FENDI AFELE SRL v. FILENE'S BASEMENT, INC.

• Decision Date: 11 March 2010
• Docket Number: No. 06 Civ. 244(RMB)(MHD).,06 Civ. 244(RMB)(MHD).
• Citation: 696 F. Supp.2d 368
• Parties: FENDI ADELE S.R.L., Fendi S.R.L., and Fendi North America, Inc., Plaintiffs, v. FILENE'S BASEMENT, INC. and Retail Ventures, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

696 F. Supp.2d 368

FENDI ADELE S.R.L., Fendi S.R.L., and Fendi North America, Inc., Plaintiffs, v. FILENE'S BASEMENT, INC. and Retail Ventures, Inc., Defendants.

No. 06 Civ. 244(RMB)(MHD).

United States District Court, S.D. New York.

March 11, 2010.

Richard L. Mattiaccio, Victor Genecin, Steven Skulnik, Squire, Sanders & Dempsey, L.L.P., New York, NY, for Plaintiffs.

Kenneth Alan Plevan, Skadden, ARPS, Slate, Meagher & Flom LLP, New York, NY, Theodore Ray Remaklus, Wood, Herron & Evans, L.L.P, Cincinnati, OH, for Defendants.

DECISION & ORDER

RICHARD M. BERMAN, District Judge.

I. Introduction

On January 12, 2006, Fendi Adele S.r.l., Fendi S.r.l., and Fendi North America, Inc. (collectively, "Fendi" or "Plaintiffs") filed a complaint against Filene's Basement, Inc. ("Filene's") and Retail Ventures, Inc. ("Retail Ventures" or "RVI") (collectively, "Defendants") pursuant to the United States Trademark Act, 15 U.S.C. §§ 1051 et seq. ("Lanham Act"), Section 360-l of the New York General Business Law, and New York common law ("Fendi Litigation").¹ (Compl., dated Jan. 11, 2006 ("Compl."), ¶¶ 1-3.) Plaintiffs allege, among other things, that Defendants' "offering for sale and selling of handbags, shoulder bags, purses, wallets and key chains . . . that imitate the designs of Fendi products and that bear reproductions, counterfeits, copies or colorable imitations of the `FENDI' trademarks" constituted trademark counterfeiting, false designation of origin, and trademark dilution under Federal law, and unfair competition and trademark dilution under New York law. (Compl. ¶¶ 1-3, 38.) Defendants assert affirmative defenses including laches and acquiescence. (Answer, dated Mar. 20, 2006 ("Answer"), ¶¶ 98-99.)

On March 4, 2009, Plaintiffs filed a motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure ("Fed. R. Civ.P.") arguing, among other things, that: (1) there is no legal or factual basis for Defendants' affirmative defenses; (2) "summary judgment is warranted on Plaintiffs' Lanham Act claims of trademark counterfeiting and false designation of origin" because Defendants' "use in commerce of the Fendi trademarks is shown by uncontroverted evidence"; (3) "proof of trademark counterfeiting and unfair competition under the Lanham Act also proves . . . common law unfair competition"; (4) Plaintiffs are entitled to summary judgment for trademark dilution under 15 U.S.C. § 1125(c) because "Defendants admit that they used the Fendi name and trademarks in commerce after the marks had become famous," and under New York law because "Defendants' use of identical marks is not only confusing, but constitutes a whittling away of the distinctive nature of Plaintiffs' valuable trademarks"; (5) Plaintiffs are entitled to a permanent injunction pursuant to 15 U.S.C. § 1116(a); (6) Plaintiffs are entitled to an order, pursuant to 15 U.S.C. § 1118, "directing the destruction of counterfeit and other infringing goods in Defendants' possession"; and (7) Plaintiffs are entitled to an accounting of Defendants' profits because "Defendants' willfulness is established by the testimony of Defendants' own employees." (Pls.' Mem. of Law in Supp. of Their Mot. for Summ. J., dated Feb. 27, 2009 ("Pl. Mem."), at 7-12 (quotations omitted), 16, 22-24.)

On May 1, 2009, Defendants filed an opposition and crossmotion for partial summary judgment arguing, among other things, that: Defendants have "valid" affirmative defenses of laches and acquiescence; there are "genuine issues" whether the Fendi items were counterfeit; "significant evidence shows that genuine Fendi merchandise is often available in grey market channels"; Fendi "seriously overreaches" in its request for injunctive relief; and the "absence of bad faith by Filene's" is supported by "substantial evidence." (Defs.' Mem. in Opp'n to Pls.' Mot. for Summ. J. and in Supp. of Defs.' Crossmotion for Partial Summ. J., dated Apr. 15, 2009 ("Def. Mem."), at 1-4 (capitalization omitted).) Defendants also argue that Retail Ventures should be dismissed as a Defendant because it "did not sell any merchandise, and there is no basis to `pierce the corporate veil.'" (Def. Mem. at 19-24.) And, Defendants argue: that "Fendi's damages expert report should be stricken"; and that "references to all Fendi marks that cannot support a statutory damages claim" should be stricken from Fendi's Complaint and Rule 56.1 Statement. (Def. Mem. at 19-24.)

On August 13, 2009, Plaintiffs filed a reply and opposition to Defendants' crossmotion arguing that because Retail Ventures "acted jointly with Filene's . . . there is no need to pierce the corporate veil"; Defendants' motion to strike the report of Fendi's damages expert should be denied; and "the question of Defendants' exposure to statutory damages need not be addressed unless . . . Plaintiffs elect statutory damages" at trial. (Pls.' Mem. of Law in Opp'n to Defs.' Cross-motion to Strike and for Partial Summ. J. and Reply Mem. in Further Supp. of Pls.' Mot. for Summ. J., dated Aug. 11, 2009 ("Pl. Reply"), at 1-7 (capitalization omitted), 20-21, 24.)

On September 1, 2009, Filene's and Retail Ventures each filed reply memoranda. (Reply Mem. in Supp. of Mot. by Def. Filene's for Partial Summ. J. on Certain Issues, dated Sept. 1, 2009 ("Filene's Reply"); Reply Mem. in Supp. of Mot. by Def. Retail Ventures for Summ. J., dated Sept. 1, 2009 ("RVI Reply").)

On February 11, 2010, Plaintiffs wrote to the Court enclosing an allegedly "directly relevant" February 8, 2010 decision by United States District Judge Leonard B. Sand granting summary judgment to Fendi on trademark counterfeiting, trademark dilution, and common law unfair competition claims against Burlington Coat Factory Warehouse Corporation ("Burlington Coat Factory") and Cohoes Fashion, Inc., a wholly-owned subsidiary of Burlington Coat Factory (collectively, "Burlington").²

As noted, on March 2, 2010, the Court heard oral argument. (See Hr'g Tr.)

For the reasons set forth below, Plaintiffs' motion for summary judgment is granted in part and denied in part. Defendants' crossmotion for partial summary judgment is denied.

II. Background

Fendi Adele S.r.l., an Italian limited liability company, is the "owner of the . . . federally registered Fendi trademarks and of all other intellectual property rights associated with merchandise bearing any of the Fendi trademarks" and "the exclusive designer of all handbags, shoulder bags, purses, wallets, and key holders that bear any Fendi trademark (the `Products')." (Compl. ¶ 5; Pls.' Statement Pursuant to Local Civil Rule 56.1, dated Feb. 27, 2009 ("Pl. 56.1"), ¶¶ 1-2; Defs.' Resp. to Pls.' Statement Pursuant to Local Civil Rule 56.1, dated Apr. 15, 2009 ("Def. 56.1"), ¶¶ 1-2.) Fendi Adele S.r.l. has held the following United States Patent and Trademark Office ("USPTO") registration numbers for at least five years: Nos. 1,214,472; 1,244,466; 1,439,955; 2,648,256; and 2,648,257 (collectively, "Fendi Marks"). (Pl. 56.1 ¶ 20; Def. 56.1 ¶ 20; see Decl. of Victor Genecin, dated Feb. 27, 2009 ("Genecin Decl."), Exs. 1-5 (USPTO Certificates of Registration).) The Fendi Marks "have acquired great value and have become well known to the consuming public and trade as identifying and distinguishing FENDI exclusively and uniquely as the source of the merchandise to which the trademarks are applied." (Compl. ¶ 21; Answer ¶ 21.)

Retail Ventures is an Ohio corporation with its principal place of business in Columbus, Ohio. (See Pl. 56.1 ¶ 10; Def. 56.1 ¶ 10.) Filene's, a Delaware corporation with its principal place of business in Columbus, Ohio, is a "chain of 25 retail stores that sells name brand and designer brand goods at off-brand prices." (Defs.' Statement of Material Facts as to Which There Are Genuine Disputes, dated Apr. 15, 2009 ("Def. Supp'l 56.1"), ¶ 31; Pls.' Resp. to Defs.' Statement of Material Facts as to Which Defs. Claim There Are Genuine Disputes, dated Aug. 11, 2009 ("Pl. Supp'l 56.1"), ¶ 31; see also Pl. 56.1 ¶¶ 8-9; Def. 56.1 ¶¶ 8-9.) From December 2004 to April 2009, Filene's was a wholly-owned subsidiary of Retail Ventures. (See Decl. of Julia A. Davis, dated Apr. 10, 2009 ("Davis Decl"), ¶¶ 1-2.) On April 21, 2009, Retail Ventures "sold all of the outstanding capital stock of Filene's . . . to FB II Acquisition Corp., a newly formed entity owned by Buxbaum Holdings, Inc." (SEC Form 10-K for the Fiscal Year Ended Jan. 31, 2009, filed by Retail Ventures, Inc., dated Apr. 29, 2009, at 6.)

Anthony Cannatella ("Cannatella"), formerly an attorney with the firm Pavia & Harcourt LLP, sent Filene's a cease and desist letter on behalf of Fendi, dated July 12, 2001, stating that "it has come to Fendi's attention that Filene's is offering for sale and selling counterfeit FENDI handbags and accessories in a number of its locations" and that Fendi "demands that Filene's immediately cease and desist from further sale and distribution of any counterfeit FENDI merchandise." (Genecin Decl. Ex. 10 (Letter from Anthony S. Cannatella, Esq. to Judy Barr, Filene's Basement, Inc. & Filene's Basement, Inc. Corporate Office, dated July 12, 2001 ("Cease and Desist Letter")), at 1-2.) Ashley Reed Trading, Inc. ("Ashley Reed") "was the source of the counterfeit goods to Filene's" that were referenced in the Cease and Desist Letter. (Decl. of Jamie Stockton, dated Apr. 20, 2009 ("Stockton Decl"), Ex. 3 (Dep. of Anthony Cannatella, dated Dec. 10, 2007 ("Defs. Cannatella Dep. Excerpts")), at 22:16-23; see also PI. 56.1 ¶ 155; Def. 56.1 ¶ 155.)³

Judith Barr ("Barr"), the then-general manager of the Filene's store in Chelsea, New York City ("Chelsea Store"), received the Cease and Desist Letter and faxed it to James Rudd, Filene's Executive Vice President of Stores and Operations ("Rudd"). (See Pl. 56.1 ¶ 156; Def. 56.1 ¶ 156.) Barr was "instructed to take all Fendi handbags off the floor" and to "send the Fendi-branded handbags to Fendi's...