Counterfeit Law Blog

Ninth Circuit Upholds Customs' Right to Impose Civil Penalty on Importer of Counterfeit Hilfiger Watches Even Though Hilfiger did not make Watches at Time of Seizure

lherrmann@kpkb.com (Leora Herrmann) — Fri, 31 Oct 2008 07:23:45 -0500

The Ninth Circuit Court of Appeals has rejected a district court's ruling that U.S. Customs could not impose a civil penalty on an importer of counterfeit Tommy Hilfiger watches because Hilfiger itself did not make watches at the time of the seizure. U.S. v. Able Time, Inc., --- F.3d ----, 2008 WL 4350027 (9th Cir. Sept. 25, 2008). Able Time imported a shipment of watches into the United States which were labeled with the mark “TOMMY,” a registered trademark of Tommy Hilfiger Licensing, Inc. Hilfiger did not make watches at the time of the seizure. However, it owned a U.S. trademark registration for the mark “TOMMY” in International Class 3 for cosmetics, cologne and similar products. The Bureau of Customs and Border Protection seized the watches pursuant to the Tariff Act, which authorizes seizure of any “merchandise bearing a counterfeit mark.” 19 U.S.C. § 1526(e). Customs’ forfeiture action against the watches was dismissed for defective service of process and could not be re-filed because the statute of limitations had run. However, Customs also imposed a civil penalty upon Able Time pursuant to 19 U.S.C. § 1526(f), which authorizes the imposition of a fine upon any person who imports merchandise that is seized under § 1526(e). The district court concluded on summary judgment that, because Tommy Hilfiger did not make watches at the time of the seizure, the watches imported by Able Time were not counterfeit, and the civil penalty imposed by Customs was unlawful. The Ninth Circuit reversed, holding that Customs may impose a civil penalty pursuant to 19 U.S.C. § 1526(f) upon an importer of merchandise bearing a counterfeit mark, even though the owner of the registered mark does not manufacture or sell the same type of merchandise. Under the Ninth Circuit’s ruling, “to run afoul of the civil penalty provision of the Tariff Act,... the offending merchandise must bear a mark identical to or substantially indistinguishable from a registered trademark owned by a United States citizen or corporation, where the offending merchandise copies or simulates the registered trademark, meaning that it is likely to cause the public to associate the offending merchandise with the registered trademark under the” traditional likelihood of confusion test applied in the Ninth Circuit (the Sleekcraft test). It remanded the case to the district court to determine "whether (1) the mark on the watches is identical to or substantially indistinguishable from the registered mark pursuant to 15 U.S.C. § 1127, and (2) whether the offending mark copies or simulates the registered mark pursuant to 15 U.S.C. § 1124, which amounts to the traditional likelihood of confusion test for infringement."

Bush Has Signed Pro-IP Act

lherrmann@kpkb.com (Leora Herrmann) — Tue, 14 Oct 2008 20:04:37 -0500

President Bush signed the controversial "Pro-IP" Act into law yesterday, almost two weeks after it was first presented to him. The Act increases statutory damage awards in civil counterfeiting cases to a maximum of $2 million for willful use of a counterfeit trademark, strengthens remedies available in the prosecution of criminal cases involving counterfeiting and piracy, provides resources for Department of Justice programs that combat IP theft, and makes permanent the Administration’s Strategy Targeting Organized Piracy (STOP!) Initiative and its inter-agency IP coordination efforts.

DOJ Weighs Against the Enforcement of Intellectual Property Right Act of 2008

lherrmann@kpkb.com (Leora Herrmann) — Sat, 27 Sep 2008 00:45:38 -0500

The Department of Justice delivered a letter to Senators Specter and Leahy this week "strongly oppos[ing]" Title I of the Enforcement of Intellectual Property Act of 2008, S. 3325, which it describes as "not only authorizes the Attorney General to pursue civil remedies for copyright infringement, but to secure 'restitution' damages and remit them to the private owners of infringed copyrights." The letter argues:

First, civil copyright enforcement has always been the responsibility and prerogative of private copyright holders, and U.S. law already provides them with effective legal tools to protect their rights....

Second, Title 1's departure from the settled framework above could result in Department of Justice prosecutors serving as pro bono lawyers for private copyright holders regardless of their resources. In effect, taxpayer-supported Department lawyers would pursue lawsuits for copyright holders, with monetary recovery going to industry.

Third, the Department of Justice has limited resources to dedicate to particular issues, and civil enforcement actions would occur at the expense of criminal actions, which only the Department of Justice may bring....

EFF Sues USTR Over ACTA and FOIA

lherrmann@kpkb.com (Leora Herrmann) — Sat, 27 Sep 2008 00:36:06 -0500

The Electronic Frontier Foundation (EFF) and Public Knowledge filed suit September 18 against the U.S. Trade Representative (USTR) asserting that the USTR had failed to comply with the Freedom of Information Act (FOIA) by withholding information regarding the Anti-Counterfeiting Trade Agreement (ACTA).

Judge Davis' Decision Throwing Out RIAA Jury Verdict Against Jammie Thomas

lherrmann@kpkb.com (Leora Herrmann) — Fri, 26 Sep 2008 22:57:37 -0500

Ruling that he had given an incorrect instruction to the jury, U.S. District Judge Michael Davis has granted Jammie Thomas' motion to vacate the $220,00 jury verdict against her in the widely-watched Kazaa file sharing case, Capitol Records Inc. v Thomas. Click here to read Judge Davis' September 24, 2008 decision granting the motion and ordering a new trial.

The offending jury instruction instructed the jury that "The act of making copyrighted sound recordings available for electronic distribution on a peer-to-peer network, without license from the copyright owners, violates the copyright owners' exclusive right of distribution, regardless of whether actual distribution has been shown." In seeking to overturn the verdict, Thomas argued that merely making a work available to the public does not constitute a "distribution" under the Copyright Act. Instead, she asserted, a distribution only occurs when a defendant actually transfers possession or ownership of copies of a work to the public.

The plaintiffs, members of the RIAA, argued that merely making a work available for distribution is sufficient. This is also the position taken by Register of Copyrights, Marybeth Peters, in a 2002 letter to Congress: "Making [a work] available for other users of [a] peer to peer network to download . . . constitutes an infringement of the exclusive distribution right, as well as the production right." Noting that the Register of Copyright's interpretation is not binding, Judge Davis sided with Thomas on this issue.

A second issue addressed by the Court is whether infringement can be found based on downloads made by the RIAA's agent, MediaSentry, from a shared folder on Thomas' hard drive. Noting that a copyright owner cannot infringe its own copyright, Thomas argued that downloads initiated by an investigator can not form the basis for a copyright violation because the investigator acts with the permission of the copyright owner. Judge Davis disagreed, holding that the act of "provid[ing] the copyrighted works for copying and plac[ing] them on a network specifically designed for easy, unauthorized copying" could constitute sufficiently substantial participation by Thomas in the distribution of the works to the RIAA investigators to support a finding of infringement. However, because his jury instruction had permitted the jury to find against Thomas merely because she made the works available without also finding finding that an actual distribution had taken place, a new trial was required.

Noting that Thomas had allegedly infringed the copyrights in only 24 songs -- the equivalent of three CDs, costing less than $54 -- and clearly frustrated by the difficulty of applying pre-Internet legal principles to peer-to-peer infringement claims, Judge Davis called the $220,000 verdict "wholly disproportionate to the damages suffered by Plaintiffs" and "implore[d] Congress to amend the Copyright Act to address liability and damages in peer-to-peer network cases such as the one currently before this Court."

David Kravets' blog at Wired provides more information about the history of this lawsuit as well as comments by the parties' attorneys.

Trademark Selection and Protection Basics

lherrmann@kpkb.com (Leora Herrmann) — Wed, 03 Sep 2008 14:00:16 -0500

"Too often, businesses, neglect the importance of selecting and protecting 'strong' names to identify their products and services. Not only can this oversight result in consumer confusion and lost business, but a valuable monetary asset might be lost as well." So writes my partner, Michael Chesal, in the attached article designed to assist businesses in selecting strong trademarks for their goods and services. I recommend Michael's article to anyone in the process of selecting and adopting a new trademark.

Update on the Anti-Counterfeiting Trade Agreement

lherrmann@kpkb.com (Leora Herrmann) — Sun, 03 Aug 2008 20:09:10 -0500

The United States Trade Representative spokesman, Scott Elmore, released a vague statement on August 1 addressing the continued negotiation of an Anti-Counterfeiting Trade Agreement (ACTA) at the 34th G8 Summit in July 2008. Participants in the negotiation included Australia, Canada, the EU, Japan, South Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland, and the United States. Elmore's statement described the negotiations as focusing "on civil remedies for infringements of intellectual property rights, including such issues as availability of preliminary measures, preservation of evidence, damages, and legal fees and costs," as well as "border enforcement of intellectual property rights."

The ACTA initiative was announced by the USTR in October 2007. Since then, very little information regarding the ACTA negotiations has been made public and the contours of the agreement that may emerge from the on-going talks are not known. Comments on ACTA that were submitted to the USTR earlier this year have been published in the Federal Register and can be accessed by clicking (1), (2), (3), and (4).

The secrecy surrounding ACTA has generated a fair amount of opposition and concern, as nicely summarized in Monika Ermert's recent article posted at IP Watch.

Tiffany v eBay: Summary of the Ruling Rejecting Tiffany's Contributory Infringement Suit Against eBay

lherrmann@kpkb.com (Leora Herrmann) — Wed, 30 Jul 2008 23:35:57 -0500

On July 14, the U.S. District Court for the Southern District of New York rejected Tiffany’s bid to invoke the doctrine of contributory infringement to hold eBay liable for the sale of counterfeit Tiffany jewelry by eBay sellers. Tiffany, Inc. v. eBay, Inc., Case No. 04-Civ-4607 (S.D.N.Y. July 14, 2008). Prior to filing the lawsuit, Tiffany had informed eBay that a large amount of counterfeit Tiffany jewelry was being sold on eBay and that sale of five or more of the same Tiffany items were very likely counterfeit. It had demanded that eBay preemptively remove listings containing five or more Tiffany items and automatically suspend the service of sellers that Tiffany identified as selling counterfeit goods. eBay refused to comply with these requests.

In its suit, Tiffany argued that the correct standard for liability as a contributory infringer should be whether wrongdoing by eBay might have been “reasonably anticipated” and that, under this standard, eBay is legally obligated to proactively investigate and take down auctions that raise a suspicion of counterfeiting, such as auctions offering multiple Tiffany items. The Court disagreed. It adopted a legal standard for contributory infringement under which an auction site is absolved of liability so long as it takes appropriate steps to remove listings and suspend sellers’ service when it receives specific knowledge of an infringing listing.

The District Court based its holding on a U.S. Supreme Court decision, Inwood Labs, Inc. v. Ives Labs, Inc., 546 U.S. 844 (1982), holding that the standard for contributory infringement articulated in, applies to businesses like eBay that provided a virtual marketplace. Inwood held that:

If a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorially responsible for any harm done as a result of the deceit.

The District Court in the Tiffany case held that the eBay auction service was a “product” for purposes of the Inwood test. It then concluded that (a) the correct legal standard is whether eBay knew or had reason to know of a particular infringement, not whether eBay could reasonably anticipate the infringement based on “known” patterns, such as Tiffany’s claim that any auction offering more than five of its products was likely to be counterfeit; (b) generalized knowledge is insufficient to impute knowledge of any and all instances of infringing activity to eBay; (c) Tiffany’s demand letters, its undercover buying programs, and its notices to eBay provided only generalized knowledge to eBay, which is insufficient to establish a duty to act; (d) eBay was not willfully blind to infringement; (e) when eBay had knowledge of specific infringing listings, eBay promptly terminated those listings; (f) when eBay had knowledge that a seller was repeatedly engaging in counterfeit activity, eBay’s practice was to suspend that seller and then take further corrective action; and finally, (g) the burden of policing the Tiffany mark should appropriately be placed on Tiffany.

The Court was impressed by eBay’s evidence that it invested millions of dollars each year on personnel and computer resources to combat counterfeiting. When alerted to a potentially infringing listing, eBay would remove the listing, send a warning to the seller, place restrictions on the seller’s account (such as a selling restriction, temporary suspension, or indefinite suspension), and/or refer the matter to law enforcement. The Court found that eBay removed thousands of listings per month. In addition, eBay maintained the VeRO “notice-and-takedown” program, whereby trademark owners could report to eBay any listing offering potentially infringing items so that eBay could remove the listings. Indeed, the District Court found that, when Tiffany informed eBay of potentially counterfeit Tiffany listings, eBay never refused to remove a reported listing, acted in good faith in responding to Tiffany, and always provided Tiffany with the seller’s contact information.

The Court stated that trademark plaintiffs bear a high burden of establishing “knowledge” of contributory infringement and that the determination of “knowledge” under Inwood is a contextual and fact-specific test, requiring a district court to consider the nature and extent of the communication, whether the defendant explicitly or implicitly encouraged the trademark violation, the extent and nature of the violations being committed, and whether there was a bad faith refusal to exercise a clear contractual power to halt the infringing activities. Given the presence of authentic goods sold on eBay, the Court found that generalized knowledge of counterfeiting is insufficient to impute knowledge to eBay of any specific acts of actual infringement.

Tiffany also argued that eBay improperly allowed repeat offenders to sell counterfeit goods even after it informed eBay of their misconduct. The Court again disagreed. First, it held that eBay’s refusal to suspend a seller after receiving notice of a single potential infringement was not inappropriate because Tiffany’s notices did not constitute a definitive finding that the item was counterfeit. Without knowledge of actual counterfeiting, Tiffany could not demonstrate that eBay should have permanently suspended a seller. Second, suspension represented a serious penalty, particularly to those sellers who relied on eBay for their livelihoods. Third, eBay’s policy was generally effective in preventing sellers from relisting potentially counterfeit items, and eBay never refused to take down a particular listing upon receiving a notice from Tiffany that particular item listed was a counterfeit. Finally, Tiffany did not prove that actual counterfeit items were sold by sellers who had previously been subject of a take-down notice filed by Tiffany.

The Court also concluded that eBay did not continue to supply its service to sellers whom eBay knew to be selling actual counterfeits because: (a) the evidence did not show that counterfeiters could return with impunity to sell counterfeit Tiffany products on eBay, and (b) eBay did not encourage sellers whose listing had been removed to simply re-list the items or list other counterfeit items.

Thanks to Paul Kobak of Kluger, Peretz, Kaplan & Berlin for assistance in preparing this summary.

Counting "Type of Goods" for Statutory Damages -- Function, not Form, Controls

lherrmann@kpkb.com (Leora Herrmann) — Fri, 28 Mar 2008 08:13:37 -0500

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.

DOJ Touts Increase in Counterfeiting Prosecutions; Stiff Sentences

lherrmann@kpkb.com (Leora Herrmann) — Wed, 27 Feb 2008 07:02:37 -0500

At her testimony before the Committee on House Judiciary Subcommittee on Courts, The Internet, and Intellectual Property during hearings on the PRO-IP bill last December, Sigal P. Mandelker, the Deputy Assistant Attorney General responsible for the Criminal Division of the Department of Justice (DOJ), touted the DOJ's increased efforts and successes in prosecuting counterfeiters. According to Mandelker, DOJ filed 217 intellectual property cases in fiscal year 2007, a 7% increase over the 204 cases filed in 2006 and a 33% increase over the 169 filed in 2005. Mandelker reported that 287 defendants were sentenced in fiscal year 2007 on IP-related charges. This is a 35% increase over 2006 and a whopping 92% increase over 2005. Mandelker noted that, in fiscal year 2006, 187 defendants were convicted of criminal copyright and trademark offenses, an increase of 57% over 2005. Of these, 39 were sentenced to 25 months or more.

Some of the highlights cited in Mandelker's testimony include:

The October 12, 2007 sentencing, in the Eastern District of Virginia, of Abbas Chouman to 57 months in prison on one count of conspiracy to commit criminal copyright infringement. Chouman was also ordered to forfeit $7 million. Chouman had pleaded guilty after being charged with operating a store that sold more than $7 million worth of counterfeit clothing.
On August 6, 2007, two individual were sentenced in the Northern District of California to 37 months in prison for conspiracy to commit copyright infringement and trafficking in counterfeit goods and labels. The sentences were the result of Operation Remaster, an undercover FBI investigation which resulted in seizure of approximately 494,000 pirated music, software, and movie CDs and DVDs, and more than 6,135 stampers for production of counterfeit optical disks.
On June 22, 2007, the federal court for the Eastern District of Virginia sentenced Hew Raymond Griffiths to 51 months in prison for running an Internet software piracy operation known as DrinkOrDie out of his home in Australia. The group was involved in the reproduction and distribution of pirated software, movies, games and music worth more than $50 million. Griffiths' extradition from Australia to the US was one of the first extraditions for an intellectual property offense.
On June 22, 2007, the last of nine defendants pleaded guilty in the District of Wisconsin to felony copyright infringement charges arising out of their involvement in eBay auctions of counterfeit Rockwell Automation software. The software had a combined retail value of approximately $30 million.
On August 25, 2006, the Eastern District of Virginia sentenced the operator of piracy website BUYUSA.com to six years in prison and ordered him to pay $4.1 million in restitution. The forfeiture order in the case included a helicopter, two Cessna airplanes, a Lamborghini, a Hummer, a boat, and an ambulance.

HR4279 - "Protecting Intellectual Property" (PRO-IP)

lherrmann@kpkb.com (Leora Herrmann) — Wed, 27 Feb 2008 06:26:43 -0500

I was recently asked to write a column for the UK publication "World Trademark Review" about Rep. Conyers pending bill, HR 4279, titled Protecting Intellectual Property ("PRO-IP"). The official summary of the bill can be found here. The PRO-IP bill generated considerable controversy when introduced in December 2007, primarily because of the proposed revision of the statutory damage provision of the Copyright Act. which has been referred to as “gluttonous” by William Patry, Senior Copyright Counsel for Google. Currently, the Copyright Act provides that, for purposes of calculating statutory damages, “all the parts of a compilation or derivative work constitute one work.” Applying this limitation the Fourth Circuit Court of Appeals in Xoom v. Imageline limited the clip art distributor Imageline, which had published two compilation CDs containing thousands of clip art images, to only two statutory damage awards against a competitor that had allegedly copied a multitude of Imageline’s images from the two CDs. PRO-IP would amend the Copyright Act so that the court (or jury, in a jury trial) has the discretion to make “either one or multiple awards of statutory damages” with respect to infringement of a compilation such as Imageline's CDs. In a case like Xoom, this would give the court the discretion to award multiple statutory damage awards instead of being limited by the number of compilations infringed. However, the magazine and consumer electronics industries, as well as some commentators and law professors have raised concerns that providing such discretion will inhibit innovation and result in disproportionate damage awards. Others fear that its passage would prompt the recording industry to threaten individuals who engage in P2P piracy with astronomical damage awards. Interestingly, at the preliminary House Subcommittee hearings on PRO-IP, Congressman Rick Boucher, a founder of the House Internet Caucus, suggested that, to avoid chilling innovation, the statutory damage scheme for copyright may need to be overhauled to decouple damages available against willful direct infringers – such as organized software pirates – from those available against device manufacturers accused of indirect secondary infringement. Others have also suggested that damage awards against individuals engaged in P2P file sharing should be separately addressed by the Copyright Act. It will be interesting to see whether such alternative proposals gain any traction when the bill comes up in Committee for mark-up in March.

Election of Statutory Damages May Be Bar to Attorney's Fee Award

lherrmann@kpkb.com (Leora Herrmann) — Mon, 14 Jan 2008 22:35:42 -0500

The Ninth Circuit Court of Appeals held in December that a plaintiff in a trademark counterfeiting case who elects to recover statutory damages is not entitled to recover attorney’s fees under Section 35(b) of the Lanham Act. Unlike Section 35(a), which only allows an award of attorney’s fees upon a finding that the case is “exceptional,” Section 35(b) provides for attorney’s fees to be granted as a matter of course, absent extenuating circumstances, in a case of willful counterfeiting:

“In assessing damages under subsection (a) of this section, the court shall, unless the court finds extenuating circumstances, enter judgment for three times such profits or damages, whichever is greater, together with a reasonable attorney's fee, in the case of any violation … that consists of intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark.”

Focusing on the clause “[i]n assessing damages under subsection (a),” the Ninth Circuit in K and N Engineering, Inc. v. Bulat, 2007 WL 4394416 (9th Cir. Dec. 18, 2007), held that the Section 35(b) presumption in favor of attorney’s fees does not apply if the plaintiff elects statutory damage because statutory damages are provided for by subsection (c), rather than assessed “under subsection (a).” The court did not decide whether a plaintiff that elects statutory damages also waives its right to recover attorney’s fees under the "exceptional case" standard of Section 35(a).

A plaintiff who elects statutory damages can still try to recover its attorney's fees "through the back door." As the court noted in Gucci America, Inc. v. Duty Free Apparel, Ltd., 315 F.Supp.2d 511 (S.D.N.Y. 2004), a counterfeiting plaintiff’s attorney’s fees may be “a persuasive measure towards determining statutory damages.” Thus, evidence regarding the plaintiff’s attorney’s fees should be submitted to the court as evidence in support of a significant statutory damage award, and the court should take such fees into consideration when it sets the amount of statutory damages.

Court Dissolves Ex Parte Seizure Order Because Prelminary Injunction Adequate to Protect Brand Owner During Pendency of Counterfeiting Litigation

lherrmann@kpkb.com (Leora Herrmann) — Wed, 05 Dec 2007 22:40:06 -0500

The Lanham Act authorizes a district court to grant an ex parte order for the seizure of items involved in the unlawful use of a counterfeit mark, including goods, counterfeit marks, the means of making such marks, and records. Under the statutory procedure, a court that issues an ex parte seizure order must schedule a hearing, generally within 15 days after the date the seizure order is issued. At that hearing, the party who obtained the order has "the burden to prove that the facts supporting findings of fact and conclusions of law necessary to support such order are still in effect.” In order to continue the seizure order, the court must make the following findings:

(i) an order other than an ex parte seizure order is not adequate;

(ii) the applicant has not publicized the requested seizure;

(iii) the applicant is likely to succeed in showing that the person against whom seizure would be ordered used a counterfeit mark in connection with the sale, offering for sale, or distribution of goods or services;

(iv) an immediate and irreparable injury will occur if such seizure is not ordered;

(v) the matter to be seized will be located at the place identified in the application;

(vi) the harm to the applicant of denying the application outweighs the harm to the legitimate interests of the person against whom seizure would be ordered of granting the application; and

(vii) the person against whom seizure would be ordered, or persons acting in concert with such person, would destroy, move, hide, or otherwise make such matter inaccessible to the court, if the applicant were to proceed on notice to such person.

If the party who obtained the order does not meet its burden of proof, the seizure order will be dissolved or modified.

In Beltronics USA, Inc. v. Midwest Inventory Distribution LLC, the federal district court in Kansas decided November 13, 2007 to dissolve an ex parte seizure order it had previously issued to Beltronics because, after conducting the required hearing, the court was not satisfied that the defendants would destroy, move, hide, or otherwise make the seized goods inaccessible, or that an order other than an ex parte seizure order would not be adequate to ensure that Beltronics would have adequate remedies if the defendants are ultimately found to have infringed Beltronics’ trademark.

The court was swayed by the absence of evidence that the defendants were “the type of fly-by-night defendants who will seek to evade the couirt’s jurisdiction.” The defendants had never failed to appear in court when required to do so, there was no prior legal action against them, and there was no other indicia that they would be unlikely to comply with a court order. Noting that the defendants are incorporated businesses with inventories, assets, and a fixed physical presence that sell merchandise other than Beltronics equipment, the court concluded that they would have much to lose if held in contempt of a court order. Consequently, the court could not find that an order other than an ex parte seizure order would not be adequate to protect Beltronics. On the grounds that Beltronics has not made the showings required by the ex parte seizure statute, the court dissolved the seizure order and directed Beltronics to return the seized goods to the defendants. At the same time, however, it entered a preliminary injunction prohibiting the defendants from selling or offering for sale any Beltronics goods which do not bear an original Beltronics serial number label. In addition, in order to ensure the preservation of evidence, the court prohibited the defendants from destroying, modifying, moving, hiding, or otherwise making any such goods inaccessible during the course of the litigation.

Diane Von Furstenberg Studio Awarded Statutory Damages of $100,000 Against eBay Seller of Fake Dresses

lherrmann@kpkb.com (Leora Herrmann) — Wed, 05 Dec 2007 20:56:08 -0500

The United States District Court for the Eastern District of Virginia in Diane Von Furstenberg Studio v. Snyder recently awarded Diane Von Furstenberg Studio the maximum statutory damage award available in cases of non-willful trademark counterfeiting. In deciding to award DVF $100,000, the court identified five factors as relevant in deciding the amount of a statutory damage award:

1.The expenses saved and profits reaped by the defendant.
2.The revenues lost by the plaintiff including damage to reputation.
3.The value of the trademark.
4.The need to deter and discourage additional counterfeiting activity by the defendant and others.
5.Whether the defendant cooperated and took responsibility for its actions.

Noting that the Internet gives counterfeit sellers a virtually limitless number of customers, the court stated that Snyder's choice of eBay as her marketplace weighed in favor of a large damage award.

Had the court found that Snyder acted willfully, it could have enhanced the statutory damage award to up to $1 million. However, because DVF withdrew its claim that the defendant acted willfully and in bad faith, DVF was not eligible for enhanced statutory damages or attorney’s fees in this case.

Snyder has filed an appeal from the damage award.

UK Criminal Action Against Film Piracy Site

lherrmann@kpkb.com (Leora Herrmann) — Sun, 21 Oct 2007 16:40:42 -0500

The Guardian Unlimited reported Friday that law enforcement authorities have shut down the website tv-links.co.uk, a popular website that provided links to pirated copies of films and television programs, and arrested a 26-year-old man from Cheltenham, UK in connection with criminal offenses related to the facilitation of copyright infringement on the Internet. Much of the film content available on the site had apparently been recorded on camcorders at movie theaters.