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689 F. SUPP. 2D 585

FENDI ADELE S.R.L., FENDI S.R.L., and FENDI NORTH AMERICA, Plaintiffs,
v. BURLINGTON COAT FACTORY WAREHOUSE CORP. et al., Defendants.

No. 06 Civ. 85 (LBS)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF


NEW YORK

689 F. Supp. 2d 585; 2010 U.S. Dist.

March 22, 2010, Decided


March 23, 2010, Filed

Fendi seeks to clarify the damages


JUDGES: Leonard B. Sand, United States awarded, if any, with regard to
District Judge. counterfeit goods sold prior to the
April 2004 letter. If the sale of
OPINION BY: Leonard B. Sand Fendi-branded goods prior to the cease
and desist letter is not found to be
OPINION willful, the issue remains as to
whether the bad faith requirement
[*608] MEMORANDUM AND ORDER still exists. The courts in this
District are currently divided as to
SAND, J. whether a finding of bad faith is
On February 8, 2010, this Court still required in order to award
granted summary judgment in favor of treble damages in light of the
Plaintiffs Fendi Adele S.R.L., Fendi Trademark Amendments Act of 1999. In
S.R.L., and Fendi North America our February 2010 order, we found the
(collectively known as "Fendi"), April 2004 letter established
finding Defendants Burlington Coat willfulness and did not reach the
Factory Warehouse Corporation and question of whether the bad faith
Cohoes Fashion, Inc., a wholly-owned requirement survives the 1999
subsidiary of Burlington Coat Factory, Amendments. Fendi, 2010 U.S. Dist.
(collectively known as "Burlington") LEXIS 10628, 2010 WL 431509, at * 11.
liable for trademark counterfeiting, Fendi urges reconsideration of the
trademark dilution, and common law issue of willfulness for the period
unfair competition. [**3] Fendi Adele prior to the April 2004 letter, or, if
S.R.L, v. Burlington Coat Factory, No. willfulness [**4] is not found, a
06 Civ. 85 (LBS), 689 F. Supp. 2d 585, determination as to whether the bad
2010 U.S. Dist. LEXIS 10628, 2010 WL faith requirement survives the 1999
431509, at * 10 (S.D.N.Y. Feb. 8, Amendments.
2010) ("February 2010 order"). We
awarded treble damages for the 1 For the purposes of this
counterfeit goods sold after the April motion, we assume familiarity
2004 cease and desist letter and with the facts.
referred the matter to the Magistrate
Judge for a calculation of damages. Upon reconsideration, we find that
Now before this Court is Fendi's Burlington willfully infringed for the
Motion for Partial Reconsideration. 1 entire period. The Court's February
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2010 order is modified to award Fendi defendant "recklessly disregarded the


treble damages for all of the possibility" that his or her conduct
counterfeit goods at issue. constituted infringement.). Courts
have repeatedly found willfulness
I. Standard of Review where a defendant receives a cease and
desist letter but continues the
[HN1] The standard for willfulness infringing conduct. See Fendi, 2010
is whether the defendant had knowledge U.S. Dist. LEXIS 10628, 2010 WL
that his or her conduct represented 431509, at * 10 (collecting cases).
infringement or recklessly disregarded Courts have also found willful
the possibility. Kepner-Tregoe, Inc. infringement where the infringing
v. Vroom, 186 F.3d 283, 288 (2d Cir. party was [**6] found liable and then
1999); see Koon Chun Hing Kee Soy & did not alter or cease the infringing
Sauce Factory, Ltd. v. Star Mark Mgmt, activity. See Burberry Ltd. v. Euro
No 04 Civ. 2293 (JFB), 2007 U.S. Dist. Moda, No. 08 Civ. 5781 (CM), 2009 U.S.
LEXIS 1404, 2007 WL 74304, at * 11 Dist. LEXIS 113407, 2009 WL 4432678,
(E.D.N.Y. Jan. 8, 2007) (applying the at * 3 (S.D.N.Y. Dec. 4, 2009)
willfulness standard in Kepner-Tregoe (finding ample evidence of willfulness
to claims brought under the Lanham where a prior settlement put
Act); Nike, Inc. v. Top Brand Co., No. defendants on notice of the infringing
00 Civ. 8179 (KMW), 2005 U.S. Dist. activity, yet defendants persisted in
LEXIS 42374, 2005 WL 1654859, at * 6 the same conduct); Kepner-Tregoe,
(S.D.N.Y. July 13, 2005) (same). While
Inc., 186 F.3d at 288 (finding
caution must be exercised in granting
copyright infringement was willful
summary judgment when state of mind is
where the defendant "chose to ignore
an issue, the summary judgment rule
the injunction [issued by a Texas
"would be rendered sterile" if the
district court and upheld by the Fifth
mere existence of an issue as to state
Circuit] and continued to use the MPO
of mind would automatically defeat an
program" that had been found to be
otherwise [**5] valid motion. Nora
infringing); Viacom Int'l Inc. v.
Beverages, Inc. v. Perrier Group of
Fanzine Int'l, Inc., No. 98 Civ. 7448
America, Inc., 269 F.3d 114, 125 (2d
(RCC), 2001 U.S. Dist. LEXIS 11925,
Cir. 2001). Where the defendant offers
2001 WL 930248, at * 4 (S.D.N.Y. Aug.
no probative evidence raising a 16, 2001) (where the defendant had
genuine issue of material fact been sued at least two times in the
regarding willfulness, summary previous year, with one suit resulting
judgment is appropriate. [*609] in a default judgment against the
Tanning Research Lab., Inc. v. defendant, the court found that the
Worldwide Import & Export Corp., 803
defendant's subsequent "strikingly
F. Supp. 606, 610 (E.D.N.Y. 1992).
similar conduct" suggests that the
defendant "knew or should have known
II. Willfulness of Pre-2004 Sales
that its actions constituted
[HN2] "Willful infringement may be [copyright] infringement.").
attributed to the defendant's actions When Burlington took no action to
where he had knowledge that his comply with the 1987 Injunction and
conduct constituted infringement or began violating the injunction as
where he showed a reckless disregard early as 1993, 2 Burlington showed
for the owner's rights." Johnson & [**7] a reckless disregard for Fendi's
Johnson Consumer Companies, Inc. v. trademark rights. Johnson & Johnson,
Aini, 540 F. Supp. 2d 374, 396 540 F. Supp. 2d at 396. The 1987
(E.D.N.Y. 2008); see also Cartier Injunction, like a cease and desist
Int'l B.V. v. Ben-Menachem No. 06 Civ. letter or a finding of liability, put
3917 (RWS), 2007 U.S. Dist. LEXIS Burlington on notice that its behavior
95366, 2008 WL 64005, at * 14 was potentially infringing on Fendi's
(S.D.N.Y. Jan. 3, 2008) (Conduct can trademark. In fact, the injunction was
be found to be willful where the even more specific than a cease and
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desist letter or a finding of purchased Fendi-branded goods from the


liability because it mandated a Vendors as early as 2000. Haigney
specific course of action to protect testified that the first time a buyer
against future infringement-- approached him regarding purchasing
Burlington was not to sell any Fendi- Fendi-branded goods from a third-party
branded merchandise without first vendor was not until 2003. (Haigney
obtaining permission from Fendi. Dep. at 113:3-21.) No buyer ever
Burlington did not implement any sought approval from Haigney for any
control mechanisms to ensure purchase of Fendi-branded goods from
compliance with the injunction. (Pl.'s Ashley Reed. (Pl.'s 56.1 P 261.)
56.1 P 16.) Burlington's in-house Burlington did not obtain [**9]
counsel, Stacy Haigney, who was authentication documents for any of
present in court when the 1987 its purchases from the Vendors. (Pl.'s
Injunction was entered, admitted that 56.P 268.) Burlington was aware of the
he was not aware of a single piece of risk associated with buying
writing concerning any steps that the trademarked goods from third-party
company took to comply with the vendors, yet it did not buy from
injunction. Id. authorized distributers, (Genecin Dec.
Ex. 38 ("Goldstein Dep.") at 143:21-
2 Burlington's records have 144:9; Pl.'s 56.1 P 255), or verify
been a persistent obstacle in the authenticity of the goods
this litigation. At the time of purchased from third-party vendors,
our 2007 opinion, we believed (Goldstein Dep. at 143:3-20).
Burlington's first sale of Fendi Burlington has failed to offer any
goods was in 2002. Subsequent evidence raising a genuine issue of
discovery revealed that material fact regarding its willfully
Burlington began selling Fendi- blind infringement. See Tanning
branded goods no later than 1993. Research, 803 F. Supp, at 610
Burlington [**8] has made no ("[D]efendants have offered no
records available for the six probative evidence raising a genuine
years immediately after the issue of material fact regarding their
injunction was entered. Fendi, willfully blind violation.").
2010 U.S. Dist. LEXIS 10628, 2010 Burlington concedes that it took no
WL 431509, at * 24. As Magistrate action to implement procedures in
Judge Dolinger noted in his order to ensure compliance with the
Report and Recommendation, "while 1987 Injunction, and it has offered no
plaintiffs know a sale was made evidence to demonstrate that it
as early as 1993, it is possible complied with its own trademark
that sales could have occurred protection policies. Burlington argues
even earlier, but impossible to that it forgot about the injunction;
confirm or refute that however, whether Burlington forgot
hypothesis." Id. about the injunction is irrelevant.
The crucial time for the purpose of
[*610] Burlington did not even finding willfulness is immediately
comply with its own trademark after the 1987 Injunction was entered.
protection policies in the years At that moment, [**10] Burlington was
following the injunction. Burlington's on notice that its conduct potentially
policies required that buyers (1) infringed on Fendi's trademark, and in
speak with Haigney prior to purchasing doing nothing, Burlington demonstrated
trademarked merchandise from third- a reckless disregard for the
party vendors, (Def. Response to 56.1 injunction and for its purpose--to
P 254; Genecin Dec. Ex. 37 ("Haigney prevent Burlington from infringing on
Dep.") at 156:20-157:23); and (2) Fendi's trademark in the future. See
obtain authentication documents for Burberry Ltd v. Euro Moda, 2009 WL
purchases from third-party vendors. 4432678, at * 3 ("In light of the
(Pl. 's 56.1 P 266.) Burlington prior June 30, 2005 settlement
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agreement where defendants admitted to


selling scarves, hats and polo shirts III. Conclusion
with counterfeit Burberry marks, but
stated it had ceased doing so in 2003 This Court's February 8, 2010
and promised not to do so in the Memorandum and Order is amended. Upon
future . . ., defendants obviously reconsideration, we find Burlington
knew that selling such items with acted willfully for the entire
counterfeit Burberry marks infringed relevant period, and Fendi is awarded
Burberry's registered trademarks."). treble damages with regard to all
Burlington's failure to alter its counterfeit goods at issue.
conduct in the wake of the 1987 SO ORDERED.
Injunction and lack of compliance with Dated: March 27, 2010
its own minimal trademark compliance New York, NY
procedures establishes willfulness for /s/ [**11] Leonard B. Sand
the entire period at issue. U.S.D.J.