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LORILLARD TOBACCO COMPANY v. S&M CENTRAL SERVICE CORP.

November 5, 2004.

LORILLARD TOBACCO COMPANY, Plaintiff,
v.
S&M CENTRAL SERVICE CORPORATION, Defendant.



The opinion of the court was delivered by: JAMES HOLDERMAN, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Lorillard Tobacco Co., ("Lorillard"), filed suit against defendant S&M Central Service Corporation, ("S&M"), alleging that S&M infringed of five of Lorillard's registered trademarks in violation of the Trademark Act of 1946, 15 U.S.C. § 1051 et seq., ("Lanham Act"), by willfully, or with willful blindness, offering for sale, selling and distributing counterfeit versions of Lorillard's Newport cigarettes. At the conclusion of a two day trial on the merits, a jury returned a verdict in favor of Lorillard and stated: (1) yes, consumers would likely confuse the cigarette packs bearing the counterfeit marks sold by S&M with genuine Newport cigarette packs; and (2) yes, S&M's actions were taken willfully or committed with willful blindness. (Dkt. No. 49.)

Lorillard's August 4, 2004 post-trial motions request this court to (1) award Lorillard statutory damages of five hundred thousand dollars, ($500,000),*fn1 pursuant to 15 U.S.C. § 1117(c); (2) award Lorillard costs and reasonable attorneys' fees pursuant to 15 U.S.C. § 1117(b); (3) enter a permanent injunction barring S&M from selling, offering for sale or distributing counterfeit cigarettes, and, (4) amend the pleadings to add Safwan Alkhawan ("Alkhawan") and Marwan Khawam ("Khawam") as individually liable defendants in order to conform the pleadings to the evidence presented at trial. Lorillard also submitted a motion on August 16, 2004 to Strike the Defendant's Brief on Damages pursuant to Rules 12, 26 and 37 of the Federal Rules of Civil Procedure, ("Rules").

  S&M, in its Brief Regarding Damages of August 6, 2004, requests that if any damages are awarded, the court should award 15 U.S.C. § 1117(c)'s minimum amount of $500 per infringed mark for a total award of $2,500. S&M also argues that an award of attorneys' fees and costs is not appropriate in this case.

  For the reasons set forth below, this court awards to Lorillard, pursuant to 15 U.S.C. § 1117(c), statutory damages of Fifty Thousand Dollars ($50,000) per infringed mark for a total statutory damage award of Two Hundred Fifty Thousand Dollars ($250,000). This court also finds that Lorillard is entitled to receive reasonable costs and attorneys' fees pursuant to 15 U.S.C. § 1117(b) but the parties must comply with the requirements of Local Rule 54.3 before this court can calculate a figure for reasonable costs and attorneys' fees. In addition, this court grants Lorillard's request for a permanent injunction, but denies Lorillard's Motion to Amend the Pleadings to Conform to the Evidence and denies Lorillard's August 16, 2004 Motion to Strike S&M's Brief on Damages.

  BACKGROUND

  A. Lorillard Tobacco Company

  Lorillard is the fourth largest tobacco company in the United States. (Stipulation and Statement of Uncontested Facts ¶ 4, Ex. 1 to the Pre-Trial Order, [hereinafter Uncontested Facts].) First introduced into the market in 1956, Newport is a Lorillard cigarette brand. (Id. at ¶ 6.) Newport is the leading brand of menthol cigarettes sold in the United States, and it is the second leading cigarette brand overall with an eight percent market share. (Id. at ¶ 6-7.)

  Lorillard has protected the value of the Newport brand by registering the five following trademarks with the United States Patent and Trademark Office: Reg. No. 1,108,876; Reg. No. 1,178,413; Reg. No. 1,191,816; Reg. No. 1,920,066; and Reg. No. 2,600,870. (Id. at ¶ 10.) Four of the marks, Nos. 1,108,876; 1,178,417; 1,191,816; and 1,920,666, have attained incontestable status under 15 U.S.C. § 1115 (b). (Id.)

  B. S&M Central Service Corporation and its interaction with Lorillard

  S&M operates a gas station in Chicago, Illinois. (Trial Tr. pg. 59.) The station sells gasoline, operates maintenance bays, and sells consumer products including food, magazines and cigarettes. (Uncontested Facts at ¶ 3.) Lorillard became aware of counterfeit Newport cigarettes at S&M when one of Lorillard's sales representatives made a sales call to S&M. (Id. at 16.) The sales representative purchased two cartons of the counterfeit cigarettes. (Trial Tr. at 42.) On July 18, 2003, Lorillard obtained an Ex Parte Seizure Order from this court authorizing a seizure of counterfeit cigarettes at S&M. The executed search of S&M resulted in a seizure of 83 cartons and 9 packages of counterfeit Newport cigarettes and associated business records.

  ANALYSIS

  A. Lorillard's Motion to Strike S&M's Brief on Damages

  On August 16, 2004, Lorillard filed a motion to strike S&M's August 6, 2004 brief on damages under Rules 12, 26, and 37. Lorillard's motion asserts two separate concerns. First, Lorillard argues that S&M's brief contains misstatement of facts unsupported by citation to the record. Second, Lorillard argues that S&M improperly included its 2001, 2002, and 2003 tax returns as an exhibit to S&M's brief on damages. Lorillard argues that it had requested financial information included tax returns from S&M during discovery, that S&M had failed to disclose these items, and therefore S&M should be prohibited from using these documents under Rule 37. Lorillard requests the court to strike S&M's brief in whole, or in the alternative strike specific offending portions of the brief, and the impose sanctions against S&M.

  S&M counters that the documents provided with its brief were specifically requested by the court at the end of the trial, that these documents were not disclosed during discovery because they were not relevant and the information contained in the brief is appropriate since S&M is making arguments to the court. S&M further ...


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