IP Law Daily Blatant infringement of licensee's marks supported treble damages under Lanham Act
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Friday, June 7, 2019

Blatant infringement of licensee's marks supported treble damages under Lanham Act

By Thomas K. Lauletta, J.D.

The defendants' wrongful and intentional use of marks identical to the plaintiff's registered marks, and its use of confusingly similar Internet domain names represented violations of the Lanham Act justifying imposition of treble damages and a permanent injunction.

Plaintiff La Michoacana Natural, LLC, was entitled to treble damages under the Lanham Act for a competing ice cream business’ infringing use of its trademarks, the federal district court in Charlotte has decided. La Michoacana owns and operates at least three ice cream parlors in North Carolina, and owns nine North Carolina trademark registrations in connection with these businesses. The defendants also owned an ice cream store in North Carolina, and sold ice cream products in flea markets, using plaintiff's trademarks and promoting his business through deceptively similar internet domain names. The plaintiff's complaint sought summary judgment, based on asserted claims under the Lanham Act for: trademark infringement; unfair competition and false designation of origin; federal trademark dilution; and cyberpiracy (causes of action (COAs) 1-4). Cause of action 6 alleged statutory trademark infringement under North Carolina law. A district court in Charlotte, North Carolina, held in favor of the plaintiff on all of these counts, and awarded treble damages and costs under the Lanham act (La Michoacana Natural, LLC v. Maestre, June 6, 2019, Conrad, R.).

The plaintiff had obtained the license for use of the La Michoacana trademark, and an Indian girl doll design mark, from PRODUCTOS LACTEOS TOCUMB, S.A. de C.V. ("PROLACTO"), a Mexican Corporation. PROLACTO is owned by direct family members of plaintiff's founding/managing member, who with their predecessors, have used the LA MICHOACANA and Indian girl doll design marks since 1940 in Mexico. The plaintiff has used these licensed marks in North Carolina since 2014.

Lanham Act claims (causes of action 1-4). The court noted that Luis Maestre, Adriana Teran, and La Linda Michoacana ("defendants") repeatedly evaded discovery motions and failed to comply with its orders. Accordingly, it adopted the plaintiff's submission of material facts as the undisputed material facts of the case. Based on these facts, which the defendants did not contest, the court held that the defendants violated Lanham Act provisions relating to trademark infringement under 15 U.S.C. §1114; unfair competition and false designation under 15 U.S.C. §1125(a); trademark dilution under 15 U.S.C. §1125(c); in addition to cybersquatting violating the Anticybersquatting Consumer Protection Act under 15 U.S.C. §1125(d)(1).

The Court supported its holdings by the fact that the defendants infringed on the plaintiff's registered trademarks with the intent and effect of causing damage and dilution to these marks. That the public was likely to be confused could be gleaned from the defendants' display of the plaintiff's trademarks at the defendants' ice cream store in Concord, North Carolina, and from their online use of deceptive domain names marketing the defendants' products worldwide.

The court noted the particular egregious acts of the defendants relating to the use of deceptively similar domain names, which included publicly listing one of these domain names for sale for $85,000, and verbally threatening to sell it to "a man in Panama for $40,000."

Monetary remedies under the Lanham Act. The court held a disgorgement of the defendants' profits under the Lanham Act was appropriate because the defendants: (1) acted in bad faith and intent and effect of palming off its infringing goods and services; (2) deceived the public and diverted sales from the plaintiff to defendants' competing business; (3) intentionally ransomed valuable domain names; (4) steadfastly failed to comply with orders of the court; (5) registered additional infringing domain names; and (6) had taken other intentional and unlawful acts during the pendency of this proceeding.

Disputing the plaintiff's computation of the defendants' profits from 2015 through 2017 as $534,958, the court computed the actual figure to be $62,616. Considering the defendant's history of noncompliance with discovery requests and the court's orders, and the willfulness of the defendants' actions, the court awarded treble the damages for a total of $187,848. The court also awarded court costs, and took the plaintiff's request for attorneys' fees under advisement. Although plaintiff could have recovered additional damages under its cybersquatting claim, the court declined to do so, considering the treble damage award to be just and sufficient.

North Carolina UDTPA claim. The court concluded that the defendants' actions warranted liability under North Carolina's UDTPA, N.C. Gen. Stat. §75-1.1 et seq., which requires proof that (1) the defendant committed an unfair or deceptive act or practice, (2) in or affecting commerce and (3) that the plaintiff was injured as a result. Because the court had already awarded treble damages under the Lanham Act, it declined to award additional damages under North Carolina's UDTPA.

Injunctive relief. In addition to the granting a preliminary injunction against the defendants on June 1, 2018, the court now granted a broad permanent injunction against the defendants. This injunction prohibited them from using the plaintiff's marks for commercial purposes, registering or using any domain names containing the terms "la," mich," and/or "cana", and requiring the defendants to transfer the deceptively similar domain names to the plaintiff.

Remaining claims. Because the plaintiff had stipulated that the court could dismiss its remaining claims if it won its Lanham Act claims, the court ordered the plaintiff to file a Stipulation of Dismissal to the remaining claims.

This case is No. 3:17-cv-00727-RJC-DCK.

Attorneys: Stephen Lee Anderson (Anderson & Associates) and Albert P. Allan (Allan Law Firm, PLLC) for La Michoacana Natural, LLC. Luis Maestre d/b/a La Michoacana d/b/a La Linda Michoacana, pro se. Adriana Teran d/b/a La Michoacana d/b/a La Linda Michoacana, pro se.

Companies: La Michoacana d/b/a La Linda Michoacana

MainStory: TopStory Trademark NorthCarolinaNews

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