Gucci America, Inc. v. Daffy's, Inc. John Does 1-10

аrresting offi- the name of the discovered AMERICA, Appellant INC. GUCCI period required time

cer within the 4(m). 15(c)(3) Rule Garvin did Rule the identi- seek to determine diligently received the

ty officer after she INC., DAFFY’S, Does 1-10. John City.16 then She initial disclosures No. 02-4046. days period before the until two waited discovery scheduled to end before fact Appeals, United States Court of in- complaint her she moved to amend Third Circuit. of four officers listed clude the names 24, July initial disclosures.17 In Argued July 2003. circumstances and the light of these Dec. 2003. Filed herein considerations we have stated other court did not we conclude that the district denying Garvin’s its discretion

abuse regard In this we find

motion to amend.18 correctly that it court held the district notice under the shared impute

could not identity

attorney and of interest methods Thus, police

to the four officers. we will 6, 2002, and

affirm the orders of December

January 2003.19 17, 2002, July we court one week before Garvin 18. Inasmuch as hold that the district On disclosures, City's impute she was correct when it declined to notice received the initial City. attorney identity interrogatories Ap- Br. under the shared served on the inter- methods, pellant question we at 5. est need not reach the require- of whether Garvin has satisfied the is, 15(c)(3)(B), ment of Rule that whether the suggesting ruling 17. We are not that our police sought added four officers to be "knew diligently different if would have been Garvin that, or should have known but for a mistake sought to obtain the name of the arrest- had concerning identity proper party, joined ing him officer so that she could hаve brought against the action would have been given as a or at least him notice of defendant party.” against days after the claim him within complaint she filed this but had not been appeal also recited that as that situation 19. Garvin’s notice of successful in this endeavor appealing granting sum- But the fact is that it is she is from the order does not exist here. City diligent mary judgment but we are not manifest Garvin was not in the affirming challenging that order as she is not prosecution of the case in the district court. appeal. it in this supra note 6. Springut (Argued),

Milton Kalow & York, NY, Springut, New Appellant. for also 2000 WL 1720738. R. Stephen Buckingham (Argued), Harris, Nance, David L. Michelle R. Low- Sandler, Roseland, Appellee. enstein for McKEE, BARRY, Before: Circuit ROSENN, Judges, and Senior Circuit Judge. THE

OPINION OF COURT McKEE, Judge. Circuit America, Inc. appeals the district deny request court’s decision to Gucci’s for compelling Daffy’s, order defendant Inc. to recall counterfeit “Jackie-O” hand- bags. appeals Gucci also the district court’s denial of request for an accounting injunctive of profits and other follow, relief. For the reasons that we will affirm.

I. FACTUAL BACKGROUND Daffy’s is a chain of retail clothing specializing selling stores popular goods brands of and apparel at discount prices. May In late acquired handbag appeared three sizes of a a particular be Gucci model known as the Daffy’s purchased “Jackie-O”. 594 of handbags supplier, these from its Sara’s Collection, Inc., prices from ranging depending on size. Sara’s $238 $250 Collection, recognized repu- Inc. was as a supplier, previously table had purchased products from it. leading purchase

The events be- gan representative ap- when of Sara’s proached Daffy’s regarding some Gucci handbags being that were diverted to the from a merchant in the Far United States Although Daffy’s representatives East. bags genuine, were confident that the supplier disclose to authen- attempted Daffy’s nevertheless by informing Daffy’s responded by taking them to Gucci Gucci. bags ticate Seeaucus, Jersey obtained be- had been New store outlet There, importer legitimate parallel for resale. outside offering them fore presented one authorized chain of distribution Daffy’s employee of Gucci’s informed the bags genuine clerk and the were bags to the Gucci and it believed bag Nevertheless, the as a despite she had received its be- bags. clerk Gucci authenticity. not certain of its that it genuine and was were and gift bags lief that the to examine asked clerk employee Daffy’s the imme- nothing improper, The had done genuine. that it was bag and confirm handbags from its diately the the withdrew so, Daffy’s the and informed clerk did adopted policy The of and has stores since authentic. bag the was emplоyee in order merchandise buying not Gucci on indi- was based certain conclusion That purchasing of coun- possibility to avoid the quality of authenticity including the cia goods. terfeit Gucci leather, bag the storage and fabric in, the Gucci label and

handbag came and HISTORY II. PROCEDURAL The clerk bag. codes on the appropriate Daffy’s took be Despite steps after with another Gucci compared bag also counterfeit nature of ing informed of the in the store. bag selling, sued bags was Gucci the Gucci bags sent had Daffy’s also one why Daf seeking an to Show Cause Order damaged to the Gucci purchased was enjoined preliminarily not fy’s should be repair. York for center repair New through infringing from Gucci’s bag and returned it repaired Gucci “Jackie-O” handb the sale of counterfeit inquiry. comment or further without denied, requested relief was ags.1 The reputa- with its experience Based denied Gucci’s motion and the court also the Gucci supplier, ble corroboration discovery Daffy’s directed expedited clerk, unquestioned repair and and view, court’s Gucci had supplier. bags from Gucci’sown return of one of likelihood of a sufficient not demonstrated center, Daffy’s concluded that the service justify the equita on the success merits were bags purchased it had from Sara’s In an effort to requested. ble rеlief it bags. That conclusion was genuine Gucci any party, prejudice unfair avoid actually coun- bags incorrect. the factual issue of court severed district terfeit, they exceptional were of although Daffy’s handbag authenticity of the virtually indistin- quality, expensive, and trial proceeded and bench bags. guishable genuine America, merits of that issue. sell a total of 588 of Daffy’s proceeded to 00-4463, ‍‌‌​‌‌​​​‌‌​‌‌​‌​​‌‌​​‌‌​​‌​​‌‌​‌‌‌‌​​​​‌​​‌​​‌​​‍No. 2000 WL Daffy’s, Inc. v. $298.99, bags for $398.99 these $339.99 2000) (D.N.J. Nov.14, (denying continued depending on size. The sales injunction and au preliminary severing Daffy’s re- through the summer trial). thenticity issue for any problem until unaware of mained quality control testified head of a letter dat- Daffy’s for Gucci sent counsel ensuing trial. Based 5, 2000, extensively at the demanding that September ed testimony, the court concluded bags upon that immediately selling the Daffy’s cease § 32(1) alleged for the violations under §§ remedies alleged [15 1. Gucci violations 1114(1)] 43(a), Act codified at 15 U.S.C. of the Lanham § [15 U.S.C. U.S.C. Act, 1125(a)] sought § 1117. of the Lanham (2) genuine as bags that the sold Guc- the risk of confusion to the public were, fact, injury product greater ci counterfeit trademark is than the cost and burden of recall to the not manufactured Gucci. alleged infringer and the district court made clear its fourth case, written in this “the there is substantial opinion danger risk of public resulting extremely from the handbag high-quality defendant’s activity. infringing fooling very even a product, capable dis- criminating appar- examiner. It should be Id. at 4. concluding After had quality ... ent of the counterfeit willfully, acted and recognizing that difficulty and the it from distinguishing Gucci failed to genuine establish a issue every step a true Gucci has colored fact as to whether acted intention- Inc., litigation.” ally or with willful Daffy’s selling Gucci America v. blindness in (D.N.J. counterfeit handbags, the court slip. op. No. 00-4463 at 2 undertook Nov. 2001) (“(GucciIV”). balancing encompassed by the second prong inquiry. of its at doing Id 5-8. The district court then moved so, the court first considered the low risk remedy phase of the trial. Gucci first public high quality confusion due to the requested an compelling Daffy’s order to and price bags of the and low injury risk of pur- contact those consumers who had to the Gucci trademark. Id. at 8-9 The chased the counterfeit bags and offer them weighed court then the' benefits Gucci below, a request- refund. As detailed might from a against derive recall denied, Daffy’s ed recall was and and Guc- negative impact recall could have on partial ci then filed cross-motions for sum- Daffy’s goodwill, as well as the difficulties mary judgment. are concerned here We obtaining the necessary consumer infor- partial with Gucci’s cross-motion for sum- mation for a recall. Id. at 10-11. The mary injunc- judgment. sought Gucci court concluded that the in tipped balance preventing Daffy’s using tion Daffy’s favor of and therefore denied Guc- trademark, finding Daffy’s Gucci ci’s motion for a recall. Id. at 12. willfully infringed through that trademark agreed district court bags, sale counterfeit Gucci trademark, infringed had Gucci’s profits an award of alleg- based Inc., v. Daffy’s slip. America No. 00-4463 edly infringement. Daffy’s willful insisted (D.N.J. 2002) (“Gucci op. Sept. at 3-4 that Gucci was not entitled be- V”), request but denied Gucci’s for an infringe- cause there had been no willful Daffy’s profits award of based on the ab ment, argued also that Gucci required sence the willfulness injunction was not entitled to an because Consulting SecuraComm Inc. v. Secura (3d Cir.1999). could not establish the harm. necessary com 166 F.3d 182 Id. rejected at 10-12. The court also explained The district court its denial request permanent for a be requested recall in its November irrepa cause Gucci could not demonstrate Opinion. 2001 Memorandum Gucci IV at so, injury. rable at In doing Id. 13. 2. The court stated that it had considered Daffy’s attempts court noted to minimize whether: damage 'by voluntarily to Gucci withdraw (1)the defendant acted a willful or ing offending merchandise from Daf egregious shelves,2 otherwise fy’s manner and the court concluded that only point. 2. Gucci notes six remained on shelves at that above, unlikely brought As noted this suit highly therefore Daffy’s was under Sections again. Id. trademark infringe Gucci’s 32(1) 43(a) view, Lanham Act. Thus, balancing Section in the court’s 32(1) provides pertinent part: in favor of hardships weighed requested relief. against granting Gucci’s shall, Any person who without the followed. appeal Id. at 15. This registrant— consent of the (a) any reproduction, use commerce III. DISCUSSION counterfeit, ... mark in registered sale, ... or in con- connection with Congress explained has that: likely to nection with which such use is Act is to [the Lanham] The intent confusion, mistake, or to cause or cause commerce within the control of regulate deceive; Congress by making actionable de- (b) counterfeit, copy, or col- reproduce, misleading ceptive and use marks orably registered mark ... imitate commerce; protect registered such in such commerce from in- marks used in a civil shall be liable action State, legis- terference or territorial registrant for the remedies hereinafter lation; engaged (b) in protect persons hereof, to provided. Under subsection against competi- unfair such commerce registrant shall not be entitled to tion; in prevent deception fraud and profits damages recover or unless the by reproduc- such commerce the use of been with acts have committed knowl- tions, counterfeits, copies, or colorable edge that such imitation is intended to marks; registered imitations of and to сonfusion, be cause or to cause used to rights stipulated provide mistake, and remedies or to deceive. by respecting and conventions treaties (2003) added). (emphasis § 1114 15 U.S.C. trademarks, names, trade and unfair 43(a) provides further follows: Section as competition entered into between the (1) who, Any person on or in connection foreign and nations. United States services,., any in goods or uses with (2008). § 1127 15 U.S.C. The Senate Re- any symbol, any commerce ... ... or Lanham Act

port on the reinforces the designation origin,., false which— intent congressional legislation behind the (A) confusion, likely is to cause or to Congress noting enacted to: mistake, cause or to deceive as to the may protect public so be ... ... origin, that, in purchasing product confident ;J: :¡; ;Jt í¡í bearing particular trade-mark which it (B) knows, by any shall be liable in a civil action favorably get it will the product person who believes that he or she is or get. which it asks for and wants to Sec- likely damaged by is such act. ondly, where the owner of a trade-mark be money in spent energy, has time and 1125(a) (2003). 34(a) § 15 U.S.C. Section product, to the he presenting public Act, 1116(a), § of the Lanham 15 U.S.C. is in protected his investment from its analysis. That au- critical to our section by and misappropriation pirates cheats. injunctions thorizes courts to issue Dash, 659, “according F.2d 672 trademark violations to thе Weil Ceramics (3d Cir.1989) principles equity n. and such terms (quoting S.Rep. No. Sess., ... may the court deem reasonable ”. Cong.2d reprinted 19th 1274). Recovery governed by Cong. 1946 U.S.Code. Serv. of lost 35(a) agree Both and provides § Lanham Act which propriety the court’s recall decision is part: in relevant by: governed (a) any right a violation When infringe- the willful or intentional registered of a mark registrant defendant; ment Office, Trademark a violation Patent and 43(a) (d) or [15 under section U.S.C. 2. whether the risk of confusion (d) 1125(a) ], § or a willful violation public injury to the trademark own- 43(c) U.S.C. [15 section greater er is than the burden of the 1125(c)], § shall have been established defendant; recall to the Act, arising civil action under this danger 3. substantial risk of entitled, subject shall be public due to the infringing defendant’s and 32 provisions [15 of sections 29 activity. 1111,1114], subject §§ U.S.C. Max See Theodore C. Total Recall: A (1) principles equity, to recover defen- Primer on a Drastic Form Equitable (2) profits, any damages sustained dant’s (1994) Relief, Rep. 84 Trademark plaintiff, the costs of the factors); (listing these see also Fit Perfect action. Co., Quilting Industries v. Acme 1117(a) (2003). 15 U.S.C. (2d Cir.1981) (weighing the first recall). two factors in decision to order statutory parameters With these mind, precise we turn to the issues raised argues Gucci first that the district court appeal. in this give “heavy.weight” failed to to whether public would benefit from a recall.

A. Recall Order Appellant’s argues Brief at 29. Gucci also that court harm underestimated the the district court’s deni We review company may suffer due to the in- request al of for recall of the coun Gucci’s fringement evaluating and that it erred in handbags terfeit for an abuse of discretion. hardship Daffy’s would face in effectu- Cie, Et Inc. v. Destileria Jacquin Ser hand, Daffy’s, a on ating recall.3 the other (3d ralles, Inc., 467, 921 F.2d 472 Cir. argues accurately that the district court 1990); see Fit Industries v. also Perfect equities proper considered all the in its (2d 800, Quilting, Acme 646 F.2d 807 Cir. exercise of discretion. 1981). district court has abused its “[A] argue if on a does not that con- discretion it has rested its decision Gucci fact, danger to clearly finding erroneous an errant duct created a substantial risk of law, applica public, or an nor does Gucci contest the dis- improper conclusion ” Jacquin, tion of law to fact.’ F.2d trict court’s conclusion that 921 at Union, 10, at or (quoting infringer,” 472 International v. “an innocent Gucci V UAW (3d Trucks, Inc., Mack 820 F.2d 95 that was unaware of the counter- Cir.1987)). bags selling. nature of it was feit argument suggests Cir.2003)(declining to consider 3. Gucci the counterfeit re- noting losing appeal quality sulted in Gucci control and raised for first time on arguments this is an additional harm that the court the court will not consider such n circumstances). any ignored. arguments compelling Gucci's re- absent event, any garding quality loss сontrol raised for the record lacks evidence that Daf- significantly appeal, fy's handbags we were of inferior the first and therefore will time readily distinguishable quality or even not consider them. See Srein v. Frankford Co., (3d Gucci's. Trust 323 F.3d n. theo post-sale invokes a confusion our discussion on Gucci Therefore, may focus we balancing ry, presumes that “the senior user’s which resolution the court’s ongoing the second factor customers potential purchasers required harms inferior mistakenly associate the might above. set forth junior with the quality work of the user that the district court contention Gucci’s and, therefore, user refuse deal senior “heavy interest public failed to afford user in the future.” Acx with the senior merit. The ar- without weight” simply Axiom, 478, 497 Corp. F.Supp.2d iom fact that Daf- entirely on the gument rests (D.Del.1998); Payless see also Shoesource genuine Gucci get did not fy’s customers International, v. Reebok court did consider The district handbags. (Fed.Cir.1993) (describing post sale confu consuming would public the benefit “a consum sion as that which occurs when bags. recalling the counterfeit receive from wearing pair er observes someone “given it had explained court Payless accused shoes believes deny- fact that serious consideration are As conse the shoes Reebok’s. Daffy’s customers ing a recall will leave may attribute quеnce, the consumer misapprehension that continued under the Payless inferior shoes perceived quality product.” Gucci Gucci TV they own real Reebok, damaging repu thus Reebok’s simply 11-12. The court concluded Yet, does not image.”). tation and justify concomitant did not the benefit court’s conclusion challenge the district upon Daffy’s, an harm a recall would have that, given quality the counterfeit infringer. We therefore find innocent party per third would not bags, observers upon the district court’s attack anything about them. Ac ceive inferior unconvincing. analysis not cordingly, consumers would attribute explain the difference Gucci does substandard merchandise Gucci. “heavy weight” argues between does, however, that the district court claim afforded the court should have district ongo gave short shrift to its concerns over recall, of a and the “serious public benefit ing confusion of consumers who gave court it. consideration” district unknowingly possess counterfeit “Gucci.” Moreover, agree we with the district Although position has some public bene- initial court’s determination not outweigh equi- appeal, the surface withstand scru- fit of a recall does not does above, tiny. A As we the district counseling against it. recall would noted ties dangers of upon Daffy’s. It court considered the customer impact have a financial likely injure company’s gave confusion. “serious consideration would also the denying to the fact that a recall will goodwill may as consumers well assume leave Daffy’s customers under Daffy’s guilty of intentional continued carefully misapprehension they own a real Guc- wrongdoing no how Daf- matter product.” ci Gucci TV at 11-12. Howev- fy’s explained leading the circumstances er, that this bags the court was convinced did any recall. Since the counterfeit quality justify not a recall because virtually indistinguishable from Gucci were bags, quite relatively court the counterfeit bags manufactured the district Daffy’s high price willing were reasonably that “a recall would customers concluded pay for them undermined claims Daffy’s harm with little real benefit Gucci,” Finally, public. at or tarnished Gucci trademark.4 Gucci TV relatively high price suggest reasonably ed would 4. court conclud- quite The district regard- post-sale argument the absence of sufficient evidence Gucci’s confusion Daffy’s customers posing are as comparative durability Daffy’s ing the wearers, true Gucci free-riding on Gucci bags, Gucci’s conclusion bags Gucci’s exclusivity Daffy’s price. at a But this require great- would that counterfeit theory regardless would hold of whether upon pure specula- er maintenance rests the consumer herself knew that Accordingly, tion. the district cоurt stated handbag Thus, was.a counterfeit. following explaining why equi- own construct of the consumer precluded ordering a recall: ties mind-set, Daffy’s customer informed of potential damage for counterfeiting might well decide that goodwill with its customers too obvi- she bargain is content with her and de Daffy’s marketing to be belabored. ous handbag. Lastly, cline to return the niche, designer goods distress sales of passage with the of time there is a real discounts, significant would mean noth- possibility that Daffy’s handbags ing if the consumer lacked confidence discarded, given away have been goods they purport were what gifts, or are otherwise unavailable. points to be. also out that a at 11. Gucci IV The court’s factual conclu- require recall would credit card records sions are not clearly erroneous. Given the only issuing from the available banks. careful application equitable of the correct Following Gucci IV at 10. a brief discus- it, standard the evidence before it is exceptions privacy sion of the to federal clear to us that the district court did not abuse its discretion in refusing laws which would allow for the release of to order a recall.6 banks, information customer

court continued: Summary Judgment-Injunctive B. Notwithstanding, the affront to the Relief and Award of Profits customers, privacy extending review the We district court’s decision to ill-feeling engendered by the customer’s grant deny for an abuse of counterfeiting wholly unrelat- Corp. discretion. Ameristeel Int’l issuers, ed credit card is unmistakable. Teamsters, Brotherhood counterweight This adds an additional (3d Cir.2001). That same standard hardships against the balance of the or- applies to the court’s refusal to award dering a recall. SecuraComm, profits. Gucci lost

Finally, possibility there is the real (reviewing F.3d at 189 award of discretion). consumers notified of this action abuse of will decline to come forward.5 Gucci Injunctive Relief

does contend the Court should compel customers to surrender At the outset of our discussion handbags. underpinning their An challenge Gucci’s to the district court’s re- quality image briefly attempts justify consistent with the Gucci 6. also Gucci to its re- apparently trying protect. to by analogy appropriate quest for a recall to remedies for consumer fraud under federal Moreover, Daffy’s represented has in its Appellant's and state law. Brief at 41-3. argu- and without brief contradiction oral However, analogy Daffy's fails the because only approximately ment that 200 of the total analogous conduct is not to the intent neces- purchased that were sold were with sary to consumer fraud. establish remaining appar- credit cards. The 388 were ently purchased with cash and therefore Daf- fy's purchasers. can not trace them to the that any “undermines inference injunction, we note that terfeit an to order fosal substantially satis- trade- Daffy’s infringe intends to Gucci’s Gucci’s concerns voluntarily policy enacted Daffy’s fied at 14. in the future.” Gucci V We marks Daffy’s products. dealing of not Gucci maintains that Daf- understand that Gucci argu- at oral policy this counsel confirmed In- adequate. was not fy’s presale inquiry ment, confusion about the though some deed, Daffy’s suggests dissent that policy that remains.7 parameters of precise superficial effort to simply effort “was that the dis- contends Gucci nevertheless of a lawsuit.” cover itself the event injunc- an by considering trict court erred However, sufficiency at 244. Dissent than Gucci was seek- tion that was broader suggest inquiry does not argues Gucci ing. specifically, More considering erred in district court injunctive prohibiting requested relief inquiries assessing the likelihood presale infringement, while Daffy’s from future for an of future or the need injunction pro- “to court considered Moreover, injunction.8 court’s state- using from ever the Gucci’s hibit injunction shows that it knew the ment future.” at 13. in the Gucci V trademark requested ‍‌‌​‌‌​​​‌‌​‌‌​‌​​‌‌​​‌‌​​‌​​‌‌​‌‌‌‌​​​​‌​​‌​​‌​​‍stop trademark being was that the court incor- argues further requested. infringement, as Gucci prove rectly required Gucci injured irreparably by the denial would be argues Thе dissent Gucci estab- placing rather than injunctive relief harm and that the dis- irreparable lished of harm on proving absence burden granted therefore have trict court should that the dis- Daffy’s. Finally, argues injunction against infringement. future only by focusing trict court erred dissent, According Dissent at 249. of future intentional danger irreparable injury infringement constitutes ignoring what it labels “evidence a matter of law and therefore as danger of future unintentional substantial injury “to prove had the burden infringement.” will not recur in the future.” Id. An of the district court’s examination deciding grant perma- whether to correctly the court opinion reveals injunction, the district court must nent injunction prevent considered an future (1) moving party consider whether: Although the court men- infringement. merits; actual on the has shown success injunction requested tioned that the (2) irreparably will moving party be prevent Daffy’s using from ever relief; injured by injunctive the denial of again, it also made clear in- granting permanent damage to minimize the Daffy’s efforts junction greater result in even harm bags proved to be coun- will Gucci before Daffy's apparently disagree position now as to Gucci's entitlement to about 7. Gucci and policy to be indef- whether intends injunctive relief in the future. analy- inite. that does not alter our sis or our resolution of the issues Gucci previously "careless- 8. We have statеd that Moreover, Daffy's raising. has inasmuch as deliberate indifference ness is not the same policy arguing against relied in- respect rights or a with to another's in mark junctive both here and before the dis- relief attempt to benefit from another's calculated court, trict our affirmance of the district SecuraComm, goodwill.” 166 F.3d at 188 denial of an will be without court's (the conduct a trade- defendant’s failure to right injunctive prejudice to to seek Gucci's suggest infringe- mark search does not wilful Daffy's abandons or relief if in the future mark.). plaintiff’s ment of injunctive policy such that relief alters this However, appropriate. we take no becomes 237 defendant; injunction potential damage reputation. for to its and damage reputation Potential public in the interest. constitutes would be irreparable injury purpose (3d Zuccarini, 476, 482 v. 254 F.3d Shields injunction granting preliminary a in a Cir.2001). “ Although we have said However, trademark case.” Id. as we noted to ir infringement amounts ‘trademark ” above, argued injury Gucci from loss of law,’ injury as a matter of dis reparable control for the first on appeal, time Corp., at & R 968 F.2d (quoting sent 243 S that aspect irreparable injury 378), injury we referred irreparable at supra therefore been waived. at n. remain to was not intended to swallow the Accordingly, correctly the district court fo- injunction permanent ing prongs injury cused on the actual to Gucci’s repu- inquiry. goodwill tation and finding In R we stated: Corp., S & had not irreparable established harm for injury irreparable Grounds for include injunctive purposes of relief. reputation, of control of loss of loss primarily cites two cases in sup- trade, goodwill. and loss of Lack of port of its claim that the burden shifts to irreparable injury amounts to re- control defendant to impossibility demonstrate the infringer gardless allegations harm of future once the estab- mark to use. Ir- putting better infringed that the defendant plain- lishes injury can based on reparable also be Appellant’s trademark. See at tiffs Brief possibility Finally, of confusion. 44-46.9 neither case advances case, importantly most for this trade- given Gucci’s claim the circumstances here. irrepara- mark amounts to injury ble as a matter of law. Shilon, Levi & v. 121 Strauss Co. F.3d Cir.1997) (9th 1309, an egre- 1314 involved (citations omitted). 968 F.2d We gious a counterfeiting case of dealer Levi Opticians cited Assoc. America v. In jeans. The court concluded that the de- support dept. Opticians America fendant’s conduct demonstrated that in pronouncement our defendant could not be trusted and an fringement irreparable injury constitutes necessary pro- was therefore A look at as matter of law. closer plaintiffs tect trademark. further inform our Opticians will therefore analysis of the district court’s denial of Lyons Partnership v. Morris Costumes injunctive relief here. Cir.2001) (4th 789, does 243 F.3d support given we in- offer Gucci a bit more Opticians, concluded There, fringement per injury record. the court held constitutes se “[ejven infringer. infringer’s products if the are of defendant was not willful (3rd renting ...” three costumes re- high quality, 920 F.2d defendant was Cir.1990). sembling popular characters in the chil- This is because show, “Barney.” “ability Appar- inhibits the owner’s to control its dren’s television marks, ently, strong such a own Guild which turn creates the the costumes bore Fashions, copyright 9. Gucci also cites Polo Inc. v. Dick Basic Fun examined a licensee’s Bruhn, Inc., (9th 1135-36 comply copy- of a failure to with the terms Cir.1986) Fun, X-Concepts, and Basic Inc. facts, right Given the it seems clear license. LLC, (E.D.Pa.2001) F.Supp.2d enjoined parties previ- in both cases support shifting argument. of its burden ously engaged behavior which in intentional Polo Fashions involved defendant who had credibility good undermined their faith. willfully rights Polo’s trademark violated Rather, that in an the court concluded on the show to characters resemblance mistakenly case, associated children alone are not many assertions with the real the costumes the wearer of ‘reason- enough “plaintiffs to eliminate the on television. they saw purple dinosaur alleged violation expectation able fol- the situation as cоurt described of a court order.” recur’ in the absence will lows: However, signifi- we think it Id. at 801. L.P., ..., a Partnership, Texas Lyons continued cant that one of the defendants all of the intel- owns partnership, limited infringing plain- to claim that was rights to the character property lectual the costumes renting trademark tiffs Tyrannosau- “Barney,” the well-stuffed informed the defendant even after stomach, green chest and rus Rex with it. stop and filed suit to back, mien, green spots on its friendly argued plain- That defendant also readily Barney is yellow “toeballs.” in- continuing tiff could not establish children, young who re- recognizable to Id. at Ac- fringement possible. was 800. “I Love parrot song, his peatedly cordingly, the court was not convinced You,”10 testing patience often trademark would be honored ab- plaintiffs nearby adults. However, injunction. fact that sent (footnote original).11 at 795 243 F.3d Partnership concluded Lyons the court in claim the defendants’ The court considered required that the circumstances there voluntarily stop renting they would injunction does not mean that the district them over to “Bar- the costumes and hand its discretion in conclud- court here abused litigation ended. Id. at 800-01. ney,” once necessary that an was not ing prevent that concession did not injunctive given Daffy’s conduct.12 We believe granting from relief. the court have suffered from in- Many only recite the first thrеe lines of Gucci could 10. can quality fringement given the of the counterfeit song: bags. Lyons to note The court in was careful you. I love that: You love me. happy family. We're a Barney appearance charac- The live big hug great and a kiss from me to With costume, ter, played by adults in is who you. by Lyons, Lyons completely controlled you say you Won't love me too? Barney because does not license costumes inability police to the behavior of of its that counsels 11. Based the folk wisdom might appear those who in the costume. imagi- things that some are better left prevent claims that it would be unable nation, temptation “go we will resist the behaving Barneys from in a de- would-be explore there” and the subtleties of "toe- cidedly un-Barney-like manner and tarnish- Appeals for the Fourth balls.” The Court According- ing reputation. his wholesome explanation, did not favor us with an Circuit ly, every person who wears the costume- readily suggests itself to us. Per- and none by single five-is trained chore- there are things many that are haps, as is true with so Moreover, Barney. ographer how to be children, peculiar young to the universe of Barney's provided by only live voice is one balls,” expla- "toe no those who understand Masters, person.... Brooke A. Protect- necessary. nation is For those who do not Beasts, ing Barney’s Image Bogus them, possible. explanation no understand 25, 1998, Post, Mar. atBl. Wash. (some omitted). potential at 795 citations harm threaten- The nature Barney Barney importance trade- ing Lyons, trade- Given the the owner of the children, mark, impressionable substantially the court differed from the harm mark Infringement appeals particularly troubled the dis- threatening of the Bar- Gucci. court's failure to focus on evidence of ney could therefore have harmed trict Id., market. at 802 Lyons analogous in the relevant in a manner not harm confusion (1) reasonable, pies equity, was recover defendant’s conclusion (2) in its discretion profits, any damages by district court did abuse sustained (3) given this denying plaintiff, the costs of the inquiry properly and the undertak- record action.

en under Shields. added). SecuraComm, (emphasis Id. we noted the importance of the intent to of Profits Award profits, stating “[tjhough award of Finally, argues the dis (1) (2) awarding the standards for profits; relying trict court erred Secura- determining whether such award should conditioning profits in an award of Comm enhanced; be awarding attorneys’ infringement. of willful finding fees under the Lanham Act differ some involved a trademark in SecumComm what, infringement the issue of willful is fringement brought by Pennsylva action (citations central to each.” Id. at 187 security systems consulting firm nia omitted). infringement Willful was viewed Jersey competitor. Secu against its New having a central type role each raComm, At 166 F.3d at 184-86. the close relief “because of the of equita relevance trial, court awarded the the district ble factors in determining appropri their gross of the defendant’s plaintiffs 10% given on a ateness set of facts.” Id. at 187 prof that an “ profits finding after award clearly n. 1. stated that “[k]nowing We or necessary to ... the kind ‘deter[ ] its was infringement willful consists more than of conduct in which all three defendants the accidental encroachment of another’s ” ... at engaged.’ (quoting Id. Secur rights. infringe involves an intent to Consulting v. aComm SecuraCom disregard a deliberate of a mark holder’s (D.N.J.1997)). F.Supp. On rights.” Id. at 187. the defendants contested the appeal, examining After whether the district profits, largely award of which was based finding court’s of willful was finding infringe on the court’s erroneous, clearly we concluded that the began ment was willful. Id. The court profits inappropriate. award of was at Id. 35(a) §to Act pointing of the Lanham [15 acknowledged 190. SecumComm that: 1117(a)], provided: U.S.C. which then permits Lanham Act courts to any [t]he right When a violation of of the monetary damages award registrant a mark registered Office, compensation equi- owners as Patent and where Trademark or viola- 43(a), regardless tion under section table do so of the willful- shall have been arising infringement. established civil action ness defеndant’s Act, Here, however, shall be the District Court entitled, subject provisions to the of sec- awarded to deter defendant’s as- misconduct; subject suredly tions 29 and 32 and princi- egregious plain- ("The among evidence of actual confusion would be used costumes to enter- children, the, .. [district] which court disre- tain children. substantial.”). Id. at garded, target That omission 803. Given the nature analysis. equivocal was fatal to the court’s district audience and the nature of the de- use, appeals explained: court of fendant’s "concession” about future conducting analysis appeals with court of concluded it was an children, respect targeted deny Lyons injunctive works abuse of discretion to against district court should have considered relief to insure the harm that would perspectives infringement. of those children.... result from future That sim- [B]oth parents ply ... [the defendant] foresaw not our case. Report House on the Trademark infringer that an acted The prove

tiff must are in its infringer’s profits Amendments Act of 1999 stated sec- willfully before the analysis that the Amend- by recoverable. tion section ments Act: Coral, v. Blue George Basch Co. (citing Id. (2d 1532, Cir.), 35(a) Act, cert. 1537 F.2d of the Lanham 968 amends section 510,

denied, 991, 113 S.Ct. recovery profits, 506 U.S. provides for of which (1992); 5 J. Thomas McCar costs, attorneys L.Ed.2d fees damages and Trademarks and Unfair McCarthy on thy, by clarifying that rights, for violations of (4th 30:62, § at 30-102 Competition costs, damages and recovery profits, of ed.1996)). attorneys fees are also available 43(c), a willful violation under section we bright line contends provides holders of a famous which un- in has been recognized SecuraComm relief for dilu- right mark the to obtain subsequent amendments by dermined tion. is therefore Lanham Act and case here. The Trade- application limited of 1999, Act H.R. Trademark Amendments 35(a), § Act of in mark Amendments (1999). Report at 10 The Rep. 106-250 “a violation under section substituted that willfulness is a suggests therefore 43(a), violation under section or a willful in cause prerequisite a trademark dilution 43(c),” a violation under section for “or action, an action. (1999) 43(a).” § Pub.L. 106-43 3b See Dilution Act of The Federal Trademark 35(a)). Therefore, the rele- § (amending 43(c) § is codified at which 35(a) § now reads: language vant 1125(c), §§ Lanham Act U.S.C. [15 1127] any right of the a violation of When creates in the registered a mark registrant of protect of action to fa- a federal cause Office, a and Trademark violation Patent unauthorized users mous marks from (d) 43(a) or U.S.C. [15 under section attempt goodwill to trade (d) 1125(a) title, or a willful § of this ] renown of such marks and established 43(c) [15 violation under section U.S.C. and, thereby, their distinctive dilute 1125(c) title, § shall have been of this ] quality. provision The is intended arising in civil action established protect famous marks where subse- plaintiff shall be chapter, under this commercial use of quent, unauthorized entitled, of sec- subject provisions to the by others dilutes the distinc- such marks §§ 1111 and [15 tions 29 and 32 U.S.C. tiveness of the mark. title, subject of this 1114] 104-374, (1995), H.R.Rep. No. at 2-3 re- (1) de- equity, to recover principles of in 1996 U.S.C.C.A.N. at 1029-30. printed (2) any damages sus- profits, fendant’s the costs plaintiff, tained 35(a) § was dis- The amendment of the action. Quick Technologies Sage in Inc. v. cussed (5th PLC, 1117(a) (2003). F.3d 347-48 Group (emphasis § add- 15 U.S.C. Cir.2003), upon the deci- ed). and Gucci relies change sig- argues Quick Technologies arguing sion in remove willful- Congress’s naled intent to given longer SecuraComm is no viable precedent awarding ness as a condition 35(a). Appellant’s change the statute.13 accounting profits an profits Roofing to award absent a noting that Tamko court’s decision is worth Ltd., Products, showing decision Roofing of fraud or bad faith. The v. Ideal Co. Inc. (1st Cir.2002) precedential on a rule “that affirmed a district was based F.3d 23 Quick Quick The District Court Technolo- Technolo- The court at 51. Brief jury instructed the that it could not gies intent was that willful to find gies refused for the defendant’s in- award lost prof- an award of precedent to a condition in- fringement finding absent a infringement. As Gucci its for appeal, was willful. On fringement light “in notes, proclaimed: court court plaintiff argued that the “erred 1117(a), ... §of we language plain conditioning profits upon award in which bright-linе rule adopt decline ... finding infringement.” willful pre- is a of willful showing “urged[d explicit- defendants Court to the] accounting profits.” of Id. requisite to an pre- that is a ly infringement hold willful so, the court noted doing at 349. accounting profits to an of requisite contrary, in- authority to the substantial 1117(a).” appeals § The court of noted holding in Id. cluding our SecuraComm. that “several of sister circuits have [its] language of quoted The court at 347. a in or- requirement embraced wilfulness that, concluded amendment and the 1999 profits.” an award of Id. der obtain of conditioning prof- an award rather than (citing including numerous cases our hold- intent; Con- finding a of willful SecuraComm). However, the ing in court that approach a broader gress intended 1117(a) upon the “amendment to relied considered: a August adopt 1999” and refused (1) had the in- the defendant whether Instead, the court held bright line rule. (2) deceive, whether to confuse or tent profits governed by an award of is (3) diverted, adequa- have been sales equities in each case. 313 F.3d particular (4) remedies, any unreason- cy of other various at 348. The court then examined asserting in delay by able factors and concluded that equitable (5) in mak- public interest rights, his denying in an district court had not erred ing unprofitable, the misconduct profits though even it had incor- award ‍‌‌​‌‌​​​‌‌​‌‌​‌​​‌‌​​‌‌​​‌​​‌‌​‌‌‌‌​​​​‌​​‌​​‌​​‍of off. palming it is a case of whether on the rectly conditioned suсh an award of the defendant. The court willfulness I Pebble Beach Co. v. Tour 18 (quoting Id. explained: (5th Cir.1998)). Ltd., F.3d 554 It from our cases willful is obvious important is an factor part upon in The also relies dissent considered when deter- which must be Quick it Technologies, and describes accounting profits mining whether an only that has consid- Appeals “the Court [H]owever, we de- appropriate.... is necessity of willful- ered issue [the rule in which adopt bright-line cline to the statute’s amendment.” Dis- since ness] is a showing of willful However, do not believe at 245. we sent accounting profits. an prerequisite to Quick Technologies supports an Rather, ap- reaffirm the factor-based we Rather, supports profits award of here. cases]. outlined our earlier proach [in court did our conclusion that the district Id., Thus, though even the court refusing profits on this at 349. not err award rejected bright-line adopted rule we record. prof- infringing an defendant's accounting profits where the order to award of defendant's require agreed "when the rationale for directly compete its and products does not fraud, faith, profits is to deter some off.” Tamko award of defendant’s palming or bad conduct, omitted). (citations required.” Roofing, 282 F.3d at 36 egregious willfulness Consult- SecuraComm (citing Id. at 36 courts of n. court noted that several circuit 190). ing, F.3d at require finding willfulness appeals of another’s mark and advertis- SecuraComm, principles harvest recognized , ing.”). control whether . still equity (“As at 346 Id. be awarded. should First, that, as was the case we note stated, goal be- ‘the previously Court has Quick the record does not Technologies, 1117 remedies is §§ 1116 and hind sales, percentage of establish what among par- or equity between achieve the result of the use of Gucci’s any, if ”). inquiry the The individualized ties.’ understand, course, mark. We prof- whether adopted to determine court quality level of suggests certain “Gucci” aimed was therefore its should be awarded certainly therefore prestige.14 result. The achieving equitable were the possible that the instant sales previously “[a]s [we have] court stressed: of that exploitation direct result of the stated, §§ goal behind 1116 and [t]he quite it is also brand name. equity is to achieve between remedies motivat- possible purchasers ” After Id. at 346-7. among parties.’ what opportunity purchasing ed only entitled noting that “a mark holder is handbag of appeared to be an attractive unlaw- profits to those attributable very at favor- exceedingly high quality mark,” court refused to ful use of its by Daffy’s “discount.” price afforded able plaintiff profits lost because award extent that consumers were moti- To the weigh equity of still do not principles “the by obtaining bargain, vated such a the fact at 350. in оf award.” Id. [such an] favor “a they obtaining genuine that were also may only an incidental Gucci” have been Accordingly, even after the 1999 amend- purchase, or no at all. factor their factor any impact to the Lanham Act and ments words, given quality, attrac- In other may holding on our in Secura- have had tiveness, cannot price bags, we Comm, we nevertheless conclude conclude that could not have sold its discretion district court did not abuse they if con- price them at the same even here, including given equities to “Gucci.” Since Guc- tained no reference Kane, D. Trade- good Siegrun faith. See “only profits ci entitled to those attribut- Guide, A mark Law: Practitioner’s mark,” able to the unlawful use ed.2000) (3d (noting that “[defen- 16:3.1 support awarding not record would usually only profits are awarded dant's Id.15 profits. lost of intentional guilty where defendant Furthermore, equi- the aforementioned infringement, deliberately trading i.e. mark”); court enunciated in its McCarthy, ties that the district plaintiffs 5 J. Thomas balancing against of harms also counsels McCarthy on Trademarks and Unfair (4th ed.2002) sup- 30:62, concluding principles equity that Competition § 30-116 awarding profits. price lost (stating accounting port obtain an “[t]o issue, handbags the small always require quality courts profits, the almost sold, bags Daffy’s status as an infringement imply some number of defendant’s infringer, possibility act and the knowing оf ‘intent’ or a innocent connotation intent, recover from the actual manu- infringe reap the Gucci could denoting Stands, argues (citing Pig very F.3d at 350 Texas Inc. 14. That is the reason that Gucci Intern., damaged by the sale of counterfeit hand- Rock 951 F.2d Hard Cafe bags. (5th Cir.1992)); Sportswear see also & HA Stores, Inc., Secret Inc. v. Victoria's proving that 15. The owner has the burden of (3d Cir.1999). profits to the unlawful lost are attributable Quick Technologies, use of the mark. against handbags tracted to the weigh all because of the facturer of awarding profits.16 opposed quality, price, Gucci mark as appearance. clearly The district court can denied recognizing profits be engaging specu- did not err in such absent the principles equity even lation, and it did not abuse its discretion SecuraComm, viability of continuing denying profits. an award of lost equity demands such suggests enrichment, unjust to avoid award here infringer intended to trade on

because the IV. CONCLUSION will, and also because lost good Gucci’s reasons, For all of the above we will for the trade- “proxy constitute affirm the orders of the district court de- damages.” Appellant’s mark owner’s nying request Gucci’s for a recall. willWe arguing, agrees, Brief at 54. The dissent deny- also affirm the district court’s order infringer’s profits award of the seeks “[a]n ing request summary judgment the trademark owner whole for to make injunctivе precluded which both relief and as a result losses sustained profits. an award of something that did not infringer’s use at 246. belong to him.” Dissent ROSENN, Judge, dissenting. Circuit position argue favor of creat- would ing very bright-line kind of rule that denying The District Court erred in courts, Quick including Technologies, plaintiff injunctive ground relief on the rejected. logical The extension of have that Gucci had not irreparable sustained require awarding position Gucci’s would injury. undisputed infringement The of infringement. in all Con- profits cases of undisputed trademark constituted gress clearly rejected policy by that choice prima irreparable injury facie case as making equitable inquiry an individualized Indeed, a matter of law. court has awarding central to remedies under the held that “trademark Lanham Act. irreparable injury amounts to as a matter Int’l, Corp. Jiffy R expresses The dissent also under- law.” S & Lube (3d Cir.1992). Daffy’s standable concern that will be un- justly profits. committed further error in disgorges enriched unless District Court denying undisputed profits the that exaggerated concern is where, here, Daffy’s bags the record does not estab- realized the sale of under infringer ground lish that the was enriched be- Gucci’s trademark on the Daf fy’s willfully. infringe cause the owner’s mark. As noted did not The court above, requires speculation. Consulting, The dis- relied on SecuraComm Inc. v. (3d Securacom, Inc., trict court could not conсlude that 166 F.3d 182 Cir. 1999), bags counterfeiting was able to sell the counterfeit be- which is not a case speculat- longer binding precedent light cause of the Gucci mark and is no without ing purchasers subsequent statutory about whether were at- of amendments. Daffy's inquiry "every opportunity Ap- 16. Given initial and its at- afforded it to do so.” tempts bags genuine to ensure that the were pellant's Brief therefore con- sale, offering Daffy's before can be them for vincingly argues right that Gucci waived its counterfeiting viewed as a victim of same 1117(a)(2), damages § seek actual under or to complaining Gucci is of. counterfeit-specific remedy of statu- seek the addition, Daffy’srepresents In without con- 1117(c).” tory damages Appellee’s tradiction that "Gucci did not avail itself of at 43. Brief remedies," although other the district court considering required disgorge profits the trade-mark statute as should be trading on it made in on the Gucci name and the Senate Committee enacted reputation. This is not an unreasonable reported: Patents request and the least that a court should encourage the Trade-marks maintenance repair damage do to to the innocent by securing producer quality owner the trademark. good reputation the benefit which protect excellence creates. To trade- specializes selling business marks, therefore, protect the public goods at popular prices. oper- discount deceit, competition, from to foster fair which, ates a business as characterized community and to secure to the business Court, the District involves considerable advantages reputation good risk. As the District Court observed in by preventing their will diversion from denying Gucci’s motion for an com- order those who have created them to those pelling Daffy’s to recall the counterfeit who have not. handbags, “Jackie-O” its business “is (1946). 79-1333, fainthearted, S.Rep. clearly No. at 1275 not a business for the Daffy’s buyers constantly are aware ignored purpose The District Court any given batch of goods branded of the trade-mark to protect statute might offered to them be If counterfeit. from deceit public and secure to the busi- Daffy’s buyers “constantly are aware” of community advantages good ness of its goods they purchase the risk are reputation. purchas- name and It left the counterfeit, much how more so must be highly expensive ers counterfeit observation, Daffy’s, the seller. This with- bags without relief or even notice — out more and there is much more to bags they carrying gen- were not — I seriously which refer below weakens uine. The court’s decision nothing does Daffy’s claims of innocence and favors discourage trade-mark but Gucci’s claims for relief. did party by allowing rewards a to the deceit acquire directly counterfeit to retain all of the obtained through Gucci or the normal chain of dis- producer’s good repu- use name and purchased any tribution. them without Moreover, tation. the court denies the supporting documentation from a middle- innocent trademark owner an man, Therefore, Sara’s Collections. against infringement future and a recall of knew that the nature of its in- business spurious goods produc- sold under the selling volved the risk of counterfeit or er’s trade-mark good name. Because stolen merchandise. decision, majority I affirms re- spectfully dissent. Even though pos- knew of these sibilities, it perfunctorily “attempted to au-

I. bags” by taking thenticate the one to a majority Secaucus, concludes clerk at a Gucci outlet store in (Gucci’s) request Jersey. America’s for a simply superficial recall of New This was a handbags 588 counterfeit sold under effort to cover itself the event of the Gucci name shall bag be denied because lawsuit. did not take the findings the District manager Court’s the difficul- the store or to someone in au- remedy thority ties to be encountered such a organization with the Gucci who was clearly denial, were not bag. erroneous. Such a familiar with the construction of the therefore, weight by asking adds considerable It satisfied its concern some defendant, claim Daffy’s, unknown retail clerk of experi- unknown they from what and with un- different level nor- ence, authority, of unknown mally intricacies of would sell. familiarity with the known construction, confirm the authentici- bag The District Court held this Court’s damaged bag bag. It also sent ty of precedent Consulting, in SecuraComm any without repair center to the Gucci (3d Securacom, Inc., v. Inc. F.3d 182 authenticity inquiry as specific Cir.1999), required showing of willful bag. infringement in all trademark cases as a (Dist. profits. to an prerequisite found that award The District Court 21.) at A “a bags. op. Ct. Securacom held that unintentionally sold counterfeit prove infringer chain must acted sophisticated as between a willfully infringer’s profits risk before the are high stores business of discount Securacom, outside the recoverable.” 166 F.3d at 187. selling products acquired infringement an intent to customary chain of retail distribution Willful involves authenticating infringe documen or willful of a trade- the usual without rights. Dis mark holder’s Id. infringed, an innocent tation and the “unintentional” trict Court rewarded longer binding prece- Securacom is no all the derived from infringer with superceded by dent because it has been bags under Gucci’s the sale of counterfeit subsequent statutory amendments to the has favored good famed name. The Court Lanham Act. is not a Willful infringer and left the and enriched the in all trademark cases for an prerequisite of a fa and innovative creator innocent longer is no profits. award There and trademark owner with product mous requirement under absolute willfulness Moreover, remedy out whatsoever. 43(a) Act except Section of the Lanham against protection the court has denied claims. The Trademark Amend- dilution Furthermore, it has infringement. future 106-43, Act of ment Pub.L. No. Act. objective of the Lanham inverted (1999), “or a violation replaced Stat. 219 infringers purpose is not a “Protection 43(a)” “a violation ... under section with contrary, Lanham Act. On the (c) (d), 43(a), or a willful under section ” objective protection Act’s is the 43(c).... section violation public.” trademark and the United States 1117(a). Under the new stan- U.S.C. Jaycees Philadelphia Jaycees, dard, I submit the District Court (3d Cir.1981). 134, 142 declining to allow Gucci to recover erred Daffy’s profits pursuant U.S.C. Daffy’s unjustly enriched itself at Guc- 1117(a). inclusion of the During specific the The expense reputation. and ci’s 2000, to “violation” the approximate- prior word “willful” of sold summer the word “violation” same sentence with ly handbags of the 594 Jackie-0 588" $398.99, adjective suggests an inten- without ranging from to prices $298.99 requirements the were far tional contrast between depending prices on size. These of violation. This is proving type for each prices handbags than the of the higher adopted by the Fifth Daffy’s gainеd interpretation the Daffy’s normally sells. only of Appeals, of the Court $195,000, including stipulated gross profits Circuit Court that considered this issue $51,064.12. Appeals sells has Daffy’s generally of $40 Quick the statute’s amendment. See handbags and has sometimes sold hand- since PLC, Techs., F.3d Sage Group Inc. v. designers Italian for bags from other Cir.2002) (5th (declining to Daffy’s acknowledged that the 348-49 $100-$200. own,” requirement adopt bright-line willfulness league “in a of their bags were (7th Cir.1989). Lee, 584, 589 This of limited 875 F.2d ‍‌‌​‌‌​​​‌‌​‌‌​‌​​‌‌​​‌‌​​‌​​‌‌​‌‌‌‌​​​​‌​​‌​​‌​​‍cases as describing pre-1999 and Securacom, here, appropriate this court remedy particularly is utility).1 Even not an ab- risks, willfulness was that understood the recognized infringer where the accounting prof- for to an requisite solute only perfunctory a feeble and but made Lan- “The by infringer. an We stated: bags to ascertain whether the effort monetary to courts award permits ham Act balance, equities On the favor authentic. compen- as trademark to owners damages Gucci. so re- equitable do where is sation may as accounting profits An of seen be defen- willfulness of the gardless of the of lost sales. rough a estimate at 190. 166 F.3d infringement.” dant’s “despoiled” not the Congress put upon did remedy generally does equitable An showing impossible the burden of often faith, willfulness, or even require bad unlawful use for the defendant’s “but Instead, question the wrongdoing. mark, particular would of the customers acquired in has been property whether the goods.” purchased plaintiffs have legal of such circumstances holder Mfg. Rubber & Woolen Co. Mishawaka retain the may good not in conscience title Co., 203, 206, 62 S.Ct. Kresge S.S. 316 U.S. Here, concedes beneficial interest. (1942). accounting An 86 L.Ed. 1381 of counterfeit Gucci the sales rough of profits functions as a measure $51,064. seriously It cannot be netted damages damages, including tangible less premium a paid that customers doubted injury reputation. such as See Polo The Circuit for name. Seventh the Gucci Fashions, Craftex, Inc. v. explained has Appeals “[a]s Court (4th Cir.1987). An award who seeks infringer innocent between the infringer’s profits seeks make the trade- scot-free, in- innocent get off for mark owner whole losses sustained with the stronger equity ... fringed infringer’s a use of S.A. v. result infringed.” Louis Vuitton innocent infringement. cases trademark As dem- study for trademark In recent remedies "Remedying infringement reported Trade- a review of the newest sub- onstrated — Faith in Infringement: The Role of Bad mark Act additions to the Lanham stantive Accounting Awarding Prof- — of Defendant's apparent FTCA and the ACPA it is its,” Conway-Jones notes that Danielle author Congress opportunities to con- had several distinguishable for dilution are the remedies requirement a bad faith sider include only infringement; the remedies permitting award of an account- before showing for dilu- of willfulness under claim infringer’s profits. ing With each of an of a famous trade- tion will entitle the owner Congress opportunity, remained silent on remedies, to all of the Lanham Act mark Taking language surround- issue. express profits. re- including defendant's ing remedy Lanham Act's provision quirement a mark owner willful show reviewing legislative history perfecting his entitlement to violation before FTCA, ACPA, Act, the Trademark supports Act remedies for dilution Lanham accounting is evident that recovery premise the theories un- showings remedy is restricted bad faith infringe- derlying remedies for only pressed by the cause of action when dilution, ment, are opposed as to trademark cybers- the trademark owner is dilution upon existence of a bad dependent the not language quatting. Nowhere in the requirement. 42 L.Rev. 863 Santa Clara faith legislative history the is there a statute or (2002). requirement trademark to show bad faith in Conway-Jones concludes: Ms. accounting before the infringement actions to be a Congress did not intend bad faith remedy can be awarded. remedy of for an award of the requirement response at accounting to Id. 924-25. an him. something belong that did not to II.

Mishawaka, 206, 316 U.S. at 62 S.Ct. Gucci injunction is also entitled to an to protect it from future unintentional in- majority disgorgement denies

The fringement by Daffy’s. Although the Dis- profits by infringer the on two untenable trict found Daffy’s infringement Court First, majority grounds. the views unintentional, was there is still а 16, danger counterfeiting, p. a victim of the n. as that Daffy’s will harm the future 243, given Daffy’s inquiry initial to authen- through an incident of unintentional in- genuineness bags. ticate the As fringement. feeble, above, pointed inquiry out was superficial, perfunctory, unsupported and To injunction determine whether an is Second, by any major- documentation. appropriate, the District Court considered ity an and places unreasonable incredible (1) four factors: whether Gucci had shown upon the trademark own- burden innocent (2) merits; actual on success whether prove infringer’s er to that the customers irreparably injured by Gucci would be handbags they purchased these because (3) injunctive relief; denial of whether

were attracted the Gucci mark. granting permanent injunction would re greater sult in even harm Daffy’s; and Although majority recognizes injunction whether the would be in the unjustly en- concern will be public (citing interest. See Gucci V at 13 disgorges profits reap- riched unless it (3d Zuccarini, v. Shields 254 F.3d bags, in the it ed sale Gucci counterfeit Cir.2001)). However, the District Court disgorgement denies because “the record improperly placed proof the burden of re infringer that the does establish harm garding future on Gucci rather than enriched because of the owner’s mark.” Daffy’s. The District Court denied majority, any supporting The without au- claim permanent for a virtually thority, places untenable and produce any because Gucci failed to evi impossible burden the innocent support finding dence to that it would be prove pur- trademark owner to injured irreparably per the denial of a chasers of the “were attracted to the injunction. manent Gucci V 13-14. mark,” handbags because owner’s as o/the The District failed recognize Court opposed quality, price appearance. property a trademark is a form of very This much greater burden than the infringe neither the trademark nor the rejected burden the District Court in de- dispute. prove irrep ment here are in To nying Gucci’smotion for recall of coun- injury, only arable must make bags. purchasers terfeit prima showing out a facie case trade customers who had no contact with Gucci. infringement. Corp. Jiffy mark S & R Requiring the innocent trademark victim (3d Int'l, Lube affirmatively prove purchasers Cir.1992)(“[T]rademark unknown to it “were attracted to the hand- injury irreparable amounts to as a matter bags because of the mark” Fun, law.”); X-Concepts, Inc. v. Basic argument never raised (E.D.Pa. LLC, F.Supp.2d appeal. District or on Adopting Court 2001). totally turns law on its head ipse places an impossible Although majority acknowledges, dixit must, unreasonable burden on the innocent that “trademark irreparable injury trademark victim. as a matter amounts By proving infringement, proved Gucci inexplicable conclu- law,” to an jumps of injury in the as á matter of law. argue irreparable failure to that Gucci’s sion injury, control” proving irreparable that the “loss of the bur- Upon District Court by the in- goods Daffy’s prove that over its trademarked den shifted to to a waiver of fringement also amounts injury not recur in the future. “[I]t will injunc- purposes harm “for irreparable voluntary dis- is well established that the incredibly holding This trans- tive relief.” challenged activities a continuance of quality” argument forms the “control necessarily moot a defendant does not by Gucci in its contention asserted Lyons P’ship, L.P. Morris lawsuit.” in legal committed error District Court (4th Costumes, Inc., 243 F.3d a recall of the counterfeit failing to order Cir.2001) (internal quotation marks omit- irreparable goods general into a waiver ted). subject “That rule is to the caveat injunctive relief.” purposes harm “for unnecessary when that is was and is a basic ele- Irreparable harm expectation that there is no reasonable inception. from its plaintiffs ment of case wrong repeated.” (citing will be Id. waiver, as the ma- Implying a sub silentio Co., States v. W.T. Grant 345 U.S. United does, legal prin- jority of the fundamental 629, 633, 894, 97 73 S.Ct. L.Ed. 1303 that “trademark cipal (1953)) (emphasis original)(internal quo- in irreparable injury” highly is amounts tO' omitted). Daffy’s tation cannot marks imprudent. unwarranted against putative policy shоw that its sell- Furthermore, though even the “control moots motion ing infringed goods presented not quality” argument injunction. To that an in- for an show in the District Court Gucci’s motion junction unnecessary and further pro- is relief, failure should have an recall that not ceedings by Daffy’s plans are mooted not argument on its in this effect adverse Daffy’s any products, to sell more Gucci court, recall issue. The recall even “heavy showing must meet burden” of its is, I a of relief as far as can issue as form “practically that is future ascertain, in impression of first matter nearly impossible.” Lyons speaking, one, legal argument this court. The P’ship, 243 F.3d at 800. evidence which requiring no additional Daffy’s that it now argues policy has Daffy’s. Barring con- might prejudice any points buying goods. not Gucci out sideration under these circumstances is buy any if it does not Gucci branded contrary prudential harsh unintentionally in- goods, it cannot even court took in v. Hotel stance this Ross That fringe Gucci’s trademark. is true as Employees Int’l Employees & Restaurant lasts, long policy as the but little (3d Cir.2001). Union, 242-43 comfort to because has the Ross, appeal In the court considered on ability policy any at time. change in argument not raised the District Court. Moreover, argües does court, rea- Writing Judge for the McKee point evidence the record raised appeal important soned that support of its -statement has implications question for labor law and “a goods to sell Gucci adopted policy never in this circuit” and the of first impression now, in the future. has no Court, case, Even “was afford- District policies procedures to authenticate mer- fully of a advantage developed ed the rare response question chandise. to our the issue.” Id. at 243. analyzing record court, Daffy’s attorney would not accordingly, argument, considered the ar- oral will sell Gucci’s stipulate never gument not raised before.

249 (9th Cir.1997)(any pres- regarding 1314 doubt merely claimed that its products. injunctive extent of relief “must be re legal No obli- is not to do so. policy ent plaintiffs] favor as the inno changing [the its solved gation prevents against and immediately resuming producer [defen cent mind tomorrow Fun, dant]”); X-Concepts, v. Basic Inc. products. purported sales of LLC, an in F.Supp.2d 157 457. Once stipulate to fore- Daffy’s unwillingness demonstrated, “heavy fringement is bur infringe- of future possibility bodes prove den” shifts to the defendant to shown, ments, infringement is once an possibility there is no of future recurrence required not to owner is ‍‌‌​‌‌​​​‌‌​‌‌​‌​​‌‌​​‌‌​​‌​​‌‌​‌‌‌‌​​​​‌​​‌​​‌​​‍the trademark infringement. Lyons P’ship, infringe infringer likely to prove that effort, no be F.3d at 800. made Licensing Corp. v. Hard Rock again. Café yond non-binding policy, prove its to Services, 955 F.2d Concession infringe upon in the future will not Guc Fun, (7th Cir.1992); X- Inc. v. Basic through trademarks sales of counter ci’s (“If LLC., at 457 F.Supp.2d Concepts, feits. not to sincerely intended infringers little; injunction above, harms them infringe, the forth For the reasons set do, gives injunction owner] trademark they [the if denial of the constituted revers- trademark.”). of its protection substantial ible error. proven, 'been infringement has

Once infringer on the

“heavy burden” falls III. possibility that there is no demonstrate I Accordingly, submit infringement. further recurrence reap not be allowed to should The un- P’ship, 243 F.3d at 800. Lyons judgment and the its that in stipulate willingness respect District with to it should be Court it would not sell Gucci the future judgment I reversed. also believe inspires no confidence obviously denying perma- of the District Court present policy. injunction enjoining infringe- future nent as Gucci did seek trademark, well as ments of Gucci’s actually con- broad as the District Court costs, re- attorneys’ fees and should be — Daffy’s from prohibition sidered versed. the Gucci trademark using ever sought enjoin Daffy’s future. Gucci infringement “through

only from future goods and false ad-

sales of unauthorized a matter

vertising.” It was erroneous as place

of law for the court to the burden infringe- prove in the future. ment would continue NEWSOM, a minor Alan (3d Zuccarini, Shields v. NEWSOM, through Fred Parent his Cir.2001), merely four factors identifies the Friend, Plaintiff-Appellant, and Next granting court in to be considered injunction. Once an act of the ALBEMARLE COUNTY SCHOOL require federal courts do not proven, BOARD, by through its School is like- plaintiff to show that the defendant in their Ca- Board Members Official ly infringe again in the future. Levi Ward, Shilon, pacity; M. Albemarle Charles & Co. v. F.3d Strauss

Case Details

Case Name: Gucci America, Inc. v. Daffy's, Inc. John Does 1-10

Court Name: Court of Appeals for the Third Circuit

Date Published: Dec 31, 2003

Citation: 354 F.3d 228

Docket Number: 02-4046

Court Abbreviation: 3rd Cir.