Counterfeit Law Blog

Under the statutory damage provision of the Lanham Act, 15 U.S.C. 1117(c), the court can award statutory damages of not less than $500 or more than $100,000 per counterfeit mark per "type of goods or services," or not more than $1,000,000 per counterfeit mark "per type of goods or services" if the court finds that the use of the counterfeit mark was willful.  A recent decision out of the Southern District of New York addresses what constitutes a “type" of good under this provision.  In Gucci America, Inc. v. MyReplicaHandbag.com, 2008 WL 512789 (S.D.N.Y. Feb. 26, 2008), Judge Koeltl accepted the recommendation of Magistrate Judge Eagan that the Internet retailer MyReplicaHandbag.com be assessed statutory damages of $4.3 million for counterfeiting trademarks owned by Gucci, Chloe and Davidoff. The plaintiffs had sought even more – $21.2 million – based on their assertion that MyReplicaHandbag.com had sold 424 different “types” of counterfeit goods.  The court rejected this count, holding that “[f]or the purpose of awarding damages, it seems unduly artificial to categorize the merchandise into separate ‘types’ for each subtle difference in a particular product’s size, shape, color, pattern or fabric.”  Instead, the court held, “the separate ‘types’ should be based on the functional purpose of the product.”  Based on the functional purpose of the counterfeit goods, the court held that “the defendants sold replicas of the following types of goods: (1) handbags (Gucci and Chloe); (2) wallets (Gucci); (3) handbag and wallet sets (Gucci); (4) watches (Gucci and Dunhill); (5) eyeglasses (Gucci); and (6) belts (Gucci).”  It then awarded Gucci $3,600,000 ($100,000 x 6 marks x 6 types of goods), Chloe $400,000 ($100,000 x 4 marks x 1 type of good), and Dunhill $300,000 ($100,000 x 3 marks x 1 type of good).  While Judge Eagan's observation that it is "unduly artificial to categorize the merchandise into separate ‘types’ for each subtle difference in a particular product’s size, shape, color, pattern or fabric" may have some merit, the standard he adopts -- that the "separate 'types' should be based on the functional purpose of the product" --  is overly simplistic and is not easily reconciled with other decisions.  For example, a 2006 decision cited in Gucci considered t-shirts and polo shirts to be separate types of goods.  Nike, Inc. v. Top Brand Co. Ltd., 2006 WL 2946472 (S.D.N.Y. Feb. 27, 2006) (Ellis, M.J.) (awarding$12 million -- $1,000,000 per infringed mark for each of four Nike trademarks for three types of goods, t-shirts, polo shirts and sweatshirts), adopted by Chief Judge Wood on October 6, 2006.  Handbag aficionados would argue that the differences between certain sizes and shapes of handbags are equivalent to the differences between a t-shirt and a polo shirt.