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Fendi Awarded At Least $12 Million Against Counterfeiter

By Sarah Robertson, Susan Progoff, Fara Sunderji and Jena Tiernan of Dorsey & Whitney LLP

The Second Circuit Court of Appeals in Fendi Adele, S.R.L. v. Ashley Reed Trading, Inc., No. 11-3025, 2013 WL 48688 (2d Cir. January 4, 2013), affirmed summary judgment, holding the defendants liable for willful counterfeiting for their sale of counterfeit FENDI bags. The district court awarded Fendi $12 million in trebled damages, prejudgment interest, costs and attorneys' fees based on the defendants' profits from selling counterfeit FENDI bags in 2005 and 2006. The defendants appealed the judgment, alleging that the district court committed various evidentiary errors. Fendi cross-appealed, claiming that, based on the district court's finding that the defendants were liable for counterfeiting from 2001 through 2004, in addition to the years on which the damages award was based, the award should be increased to account for the defendants' profits during those years as well.

The Court of Appeals held that the defendants were properly found to be willful counterfeiters. The evidence showed that after receiving a cease and desist letter from Fendi in 2001, the defendants were clearly on notice that they might be selling counterfeit FENDI merchandise. After being put on notice, the defendants failed to inquire about the authenticity and original sources of the products they purchased. The defendants' suppliers provided them with "sanitized" invoices that did not disclose the original sources and in some cases, refused to provide any paperwork. The defendants failed to maintain records of their transactions with suppliers and did not maintain any documentation of their purported side-by-side comparisons of their merchandise with genuine FENDI products. In addition, what the court characterized as "most telling," the defendants returned their remaining FENDI merchandise to their supplier when Fendi filed suit, so that the merchandise could not be inspected, and did not keep any records relating to these goods or their return. Based on this evidence, the court held that no reasonable jury could have found that the defendants acted with sufficient care. Accordingly, the court affirmed the finding of liability for willful counterfeiting.

As the defendants were found to have sold counterfeit FENDI bags from 2000 through 2006, the court found the district court's award of damages for only 2005 and 2006 to have been facially inconsistent. Consequently, the Second Circuit vacated the damage award and remanded the case to the district court to determine whether it would be equitable to award damages only for 2005 and 2006, or whether damages should be awarded for the entire period for which the defendants were found to have sold counterfeit FENDI products.

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This page contains a single entry from the blog posted on February 7, 2013 4:01 PM.

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