408 F.Supp.3d 508
S.D.N.Y.2019Background
- HBI (d/b/a RAW) owns registered trademarks and protected trade dress for RAW rolling papers and accessories and sells through authorized wholesalers.
- Galaxy VI Corp., a small Brooklyn smoke-supply storefront run by Said Ghnaim, sold RAW-branded products and purchased from HBI and other wholesalers (My Import, Metro General).
- On March 2, 2017, an HBI-paid investigator bought a package of RAW King Size Slim (KSS) papers and a RAW-branded tray from Galaxy; HBI’s creative director identified subtle defects showing they were counterfeit.
- Galaxy kept incomplete purchase/sales records, paid some suppliers in cash, and bought at prices below HBI’s wholesale price; Ghnaim denies knowing products were counterfeit and says he lacked experience to detect counterfeits.
- HBI moved for summary judgment on Lanham Act liability and willfulness and on state-law claims; the Court granted summary judgment that Galaxy sold counterfeit RAW products in violation of the Lanham Act, but denied summary judgment on willfulness, GBL § 349, and New York common-law unfair competition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability under Lanham Act (trademark/trade dress/counterfeiting) | Galaxy sold counterfeit RAW goods (investigator purchase + expert comparison); RAW marks/trade dress are valid and protected. | Denies sale of the specific counterfeit items; disputes provenance of receipt and challenges some evidentiary points. | Granted: Plaintiff proved marks/trade dress protectable and that the items sold were counterfeit and purchased from Galaxy. |
| Willfulness for enhanced statutory damages and fees | Galaxy acted willfully or was willfully blind given low supplier prices, cash transactions, poor records, and purchases from non-authorized sources. | Ghnaim lacked intent, was inexperienced, relied on price and barcode checks, and had innocent explanations for record gaps. | Denied: Genuine disputes exist about Galaxy’s knowledge/reckless disregard; evidence insufficiently egregious for summary judgment of willfulness. |
| New York common-law unfair competition (bad faith required) | Use of counterfeits supports inference of bad faith; Galaxy’s conduct shows misappropriation. | No evidence Galaxy knowingly or recklessly sold counterfeits; no prior notices or litigation. | Denied: Plaintiff failed to establish the required mens rea (bad faith) at summary judgment. |
| GBL § 349 (consumer-oriented deception beyond ordinary trademark harm) | Sale of counterfeits is deceptive and harms consumers/public interest. | Conduct is ordinary trademark infringement; no separate substantial public injury shown. | Denied: Plaintiff did not show the requisite consumer/public injury beyond trademark confusion. |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard and burdens).
- Anderson v. Liberty Lobby, 477 U.S. 242 (1986) (standard for genuine issue of material fact).
- Polaroid Corp. v. Polarad Elec. Corp., 287 F.2d 492 (2d Cir. 1961) (multi-factor likelihood-of-confusion test).
- Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992) (trade dress distinctiveness/secondary meaning).
- Gucci Am., Inc. v. Duty Free Apparel, Ltd., 286 F. Supp. 2d 284 (S.D.N.Y. 2003) (counterfeits inherently cause confusion; liability discussion).
- Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83 (2d Cir. 2012) (statutory damages scheme for counterfeits).
- Fendi Adele, S.R.L. v. Ashley Reed Trading, Inc., [citation="507 F. App'x 26"] (2d Cir. 2013) (willfulness and willful blindness standard).
- Sunward Elecs., Inc. v. McDonald, 362 F.3d 17 (2d Cir. 2004) (Lanham Act strict liability for infringement).