Gucci America, Inc. v. Duty Free Apparel, Ltd.

• Citation: 286 F.Supp.2d 284
• Decision Date: 06 October 2003
• Docket Number: No. 02 Civ. 1298(VM).,02 Civ. 1298(VM).
• Parties: GUCCI AMERICA, INC., Plaintiff, v. DUTY FREE APPAREL, LTD. d/b/a Duty Free Apparel, Inc., Joel Soren, Harvest Wrap, Inc., Kurt Davidsen and John Does 2-20, Defendants.
• Court: U.S. District Court — Southern District of New York

286 F.Supp.2d 284

GUCCI AMERICA, INC., Plaintiff, v. DUTY FREE APPAREL, LTD. d/b/a Duty Free Apparel, Inc., Joel Soren, Harvest Wrap, Inc., Kurt Davidsen and John Does 2-20, Defendants.

No. 02 Civ. 1298(VM).

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

October 6, 2003.

Milton Springut, Tal S. Benschar, Kalow & Springut, LLP, New York City, for Gucci America, Inc.

Steven M. Lester, Law Offices of Steven M. Lester, East Meadow, New York City, for Duty Free Apparel, Ltd. and Joel Soren.

Darren Oved, Oved & Oved, LLP, New York City, for Harvest Wrap, Inc. and Kurt Davidsen.

DECISION AND ORDER

MARRERO, District Judge.

Plaintiff Gucci America, Inc. ("Gucci") alleges that defendants Duty Free Apparel Ltd. ("DFA") and Harvest Wrap, Inc. ("Harvest Wrap") sold counterfeit Gucci merchandise in violation of federal and state law. Gucci seeks an entry of partial summary judgment on the issue of liability for its federal claims against all four defendants: DFA, DFA President Joel Soren ("Soren"), Harvest Wrap, and Harvest Wrap owner Kurt Davidsen ("Davidsen") (collectively, "Defendants"). Gucci also seeks to enjoin Defendants from selling counterfeit Gucci merchandise in the future. For the following reasons, Gucci's motion is granted.

I. BACKGROUND

Gucci owns the trademark and trade name "GUCCI" and various "G" and "GG" logos and designs. (Compl. ¶ 7.) These trademarks are associated with various articles of jewelry, watches, handbags, wallets, and accessories. (Id.) DFA, a Manhattan retailer of designer merchandise and accessories, sold a "Gucci" wallet to a Gucci investigator for $150 on August 14, 2000. (Decl. of Cece McNair, dated July 15, 2003 ("McNair Decl.") ¶¶ 2-3.) That same day, DFA sold to another Gucci investigator a "Gucci" handbag for $350. (Decl. of Kevin Dougherty, dated July 15, 2003 ("Dougherty Decl.") ¶ 4.) In May 2001, an assistant for Gucci's outside counsel purchased a "Gucci" handbag from DFA's website for $415. (Decl. of Vanessa Beigner, dated July 21, 2003 ("Beigner Decl.") Ex. A.)

After Gucci initiated this lawsuit, DFA identified Harvest Wrap as its source for "Gucci" goods, and Gucci added Harvest Wrap as a defendant. (Decl. of Tal S. Benschar, dated July 21, 2003 ("Benschar Decl.") Ex. D, at 3.) At some point in late 2002, Harvest Wrap sold several "Gucci" backpacks to Sherry Dvorkin ("Dvorkin"), who is in the business of selling women's accessories through private sales, including sales on the internet. (Id. Ex. B, at 160-61 and Ex. C, at 5, 19-20.) Gucci subpoenaed Dvorkin to appear at a deposition in connection with this lawsuit. (Id. Ex. C, at 14.) She testified that she purchased over $50,000 worth of merchandise from Harvest Wrap in several cash transactions with Davidsen. (Id. at 23.) An invoice of her transactions indicates that she purchased 173 "Gucci" backpacks and 44 "Gucci" pouch bags, along with 24 "Fendi mamma bags" and 503 "Prada key chains." (Id. at 60.) She turned over to Gucci's lawyers two of the "Gucci" backpacks she obtained from Harvest Wrap, along with the invoice. (Id. at 36.)

Gucci's expert, Luciano Chiarelli ("Chiarelli"), has determined that all five of the above "Gucci" items which Gucci obtained for this lawsuit — the wallet and two handbags from DFA and the two backpacks from Harvest Wrap — are counterfeit. (Decl. and Expert Report of Luciano Chiarelli, dated Jan. 18, 2003 ("Chiarelli Decl.") ¶ 8; Supp. Decl. and Expert Report of Luciano Chiarelli, dated Feb. 26, 2003 ("Supp. Chiarelli Decl.") ¶ 3.) Chiarelli has been associated with Gucci since 1969 and has been head of the Quality Control department since 1995. (Chiarelli Decl. ¶ 2.) He has participated in numerous federal cases on Gucci's behalf. (Id. ¶ 11.) The purchasers of the "Gucci" items at issue stated that they immediately marked and turned over the items to Gucci's lawyers, and Chiarelli's report indicates that he received those marked items from Gucci's lawyers for the purpose of evaluating their authenticity. (Beigner Decl. ¶ 4; Dougherty Decl. ¶¶ 4-5; McNair Decl. ¶¶ 3-4; Benschar Decl. Ex. B, at 36; Chiarelli Decl. ¶ 7; Supp. Chiarelli Decl. ¶ 2.)

Gucci supplies its leather goods assembly factories with the component parts and the necessary materials for assembly. (Chiarelli Decl. ¶ 4.) Those factories then must account for all of these materials. (Id. ¶ 6.) Assembled items must meet Gucci's quality control standards before being sold to the public. (Id.) Those items that do not meet the standards are either destroyed, or, if the defects are minor, the items are marked as "seconds" and sent to Gucci's outlet store in Florence, Italy. (Id.)

Chiarelli obtained authentic component parts from Gucci suppliers and compared those parts with the components of the items at issue here. (Reply Decl. of Luciano Chiarelli, dated Sep. 8, 2003 ("Reply Chiarelli Decl.") ¶ 13.) Chiarelli's report identifies various deviations in each of the five items. (Chiarelli Decl. ¶ 8; Supp. Chiarelli Decl. ¶ 3.) For example, Chiarelli asserts that one of the handbags contains a gold-colored closure and buckle, which has never been used on that particular style of bag, and the Gucci logo on the backpacks is different from the genuine logo. (Id.) The items in evidence are not marked as "seconds." (Reply Chiarelli Decl. ¶ 15.)

DFA states that it no longer sells items from Harvest Wrap. (Decl. of Joel Soren in Opposition to Plaintiff's Motion for Partial Summary Judgement, dated Aug. 11, 2003 ("Soren Decl.") ¶ 3.) DFA and Soren consent to an injunction, but they object to certain parts of Gucci's formulation of the proposed order.¹ (Id. ¶¶ 6-10.)

Harvest Wrap concedes selling backpacks to Dvorkin, but it denies that any of the five items at issue came from Harvest Wrap, as it only sells authentic goods. (Defendants Harvest Wrap, Inc. and Kurt Davidsen's Affidavit in Opposition to Plaintiff's Motions, dated Aug. 11, 2003 ("Davidsen Aff.") ¶¶ 21, 22, 29.) Alternatively, Harvest wrap asserts that there is at least an issue of fact as to whether the items are in fact counterfeit. (Defendants Harvest Wrap and Kurt Davidsen's Memorandum of Law in Opposition to Plaintiff's Motion for Summary Judgment and in Opposition to Plaintiff's Motion for a Permanent Injunction ("Harvest Wrap Mem.") 9-12.)

II. SUMMARY JUDGMENT STANDARD

The Court may only grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court must first look to the substantive law of the action to determine which facts are material; "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Even if the parties dispute material facts, summary judgment will be granted unless the dispute is "genuine" — i.e., "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249, 106 S.Ct. 2505.

In a case such as this one where the plaintiff would ultimately bear the burden of persuasion at trial, the plaintiff must make a prima facie showing, with sufficient admissible evidence, that there are no genuine issues of material fact for trial. Celotex, 477 U.S. at 331, 106 S.Ct. 2548. After such a showing, the non-moving party "may not rest upon the mere allegations or denials of the adverse party's pleading"; the non-moving party must respond with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). To this end, "[t]he non-moving party may not rely on mere conclusory allegations nor speculation, but instead must offer some hard evidence showing that its version of the events is not wholly fanciful." D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir.1998). In other words, "[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

Throughout this inquiry, the Court must view the evidence in the light most favorable to the non-moving party and must draw all inferences in favor of that party. See Hanson v. McCaw Cellular Communications, Inc., 77 F.3d 663, 667 (2d Cir. 1996).

III. DISCUSSION

A. LIABILITY

As relevant to this motion for summary judgment, Gucci claims that Defendants have violated Sections 32(1) and 43(a) of the Lanham Act (the "Act"), 15 U.S.C. §§ 1114(1), 1125(a). For both Lanham Act claims, Gucci must demonstrate (1) that it has a valid mark that is entitled to protection under the Act and (2) that Defendants' actions are likely to cause confusion as to the origin of the mark.² See The Sports Authority, Inc. v. Prime Hospitality Corp., 89 F.3d 955, 960 (2d Cir.1996). The parties do not dispute the validity of Gucci's mark, and thus the Court's resolution of this motion will turn on the likelihood of confusion.

In considering the likelihood of confusion, Courts in this Circuit generally look to the factors set forth in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (1961): "the strength of [plaintiff's] make, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers." See, e.g., Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 871-72 (2d Cir.1986) (applying Polaroid factors).

In this case, however, the Court need not undertake a factor-by-factor analysis...