adidas awarded significant amount of damages in counterfeit sunglasses case

The Athens Single-Member First Instance Civil Court (Community Trademark Court) has upheld an action filed by adidas AG against an importing/wholesale trading company and its managing director on the grounds of trademark infringement and unfair competition (Judgment 555/2014, January 28 2014).

On February 21 2012 the Financial Crime Department of the Athens Police raided the defendants’ warehouse, located in the greater Athens area. Among other things, the police found and seized 57,082 pairs of sunglasses bearing imitations of several famous marks, namely CHRISTIAN DIOR, ADIDAS, NIKE, VERSACE, GUCCI, CHANEL and ARMANI. Among the seized products, 1,800 pairs of sunglasses bore slavish imitations of the word mark ADIDAS. In addition, the police found and seized two invoices pertaining to the supply to the defendants by another wholesale trader of 255,000 pairs of sunglasses, described as "stock items", for the total price of €12,750 (namely €0.05 per item). Shortly afterwards, the Tax Police inspected the two invoices seized and found them to be - from a tax law perspective - fake.   

In parallel with the ex officio criminal proceedings, adidas filed a civil lawsuit seeking, among other things, a permanent injunction and moral damages. In response, the defendants acknowledged the counterfeit status of the seized products and that the seized sunglasses were the unsold part of a larger quantity of goods shipped to them under the two seized invoices. However, the defendants focused their defense mainly on their lack of malicious intent. Among others, they argued that:

1. they had never ordered counterfeit sunglasses - let alone the seized ones - from their supplier; they had solely ordered "no name/stock" eyewear; 
2. they were not aware of the counterfeit character of the seized sunglasses when they received them;
3. they had never sold a single pair of counterfeit sunglasses to their customers; and
4. they had no intention of distributing the seized products; they merely intended to return the counterfeit sunglasses to the supplier and claim a refund for the corresponding purchase value.

The court dismissed all of the defendants' allegations. In particular, the court found that:

1. prior to the raid, the defendants had already distributed a significant part of the counterfeit adidas sunglasses to their retail customers;
2. there was no doubt that the defendants had knowingly ordered, received, stockpiled and distributed the counterfeit adidas sunglasses;  
3. the distribution by the defendants of counterfeit adidas sunglasses, whose quality and safety specifications were substantially lower than authentic sunglasses, “seriously jeopardised consumers’ health”; and
4. as a result of the defendants’ infringing activity, adidas’ reputation and goodwill among consumers had been harmed (moral damage).      

Among other things, the court:

1. permanently enjoined the defendants from importing, exporting, stockpiling, advertising, offering for sale, distributing and commercialising in any way sunglasses bearing adidas’ trademark and distinctive signs without adidas’ authorisation;
2. ordered the defendants to withdraw from circulation any counterfeit adidas sunglasses that they had distributed, and permitted adidas to destroy the withdrawn products at the expense of the defendants;
3. ordered the destruction of the seized adidas sunglasses at the expense of the defendants as soon as the pending criminal proceedings were concluded;
4. ruled that both defendants were liable to pay a monetary penalty of €10,000 per violation of any of the above orders, and that the second defendant was liable to imprisonment for a term of three months for each violation of any of the above orders;
5. ordered the defendants to jointly pay adidas the amount of €30,000 plus legal interest in compensation for adidas’ moral damage; and
6. allowed the publication, at the expense of the defendants, of a summary of the operative part of the judgment in two daily newspapers within two months of the delivery of final judgment in this case. 

The judgment is subject to appeal.

Manos K Markakis, Dontas Law, Luxembourg