的原因商标侵权诉讼的。

 

针对外国在线零售商的商标侵权案件的特殊之处就在于个人服务和送达诉讼到人手上是不需要的。原告要求,并获得特别许可,可以通过电子邮件或张贴在已扣押的域名通知被告而送达诉讼。这个不一般的程序背后的理由将在另外单独的博客帖子中探讨。当Paypal收到联邦地区法院命令时,Paypal必须遵守。Paypal不会拿到任何冻结资金。事实上,Paypal要负担执行法院命令的成本,由于账户冻结而蒙受损失,也成为其顾客的愤怒的目标。

 

首先,让我们考虑一下Paypal抵制法庭命令的能力。联邦地区法院是美国国家法院,有执行他们的法令的能力。如果Paypal不遵守任何法令,Paypal这家公司会被惩罚。这意味着,美国法庭可以对Paypal罚款,在极端情况下如果继续抵制法令,法院会逮捕和把公司负责人关在监狱里直到法院命令被执行。中国银行美国分公司试图抵制类似的命令证明了抗争是徒劳的。2015年11月中国银行被美国纽约的一个地区法官判罚,因为他们拒绝交出账户记录,理由是作为中国的国有银行,执行了美国的法令就会使银行违反了中国的隐私法。在中国银行不服判决向上级法院提出上诉时地区法院每天对银行罚款50000美元。2016年1月,中国银行上交了要求的记录,遵守法院的命令。

 

第二,除了Paypal没有抵制法庭命令的法律能力,也有其他强大的法律和商业上的原因,需要Paypal遵守法庭命令。考虑到Ebay和Paypal自己也是一些诉讼的被告,声称他们有意提供平台和方便销售假冒产品。该诉讼是Wimo Labs公司起诉Ebay等公司,案件编号8:15-cv-01330,加利福尼亚中心区美国地方法院。原告认为,Ebay和Paypal不真诚地执行他们的反销售假冒商品政策。原告声称,Ebay和Paypal让造假者利用自己的平台使他们获利,而不考虑对合法零售商和商标所有者带来的损失。拒绝或未遵守美国地区法院对涉嫌伪造产品者的法庭命令会被现在和今后针对Ebay和Paypal的诉讼中当作证据。

 

Paypal必须遵守美国法院命令的第三和最后一个原因是,合法的网上商家和客户强烈支持结束网上假冒商品的努力。曾在Ebay上多年并建立了大量生意的商家经常发现,有完全重复他们的产品和精确复制商品标题的照片的新店出现。唯一不同的是,价格大大降低,出售的商品是假货。同样,购买到假冒商品的消费者经常指责Ebay和Paypal对他们犯下的欺诈。每当通过这些平台销售假冒商品给消费者时,很明显防止假冒产品的努力失败了。出现任何和网上造假者勾结,不管被证明与否,将极大地损害Ebay或Paypal在使用其服务的买家和卖家中的生意。

 

商标诉讼对大多数被告来说都是紧张和混乱的。尤其是对于那些在美国以外经营的在线商户。这些被告通常不熟悉美国法律也不知道如何应对诉讼。责怪一个他们知道的组织在线支付商Paypal是很自然的。这也是浪费和不正确的。Paypal缺乏反抗美国政府的合法性而且也不应该。Paypal在中国跨境业务负责人Patrick Foo,于2015年2月在PYMNTS.com上的文章中解释,Paypal只是简单地遵循美国法院的法令,正如任何一家银行和第三方支付商需要做的那样。这一政策不仅符合美国法律,也是绝大部分Ebay和Paypal客户的意愿。被告人希望保护他们的利益和恢复冻结的资金不能简单地指望Paypal。他们必须辩护已向他们提起的诉讼。

 

在互联网上有一种神话说,那些Paypal账户资金被冻结的人可以起诉Paypal并收回自己的资金。这是完全错误的。我将在一个单独的博客帖子上详尽解释。现在,我希望被告知或阅读到状告Paypal是一种拿回损失的可行手段的任何人询问或试图自己去发现是否这样的诉讼在任何国家已经成功被起诉。答案是响亮的“没有”!美国商标侵权案件已经像这样诉讼多年。如果起诉Paypal是一个可行的手段,是不是应该已经发生过至少一次?任何被告基于这样不切实际的希望而选择在针对他们的诉讼中不捍卫自己的利益将永远失去所有的冻结资金,并可能遭受其他严重的法律和财务后果。

 

如果你是一个美国商标侵权诉讼的被告,请联系L. Ford Banister II律师事务所进行案件回顾和法律咨询代表。延迟回应美国诉讼可能会导致失去权利和/或更多的辩护费用。点击这里了解关于美国商标侵权辩护的常见问题。

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