Pattishall IP Blog

June 5, 2013

Flea Market Operator Hit for Over $5 Million for Permitting Sale of Counterfeit Products

Filed under: Counterfeiting, Litigation — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 5:41 pm

By Janet Marvel, Partner

The Sixth Circuit, in a case of first impression, held that a flea market operator can be contributorily liable for counterfeiting carried on by vendors renting stalls at his market.  The case illustrates that contributory infringement can be a valuable tool against counterfeiting when the primary infringers are small, numerous, anonymous or (individually) commercially insignificant.

In Coach, Inc. v. Goodfellow, 2013 WL 2364091 (6th Cir. May 31, 2013), the appellate court affirmed a jury award of over $5 million dollars in damages, and a grant of $186,666.61 in attorneys’ fees against Goodfellow, the operator of a flea market at which counterfeit goods were sold.  The district court had granted summary judgment on liability, which Goodfellow failed to contest.  While Goodfellow technically had forfeited his ability to appeal the liability ruling, the court nonetheless used its discretion to render an opinion on liability.

Goodfellow received a letter from Coach in January, 2010, from the district attorney in March, and was served with the complaint in June.  Police raided the market in April, March and June.  In response, Goodfellow distributed pamphlets telling vendors not to counterfeit, and held a voluntary meeting with some vendors, many of whom did not speak English.  He also posted signs saying “counterfeit is prohibit,” but these were meant to address counterfeit currency.  While he claimed to have ejected 16 vendors over a one year period, the court held that “this effort, if believed, is hardly compelling evidence of a reasonable response….”   Goodfellow claimed to believe other counterfeit goods were genuine, but did not check.  He did not train his employees to recognize counterfeits.  Vendors did not sign any agreements that they would not sell counterfeit goods.

The court found that Goodfellow’s remedial measures fell short.  It approved the district court’s conclusion that Goodfellow had engaged in “ostrich-like practices.”  According to the court, Goodfellow “continued to supply flea market resources to vendors with knowledge of and willful blindness toward ongoing infringing activities, thereby facilitating continued infringing activity.”

This supported the court’s finding that Goodfellow was contributorily liable.

Goodfellow equated his anti-counterfeiting efforts with those of eBay, which the court found acceptable in Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93 (2d Cir. 2010).   There Tiffany sued eBay for contributory liability for sale of counterfeit Tiffany jewelry on the eBay website.  Perhaps the most important distinction between the flea market bricks-and-mortar contributory infringement standard and that imposed on eBay is the speed with which items are listed and the sheer number of them.  The court in Tiffany held that eBay’s general knowledge that counterfeiting was occurring on its site did not create liability.  Specific knowledge (which Goodfellow had, but eBay did not) was required.  It didn’t hurt that eBay spent millions on anti-counterfeiting and had a sophisticated program for dealing with it.

Courts impose contributory liability on those who know about and facilitate counterfeiting, as well as those who would simply “stick their heads in the sand,” refusing to recognize or police it.  Increasingly, liability applies not only to those who sell goods, but also those that offer services.  Manufacturers and licensors suffering from numerous small scale counterfeits would do well to add actions for contributory counterfeiting and trademark infringement to their arsenals.

*     *     *

Janet Marvel is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues.  Ms. Marvel’s practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, Internet, and copyright law.  She co-authored the Sixth Edition of the Trademarks and Unfair Competition Deskbook, recently published by LexisNexis.

For a printer friendly version, click here.

October 10, 2012

Pattishall Client Prevails On Counterfeiting and Infringement Claims Over Marks for Vehicle Braking Systems; Court Awards Over $13 Million in Damages, Attorneys’ Fees, Costs and Sanctions

Pattishall client Robert Bosch LLC (“Bosch”) was awarded judgment of over $13 Million by default on its claims of counterfeiting, infringement, unfair competition, and false advertising after nearly three years of litigation and “extensive and cumbersome discovery” in Robert Bosch LLC v. A.B.S. Power Brake, Inc., Case No. 09-14468 (E.D. Mich. August 2, 2012).  Pattishall attorneys Belinda Scrimenti, Bradley Cohn, Thad Chaloemtiarana, and Jeffrey Wakolbinger represented Bosch in this litigation in the United States District Court for the Eastern District of Michigan before the Honorable Patrick J. Duggan.

Specifically, Judge Duggan:

  • awarded Bosch $12,875,997.96; consisting of $3,931,220 in defendant’s profits (which the court trebled to $11,793,660), $993,309.00 in reasonable attorneys’ fees, and $89,028.96 in costs;
  • awarded Bosch $142,082.52 as a judgment for previously entered sanctions;
  • enjoined defendants from future use of Bosch’s HYDRO-BOOST and HYDRO-MAX marks in connection with hydraulic vehicle braking systems or remanufactured, reconditioned or rebuilt Bosch products; and
  • ordered the defendants to destroy all infringing products and promotional materials.

The Court’s opinion highlighted the difficulty of assessing actual damages given the actions of the defendants in discovery and found the Pattishall team’s method for estimating damages to be reasonable.  Relying on survey evidence of law firms nationwide, Judge Duggan also found Pattishall’s Chicago-based attorneys’ fees request reasonable and consistent with rates of comparably-situated firms in Detroit with large intellectual property practices under the traditional lodestar analysis.

The defendants’ alleged violations covered a range of activities, including manufacturing of counterfeit products sold under Bosch’s trademarks, use of identical and similar infringing marks on generic products, sale of refurbished Bosch products that failed to meet genuine Bosch specifications, and false advertising of refurbished hydraulic brake products as new, genuine Bosch products.

For a printer-friendly version, click here.

July 5, 2012

European Parliament Rejects Anti-Counterfeiting Trade Agreement

Filed under: Counterfeiting, International — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:38 pm

by Phillip Barengolts, Trademark Attorney

The European Parliament voted against the Anti-Counterfeiting Trade Agreement (ACTA).  Thus, it is highly unlikely to become law in the European Union.  The E.U. had signed the agreement[1] and the European Commission referred it to the European Court of Justice for review.[2]  The E.U. Parliament’s vote signals, however, that ACTA is not likely to be ratified by the E.U. member states.  According to the press release, this was the first time that the Parliament had exercised its Lisbon Treaty right to reject an international trade agreement.[3]  The vote was not even close with 478 votes against, 39 in favor and 165 abstentions.

As previously noted here,[4] ACTA was negotiated among a select group of nations, including the U.S. and the E.U., to set a higher floor for laws against trademark counterfeiting and copyright piracy, including on the Internet.  Most of these countries already have strong protection for intellectual property rights, but these protections were not consistent and, often, not consistently enforced.

ACTA’s provisions establish a level of protection for trademarks and copyrights higher than the baseline embodied in the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).  ACTA achieves this enhanced protection primarily by harmonizing the participating nations’ laws on remedies (e.g., criminal penalties for commercial counterfeiting and copyright piracy, statutory damages, seizures, preliminary injunctions) and customs authorities’ ability to act.  Some countries, like the U.S., already had these types of laws in place, while others, like Canada, will now have to make minor changes to come into compliance.

ACTA remains signed by 8 of the negotiating nations: the U.S., Australia, Canada, South Korea, Japan, New Zealand, Morocco, and Singapore.  Thus, it can go into effect for those nations once their signatures are properly deposited, despite the likely rejection of the agreement by the E.U.

The negotiations over ACTA generated much controversy because of non-governmental non-IP rights-holder stakeholders generally were not invited to participate.   After early texts were leaked and a draft text officially released, as well as other stakeholders invited to make comment, the final text of the agreement[5] was released by the participating nations in December 2010.

The primary controversy that lingers in the U.S. is whether the President can simply enter into this agreement without ratification by the Senate – as required with a treaty.    Throughout the E.U., however, a mass movement developed against ACTA because of fears that individual rights on the Internet would be threatened.  The agreement generated protests, with some of the largest in Poland, and even a 2.8 million signature petition.

The provisions of ACTA, as ultimately written, simply did not merit such anger in large part because most European nations already have enforcement mechanisms as tough or even tougher than ACTA would have put in place.  In this author’s opinion, because the debate in the E.U. over ACTA coincided with the debate in the U.S. over the Stop Online Piracy Act (SOPA) at the beginning of this year, the perception of ACTA grew far more negative than was warranted, even though SOPA and ACTA have almost no resemblance and served very different purposes in the overall goals of the IP community.  It remains to be seen where international protection for intellectual property rights goes from here.

*     *     *

Phillip Barengolts is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues.  Mr. Barengolts’ practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, Internet, and copyright law.  He teaches trademark and copyright litigation at John Marshall Law School, and co-authored Trademark and Copyright Litigation, published by Oxford University Press.


October 12, 2011

The Anti-Counterfeiting Trade Agreement (ACTA) Strives to Strengthen Protection for Copyright and Trademark Owners throughout the World Against Counterfeiting and Piracy of their Products by Attempting to Harmonize the Laws of Member Nations. But will it Work?

Filed under: Counterfeiting, International — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:07 pm

Categories:  Trademark (General), Counterfeiting
Tags:  International, Phillip Barengolts, Legislation

by Phillip Barengolts, Trademark Attorney

[UPDATE 10/1/11: ACTA signed by U.S., Australia, Canada, South Korea, Japan, New Zealand, Morocco, and Singapore - all that's left for it to come into effect is the deposit of instruments of acceptance by six of these signatories.] On November 15, 2010, the U.S. Trade Representative (USTR) released the final text of the Anti-Counterfeiting Trade Agreement (ACTA).  See it here: http://www.ustr.gov/webfm_send/2379.  [UPDATE: The final ACTA text, after legal verification in Australia, can be found here: http://www.dfat.gov.au/trade/acta/Final-ACTA-text-following-legal-verification.pdf]] It is now up to member nations to “undertake relevant domestic processes” to have ACTA ratified in each participating jurisdiction.  Below is a brief background on ACTA and a summary of its most relevant provisions.  Also, for a European perspective on ACTA, see this excellent discussion on IPKat. http://ipkitten.blogspot.com/2010/10/letter-from-amerikat-acta-its-baaaa.html.

Who are the potential member nations and when will ACTA take effect?

The participants in the negotiations over ACTA are: Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, the Republic of Korea, Latvia, Lithuania, Luxembourg, Malta, Mexico, Morocco, the Netherlands, New Zealand, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, the United Kingdom, the U.S., and the European Union.  For an as yet to be determined two-year period, only they will have the opportunity to accede to ACTA, as well as any other WTO Members that the participants agree may join.  After this initial two-year period any member of the WTO may accede to ACTA simply by depositing a document noting the member’s approval of ACTA’s terms. (more…)

November 19, 2010

The Anti-Counterfeiting Trade Agreement (ACTA) Strives to Strengthen Protection for Copyright and Trademark Owners throughout the World Against Counterfeiting and Piracy of their Products by Attempting to Harmonize the Laws of Member Nations. But will it Work?

Filed under: Counterfeiting, International — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 4:49 pm

Categories:  Trademark (General), Counterfeiting
Tags:  International, Phillip Barengolts, Legislation

by Phillip Barengolts, Trademark Attorney

On November 15, 2010, the U.S. Trade Representative (USTR) released the final text of the Anti-Counterfeiting Trade Agreement (ACTA).  See it here: http://www.ustr.gov/webfm_send/2379.  [UPDATE: The final ACTA text, after legal verification in Australia, can be found here: http://www.dfat.gov.au/trade/acta/Final-ACTA-text-following-legal-verification.pdf]] It is now up to member nations to “undertake relevant domestic processes” to have ACTA ratified in each participating jurisdiction.  Below is a brief background on ACTA and a summary of its most relevant provisions.  Also, for a European perspective on ACTA, see this excellent discussion on IPKat. http://ipkitten.blogspot.com/2010/10/letter-from-amerikat-acta-its-baaaa.html.

Who are the potential member nations and when will ACTA take effect?

The participants in the negotiations over ACTA are: Australia, Austria, Belgium, Bulgaria, Canada, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, the Republic of Korea, Latvia, Lithuania, Luxembourg, Malta, Mexico, Morocco, the Netherlands, New Zealand, Poland, Portugal, Romania, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, the United Kingdom, the U.S., and the European Union.  For an as yet to be determined two-year period, only they will have the opportunity to accede to ACTA, as well as any other WTO Members that the participants agree may join.  After this initial two-year period any member of the WTO may accede to ACTA simply by depositing a document noting the member’s approval of ACTA’s terms. (more…)

July 7, 2009

Second Circuit enjoins sale of colognes without UPC codes in chain drugstores

Filed under: Counterfeiting, Gray Market — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 1:00 pm

By Daniel Hwang, Trademark Attorney

Davidoff markets COOL WATER, a prestige brand of cologne that Davidoff only permits luxury retailers to sell.  When Davidoff declined to permit CVS to sell the product, CVS obtained COOL WATER from unauthorized channels with the UPC codes removed that it then sold through its stores.  Davidoff brought suit for trademark infringement, arguing that CVS’s sales of COOL WATER products without UPCs (“decoded products”) hinders Davidoff from guarding against counterfeits and from protecting the reputation of its brand.  CVS denied that the products were counterfeit, instead arguing that removing the UPCs and selling gray market goods was not illegal.  The district court preliminarily enjoined CVS from selling any Davidoff trademarked products with the UPCs removed and the Second Circuit affirmed.

The Second Circuit affirmed based on the importance of UPCs to both Davidoff’s counterfeit protection program and its quality controls.  CVS raised as a defense that the decoded products are gray market goods and thus genuine goods.  The Second Circuit stated “[t]he fact that the goods in question may be gray-market goods does not furnish CVS with a valid defense.” Rather, the injunction was justified on the basis of interference with Davidoff’s trademark rights. (more…)

June 25, 2009

Tenth Circuit prevents eBay auctions of radar detectors stripped of their serial numbers

Filed under: Counterfeiting, Gray Market, Internet — Tags: — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 1:00 pm

By Jake Linford, Trademark Attorney

Beltronics made radar detectors, which two Beltronics distributors stripped of their serial number labels and sold in violation of their distributorship agreements to retailer Midwest.  Midwest sold the radar detectors as “new” on eBay.  Irate consumers complained when Beltronics refused to provide warranty coverage and other services for the radar detectors purchased from Midwest because they had no serial number labels.  The District Court for the District of Kansas granted Beltronics motion for a preliminary injunction to stop Midwest sales and Midwest appealed.  Midwest claimed its sale of the Beltronics radar detectors was protected by the first sale doctrine, which allows consumers to resell items they have purchased without triggering trademark liability.  Midwest argued in the alternative that the district court erred in finding that its disclosures to consumers were insufficient to prevent confusion.

The Tenth Circuit followed a line of gray market goods cases to conclude that differences in warranty protection or service commitments constituted a material difference.  As removal of the serial numbers voided Beltronics’s warranty, the products sold by Midwest were materially different from genuine radar detectors.  Thus, the Tenth Circuit found the first sale doctrine did not protect Midwest’s activities.  Midwest argued that the court’s interpretation would permit any trademark owner to eliminate the unauthorized resale of its goods and shut down secondary markets by limiting warranty coverage and service commitments to those who buy from authorized outlets.  The Tenth Circuit rejected this argument, because the Lanham Act—the federal trademark statute—only proscribes those sales that are likely to confuse consumers, and vendors who sell materially different goods but take sufficient steps to prevent consumer confusion, like fully disclosing the material differences, would not trigger liability under the Lanham Act.

The Tenth Circuit found Midwest’s attempted disclosures insufficient.  While Midwest stated on its auction page that it was retaining the serial number label because the detectors it sold were not covered by Beltronics’ warranty, there were also material differences regarding product and service assistance, product use information, software upgrades, rebates and recalls that Midwest did not endeavor to correct.  Thus, the Tenth Circuit upheld the injunction.

Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC, No. 07-3340 (10th Cir. 2009)

Return to www.pattishall.com.

For a printer-friendly version, click here.

Theme: Silver is the New Black. Get a free blog at WordPress.com

Follow

Get every new post delivered to your Inbox.

Join 86 other followers