Reporting on activity in civil and criminal counterfeiting cases in the United States

TM Counterfeiting Decision Alert content is authored by Wendy R. Stein, Counsel in the Gibbons Intellectual Property Department and Paolo A. Strino, a Director in the Gibbons Intellectual Property Department. Ms. Stein has relevant enforcement experience in the United States and Mr. Strino has experience in coordinating and organizing, with the assistance of local counsels, enforcement actions in foreign jurisdictions, including Europe and Asia.

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California Court Rules on Proper Venue for Wrongful Seizure Claims
A federal district court in the Northern District of California has recently given litigants in trademark counterfeiting cases guidance on where wrongful seizure claims under the ex parte provisions of the Lanham Act may be brought. The court ruled in United Tactical Systems, LLC v. Real Action Paintball, Inc.that wrongful seizure claims may be brought in any federal court, and not just the court that ordered the seizure. The case should be watched by accused infringers who have been the target of an ex parte seizure under the Lanham Act.
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Illinois Court Refuses to Release Frozen Funds or Enlarge Bond Amount in Trademark Counterfeiting Case
A federal district court in the Northern District of Illinois has refused a request by certain defendants accused of trademark counterfeiting to release funds frozen in PayPal accounts and to increase the amount of a bond posted by the plaintiff in the case. The case highlights an uptick in challenges to financial asset restraints by defendants and nonparties in trademark counterfeiting cases and the discretion courts have in setting an appropriate bond to protect defendants in such cases.
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Court Orders Nonparty Bank to Produce Documents Said to be Located Abroad in Trademark Counterfeiting Case
After more than five years of litigating access to documents requested in a subpoena directed to a nonparty foreign bank, the district court in Gucci Am. Inc. v. Weixing Li has ordered the bank to produce the documents, despite objections from the bank that production would violate Chinese law. The decision written by Judge Sullivan of the Southern District of New York, is an important decision for brand owners seeking to obtain financial documentation related to the sale of allegedly counterfeit goods.
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New York Real Property Owners at Risk for Exposure to Joint and Several Liability in Connection with Trademark Counterfeiting Taking Place on Their Property
Brand owners are increasingly asserting claims against owners of real property where alleged trademark counterfeiting is taking place. Three recent actions filed in the Southern District of New York, styled Michael Kors, LLC v. Mulberry Street Properties Corp., et. al., 15-cv-5504 (S.D.N.Y.); Michael Kors, LLC v. Canal Venture, Inc. et. al., 15-cv-5788 (S.D.N.Y.); and Michael Kors, LLC v. Mid Center Equities Associates, et. al., 15-cv-5856 (S.D.N.Y.), raise the question of when property owners/lessors can be held jointly and severally liable for damages resulting from the sale of counterfeit goods on their properties.
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District Courts Adopting Middle Ground in Fashioning Statutory Damages Awards in Trademark Counterfeiting Cases
Two recent opinions, one from the Northern District of Illinois and another from the Southern District of New York, offer guidance to those electing statutory damages in lieu of actual damages and profits in trademark counterfeiting cases. The takeaway for litigators is that courts appear to be taking a middle ground in statutory damages awards, awarding $1 million per mark/good combination instead of the $2 million statutory maximum.
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Claims by Brand Owners Against Alibaba Defendants are Reasserted in S.D.N.Y.
A group of brand owners has filed another complaint against eleven Alibaba and Taobao entities for claims including direct and contributory trademark counterfeiting and violations of the RICO statute. At issue is when and to what extent a service provider can be held liable for alleged trademark counterfeiting taking place on an online platform.
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Case Highlight: California District Court Refuses to Stay Civil Case Pending Resolution of Potential Criminal Prosecution
In Sanrio, Inc. v. Ronnie Home Textile Inc., the U.S. District Court for the Central District of California recently refused to stay a civil case pending completion of a parallel criminal counterfeiting investigation. In Sanrio, the plaintiffs sued a corporation and two alleged principals for trademark infringement and other claims. The case was filed after law enforcement seized allegedly counterfeit goods offered for sale by the defendants and related evidence. The defendants argued that the civil case should be stayed because the seizure left them without means to substantively defend themselves. They further argued that allowing the civil case to go forward would implicate the individual defendants’ Fifth Amendment rights, though criminal charges had not been brought against them.
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Recent Damages Award for Wrongful Seizure Under the Lanham Act
Judge Preska of the United States District Court for the Southern District of New York recently awarded attorneys’ fees, damages, and prejudgment interest on damages, but not fees to defendants, in a trademark counterfeiting case. In Prince of Peace Enterprises, Inc. v. Top Quality Food Market, LLC, Judge Preska adopted in part a report and recommendation of Magistrate Judge Maas, ending an eight-year litigation surrounding ex parte seizures of herbal supplements which took place in 2007.
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Second Circuit Issues Decision in Gucci America, Inc. et. al. v. Li et. al.
On September 17, 2014, the Second Circuit issued its long awaited decision in Gucci America, Inc. et. al. v. Li et. al., 2014 WL 4629049 (Appeal Nos. 11-3934 & 12-4557). In its decision, the Court vacated and remanded an August 2011 order compelling nonparty Bank of China (BOC) to comply with a document subpoena and asset freeze provision in an injunction and a May 2012 order denying the bank’s motion to reconsider. The court also reversed a November 2012 decision holding the bank in contempt for non-compliance with the court’s August 2011 order and imposing civil penalties.
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New Guidance on How to Calculate Statutory Damages Awards in Counterfeiting Cases
Judge Koeltl of the United States District Court for the Southern District of New York recently adopted a recommended statutory damages award of $6.6 million dollars in a case involving trademark counterfeiting. Richemont Int’l S.A. et. al. v. Montesol Ou, et. al., 2014 WL 3732919, at *1 (S.D.N.Y. July 28, 2014). The plaintiff sellers of luxury goods had initially sought $78 million or $2 million per counterfeit mark per type of good counterfeited in connection with 88 domain names operated by the defendants. Richemont Int’l S.A. et. al. v. Montesol Ou, et. al., 2014 WL 3732887, at *4 (S.D.N.Y. May 13, 2014). But Magistrate Judge Pitman recommended instead an award of $6.6 million, including $6.3 million under the Trademark Act and $300,000 under the Anticybersquatting Consumer Protection Act.
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