NEW YORK — Gucci America Inc. and Compagnie Financière Richemont brands Chloé and Alfred Dunhill are squaring off in federal court with one of China’s state-owned banks over a multimillion-dollar Internet counterfeiting judgment.
This story first appeared in the June 4, 2009 issue of WWD. Subscribe Today.
Despite a court order, the Bank of China has not produced documents related to accounts held by counterfeiter Kelvin Cho, according to legal papers filed Tuesday in Manhattan.
Gucci, Chloé and Alfred Dunhill are seeking a contempt order and $4 million in damages from the bank.
An attorney for the bank did not return a call seeking comment.
The legal maneuvering stems from a 2007 infringement lawsuit in which the luxury brands alleged that Cho, a native of Malaysia, sold counterfeit Gucci, Chloé and Alfred Dunhill handbags, belts and watches on a handful of Web sites with names such as Myreplicahandbag.com.
Customers wired payments to Cho’s Bank of China account in the U.S., which the bank then transferred to his Chinese account, according to court documents. Between May 2004 and August 2007, Cho deposited about $850,000 into the foreign account, the court papers said.
In March 2007, U.S. District Court Judge Harold Baer in Manhattan issued a temporary restraining order requiring the bank to freeze Cho’s account and hand over related documents. A year later, Judge John G. Koeltl entered a $4.3 million judgment against Cho for trademark infringement.
Gucci, Chloé and Alfred Dunhill said Cho still owes $4 million.
Attorneys for the brands argued that after the judgment they discovered Bank of China had permitted Cho to drain his account. They asked Koeltl to hold the bank in contempt of court in July 2008, but in December the parties reached an agreement requiring the bank to produce the records and pay a settlement of $190,952.
However, this week the brands again asked the court to hold the bank in contempt for failing to comply with “nearly every condition of the settlement,” including payment.
In a memo related to the new motion, attorneys accused Bank of China of continuing to refuse to provide Cho’s complete account records. Instead, they said they received “an entirely useless list of figures that convey no useful information about defendant Cho’s business or the location of the assets that passed through the BOC accounts.”
In addition to the contempt order, Gucci and Richemont are seeking $4 million in compensatory damages and an order requiring the bank to pay a daily fine until it complies with all terms of the settlement.