Counterfeit item was sold on our market place website by one of our member.

[Might]

Counterfeit item was sold on our market place (website) by one of our via member (from China) using our merchant service.

What is the name of my state? NY
Lawsuit Filed in California.

Need a best advice Please.

We have been sued by Company owner, That we are selling counterfeit item on our website.

Actually we are not a seller. Our site was a platform which was an outlet marketplace. We allowed users to create accounts which enabled them to create profiles, stores, blogs, and calendars. In details, we offered in our market place following:

1. Profile Blogs.
Supports the creating/updating/deleting of Blog Entries

2. Photo Album.
An elite photo album function where users can upload photos

3. Online Store.
In our market page we allow member profiles access to their own "Store" for selling physical goods via there own merchant account (we have no access or information for there account or payment method, just like ebay and others. Unless if the use our merchant service. We offer our merchant service just like pay-pal.

It was brought to our attention by company owner, that our services were being exploited by one individual who was infringing trademarks. We immediately froze and desisted the account and agreed to cooperate. According to our User Agreement, we are not allowed to expose information regarding our members. After re-evaluating the situation and realizing that it has escalated to federal law, we launched an internal investigation and release information of the owner of the account receiving.

After receiving the information, greedy Company owner realized that he couldn't do any thing against them because they were reside in china and selling a counterfeit item Via our site. He filed the lawsuit against us and accusing us that we are the one responsible.

We have explain them, We're not clothing experts. We're not car experts, and we're not jewelry experts. We're experts at building a marketplace and bringing buyers and sellers together. If you are going to sue us for profiting from counterfeit sales, then the credit card companies who
cards were used to pay for purchases of the counterfeit items. Much like Ebay, we never take
possession of the goods sold through our system.

We have also been tracking and investigating the previous actions of the accountholder and we were able to track down the entire history of his account. But Greedy Owner want whole data from every single thing was sold via our site. We had over 300 member who was selling different merchandize.

He made us wait more than 20 days after receiving the summon and the end he told us that judgement has be against you by default now.

What can we do in the condition. Please give us some advice so we can safe others with their scams
Thanks in advance

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