Louis Vuitton bags significant damages award

The US District Court for the Southern District of New York has granted Louis Vuitton Malletier (LV), the famous French design firm and owner of the LOUIS VUITTON marks for luggage, handbags and accessories, an injunction and a $1.1 million damages award against counterfeiter Lushbags.com.

In 2002 LV introduced an updated toile monogram created by Marc Jacobs and Takashi Murakami. Between January 2003 and July 2003, LV spent almost $3.5 million promoting and advertising its collections with the new toile monogram. By February 2005 LV had sold over 71,000 handbags and accessories with the new monogram. Total sales reached over $40 million.

The infringement claims stemmed from Lushbags.com's sale of counterfeit LV handbags and wallets with the new toile monogram. Lushbags.com sold its products at 'www.lushbags.com' but also contracted with second defendant WhenU.com to place pop-up advertisements on LV's legitimate website. WhenU offered a software program whereby internet users were diverted from the websites they intended to visit to websites maintained by WhenU.com's advertisers. At the time the complaint was written, 30 million active personal desktop computers had WhenU.com's software.

When internet users with WhenU.com's software program accessed LV's website, they received pop-up advertisements for Lushbags.com. These pop-up advertisements appeared on the secure side of LV's website and contained LV's copyrighted photographs of its genuine products as well as LV's descriptions of the bags. Lushbags.com copied LV's photographs and descriptions directly from LV's website and did not use photographs of its own bags at its website. LV received numerous complaints from customers who bought Lushbags.com's counterfeit goods.

LV brought its infringement action against Lushbags.com and WhenU.com. WhenU.com was dismissed from the case with prejudice in 2005.

On November 15 2006 the US magistrate judge in the case filed a report and recommendation on an uncontested inquest into damages in the trademark and copyright infringement claims following Lushbags.com's default in the case. The District Court for the Southern District of New York accepted the magistrate's report and recommendation on January 26 2007.

LV requested that $11 million statutory damages be awarded for Lushbags.com's counterfeiting activities. Under the trademark statute, a plaintiff may elect for an award of statutory damages in a counterfeiting case. If the counterfeiting was wilful, the court can award up to $1 million per counterfeit mark per product sold or offered to be sold. LV based its request on the fact that Lushbags.com acted wilfully when it sold its 11 different types of bags.

In considering LV's request, the court looked to the Copyright Act because the trademark statute does not provide guidance for determining an appropriate statutory damages award. Under the Copyright Act, a court considers:

• the expenses saved and the profits reaped;
  
  
• the revenue lost by the plaintiff;
  
  
• the value of the copyright;
  
  
• the deterrent effect on others besides the defendant;
  
  
• whether the defendant's conduct was innocent or wilful;
  
  
• whether a defendant has cooperated in providing particular reasons to assess the value of the infringing material produced; and
  
  
• the potential for discouraging the defendant.

In determining the damage amount here, the court also looked at awards in prior counterfeiting cases and found that most courts awarded the statutory maximum of $1 million without multiplication, or issued per mark awards well below the individual maximum. The court recommended an award of $1.1 million, basing the recommendation on the above-listed factors and prior statutory awards in similar cases.

Leigh Ann Lindquist, Sughrue Mion PLLC, Washington DC