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LVMH Notches Victory In Counterfeiting Case

NEW YORK — LVMH Moët Hennessy Louis Vuitton is finding success in its campaign to bring legal action against Chinatown landlords allowing counterfeit goods to be sold out of their properties.<BR><BR>Richard Carroll, the owner of seven Canal...

NEW YORK — LVMH Moët Hennessy Louis Vuitton is finding success in its campaign to bring legal action against Chinatown landlords allowing counterfeit goods to be sold out of their properties.

Richard Carroll, the owner of seven Canal Street properties, agreed to the terms of a preliminary injunction that LVMH is lauding as a “breakthrough” in its counterfeit battle.

According to the terms of the injunction issued by Manhattan federal court Judge Thomas Griesa on Tuesday, Carroll will be required to begin eviction proceedings against the tenants at 310, 336, 338, 340 and 386 Canal Street. At each of the seven Canal Street locations the landlord has agreed to post signs “in a highly visible and public location” warning customers that the retailer is not an authorized Louis Vuitton dealer, and that the purchase of counterfeits may result in legal action. The signs will be posted both inside and outside the properties.

Carroll also will be responsible for picking up half the cost of a monitor, who will make weekly “warrantless searches of each of the properties” for a one-year period.

Steven Kimelman, a partner with Arent Fox who is representing LVMH, said the monitor will likely be a former law enforcement official with the right to search both public and nonpublic areas of the building. “Most monitors can only go into public areas, but it’s in those private areas where you’re going to find things,” Kimelman said.

The injunction also calls for a new rider to be placed in future leases prohibiting the sale of counterfeit goods, an addition that will make it easier for landlords to expel tenants, said Kimelman.

“This is not the last action this company is going to bring against a landlord,” said Kimelman. “We believe this will be precedent-setting. Once you can have one court order and a landlord agreeing to the terms, other landlords will understand that the tide is changing.”

Steven Gursky, an intellectual property lawyer and partner with Dreier LLP, and who is not a part of this case, said that getting a landlord to agree to the terms was a solid victory for LVMH. However, Gursky noted that because the landlord consented to the terms of the injunction it was less likely to establish precedent for future cases.

“It’s a terrific result, but the fact is the judge did not reach that conclusion without the defendant agreeing to it,” said Gursky.

LVMH filed the original complaint on March 30, alleging violations on 11 counts, including trademark counterfeiting, contributory and vicarious trademark counterfeiting and false designation of origin. The complaint also included eight pages devoted to a breakdown of the more than 8,000 LVMH branded goods seized from the locations.