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No longer Bluffing
Fendi has been awarded triple damages against Burlington Coat Factory for breach of a 23 year old injunction prohibiting Burlington from selling counterfeit Fendi goods. This ruling puts retailers on notice that they need to take an active role in investigating the source of their goods. They can no longer avoid liability for selling counterfeits by failing to verify the origin and authenticity of the goods received from vendors or they may face a claim of willful blindness.
The court found a 1987 injunction should have put Burlington on notice, however it did not “implement any mechanisms to ensure compliance with the order”. Even more alarming was Burlington’s continued sale of the goods after receiving Fendi’s cease and desist letter in 2004 (Burlington only removed the Fendi goods after Fendi initiated the action in 2006). Burlington’s response for their inaction; they believed the “letter was a bluff in an attempt to scare Burlington into taking Fendi merchandise off its shelves.”
Titre original
Fendi v. Bulrington Coat Factory No Longer Blushing
No longer Bluffing
Fendi has been awarded triple damages against Burlington Coat Factory for breach of a 23 year old injunction prohibiting Burlington from selling counterfeit Fendi goods. This ruling puts retailers on notice that they need to take an active role in investigating the source of their goods. They can no longer avoid liability for selling counterfeits by failing to verify the origin and authenticity of the goods received from vendors or they may face a claim of willful blindness.
The court found a 1987 injunction should have put Burlington on notice, however it did not “implement any mechanisms to ensure compliance with the order”. Even more alarming was Burlington’s continued sale of the goods after receiving Fendi’s cease and desist letter in 2004 (Burlington only removed the Fendi goods after Fendi initiated the action in 2006). Burlington’s response for their inaction; they believed the “letter was a bluff in an attempt to scare Burlington into taking Fendi merchandise off its shelves.”
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No longer Bluffing
Fendi has been awarded triple damages against Burlington Coat Factory for breach of a 23 year old injunction prohibiting Burlington from selling counterfeit Fendi goods. This ruling puts retailers on notice that they need to take an active role in investigating the source of their goods. They can no longer avoid liability for selling counterfeits by failing to verify the origin and authenticity of the goods received from vendors or they may face a claim of willful blindness.
The court found a 1987 injunction should have put Burlington on notice, however it did not “implement any mechanisms to ensure compliance with the order”. Even more alarming was Burlington’s continued sale of the goods after receiving Fendi’s cease and desist letter in 2004 (Burlington only removed the Fendi goods after Fendi initiated the action in 2006). Burlington’s response for their inaction; they believed the “letter was a bluff in an attempt to scare Burlington into taking Fendi merchandise off its shelves.”
Droits d'auteur :
Attribution Non-Commercial (BY-NC)
Formats disponibles
Téléchargez comme RTF, PDF, TXT ou lisez en ligne sur Scribd
FENDI ADELE S.R.L., FENDI S.R.L., and FENDI NORTH AMERICA, Plaintiffs, v. BURLINGTON COAT FACTORY WAREHOUSE CORP. et al., Defendants.
No. 06 Civ. 85 (LBS)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK
689 F. Supp. 2d 585; 2010 U.S. Dist.
March 22, 2010, Decided
March 23, 2010, Filed
Fendi seeks to clarify the damages
JUDGES: Leonard B. Sand, United States awarded, if any, with regard to District Judge. counterfeit goods sold prior to the April 2004 letter. If the sale of OPINION BY: Leonard B. Sand Fendi-branded goods prior to the cease and desist letter is not found to be OPINION willful, the issue remains as to whether the bad faith requirement [*608] MEMORANDUM AND ORDER still exists. The courts in this District are currently divided as to SAND, J. whether a finding of bad faith is On February 8, 2010, this Court still required in order to award granted summary judgment in favor of treble damages in light of the Plaintiffs Fendi Adele S.R.L., Fendi Trademark Amendments Act of 1999. In S.R.L., and Fendi North America our February 2010 order, we found the (collectively known as "Fendi"), April 2004 letter established finding Defendants Burlington Coat willfulness and did not reach the Factory Warehouse Corporation and question of whether the bad faith Cohoes Fashion, Inc., a wholly-owned requirement survives the 1999 subsidiary of Burlington Coat Factory, Amendments. Fendi, 2010 U.S. Dist. (collectively known as "Burlington") LEXIS 10628, 2010 WL 431509, at * 11. liable for trademark counterfeiting, Fendi urges reconsideration of the trademark dilution, and common law issue of willfulness for the period unfair competition. [**3] Fendi Adele prior to the April 2004 letter, or, if S.R.L, v. Burlington Coat Factory, No. willfulness [**4] is not found, a 06 Civ. 85 (LBS), 689 F. Supp. 2d 585, determination as to whether the bad 2010 U.S. Dist. LEXIS 10628, 2010 WL faith requirement survives the 1999 431509, at * 10 (S.D.N.Y. Feb. 8, Amendments. 2010) ("February 2010 order"). We awarded treble damages for the 1 For the purposes of this counterfeit goods sold after the April motion, we assume familiarity 2004 cease and desist letter and with the facts. referred the matter to the Magistrate Judge for a calculation of damages. Upon reconsideration, we find that Now before this Court is Fendi's Burlington willfully infringed for the Motion for Partial Reconsideration. 1 entire period. The Court's February WWW.FAMEAPPEAL.COM
2010 order is modified to award Fendi defendant "recklessly disregarded the
treble damages for all of the possibility" that his or her conduct counterfeit goods at issue. constituted infringement.). Courts have repeatedly found willfulness I. Standard of Review where a defendant receives a cease and desist letter but continues the [HN1] The standard for willfulness infringing conduct. See Fendi, 2010 is whether the defendant had knowledge U.S. Dist. LEXIS 10628, 2010 WL that his or her conduct represented 431509, at * 10 (collecting cases). infringement or recklessly disregarded Courts have also found willful the possibility. Kepner-Tregoe, Inc. infringement where the infringing v. Vroom, 186 F.3d 283, 288 (2d Cir. party was [**6] found liable and then 1999); see Koon Chun Hing Kee Soy & did not alter or cease the infringing Sauce Factory, Ltd. v. Star Mark Mgmt, activity. See Burberry Ltd. v. Euro No 04 Civ. 2293 (JFB), 2007 U.S. Dist. Moda, No. 08 Civ. 5781 (CM), 2009 U.S. LEXIS 1404, 2007 WL 74304, at * 11 Dist. LEXIS 113407, 2009 WL 4432678, (E.D.N.Y. Jan. 8, 2007) (applying the at * 3 (S.D.N.Y. Dec. 4, 2009) willfulness standard in Kepner-Tregoe (finding ample evidence of willfulness to claims brought under the Lanham where a prior settlement put Act); Nike, Inc. v. Top Brand Co., No. defendants on notice of the infringing 00 Civ. 8179 (KMW), 2005 U.S. Dist. activity, yet defendants persisted in LEXIS 42374, 2005 WL 1654859, at * 6 the same conduct); Kepner-Tregoe, (S.D.N.Y. July 13, 2005) (same). While Inc., 186 F.3d at 288 (finding caution must be exercised in granting copyright infringement was willful summary judgment when state of mind is where the defendant "chose to ignore an issue, the summary judgment rule the injunction [issued by a Texas "would be rendered sterile" if the district court and upheld by the Fifth mere existence of an issue as to state Circuit] and continued to use the MPO of mind would automatically defeat an program" that had been found to be otherwise [**5] valid motion. Nora infringing); Viacom Int'l Inc. v. Beverages, Inc. v. Perrier Group of Fanzine Int'l, Inc., No. 98 Civ. 7448 America, Inc., 269 F.3d 114, 125 (2d (RCC), 2001 U.S. Dist. LEXIS 11925, Cir. 2001). Where the defendant offers 2001 WL 930248, at * 4 (S.D.N.Y. Aug. no probative evidence raising a 16, 2001) (where the defendant had genuine issue of material fact been sued at least two times in the regarding willfulness, summary previous year, with one suit resulting judgment is appropriate. [*609] in a default judgment against the Tanning Research Lab., Inc. v. defendant, the court found that the Worldwide Import & Export Corp., 803 defendant's subsequent "strikingly F. Supp. 606, 610 (E.D.N.Y. 1992). similar conduct" suggests that the defendant "knew or should have known II. Willfulness of Pre-2004 Sales that its actions constituted [HN2] "Willful infringement may be [copyright] infringement."). attributed to the defendant's actions When Burlington took no action to where he had knowledge that his comply with the 1987 Injunction and conduct constituted infringement or began violating the injunction as where he showed a reckless disregard early as 1993, 2 Burlington showed for the owner's rights." Johnson & [**7] a reckless disregard for Fendi's Johnson Consumer Companies, Inc. v. trademark rights. Johnson & Johnson, Aini, 540 F. Supp. 2d 374, 396 540 F. Supp. 2d at 396. The 1987 (E.D.N.Y. 2008); see also Cartier Injunction, like a cease and desist Int'l B.V. v. Ben-Menachem No. 06 Civ. letter or a finding of liability, put 3917 (RWS), 2007 U.S. Dist. LEXIS Burlington on notice that its behavior 95366, 2008 WL 64005, at * 14 was potentially infringing on Fendi's (S.D.N.Y. Jan. 3, 2008) (Conduct can trademark. In fact, the injunction was be found to be willful where the even more specific than a cease and WWW.FAMEAPPEAL.COM
desist letter or a finding of purchased Fendi-branded goods from the
liability because it mandated a Vendors as early as 2000. Haigney specific course of action to protect testified that the first time a buyer against future infringement-- approached him regarding purchasing Burlington was not to sell any Fendi- Fendi-branded goods from a third-party branded merchandise without first vendor was not until 2003. (Haigney obtaining permission from Fendi. Dep. at 113:3-21.) No buyer ever Burlington did not implement any sought approval from Haigney for any control mechanisms to ensure purchase of Fendi-branded goods from compliance with the injunction. (Pl.'s Ashley Reed. (Pl.'s 56.1 P 261.) 56.1 P 16.) Burlington's in-house Burlington did not obtain [**9] counsel, Stacy Haigney, who was authentication documents for any of present in court when the 1987 its purchases from the Vendors. (Pl.'s Injunction was entered, admitted that 56.P 268.) Burlington was aware of the he was not aware of a single piece of risk associated with buying writing concerning any steps that the trademarked goods from third-party company took to comply with the vendors, yet it did not buy from injunction. Id. authorized distributers, (Genecin Dec. Ex. 38 ("Goldstein Dep.") at 143:21- 2 Burlington's records have 144:9; Pl.'s 56.1 P 255), or verify been a persistent obstacle in the authenticity of the goods this litigation. At the time of purchased from third-party vendors, our 2007 opinion, we believed (Goldstein Dep. at 143:3-20). Burlington's first sale of Fendi Burlington has failed to offer any goods was in 2002. Subsequent evidence raising a genuine issue of discovery revealed that material fact regarding its willfully Burlington began selling Fendi- blind infringement. See Tanning branded goods no later than 1993. Research, 803 F. Supp, at 610 Burlington [**8] has made no ("[D]efendants have offered no records available for the six probative evidence raising a genuine years immediately after the issue of material fact regarding their injunction was entered. Fendi, willfully blind violation."). 2010 U.S. Dist. LEXIS 10628, 2010 Burlington concedes that it took no WL 431509, at * 24. As Magistrate action to implement procedures in Judge Dolinger noted in his order to ensure compliance with the Report and Recommendation, "while 1987 Injunction, and it has offered no plaintiffs know a sale was made evidence to demonstrate that it as early as 1993, it is possible complied with its own trademark that sales could have occurred protection policies. Burlington argues even earlier, but impossible to that it forgot about the injunction; confirm or refute that however, whether Burlington forgot hypothesis." Id. about the injunction is irrelevant. The crucial time for the purpose of [*610] Burlington did not even finding willfulness is immediately comply with its own trademark after the 1987 Injunction was entered. protection policies in the years At that moment, [**10] Burlington was following the injunction. Burlington's on notice that its conduct potentially policies required that buyers (1) infringed on Fendi's trademark, and in speak with Haigney prior to purchasing doing nothing, Burlington demonstrated trademarked merchandise from third- a reckless disregard for the party vendors, (Def. Response to 56.1 injunction and for its purpose--to P 254; Genecin Dec. Ex. 37 ("Haigney prevent Burlington from infringing on Dep.") at 156:20-157:23); and (2) Fendi's trademark in the future. See obtain authentication documents for Burberry Ltd v. Euro Moda, 2009 WL purchases from third-party vendors. 4432678, at * 3 ("In light of the (Pl. 's 56.1 P 266.) Burlington prior June 30, 2005 settlement WWW.FAMEAPPEAL.COM
agreement where defendants admitted to
selling scarves, hats and polo shirts III. Conclusion with counterfeit Burberry marks, but stated it had ceased doing so in 2003 This Court's February 8, 2010 and promised not to do so in the Memorandum and Order is amended. Upon future . . ., defendants obviously reconsideration, we find Burlington knew that selling such items with acted willfully for the entire counterfeit Burberry marks infringed relevant period, and Fendi is awarded Burberry's registered trademarks."). treble damages with regard to all Burlington's failure to alter its counterfeit goods at issue. conduct in the wake of the 1987 SO ORDERED. Injunction and lack of compliance with Dated: March 27, 2010 its own minimal trademark compliance New York, NY procedures establishes willfulness for /s/ [**11] Leonard B. Sand the entire period at issue. U.S.D.J.