In the context of counterfeit luxury good, the U.S. Court of Appeals for the Second Circuit affirmed summary judgment of willful trademark infringement by an importer of the goods.  The 2d Circuit also remanded the case for the district court to consider the full scope of the rights holder’s damage claims.  Fendi Adele, S.R.L. v. Ashley Reed Trading Inc., Case No. 11-3025 (2d Cir., Jan. 4, 2004) (summary order). 

Plaintiff Fendi Adele brought suit against Ashley Reed Trading, alleging that Ashley Reed knowingly imported fake “Fendi” bags after having been put on notice by Fendi of the counterfeit nature of the goods.  The district court, on summary judgment, found Ashley Reed liable for trademark counterfeiting, false designation of origin and trademark dilution under the Lanham Act.  It also found Ashley liable for unfair competition and trademark dilution under New York law.  The district court also found the infringement to have been willful.  Fendi was awarded over $12 million in damages for the 2005-2006 period.  However, although the district court also found liability for the 2001-2006 period, it did not award any further damages.  Both sides appealed. 

Ashley Reed challenged the district court’s decision on multiple grounds—all of which were rejected by the 2d Circuit.  Ashley Reed challenged the finding of infringement prior to 2005 arguing there was no “direct proof” of infringement.  The 2d Circuit affirmed the lower court’s decision holding that although there was no direct proof of infringement during that period, circumstantial evidence, including counterfeit invoices, failure to keep adequate records, and failure to adequately check the authenticity of goods provided sufficient support for the summary judgment. 

Ashley Reed also challenged the district court’s summary judgment finding of willful infringement, asserting there were disputed issues of fact and that, in the summary judgment context, the district court ignored reasonable inferences that should have been drawn in its favor.  The 2d Circuit disagreed, concluding that no reasonable jury could have credited Ashley Reed’s proposed inferences.  Rather the evidence was undisputed that Ashley Reed was on notice that it might be infringing Fendi’s trademark after Fendi sent a cease-and-desist letter in 2001, i.e., at the same time Ashley Reed was confronted with multiple infringement suits from other designers.  Furthermore, Ashley Reed’s failure to adequately inquire about the authenticity of the goods purchased, its failure to maintain records and the return of merchandise to its suppliers without documentation after Fendi filed suit, all supported the district court’s summary judgment ruling.

In its cross appeal for an award of damages for the period between 2000 and 2004, Fendi contended that based on the district court’s finding of infringement from 2001-2006.  It was entitled to an award of damages for that period.  The 2d Circuit agreed that district court’s award of damages for only 2005-2006 was facially inconsistent with its infringement finding, but acknowledged that it is within the district court’s discretion to decrease the award based on principles of equity.  However, if this was the district court’s reasoning, the 2d Circuit noted that it did not explain its analysis.  Accordingly the 2d Circuit vacated the damages award and remanded to the district court for a redetermination on damages.