MAKERS SUE LANDLORDS IN BOGUS GOODS CASE
Byline: Rosemary Feitelberg
NEW YORK — A group of activewear, sportswear and luxury goods manufacturers filed joint lawsuits Tuesday against three landlords whose tenants allegedly have been selling counterfeit goods in their stores in Manhattan’s Chinatown. The tenants were also named as defendants.
Polo Ralph Lauren, Nautica, Donna Karan, Tommy Hilfiger, Timberland, Guess, Sara Lee Corp., Rolex Watch USA, Louis Vuitton and Oakley took the action in the Southern District of New York’s U.S. District Court.
Each party is seeking statutory damages of up to $1 million from Stereo-Stereo, a store at 320 Canal Street, and its landlord, Trans World Equities of Manhattan; China & Japan Gift at 24 Mott Street and its landlord, Luen Hop Realty of Philadelphia, and Canal Mall at 271 Canal Street and its landlord, Lay Fung Realty Corp of Manhattan.
Armed with court orders, officials from the 10 manufacturers and private investigators have seized over the past two years a total of $1.5 million worth of counterfeit T-shirts, sweatshirts, shorts, jackets, jeans, vests, bags, hats, watches and sunglasses at the three stores, said Brian Brokate, a partner at Gibney, Anthony & Flaherty, the Manhattan law firm that filed the lawsuits on behalf of the manufacturers.
After complaints were served to the retailers and landlords, investigators from Holmes Hi-Tech, the Manhattan firm hired by the manufacturers, continued to purchase knockoffs of each of the respective brands at the three stores, Brokate said.
“Seizures by themselves clearly don’t work. As quickly as we take the counterfeit merchandise, they replace it,” said Lee Sporn, general counsel for Polo Ralph Lauren. “The only way to get counterfeiters is to get them out of the places they do it.”
Each landlord was notified at least three times of the tenant’s illegal actions, but failed to take action within three months, Brokate said.
Executives at Trans World Equities and China & Japan Gift declined to comment. Executives at the other firms could not be reached.
Lay Fung Realty was served its complaint Tuesday. Trans World Equities and Luen Hop Realty were served with complaints Wednesday. Once complaints are served, each party has 20 days to respond.
Thanks to an amendment made in July to the Lanham Act, a federal law outlining trademark rights, trademark holders can now seek statutory damages of up to $1 million against counterfeiters. If the counterfeiters fail to comply, their landlords can be held liable for up to $1 million. Previously, trademark holders could seek damages only for proven losses and legal fees.
In the past, the difficulty in finding counterfeiters’ business records and assets restricted the ability of trademark holders to seek damages, Sporn said.
“If we could prove damages, counterfeiters often took the attitude of, ‘Collect it, if you can,”‘ he said. “With the new measure for damages, it’s worthwhile for us to go after the landlord.”
With their new legal ammunition, manufacturers plan to go after landlords in force, Brokate said.
Pooling resources to fight counterfeiting, a practice initiated earlier this year, is highly effective, according to Steven Gursky, legal counsel for Tommy Hilfiger and Nautica, who was instrumental in organizing the group.
“We have much more impact with 10 of the hottest companies,” he said.
Gursky, Sporn and Sherry Jetter, assistant general counsel and director of intellectual property for the Donna Karan Co., who make up the anti-counterfeiting team’s steering committee, emphasized the extent of the problem.
In the past 18 months, 250,000 units of counterfeit goods — with a $2.5 million street value — have been seized in a five-block radius in Chinatown, they said.