Fendi has prevailed in its long-running counterfeiting battle against Burlington Coat Factory Warehouse Corp. and said the off-price retailer this week paid it more than $10 million in an out-of-court settlement.
This story first appeared in the October 20, 2010 issue of WWD. Subscribe Today.
In February, a federal judge ordered Burlington Coat Factory to pay Fendi $4.7 million for violating a decades-old injunction barring the off-price giant from selling the luxury brand’s trademarked goods without permission.
On Tuesday, Fendi said U.S. Magistrate Judge Michael H. Dolinger recommended in August that Burlington Coat pay Fendi an additional $5.6 million in treble damages, attorneys fees and costs for willful counterfeiting.
The settlement puts to rest a dispute festering between Fendi and Burlington Coat since 1986 and leaves in place a permanent injunction against the sale of Fendi-branded products in Burlington Coat stores that has been in effect since 1987.
Michael Burke, Fendi’s chairman and chief executive officer, characterized the agreement as a victory in protecting consumers.
“Fendi takes all appropriate and necessary action to protect our customers against counterfeiting and infringement,” he said. “We also expect retailers to acknowledge and uphold their responsibility to verify their sources and to sell only authentic goods. It’s particularly reassuring that the district court made clear in its rulings in this case that the retailer is responsible for making sure that trademarked products sold to the public are authentic, and that the consequences when a retailer sells counterfeit goods are serious.” Burke held out hope that the eight-figure settlement with Burlington Coat would signal to other retailers to be “responsive” in addressing problems to avoid protracted litigation. Burke lamented that such procedures are often protracted — and placed the blame squarely on retailers. “They challenge you: They tell you they fell off a truck,” he told WWD. “I can assure you, boxes of Fendi handbags do not fall off trucks.”
Burlington Coat had originally said it would appeal the February judgment by District Judge Leonard B. Sand.
In 2004, Fendi sent a cease-and-desist letter to Burlington Coat having discovered the sale of Fendi leather goods it deemed counterfeit.
Fendi North America Inc., the brand’s U.S. unit, went further and filed an infringement lawsuit in 2006 accusing Burlington Coat of continuing to sell counterfeit handbags. Judge Sand in Manhattan on Feb. 8 granted Fendi’s motion for summary judgment in the latest case. Fendi has been vigilant in battling counterfeit products sold at U.S. retailers and their suppliers. In June, Fendi won a $2.5 million settlement with Retail Ventures Inc. and its former Filene’s Basement subsidiary in bankruptcy. In April, the brand settled a counterfeiting lawsuit against Big M Inc., the owner-operator of the Annie Sez nameplate, warning that if a retailer doesn’t purchase directly from the Italian luxury firm, there is a risk the goods are fakes. Fendi sued Big M in 2006 in Manhattan federal court, alleging Annie Sez was selling counterfeit Fendi-branded handbags. Big M agreed to pay Fendi an undisclosed amount and a permanent injunction prohibits the retailer from buying or selling any Fendi-branded product in its stores without Fendi’s written permission.
And in 2007, Fendi and Sam’s Club, a division of Wal-Mart Stores Inc., settled a dispute that claimed the U.S. warehouse club sold counterfeit handbags and leather goods in five states. Under the sealed agreement, Sam’s Club agreed to pay the Italian luxury firm a confidential amount to settle the dispute and dismiss the action, which had charged the retailer with selling “significant quantities” of counterfeit items valued “in the millions of dollars.” Sam’s Club also offered its customers a full refund for any counterfeit Fendi bags, wallets and scarves they purchased.