Monday, May 01, 2017

What does a counterfeit look like?

Coach, Inc. v. Chung Mei Wholesale, Inc., 2016 WL 7470001, No. 15-22829 (S.D. Fla. Jul. 17, 2016)

Interesting case involving alleged counterfeiting of Coach products.  The defendants ran a business importing goods from China and selling them to retailers and wholesalers, including merchants who sell items at flea markets or operate 99-cent retail stores.  Customs and Border Protectionseized a shipment imported by Chung Mei from China, which CBP determined contained 1,800 “Coach Design Handbags,” identified as constituting “counterfeit copies” of the Coach trademarks. A private investigator observed approximately “2,000 units of handbags bearing Coach trademarks” from that shipment.  CBP intercepted a similar second shipment, this time with “approximately 3,000 units of clutch purses bearing Coach trademarks.” The private investigator took photographs of the imported handbags. A Coach employee trained to identify counterfeits examined the photos and concluded the pictured items were counterfeit and bore counterfeit representations of four registered Coach trademarks as well as trade dresses.

Coach sought summary judgment on its counterfeiting and related claims, which the court denied because a reasonable jury could conclude that the bags didn’t use counterfeit marks. A counterfeit mark is defined as a “spurious mark which is identical with, or substantially indistinguishable from, a registered mark”; the standard is “more rigorous than the test for likelihood of confusion.”  The private investigator and Coach employee’s opinions were not sufficient, nor was one of the defendant’s acknowledgement at his deposition that the exterior—but not the interior—of the confiscated bags bore resemblances to Coach products.  

The court’s own review of the photos showed undoubted similarities, but also that there was a genuine issue whether they could be considered “identical” or “substantially indistinguishable” from Coach’s marks. “For example, the design on the clutch bags confiscated in the second seizure consists of a series of thick black ovals, some containing four smaller ovals inside forming a flower-like pattern, while the marks Coach claims are infringed consist of a series of the letter ‘C’ in bold black font.”  The court also mentioned factors that seemed to go more to likely confusion (which is understandable, as Coach also alleged regular infringement), such as the differing zippers and interiors on the bags and the extremely low prices ($2.50 each) and resultant likely quality of the bags.  The CBP’s notice of seizure letter was also insufficient to prove the goods counterfeit—which, as my suit against ICE indicates, is a good call given that, despite what ICE initially told me, they don’t have any independent standards or training on what constitutes a counterfeit; ICE instead relies entirely on what trademark owners say.

close-up comparison

Coach argued that it didn’t have to show likely confusion, but that’s only true when there’s no disputed factual issue over whether the defendant’s products are identical to or substantially indistinguishable from the plaintiff’s products.  For similar reasons, the court declined to grant summary judgment on the trade dress infringement and trademark dilution claims.

Denouement: Defendants lost a jury trial on infringement/counterfeiting and also had to pay attorneys’ fees, though not all individual defendants were found liable.

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