Designer Thumps Discount Retailer: Fendi v. Burlington Coat Factory

Designer Thumps Discount Retailer: Fendi v. Burlington Coat Factory
In its February 8, 2010 decision in Fendi Adele S.r.l v. Burlington Coat Factory Warehouse Corp. (2010
U.S. Dist. LEXIS 10628 (S.D.N.Y.)), the district court for the Southern District of New York found in favor
of plaintiff Fendi on its claims premised upon defendant Burlington’s ongoing sale of counterfeit FENDIbranded
products in willful violation of a 1987 injunction. The present ruling was in response to Fendi’s
request for summary judgment against Burlington on its claims of trademark infringement, false
designation of origin, trademark dilution, and unfair competition under New York law. Fendi sought a
supplemental permanent injunction against Burlington, in addition to damages.
On the trademark infringement and false designation of origin claims, the court pointed out that in order
to prevail Fendi needed to successfully establish that it had a valid mark entitled to protection and that
Burlington used a similar mark in commerce in a way that would likely cause confusion among the
relevant consuming public. Because Fendi’s trademarks were registered and thereby prima facie valid,
and because Burlington did not provide any credible evidence to the contrary, Fendi easily carried the
day on the protectability point. The second part of the test, likelihood of confusion, was also readily
satisfied because the products involved were counterfeit and Burlington did not deny that it had sold
them. Because counterfeit marks were involved, and counterfeit marks are inherently confusing, the
court concluded that it did not need to engage in the eight-factor test set forth in Polaroid Corp v.
Polarad Electronics Corp., 287 F.2d 492 (2d Cir. 1961) normally used in evaluating the likelihood of
confusion question. Here, Fendi only had the burden of showing the goods were counterfeit, and it
provided persuasive evidence of that by way of holograms, coding, materials, hardware, fabric, and
other tests used by it to confirm genuineness. Burlington was unable to counter any of Fendi’s
evidence and while Burlington did argue that genuine goods could be purchased from sources other
than Fendi, and that it had made such purchases in the past, the court was not persuaded because it
had no bearing -- at the end of the day the goods Burlington was selling were counterfeit regardless of
where or how it had obtained them.
Summary judgment in favor of Fendi was also appropriate on the trademark dilution claim because
Fendi was easily able to establish that its mark was famous, that Burlington was making use of the
FENDI mark in commerce, that Burlington’s use began after the FENDI mark had become famous, and
that Burlington’s use diluted the quality of Fendi’s mark by diminishing its capacity to identify and
distinguish goods and services. Relying on its prior decision in Savin Corp. v. Savin Group, 391 F.3d
439 (2 nd Cir. 2004), the court concluded that because Fendi, as the owner of a famous mark, could
show commercial use of an identical junior mark, a presumption of actual dilution arose. Burlington
could put forth no evidence to counter the presumption in light of the identical nature of the marks found
on the goods it was selling.
The court next addressed Fendi’s claim of unfair competition under New York law. Pointing out that an
unfair competition claim under common law is governed largely by the same standard as one under the
Lanham Act, except common law requires a showing of bad faith or intent, the court ruled that the use
of a counterfeit mark creates a presumption of bad faith. As a result, summary judgment on this claim
was also appropriate.

Because the court determined that Burlington willfully infringed -- meaning it either knew its conduct
represented infringement or recklessly disregarded the possibility -- it went on to find that for
Burlington’s violations Fendi was entitled to treble damages and reasonable attorneys’ fees amounting
to more than $4 million.
In an attempt to head off future violations, Fendi also sought to supplement the 1987 injunction. The
court adopted a $1,000 forward-looking sanction (i.e., $1,000 per each item sold in violation of the 1987
injunction). It also ordered Burlington to both submit a written report outlining in detail how it planned to
comply with the 1987 injunction going forward, and to thereafter submit, semi-annually for the next five
years, reports on its full compliance with the 1987 injunction.
Burlington was not the only entity left “holding the bag”, however. It was able to obtain indemnification
from several of the vendors from whom it had purchased the products giving rise to Fendi’s claims, as
these vendors had warranted the authenticity of their merchandise.