FENDI ADELE, S.R.L., Fendi S.R.L., Fendi North America, Inc., Plaintiffs-Appellees-Cross-Appellants, v. ASHLEY REED TRADING, INC., Scott Ressler, James Ressler, Defendants-Appellants-Cross-Appellees.
Nos. 11-3025-cv (Lead), 11-3027-cv (Con), 11-3058-cv (XAP)
United States Court of Appeals, Second Circuit
Jan. 4, 2013.
We have considered all of the defendant‘s remaining arguments and find them to be without merit. Accordingly, for the foregoing reasons, the judgment of the district court is AFFIRMED.
Gerard F. Dunne, Law Firm of Gerard F. Dunne, New York, NY, for Defendants-Appellants-Cross-Appellees Ashley Reed Trading, Inc. & Scott Ressler.
David I. Schoen, Montgomery, AL, for Defendant-Appellant-Cross-Appellee James Ressler.
Present: ROBERT A. KATZMANN, BARRINGTON D. PARKER, RICHARD C. WESLEY, Circuit Judges.
SUMMARY ORDER
Defendants-Appellants-Cross-Appellees Ashley Reed Trading, Inc., Scott Ressler, and James Ressler (collectively, “Ashley Reed“) appeal a June 30, 2011, judgment of the United States District Court for the Southern District of New York (Berman, J.). On summary judgment, the district court held Ashley Reed liable for trademark counterfeiting, false designation of origin, and trademark dilution under the
On appeal, Ashley Reed contends that the district court erred by (1) rejecting its
We review a district court‘s grant of summary judgment de novo. 10 Ellicott Square Court Corp. v. Mtn. Valley Indem. Co., 634 F.3d 112, 119 (2d Cir.2011). Summary judgment is “appropriate where there exists no genuine issue of material fact and, based on the undisputed facts, the moving party is entitled to judgment as a matter of law.” Id. (internal quotation mark omitted). The moving party must offer concrete evidence showing the absence of a disputed issue of material fact, and then the burden shifts to the nonmoving party to present specific evidence showing a genuine dispute. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986), 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
We first address Ashley Reed‘s contention that the affirmative defenses of acquiescence and laches should have barred Fendi‘s claims. To prove acquiescence, a defendant must demonstrate that the plaintiff actively consented. Active consent means “conduct on the plaintiff‘s part that amount[s] to an assurance to the defendant, express or implied, that the plaintiff would not assert his trademark rights against the defendant.” ProFitness Physical Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy P.C., 314 F.3d 62, 68 (2d Cir.2002) (alteration in original) (internal quotation marks omitted). Laches will bar a plaintiff‘s claim when a defendant has been prejudiced by a plaintiff‘s unreasonable delay in bringing suit; no affirmative consent is required because the unreasonable delay implies consent. Id. at 67. Here, the parties agree that Ashley Reed bears the burden of proof.
Ashley Reed failed to prove either defense. There is no evidence that Fendi actively consented to infringement by Ashley Reed. Although Fendi remained silent for several years after the 2001 meetings between the parties, Fendi was entitled to investigate and was under no obligation to respond. Ashley Reed was on notice that Fendi believed it was selling infringing products. Moreover, Ashley Reed presented no evidence that Fendi unreasonably delayed in filing suit. On the contrary, Fendi sued promptly after discovering counterfeit handbags that it could prove were sold by Ashley Reed.
We next turn to Ashley Reed‘s argument that the district court erred in considering Leonardo Minerva‘s deposition testimony, which Ashley Reed contends was inadmissible. The district court “has wide discretion in determining which evidence is admissible [on summary
Ashley Reed does not dispute that Minerva‘s testimony—if admissible—establishes its liability for infringement during 2005 and 2006. However, it argues that a trial was necessary to determine whether it infringed Fendi‘s trademarks before 2005 because there was no direct proof that it infringed during that period. Although Fendi did not produce any counterfeit items sold by Ashley Reed before 2005, there is a significant amount of circumstantial evidence that supports the district court‘s apparent finding of liability.3 During that time, Ashley Reed was operating under the same procedures as it was in 2005 when it sold the counterfeit bags inspected by Minerva. As discussed further below, it failed to keep adequate records of its transactions with its suppliers and to adequately check the authenticity of the goods it purchased. Moreover, Fendi‘s Chief Financial Officer compared invoices that Ashley Reed did retain to legitimate Fendi records and concluded that many of Ashley Reed‘s invoices—dated as early as 2000—were forgeries. Given that Ashley Reed was buying products with fabricated Fendi invoices as early as 2000, it strains credulity to believe that none of these products were counterfeit. The district court did not err in resolving Ashley Reed‘s liability for the entire 2001 to 2006 period on summary judgment.
Once liability is established, Fendi‘s entitlement to Ashley Reed‘s profits depends upon whether the infringement
Ashley Reed argues that the district court ignored reasonable inferences that should have been drawn in its favor and, in doing so, improperly resolved disputed questions of material fact. However, given the evidence, no reasonable jury could have credited these proposed inferences. Ashley Reed was clearly on notice that it might be infringing trademarks after Fendi‘s 2001 cease and desist letter and multiple lawsuits filed by other designers in 2000 and 2001. Nevertheless, the record shows that Ashley Reed failed to adequately inquire about the authenticity and original sources of the goods they purchased. Ashley Reed‘s suppliers provided defendants with “sanitized” invoices that did not disclose the original sources and, in some cases, refused to provide any paperwork. Ashley Reed also failed to maintain records of their transactions with suppliers and other key financial documents and did not retain any documentation of its purported side-by-side comparisons of its goods with genuine Fendi merchandise. Perhaps most tellingly, Ashley Reed returned its remaining Fendi merchandise to its suppliers after Fendi filed suit instead of allowing it to be inspected and did not keep any records concerning these goods or their return.
Under these circumstances, a reasonable jury could not conclude that Ashley Reed acted with sufficient care to ensure that its goods were not counterfeit given that they were on notice of the goods’ possibly counterfeit nature. Similarly, a reasonable jury could not credit Scott Ressler‘s testimony that he conducted side-by-side comparisons to ensure his products’ authenticity given the lack of records and obvious differences--according to Mr. Minerva--between the counterfeit goods and genuine Fendi products. See Scott v. Harris, 550 U.S. 372, 378-80 (2007), 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (holding that a court should not credit testimony on summary judgment when it is so clearly contradicted by other evidence that no reasonable jury could believe it). Even if we credited Scott Ressler‘s testimony that a Fendi inspector assured him that certain goods from certain suppliers would be authentic, Ashley Reed does not contend that it purchased all of its Fendi-branded products through those channels. Additionally, the other evidence establishes that the defendants exhibited willful blindness with respect to the goods it acquired through other channels. Therefore, the district court correctly concluded that Ashley
Separate from his co-defendants, James Ressler contends that the district court should have stayed his deposition until the termination of federal criminal proceedings against him. This argument is without merit. As an initial matter, nothing prevented Mr. Ressler from petitioning the district court to allow him to submit an affidavit after his criminal trial had ended; however, he declined to do so. Moreover, we have held that in this context we will not disturb “[a] decision so firmly within the discretion of the district court” unless “it vitiates a defendant‘s constitutional rights or otherwise gravely and unnecessarily prejudices the defendant‘s ability to defend his or her rights.” Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 100 (2d Cir.2012). Here, the court accommodated Ressler by scheduling his deposition last. It considered the possible prejudice to Mr. Ressler but ultimately concluded that a stay was inappropriate because it was not necessary to protect Ressler‘s Fifth Amendment rights and it would further delay a discovery process that had already been significantly delayed. This was not an abuse of discretion.
The final two issues both relate to the calculation of damages. The district court used Ashley Reed‘s revenues from selling Fendi-branded products as a proxy for its profit and did not subtract any of the costs Ashley Reed might have expended in acquiring the bags or operating its business. Ashley Reed argues that this was error. However, a defendant bears the burden to prove any “deductions” from its gross revenue in calculating profits, Manhattan Industries, Inc. v. Sweater Bee by Banff, Ltd., 885 F.2d 1, 7 (2d Cir.1989), and Ashley Reed failed to present any specific evidence of its costs. Therefore, the district court correctly declined to deduct any of Ashley Reed‘s purported costs.
On cross-appeal, Fendi contends that it was entitled to recover Ashley Reed‘s profits from 2000 to 2006 but that the district court‘s award only covered 2005 and 2006. We agree that the damage award seems facially inconsistent with the court‘s apparent conclusion that Fendi had proven infringement during the entire 2001 to 2006 period. The district court has the discretion to award profits “subject to the principles of equity,”
For the reasons stated herein, the district court‘s decision is AFFIRMED IN PART, VACATED IN PART, and REMANDED.