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Bulgari, S.P.A. v. Partnerships and Unincorporated Associations

United States District Court, N.D. Illinois, Eastern Division

July 29, 2014

BULGARI, S.p.A., Plaintiff,
v.
The Partnerships and Unincorporated Associations Identified on Schedule A, ' Defendants.

MEMORANDUM OPINION AND ORDER

RONALD A. GUZMN, District Judge.

Plaintiff faces a conundrum. Plaintiff's complaint alleges federal trademark infringement and counterfeiting (Count I), false designation of origin (Count II), cybersquatting (Count III), and violation of the Illinois Uniform Deceptive Trade Practices Act ("UDTPA") (Count IV) against hundreds of unidentified defendants controlling an even greater number of ".com" websites selling counterfeit plaintiff brand name products. Because defendants attempt to avoid liability by going to great lengths to conceal their identities and because the Court found there existed a danger that defendants would close their websites and empty their accounts of funds received from sale of their counterfeit products if given prior notice, the temporary restraining order hearing was ex parte. After the entry of a temporary restraining order, the motion for preliminary injunction was referred to the magistrate judge. Before its expiration, the magistrate judge continued the temporary restraining order for another fourteen days to July 29, 2014. Subsequently, on July 18, 2014, the magistrate judge's report and recommendation (Dkt. #38) issued. Objections to the report must be filed within 14 days thereof, i.e. by August 1, 2014. But, by August 1, 2014 the ex parte temporary restraining order will have expired leaving the frozen accounts again accessible to the defendants to drain the funds (proceeds of the fraudulent sales) from them.

In order to avoid the automatic expiration of the temporary restraining order before the preliminary injunction may be entered, the Court has undertaken a de novo review of the magistrate judge's report and recommendation even though no objections have been filed. Pursuant to the Court's temporary restraining order BULGARI has provided notice of the preliminary injunction hearing to Defendants by electronic mail at the e-mail addresses identified in Schedule A to BULGARI's Complaint and electronic publication at the Defendant Domain Names that have been transferred to BULGARI's control. No defendants have filed an appearance, objection or other pleading in response thereto, nor has any defendant appeared at the preliminary injunction hearing.[1]

The Court concurs with the magistrate judge's finding that through various fully interactive commercial Internet websites operating under at least the Defendant Domain Names and Online Marketplace Accounts listed in Schedule A to the Complaint the Defendants are promoting, advertising, marketing, distributing, offering for sale and selling counterfeit products, including jewelry, watches and other merchandise, bearing counterfeit versions of BULGARI's trademarks. Defendants design their internet stores so that they appear to the consumer to be authorized online sellers of genuine BVLGARI products, when in fact, they are not. Defendants also use, without authorization, plaintiff's trademarks in order to attract consumers conducting internet searches looking for legitimate BVLGARI products to their websites, rather than to legitimate BVLGARI or BVLGARI authorized websites. See Decl. of Laurence Morel-Chevillet filed in support of plaintiff's motion for preliminary injunction (#11).

As the report and recommendation points out, the ultimate test in claims pursuant to both The Illinois Uniform Deceptive Trade Practices Act and the Lanham Act is whether the public is likely to be deceived or confused by the similarity of the marks. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780 (1992). In that regard, plaintiff has established that its trademarks are famous and inherently distinctive and are registered with the United States Patent and Trademark Office on the Principal Register. Plaintiff has not licensed or authorized the defendants as resellers of its products, or to use its trademarks in any manner. Furthermore, plaintiff's submissions have established that Defendants are selling low quality, counterfeit versions of products that look similar to BVLGARI products and use counterfeit marks identical to the BVLGARI Trademarks. Clearly, the unauthorized use of plaintiff's trademarks is being done in the same channels of commerce and target's the same consumers.

Defendants are targeting the same consumers, selling similar products for similar use and utilizing the same channels of commerce to target these consumers. The consumers being targeted are the general population and, as such, have no specialized knowledge or skill that would allow them to discern between defendant's low-quality copies and plaintiffs''s genuine products when plaintiff's established trademark and brand name are attached to both. The potential for confusion here is great, especially at the point-of-sale were the consumer sees only defendant's' photographs of nearly identical products with plaintiff's trade names and trademarks appearing on the website and in the description of the products.

The Court finds that the evidence as a whole is more than sufficient to establish a likelihood of success on the merits as to the alleged violations of the Lanham Act and the UDTPA.

Count III of the Complaint also alleges a cause of action for violation of the Anti-cybersquatting Consumer Protection Act, 15 USC ยง1125(d), in the operation of a domain name incorporating the plaintiff's trademarks. The gist of this action is the allegation that defendants have acted with bad faith and to profit from the unauthorized use of the BVLGARI Trademarks by registering domain names identical to, or confusingly similar to the BVLGARI Trademarks. The Court concurs with the findings of the magistrate judge. The defendants register, traffic in and use domain names that are identical or confusingly similar to plaintiff's famous and distinctive "BVLGARI" and "BULGARI" marks, use photographs of BVLGARI products and of logos in order to sell their own counterfeit BVLGARI products. Some of the many Defendant Domain Names directly incorporate the marks "BVLGARI" and "BULGARI, " and Defendants use copyright-protected photographs of BVLGARI Products and logos without a license in order to sell their counterfeit BVLGARI Products.

Damage to any trademark holder's goodwill is irreparable injury for which the trademark owner has no adequate legal remedy. Eli Lilly &Co. v. Natural Answers, Inc., 233 F.3d 456, 469 (7th Cir.2000). By selling inferior quality goods which purport to be genuine BVLGARI products, defendants erode plaintiffs' well established reputation for producing and selling high quality merchandise. Such damage is seldom compensable in money alone in part because the extent of the damage is difficult if not impossible to ascertain. It is not possible to establish the extent, either geographic, in time, or degree of the resulting damage to reputation. Thus, proving the amount of loss in monetary value is seldom possible. Indeed, once consumer confidence is lost there is no magic formula for regaining it.

For all the above reasons, plaintiff's motion for preliminary injunction is granted as specified below, subject to the defendant's' right to object to the magistrate judge's report and recommendation and move for reconsideration on or before August 1, 2014.

PRELIMINARY INJUNCTION ORDER

THIS CAUSE being before the Court on Plaintiff Bulgari, S.p.A.'s ("Bulgari") Motion for Entry of a Preliminary Injunction, against the Partnerships and Unincorporated Associations identified on Schedule A to Plaintiff''s Complaint (collectively, the "Defendants") the Court orders that:

1. Defendants, their officers, agents, servants, employees, attorneys, confederates, and all persons acting for, with, by, through, under or in active concert with them be preliminarily enjoined and restrained from:

a. using the BVLGARI Trademarks or any reproduction, counterfeit copy or colorable imitation thereof in any manner in connection with the distribution, advertising, offering for sale, or sale of any product that is not a genuine BVLGARI product or not ...

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