Strong whiff of counterfeiting found in bath and beauty products

In Hunter Amenities International Ltd v Dorothy Prentice Aromatherapy Inc (Chancery 174063), the Circuit Court of Fairfax County, Virginia has found Hunter Amenities International Ltd liable for trademark counterfeiting under the Lanham Act.

Hunter, a Canadian manufacturer of bath and beauty products, was a licensee of Dorothy Prentice Aromatherapy's (DPA) DOROTHY PRENTICE AROMATHERAPY and SWEET SEA GRASS trademarks. For nearly two years, Hunter manufactured and sold bath products under DPA's trademarks to luxury hotels throughout the United States and Canada. As part of the licence, Hunter was obligated to pay a royalty to DPA on all sales. In the Summer of 2001, DPA terminated Hunter's licence because of performance issues. Hunter continued to sell products under DPA's trademarks after the licence was terminated in order to recoup amounts it claimed were owed to it by DPA. Because Hunter was no longer receiving genuine fragrance from DPA for use in products following the termination of the licence, Hunter tried to copy it and use it in products sold under the original DPA trademarks. Hunter never informed its customers of this fact.

Hunter filed suit in Virginia to recover the amounts allegedly owed to it 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 Circuit Court of Fairfax County determined that Hunter had infringed DPA's trademarks following termination of the licence pursuant to 15 USC § 1051 et seq. The court rejected Hunter's argument that its infringement was justified as a means to recover amounts owed by DPA. The court also found that Hunter had committed acts of trademark counterfeiting pursuant to 15 USC § 1116(d) as it sold 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 licence. The court then trebled that amount under 15 USC § 1117(b), awarded DPA its attorney fees and costs, and entered a permanent injunction.

Matthew R Sheldon, Reed Smith Hall Dickler LLP, New York