Court Awards Damages and Attorneys' Fees for Wrongful Seizure in Couterfeiting Case

In a February 28, 2014 ruling, Magistrate Judge Frank Maas issued a Report and Recommendation recommending that the Court award defendant Top Quality Food Market, LLC and the other defendants $22,535 in attorneys’ fees and damages for the wrongful ex parte seizure of allegedly counterfeit goods. Plaintiff Prince of Peace Enterprises, Inc. obtained the seizure order, which Judge Howell later vacated. The defendants then asserted a counterclaim seeking damages for the wrongful seizure. After the plaintiff defaulted in responding to the defendants’ motion to dismiss, Judge Howell granted the motion and ordered that the defendants’ counterclaim be decided in their favor. The Court then referred the matter to Judge Maas for an inquest on damages arising from the unwarranted seizure.

Judge Maas began his analysis by noting that because the plaintiff never answered the counterclaim, “the well-pleaded factual allegations therein must be accepted as true,” but the plaintiffs “nevertheless still must submit proof sufficient to enable this Court to determine their losses since a default ‘is not an admission of damages.’” Judge Maas also wrote that the amount of damages recoverable is governed by 15 U.S.C. § 1116(d)(11), which provides that a victim of a wrongful seizure is entitled to recover “lost profits, cost of materials, loss of good will, and punitive damages in instances where the seizure was sought in bad faith, and unless the court finds extenuating circumstances, to recover a reasonable attorneys’ fee.”

The plaintiffs sought $192 for seized goods that were never returned, $2,000 for goods that spoiled while the seizure was in effect, $2,064 in wages, $4,577.60 in lost profits and $29,721.95 in attorneys’ fees. Judge Maas awarded the $192 for the seized goods even though they were inadequately documented because the amount is de minimis. The Court examined the documentation with regard to the other non-attorneys’ fees items of damages, and concluded that the defendants had not carried their burden of showing them with reasonable certainty.

Magistrate Recommends Statutory Trademark Damages and Permanent Injunction Against Counterfeiters

In an August 9, 2013 ruling, Magistrate Judge Frank Maas recommended a $9 million award of statutory trademark damages to Tiffany (NJ) LLC against a series of related defendants (all but one of whom is located in China) and their credit card processor and entered a permanent injunction, but declined to enter a turnover order of funds held in Chinese banks pending an appeal to the Second Circuit of a similar order in another action.  Tiffany filed its complaint against the defendants alleging that they, "through a series of companies and websites, unlawfully manufactured, marketed and sold counterfeit versions of trademarked Tiffany products over the internet, in violation of the Lanham Act."  Tiffany also sued the defendants' credit processor, 95epay, alleging contributory infringement.  All defendants defaulted, and an inquest was ordered.  None of the defendants appeared at the inquest, although three Chinese banks holding defendants' assets and that had previously been restrained appeared to contest a turnover order on, among other grounds, China's bank secrecy laws.