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[BobRoberts]

Assume that individual purchased a DVD from online auction site, 1-2 years ago.  After use to the extent desired, individual lists the used DVD on online auction site.  Original Suction listed item as new, and was 1/3 price of a new version from some other sources-  however,there were many other sources that offered the item for the same price as individual paid. 

After listing item for sale, individual received a "Cease and Desist" demand for distributing Copyright items, and for TM violation under 1114 (a) and 1125 (a), and demand for $1000 settlement to pay legal fees incurred as well.

Item was not sold, and was removed by online auction site shortly after listed (within 1-2 days) indicating that a complaint was received by online auction site that counterfeit item was being aucioned (and still in possession of individual). 

Item itself is 'believable' as being authentic - ie, packaging looks real, DVD is professionally printed in color, all other information expeced was included.  No real clue at purchase time that counterfeit except the price,  but there were other sites offering identical item at similar prices as well.  Yet in todays society, with grey market goods, and factory seconds readily available on the internet, and the good 'quality' of the item, I personally understand why the itm could have been perceived as authentic. 
Let's assume the item is indeed counterfeit. How do you respond to the C&D?

There seems to be a strict liability for selling/reselling a counterfeit good(s) under 1114(a) and 1125(a), even if innocently.  Is there any way around the Statutory dmgs provision of 1117(c) if taken to court?

In your experience, with 1 article at issue, will the demander just let the matter drop if you file a response to their C&D, or do they usually push the matter?

Thanks for any input.

[JSonnabend]

If the article looks genuine, and the only issue presented is copyright infringement/TM infringement, then first step is to send a counter notice.  You can also contact the party asserting rights and demand that they provide support for their position.  If you want to get aggressive, you can probably file suit directly as a DJ action or maybe tortious interference.

- Jeff

[BobRoberts]

Thanks Jeff,

On first glance, the article looks genuine (I suppose today, it is not uncommon to get 'good' looking counterfeit items).  But after further investigation, there are clues that hint that the item might/could be counterfeit -i.e., artwork on box slightly different than at the providers web site (but again the same as on other Internet sites (that may also vending counterfeit items)), but completly believable, yet may not have been used on the authentic version. Again I would have (perhaps naively) believed the item was authentic.

 But, perhaps what you say is the answer.  Begin by assuming it is authentic, and file response that no C or TM infring.  And end with statement that consider matter closed unless hear otherwise.

 I'd prefer not to get aggressive, as if it is indeed counterfeit, they really could apparently proceed for stat dmgs (minimum $1000) whether the acts were done innocently or not.  And if thy decide to respond, maybe it's an indication that they mean business, rather than just looking for a cheap paycheck.  The concern (and of course we don't have a crystal ball) is that a reponse could be sent for less than the demand amount.  But if further responses/time is necessary, then he ultimate cost (esp. with a DJ action) would by far outweigh the setlement amt...  And client wants to get out of it with the least expense as possible (rather than on principle).  Of course I'm not going to provide the individual with any guarantees, but will just mentioned that I can't control how the other side will respond (or whether they will let it drop).  But really now- one instance, where the item was used and just and individual here (As opposed to a business that continually buys/sells items)- I can't really see them pursuing this further... 

I've seen others on the Internet experiencing an identical problem, but some of the referred-to demand letters just said stop using it, and destroy the product and all will be ok, whereas others demandd a similar amount...  Come must be intitiated from from a different firm representing the demander...

Thanks again...

[BobRoberts]

Oh...

Does anyone knowif you can get around the Stat Dmgs provisions of 15 USC 1117C where an individual innocently attempts to resell a counterfeit item (for sake of argument, assuming again, it's counterfeit)? Anyone have experience wih this?

Thanks

[mhdeaton]

$1000 is getting off cheap.  I have a good friend who regularly defends copyright infringement cases and $100K is a typical retainer.. It will cost you $100K just to tell your side of the story. My advice is call them apologize explain you had no idea and all you have is $500 and settle it.  Don't get nasty that's not a good idea.

[BobRoberts]

Hi MhDeaton.  Thanks for the input. 

If I understand correctly, under the Counterfeiting laws, intent is an element of the crime.  There is no intent here.  Someone purchased DVd off of online auction site, believing it to be authentic (and there is a chance it may be).  If it is counterfeit, it's a good fake. 

Nor is there any Copyright Infringement, as no copies were made by client, and no distribution occured. 

The issue is more regarding the Trademark side, where intent doesn't seem to be an element, and if it tuly is counterfeit, stat dmgs (min $1000 max $200,000 I believe) apply.  Really, I don't honestly believe that a judge would award more than the mimimum, and costs.  I doubt that even attorney fees would be awarded...  If it is a counterfeit, I believe we truly have an innocent seller (countfeiter?) here.  I was wondering whether anyone knows whether there is case law that would allow a judge to forgo the Stat. Dmgs.  McCarthy used interesting language that a judge "could" award statutory dmgs.  The Statute seems to be worded that a Plaintiff has the option of seeking Stat Dmgs...  I'll hafta look more into it...

I understand what you are saying re: large verdicts/dmgs if this were a counterfeiter, but that is not the case here.

Thanks again.

[JSonnabend]

$1000 is getting off cheap.  I have a good friend who regularly defends copyright infringement cases and $100K is a typical retainer.. It will cost you $100K just to tell your side of the story. My advice is call them apologize explain you had no idea and all you have is $500 and settle it.  Don't get nasty that's not a good idea.

$100,000 is a "typical retainer"?  Nonsense.  Perhaps for the big firms with big clients in big cases, but to suggest that that's the "typical" amount is unsupportable by fact.

- Jeff

[BobRoberts]

Just wondering...

Does anyone know how to get around the Stat Dmgs provisions of 15 USC 1117C where an individual innocently purchases, and at a much later date attempts to resell, a counterfeit item (for sake of argument, assuming again, it's counterfeit)? Anyone have experience with this?  Is there any out, outside of the printer/publisher exception for innocent infringement?

Though it's likely reaching, is a single attempted sale (with no actual sale, and removed within 24 hour of posting) on an online auction site considered sufficient use in commerce to trigger the Lanham Act? 

There's likely no actual confusion here (again, I realize it is reaching, and actual confusion is not required).   

Is the fact that the individual didn't manufacture the product or generate the potentially (counterfeit?) offending mark, and only a single item is at issue much of a factor (i.e., not a commercial use, since the person is obviously not a dealer or business)?  My answer to these three questions is "no", but I'm hoping that I'm missing something... 

Looking at the case law and treatises, I've found no case on point...  The cases are either the outright counterfeiters,  either sticking fake products in boxes marked with a legit. mark, or sticking labels on a fake product...  And the smallest number of items I've run across that is discussed in caselaw is 6 items, but they were several thousand dollar items... Another line of cases was with/regarding distributors that purchased counterfeit items, and resold them (sometimes knowing they were counterfeit, and sometimes turning a 'blind-eye' to the fact that the items were counterfeit.

Now some will say that "You've spend a thousand in legal fees that you could've just spent to settle the matter"...  It's a close family friend, so I'll just say that they are getting a great discount.

So, there is a threat to sue here and a demand to pay damages.  A Declar. Judge. would be a possibility (though if the item is truly counterfeit, it would be a short action), and even if the other party brought a case(I mean really, for Stat Dmgs of $1000 and a fair chance at costs, but likely not attorney fees) theres a fair/good chance that the case would be transferred to the Defendent's jurisdiuction, states away from the Plaintiff. 

I guess I'm just looking for the basic arguments to get it to the point where the Plaintiff's decide it's not worth the small return, or arguments to show that I've missed something, and innocent counterfeiters have an out from the Stat Dmgs...

thanks for any input....


Thanks

[JSonnabend]

Damages are only available for violations of 1125(c) for "willful violations".  See 1117(a).

- Jeff

[BobRoberts]

Thanks Jeff.

§1117. Recovery for violation of rights; profits, damages and costs; attorney fees; treble damages

(a) When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 43(a) or (d) [15 USC 1125(a) or (d)], or a willful violation under section 43(c) [15 USC 1125(c)], shall have been established in any civil action arising under this Act, the plaintiff shall be entitled, subject to the provisions of sections 29 and 32 [15 USC § §1111, 1114], and subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not a penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party.

...

(c)  In a case involving the use of a counterfeit mark (as defined in section 34(d) (15 U.S.C. 1116(d)) in connection with the sale, offering for sale, or distribution of goods or services, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection (a), an award of statutory damages for any such use in connection with the sale, offering for sale, or distribution of goods or services in the amount of--
(1) not less than $ 500 or more than $ 100,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just; or

(2) if the court finds that the use of the counterfeit mark was willful, not more than $ 1,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.

Jeff, and assuming the item is counterfeit( if item notcounterfeit, then first sale applies), the Sections at issue would be 1114(a) and 1125(a).  I don't believe there was Dilution here.  1114 (a) and 1125(a) donb't seem to have an intent element.  Couldn't find anything (i.e., caselaw) that reads intent into it (though intent is initially considered in a general LOC analysis).

Thanks again for any input.

[JSonnabend]

Dilution?  Not unless the DVD said "Coca Cola" or something like that.

- Jeff

[BobRoberts]

Insert Quote
Dilution?  Not unless the DVD said "Coca Cola" or something like that.

I only mentioned (said I didn't believe it applied) Dilution, because your prior post mentioned 1125(c)...

[JSonnabend]

Insert Quote
Dilution?  Not unless the DVD said "Coca Cola" or something like that.

I only mentioned (said I didn't believe it applied) Dilution, because your prior post mentioned 1125(c)...

Pay no attention to that man behind the curtain!

Yeah, I'm not doing too well today, caffeine wise.  Ignore my 1125(c) reference. 

As for counterfeit, I can tell you from experience that there is very little by way of definition for the term in the case law (the statutory definition is essentially "spurious" -- thanks a lot).  In some jurisdictions (like the Second Circuit, for instance), a plaintiff cannot receive damages for plain vanilla infringement unless he shows actual confusion and/or deceptive intent.  How all that plays in to your facts, I don't know. 

- Jeff

[BobRoberts]

Thanks Jeff. 

"As for counterfeit, I can tell you from experience that there is very little by way of definition for the term in the case law (the statutory definition is essentially "spurious" -- thanks a lot)."     I hear ya!

"In some jurisdictions (like the Second Circuit, for instance), a plaintiff cannot receive damages for plain vanilla infringement unless he shows actual confusion and/or deceptive intent.  How all that plays in to your facts, I don't know." 

I'll try another research session to see if I can dig anything similar up in my circuit...

And thinking about it, I'll hafta look at the caselaw with regards to the definition in 1116(d) to see if there is anything giving an "out" with regards to intent... 

Thanks again, Jeff! 

[BobRoberts]

So, I was able to do more research today.  Jeff, I understand and agree that if we are talking vanilla (non willful) infringement, it may be difficult to collect monetary damages. 

The hurdle I have here is (assuming) there is a counterfeit item, the offer for sale of the single item on the online auction site (even though no sale were made) would seem to clearly fall under 1114(a), and 1117(c) (as defined at 1116D and 1127).  Since it seems that the single attempted act falls in the 1114(a) and 1117(c), the latter allowing Stat dmgs of at least $1000, the innocent infringer is out of luck unless there is some out.  Doesn't take into account willfulness at all.

So (again assuming the item is counterfeit), it seems that I need some way to pull the 'innocent counterfeiter' out of the realms of 1114(a),  and/or 1117(c) or the Lanham Act in general.  Seems like the act of attempting sale over online auction would place the action of use of the mark into "use in commerce" and otherwise meets the 1114 and 1117, so it would seem that the innocent infringer is out of luck.  I guess you win some and you lose some.  Does seem kind of harsh for the innocent infringer unknowingly attempting resale of an item after exhausting their use of the item...