Presented by the Technology, Media and Intellectual Property Litigation Practice Group

IP Claims Quarterly

December 4, 2017

Edited by David J. Shannon, Esq.

Despite the Smell, No Counterfeiting Found in Perfume Trademark Infringement Case

A New York federal judge recently found in favor of Coty, Inc., the producer of high-quality perfumes associated with Calvin Klein, Vera Wang and Lady Gaga, against Excell Brands, a well-known copycat fragrance company. While the court concluded that Excell's knock-off fragrances infringed on Coty's trademarks, the court—unfortunately—did not find the company liable for counterfeiting. Therefore, Coty was entitled only to injunctive relief and Excell's profits on the products at issue. Coty could not recover enhanced monetary relief. The court also denied the company's claims for attorney fees and prejudgment interest.

Excell Brands had been creating and selling knock-off fragrances, including Eternity and Serenity by Calvin Klein. The bottles and packaging were designed to mimic the famous trademarks. The court found that Excell's entire business model was based on copying Coty's distinctive and well-known trademarks. In many instances, Excell used the phrase "Our Version Of" the plaintiff's fragrances on the copycat brand packaging.

Despite these facts, the court did not find actual counterfeiting. Therefore, no award of enhanced damages was allowed. The court also did not consider the matter "exceptional," so Coty could not recover its attorney fees or prejudgment interest. The court's decision demonstrates the high bar a plaintiff must overcome to be awarded enhanced damages and attorney fees.

The Lanham Act provides that a court can award reasonable attorney fees and prejudgment interest to a prevailing party in "exceptional" cases, which have been defined to involve fraud, bad faith or willfulness. However, the mere finding of bad faith does not automatically entitle a party to attorney fees. This District Court, in fact, noted that courts routinely decline to award attorney fees in cases involving willful infringement.

Defendants routinely receive demands in trademark infringement matters that include potential attorney fees, interest and enhanced damages. This case is an excellent example of the courts' reluctance—even in an almost airtight infringement matter—to award these type of damages unless truly "exceptional" circumstances are found.

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