Djarum v. Dhanraj Imports, Inc.
876 F. Supp. 2d 664
W.D.N.C.2012Background
- Djarum moves for default judgment under Fed.R.Civ.P. 55(b)(2) against Dhanraj Imports, Inc. and Sanjay Patel after default was entered; Djarum seeks Lanham Act relief and NC Gen Stat. § 75-1.1 remedies including permanent injunction, profits, and treble damages.
- Djarum is an Indonesian tobacco company with a long-standing U.S. presence and the Djarum Black trade dress for cigars since 2009, including distinctive black packaging, gold lettering, and a stylized logo.
- Defendants copied Djarum’s Black trade dress for Zanzibar Xtreme cigars, creating packaging that is substantially similar in overall impression and branding.
- Defendants sold Zanzibar Xtreme cigars in this District and via an established distribution network; Djarum sought information on sales, distributors, and cessation of infringing activity, which Defendants did not provide.
- The court evaluates Lanham Act trade dress claims under nonfunctionality, distinctiveness, secondary meaning, and likelihood of confusion, and finds these elements satisfied here.
- The court awards damages, treble damages, and imposes a permanent injunction prohibiting further trade dress infringement and unfair/deceptive trade practices.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Djarum’s trade dress claims satisfy Lanham Act standards | Djarum’s Black trade dress is nonfunctional, inherently distinctive, with secondary meaning, causing likelihood of confusion. | Defendants did not contest; no defense presented due to default. | Yes; trade dress nonfunctional, distinctive, with likelihood of confusion established. |
| Whether a permanent injunction is proper | Irreparable harm presumption from likelihood of confusion; balance of hardships favors owner; public interest supports protection of branding. | No argument due to default; not raised. | Permanent injunction granted. |
| Whether the defendant’s profits should be disgorged and damages trebled under the Lanham Act | Disgorge defendants’ profits; treble damages warranted for willful infringement. | Not raised due to default. | Damages awarded $258,400; profits disgorged and trebled to $775,200 total. |
| Whether NC Gen Stat. § 75-1.1 penalties support trebling or additional relief | UTPA-based treble damages applicable to deceptive trade practices; supports treble relief. | Not raised. | Treble damages deemed appropriate and added to Lanham Act award; no duplicative recovery. |
Key Cases Cited
- Ashley Furniture Indus., Inc. v. SanGiacomo N.A. Ltd., 187 F.3d 363 (4th Cir.1999) (test for trade dress infringement: nonfunctionality, likelihood of confusion, and distinctiveness/secondary meaning)
- Qualitex Co. v. Jacobson Products Co., 514 U.S. 159 (1995) (trade dress nonfunctionality and protectability)
- People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359 (4th Cir.2001) (likelihood of confusion framework)
- eBay Inc. v. MercExchange, LLC, 547 U.S. 388 (2006) (test for granting permanent injunctions)
- Lorillard Tobacco Co. v. S & M Brands, Inc., 616 F. Supp. 2d 581 (E.D. Va. 2009) (public interest and protections in trademark context)
- United States v. Jones, 136 F.3d 342 (4th Cir.1998) (ceasing infringing activity does not moot suit)
- Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188 (5th Cir.1998) (continuing liability despite voluntary cessation)
- Pleasant Valley Promenade v. Lechmere, Inc., 120 N.C.App. 650, 464 S.E.2d 47 (1995) (UTPA and Lanham Act interplay in North Carolina context)