- Judge Finds Trademark Counterfeiting In Case Involving Bath And Beauty Products
- May 26, 2004
- Law Firm: Reed Smith LLP - Pittsburgh Office
On April 21, 2004, following a two-day trial, a judge in a Virginia state court found a Canadian company liable for trademark counterfeiting under the federal Lanham Act, 15 U.S.C. §§ 1051 et seq. The case is Hunter Amenities International, Ltd. v. Dorothy Prentice Aromatherapy, Inc., Chancery No. 174063 (Circuit Court of Fairfax County, Virginia). Reed Smith LLP represented the trademark owner, Dorothy Prentice Aromatherapy, Inc. ("DPA").
Hunter Amenities International, Ltd. ("Hunter"), a Canadian manufacturer of bath and beauty amenities, was a licensee of DPA's "Dorothy Prentice Aromatherapy" and "Sweet Sea Grass" trademarks. For nearly two years, Hunter manufactured and sold bath amenities under DPA's trademarks to luxury hotels throughout North America, including the United States. As part of the license, Hunter was obligated to pay a royalty to DPA on all sales. In the Summer of 2001, DPA terminated Hunter's trademark license because of performance issues. At the same time, Hunter accused DPA of failing to pay Hunter for certain amounts allegedly owed by DPA to Hunter. Although DPA expressly terminated Hunter's license, Hunter continued to sell products under DPA's trademarks in order to "recoup" amounts Hunter claimed were owed to it by DPA. Because Hunter was no longer receiving genuine "fragrance" from DPA for use in products following termination of the license, Hunter tried to copy the fragrance and use it in products sold under the original DPA trademarks. Hunter never informed its customers that they were purchasing counterfeit products under the DPA label.
While Hunter continued to use DPA's trademarks without authorization, Hunter also filed suit in Virginia to recover the amounts allegedly owed to Hunter by DPA. DPA asserted a counterclaim against Hunter for, among other things, trademark infringement under the Lanham Act.
After finding that it had jurisdiction to hear a federal Lanham Act claim, the Court determined that Hunter had infringed DPA's trademarks following termination of the license. The Court rejected Hunter's argument that its infringement was justified as a means to recover amounts owed to Hunter by DPA. The Court also found that Hunter had committed acts of trademark counterfeiting as defined in 15 U.S.C. § 1116(d), because the evidence showed that Hunter was selling counterfeit products under the genuine DPA label.
During the damages phase of the trial, the Court determined that DPA was entitled to a reasonable royalty on all sales occurring within the United States after termination of the license. The Court then trebled that amount under 15 U.S.C. § 1117(b), awarded DPA its attorney fees and costs, and entered a permanent injunction.