Someone Is Selling Fake Versions Of Our Product Online And Even Claimed They Own It. What Should We Do Legally?

Location: Connecticut. My mom and I run a small online business in the U.S. selling a children’s toy product that we created. We have a registered trademark for the product name, and the artwork/images are our original creations (currently in the copyright process).

Over the past few months, we discovered multiple third-party sellers on major marketplaces, using our product images and branding without permission. In many cases, they altered the images to remove branding. Some sellers also appear to be producing physical knockoffs that closely replicate our design and included items.

We’ve submitted infringement complaints and sent cease and desist letters, and have successfully had over 100 listings removed.

However, one seller recently submitted a counterclaim claiming that they own the rights to the images/product and requested reinstatement of their listing.

We are concerned about what happens next and how to protect ourselves. Specifically:

• What is the proper legal response to a counterclaim like this?
• Do we need to escalate this formally (e.g., filing a lawsuit), or are there intermediary steps?
• How can we better protect our product and IP across multiple marketplaces going forward?
• At what point should we involve an attorney, and what type (IP lawyer, etc.)?

We are based in the U.S., and the business is relatively new (about a year old).

Any help would be appreciated. Thank you for reading.

TLDR: My mom and I own a small business and we have trademarked a children’s toy. We are dealing with widespread knockoffs and stolen product images across online marketplaces. After successfully removing many listings, one seller filed a counterclaim asserting ownership of the product/IP. I want to know how to respond legally, whether to escalate (lawsuit vs. other steps), how to better protect their IP, and when to hire an IP lawyer.