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NEW YORK — Gucci America Inc. reached a settlement with a retailer renting and selling knockoff Gucci handbags through its Web site.

According to an order of dismissal filed by judge Victor Marrero of the U.S. District Court, Southern District of New York, on Oct. 26, Gucci and Hollywood, Fla.-based Bag Borrow or Steal Inc. reached a settlement agreement on Oct. 6. Also named in the dismissal were Bag Borrow or Steal executive officers Gregory Pippo and Lloyd Lapidus.

Details of the settlement were not available and both parties declined to comment on the matter.

According to Gucci’s original complaint, filed Sept. 24, Bag Borrow or Steal allows subscribers to its Web site, Bagborroworsteal.com, to rent designer handbags for a monthly fee.

Background information in the complaint said a Gucci employee paid $99.95 to enroll in the company’s “Diva Membership,” the company’s highest subscriber level, on July 28, 2004. Coincidentally, WWD had profiled Bagborroworsteal.com in its Fashion Scoops column a week earlier in the July 21 issue.

According to the company’s site, diva-level members have access to the most expensive bags, as well as access to any of its two lower-priced collections. The employee ordered a Gucci bag that upon delivery proved to be a counterfeit.

Gucci sought redress on eight counts, including trademark counterfeiting, trademark infringement and unfair trade practices. The luxury giant also claimed to have sustained damages in excess of $1 million. The company asked for a permanent injunction and an unspecified amount in damages.

The case marks the second such settlement Gucci has reached with an Internet retailer this month. Gucci filed an identical eight-count indictment on July 30 against a man named Frank Mirable who it claimed was selling counterfeit Gucci handbags on eBay. Again, Gucci claimed it had sustained damages of more than $1 million because of the activity. Judge George B. Daniels issued an order of dismissal on Oct. 4 after being informed of the settlement.

This story first appeared in the October 29, 2004 issue of WWD.  Subscribe Today.