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Nike Seeks $150 Million In Sanctions from Six Chinese Banks, and Loses
In 2013, Nike and its subsidiary, Converse, brought suit under the Lanham Act against 636 members of Chinese counterfeiting networks engaged in advertising and selling products bearing Nike's famous "Swoosh," "Jumpman," and Converse Chuck Taylor "All Star" label trademarks. The Defendants never having appeared, Nike was awarded a default judgment of over $1 billion. Much of the Defendants' funds were held in Chinese bank accounts, making it that much harder to collect from them, so Nike's successor-in-interest, Next Investments, LLC, sought $150 million in sanctions against six Chinese banks — non-parties to the underlying suit — (collectively Banks) primarily for the Banks' failure to freeze the Defendants' foreign accounts. A few weeks ago, the Second Circuit upheld a decision of the U.S. District Court for the Southern District of New York refusing to make the Banks pay.
The asset restraint, first ordered early in the underlying litigation as part of a temporary restraining order, stated in relevant part that "Defendants…. and all persons acting in concert or in participation with any of them… are restrained and enjoined from transferring, withdrawing or disposing of any money or other assets of Defendants, or otherwise paying or transferring any money or other assets into or out of any accounts held by… Defendants, regardless of whether such money or assets are held in the U.S. or abroad."
Twice the Banks attempted to challenge the application of the asset restraint to their Chinese branches. Twice Nike and Next told them not to worry and that the restraints applied only to the Defendants. The switcheroo, or "gotcha tactic," as the district court called it, didn't come until 2019 — six years after the asset restraint was first ordered.
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