Nike, Inc. v. B&H Customs Servs., Inc.
| Decision Date | 30 September 2021 |
| Docket Number | 20-CV-1214 (JMF) |
| Parties | NIKE, INC., Plaintiff, v. B&H CUSTOMS SERVICES, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Kimberly Harchuck, Michael W.O. Holihan, Michael W.O. Holihan, P.A., Maitland, FL, Michael D. Hynes, DLA Piper US LLP, New York, NY, for Plaintiff.
Brendan Collins, GKG Law, P.C., Washington, DC, for Defendants Shine International Transportation (Shenzhen) Limited, Shine Shipping Ltd.
This case raises a question of federal trademark law on which lower courts disagree: whether a party that unknowingly transports counterfeit goods on behalf of a customer is strictly liable for trademark infringement under the Lanham Act, 15 U.S.C. § 1051 et seq. The question arises on cross-motions for summary judgment filed by Plaintiff Nike, Inc. and Defendants Shine Shipping Ltd. ("Shine Shipping") and Shine International Transportation (Shenzhen) Limited ("Shine International" and together with Shine Shipping, "Shine") with respect to Shine's liability for the shipment of counterfeit Nike shoes from China.
The Court concludes that Shine is not strictly liable for direct trademark infringement under Sections 1114 and 1125(a) of the Lanham Act, but can be held liable for contributory infringement if Nike can show at trial that Shine knew or should have known that its customer was shipping counterfeit goods. As to Nike's other claims against Shine, the Court holds that its claim under the Tariff Act for importation of counterfeit goods, 19 U.S.C. § 1526, cannot be resolved without trial and that its remaining claims — for trademark dilution and importation under the Lanham Act and for violation of New York common law — fail as a matter of law. Accordingly, and for the reasons that follow, Nike's motion for summary judgment is DENIED, while Shine's cross-motion for summary judgment is GRANTED in part and DENIED in part.
The following facts, drawn from the admissible materials submitted by the parties in connection with their motions, are undisputed unless otherwise noted.
Nike advertises and sells footwear. See ECF No. 66-1 ("Pl.’s SoF") ¶ 1. In connection with its footwear business, Nike owns a number of registered trademarks. Id. ¶¶ 2-3.
Shine Shipping and Shine International are foreign non-vessel operating common carriers ("NVOCCs"). Id. ¶ 15. NVOCCs do not operate ships directly, but rather arrange for the shipment of goods with vessel operating common carriers ("VOCCs"). Id. ¶ 28.
Shine1 was contacted by a company operating under the name I/O Interconnect, Ltd. ("I/O Interconnect"), located in Guangdong, China, to arrange for a series of shipments from China to the United States between December 2017 and June 2018. Id. ¶¶ 36, 39-40. The shipments were purportedly on behalf of a company operating under the name IO Innovative Electronic Co., Ltd. ("IO Innovative"), located in Hong Kong. Id. ¶ 39. To arrange the shipments, Shine communicated with an employee of I/O Interconnect named Mark, using the email address mark.hk@iointerllc.com. Id. ¶¶ 42-43. Shine was paid for its services in part by a third party, Global Trade International Forwarding Company. Id. ¶ 53.
Shine had previously been contacted by I/O Interconnect to arrange a shipment in February 2017. Id. ¶ 46. For that shipment, I/O Interconnect asked Shine to list on the house bill of lading ("HBL") — which functions as the contract of carriage between Shine and its customer — I/O Interconnect as both the shipper in China and the consignee, or receiver of the goods, in the United States. Id. ¶¶ 21, 48. Shine was informed by its agent in California that I/O Interconnect could not act as the consignee because I/O Interconnect did not do business in the United States. Id. I/O Interconnect then asked Shine to list "Jetway Corp." as the consignee. Id. ¶ 49. According to Nike, "Jetway Corp." is a fraudulent company name. Id. ¶ 50.
For the five shipments on behalf of IO Innovative, the HBL listed Zhong Wang Lighting Factory as the Chinese shipper and "Artiva" as the United States consignee receiving the shipments. Id. ¶¶ 36, 52. The contents of each shipment were listed as lamps. Id. ¶ 64. Shine contends that I/O Interconnect provided this information for each shipment. ECF No. 74 ( ) ¶¶ 52, 64.
For the first two shipments, Shine contracted with K-Line America, Inc. ("K-Line"), a VOCC. Pl.’s SoF ¶ 67. K-Line issued a master bill of lading ("MBL") — a contract of carriage between the VOCC and its customer — identifying Shine as the Shipper and Hana Freight LLC d/b/a Hana International Logistics ("Hana") as the consignee. Id. ¶¶ 7, 67-68. Hana is a U.S.-licensed NVOCC that acts as Shine's receiving agent for some shipments, including the five IO Innovative shipments. Id. ¶¶ 86-87, 91. Shine "issued credit notes to Hana" to pay for its services. Defs.’ Resp. ¶ 116.
For the last three shipments, Shine contracted with another NVOCC, CTS Global Supply Chain Solutions ("CTS Global"), to arrange shipping with VOCC Maersk Line A/S ("Maersk"). Id. ¶¶ 69, 70. CTS Global issued an HBL listing Shine as the shipper and Hana as the consignee. Id. ¶ 69. Maersk then issued an MBL listing CTS Global as both the shipper and the consignee. Id. ¶ 70. Shine contends that issuing bills of lading "back-to-back" when multiple NVOCCs are involved in shipment is common, so that the liabilities governed by the bill of lading are passed from one entity to another. Defs.’ SoF ¶ 45. Shine paid CTS for its services. Defs.’ Resp. ¶ 74.
As part of the U.S. customs process for each of the five shipments, Automated Manifest System filings ("AMS") and Import Security filings ("ISF") were made, as required. Pl.’s SoF ¶¶ 75, 78. The AMS describes the goods to be shipped and must be filed before the goods may be transported to the United States; an ISF is filed by a customs broker on behalf of the importer of the goods and contains a number of pieces of information, including a description of the goods. Defs.’ SoF ¶¶ 60, 62-65. According to Shine, it did not make any of the filings for the IO Innovative shipments, but obtained information for the filings, including that the five shipments consisted of lamps, from I/O Interconnect and passed that information along to the relevant parties. Defs.’ Resp. ¶¶ 75, 78, 100. Shine also forwarded the HBLs and contact information it was provided by I/O Interconnect for "Artiva," the supposed consignee, including the email address tom@artivallc.com, to Hana, to facilitate the filing of the ISFs. Id. ¶¶ 101, 122. Shine invoiced I/O Interconnect $35 for services related to the filing of the ISF for the seized shipment; according to Shine, that fee was passed directly to Hana. Id. ¶¶ 85, 117. Shine was also paid $30 for passing along information related to the ISF filing. Id.
For each shipment, Hana contracted with B&H Customs Brokerage Services, Inc. ("B&H") to act as customs broker. Id. ¶ 107. Hana communicated with Tom Lee, the putative president of Artiva, using the email address provided by Shine. Pl.’s SoF ¶ 106. Hana obtained a customs power of attorney from Lee for B&H to use, which was returned in the name of "Artiva USA Inc." B&H then filed customs paperwork for the shipments in the name of E-Ko Image, Inc. d/b/a Artiva ("E-Ko"), not "Artiva USA Inc." Id. ¶¶ 113, 118-19. Nike posits that the "likely explanation" for the change is that the form returned by Lee "utilized the Federal Tax ID# for E-Ko Image, Inc." and that "[w]hen B&H fil[l]ed out the entry document, like most customs brokers, it used the Federal Tax ID# to automatically prefill the entry document in with all of the entity information related to Federal Tax ID # already on file with Customs." ECF No. 68 ("Pl.’s Mem."), at 12 n.6; see also ECF No. 76 ("Pl.’s Resp. to Supp. SoF") ¶ 17.
On November 29, 2019, Customs and Border Protection seized the fifth shipment arranged by Shine after it was found to contain counterfeit Nike shoes. Id. ¶¶ 7, 36. Thereafter, Nike determined that E-Ko, a company located in California, did not authorize or have knowledge of the shipments; that "Tom Lee" is not employed by E-Ko; and that the domain listed for "Lee's" email is not E-Ko's authentic domain name. Id. ¶¶ 51, 103-05, 111.
Shine contends that it "did not learn that the shipment at issue contained counterfeit goods until after Customs seized it" and that it "did not know that the name of the shipper and consignee it had been provided by its customer was inaccurate at the time of the shipment." ECF No. 73 ( ) ¶¶ 17, 28. Nike disputes this and argues that Shine was "on constructive notice that there was a problem with identity theft" concerning the consignee, "Artiva," because, for the first shipment, Hana received from "Artiva," via Tom Lee, a customs power of attorney in the name of Artiva USA, Inc. that utilized the federal tax ID number of E-Ko, which resulted in B&H listing E-Ko on the entry documents it filed. Pl.’s Resp. to Supp. SoF ¶ 17; Pl.’s Mem. 12 n.6. Nike further contends that Shine had "actual notice" of "problems" with IO Innovative as a client because it was represented by a third party, I/O Interconnect, which had previously tried to import goods to the United States in its own name. Pl.’s Resp. to Supp. SoF ¶ 17.
Nike filed suit against Shine, Hana, and B&H, alleging claims under the Lanham Act, the Tariff Act of 1930, and New York law. ECF No. 32 ("Compl."). B&H and Hana were later dismissed as defendants following the Court's entry of stipulated permanent injunctions as to each. ECF Nos. 38, 50. Shine now moves for summary judgment as to liability on all counts. ECF No. 63. Nike cross-moves for summary judgment as to liability and for a finding that it is entitled to a presumption of willfulness on its Lanham Act claims. ECF No. 66.
Summary judgment is appropriate where the admissible evidence and pleadings...
To continue reading
Request your trial