Diserio Martin O'Connor & Castiglioni LLP

Partner Matthew Wagner and Associate Jane Christie lead trial team in enforcement of counterfeit and grey market products in New York

October 30, 2014

Partner Matthew Wagner and Associate Jane Christie lead trial team in enforcement of counterfeit and grey market products in New York: Counterfeit Seizure of NEOPROSONE, LEMONVATE, FAIR & WHITE, and PARIS FAIR & WHITE goods in New York, Injunction issued (Oct. 8, 2014).

Matthew Wagner, Chair of the IP Department, along with Associate Jane Christie, lead the team on behalf of client Mitchell Group, of Miami Florida, in action to combat counterfeit and grey market goods in New York.  The matter was reported by Wolters Kluwer in its Trademark Daily Wrap up, on October 8, 2014:

Trademark Daily Wrap up, TRADEMARK NEWS—E.D.N.Y.: Counterfeit sales of NEOPROSONE, LEMONVATE, FAIR & WHITE, and PARIS FAIR & WHITE goods enjoined, (Oct. 8, 2014)

By Peter Reap, J.D., LL.M.

Mitchell Group USA LLC and Gapardis Health and Beauty, Inc. (collectively, the “plaintiffs”) were entitled to a preliminary injunction against defendants Nkem Udeh and Beauty Resource enjoining their use, in connection with the offering for sale, of the plaintiffs’ registered marks: NEOPROSONE, LEMONVATE, FAIR & WHITE, and PARIS FAIR & WHITE, the typestyle utilized by the plaintiffs in connection with those marks, or any other confusingly similar marks or symbols, the federal district court in Brooklyn has ruled (Mitchell Group USA LLC v. Udeh, October 7, 2014, Irizarry, D.).

In addition, the defendants were enjoined from destroying or removing any books or records containing information concerning the defendants’ business or finances reflecting transactions involving counterfeit or infringing goods bearing the plaintiffs’ marks. Finally, the defendants were ordered to notify the plaintiffs’ attorneys if they obtain the possession of or are currently in the possession of any counterfeit or infringing goods bearing the plaintiffs’ marks.

Background. The plaintiffs presented sworn allegations of facts, supplemented by photographs, demonstrating that their investigator visited the defendants’ store and purchased unauthorized counterfeit products bearing the plaintiffs’ registered trademarks.

On October 1, 2014, the Court granted the ex parte request of the plaintiffs for a temporary restraining order, expedited discovery to be scheduled by a magistrate judge, and an order of seizure of inventory and assorted business records, upon the plaintiffs’ sworn allegations that the defendants were unlawfully infringing upon their trademark rights by selling counterfeit goods and other products bearing the plaintiffs’ trademarks. Following the entry of that order, the plaintiffs, along with the U.S. Marshals Service, conducted seizures and recovered the following counterfeit items at the defendants’ location: Lemonvate Cream 30 grams (22 items); Neoprosone Body Lotion 500 mL (1 item); Neoprosone Gel 30 grams (40 items).

On October 7, 2014, the court held a hearing, at which the plaintiffs’ counsel appeared and defendant Nkem Udeh appeared pro se. No counsel appeared for Beauty Resource. At this hearing, Udeh consented to the entry of the plaintiffs’ requested preliminary injunction.

Analysis. The test for determining whether a mark is a counterfeit is essentially the same as whether a suspect mark infringes a registered mark, the court noted. The standard for determining whether a suspect mark infringes a registered mark is whether numerous ordinary prudent purchasers are likely to be misled or confused as to the source of the product in question because of the entrance in the marketplace of defendant’s mark.

In order to determine whether a likelihood of confusion exists, courts in the Second Circuit apply the eight factor test set forth in Polaroid Corp. v. Polarad Electronics Corp., 287 F.2d 492, 495 (2d Cir. 1961). However, where items are counterfeit, the court need not undertake a factor-by-factor analysis under Polaroid because counterfeits, by their very nature, cause confusion, according to the court. The Lanham Act defines “counterfeit” as “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127.

To obtain a preliminary injunction in a trademark case a movant must demonstrate a likelihood of success on the merits, and that: (1) they are likely to suffer irreparable injury in the absence of an injunction; (2) remedies at law, such as monetary damages, are inadequate to compensate plaintiffs for that injury; (3) the balance of hardships tips in plaintiffs’ favor; and (4) the public interest would not be disserved by the issuance of a preliminary injunction.

Here, based on the findings following the seizure at the defendants’ location, as well as the plaintiffs’ complaint and supporting declarations, there was a substantial likelihood of success on the merits, the court held. 

Although irreparable harm may not be presumed upon a showing of a likelihood of success, irreparable harm exists in a trademark case when the party seeking the injunction shows that it will lose control over the reputation of its trademark because loss of control over one's reputation is neither calculable nor precisely compensable, the court observed. Further, it has been recognized that counterfeiting specifically may also lead to irreparable harm.

There was irreparable injury here to the plaintiffs because the defendants engaged in the act of selling goods bearing marks that are almost identical to the plaintiffs’ marks, but not identical in composition or in warnings to consumers, the court decided. Thus, the defendants’ acts of selling these goods caused a likelihood of confusion and harm to the plaintiffs and the goodwill and reputation built in their trademarks. Such damage was neither precisely measurable, nor compensable.

Further, the balance of hardships in the case also favored the plaintiffs. In weighing the hardships, hardship to a defendant based on his or her own wrongful acts is not legally cognizable. Here, the potential harm to the defendants in restraining their trade in counterfeit products was outweighed by the potential harm to the plaintiffs’ reputation and goodwill.

The public interest also favored a preliminary injunction to protect the plaintiffs’ registered trademarks and to protect the public from being misled by the defendants’ sale of counterfeit and gray market goods, according to the court.

The case is No. 14-cv-5745 (DLI) (JO).

Attorneys: Matthew C. Wagner (Diserio Martin O'Connor & Castiglioni, LLP) for Mitchell Group U.S.A., LLC, and Gapardis Health and Beauty, Inc.

Companies: Mitchell Group U.S.A., LLC; Gapardis Health and Beauty, Inc. Cases: Trademark NewYorkNews

© 2014 CCH Incorporated. All rights reserved. The foregoing article is reprinted with permission. This article was published in Wolters Kluwer Trademark Daily News on October 8, 2014.