Chicago IP Attorney & Lawyer : R. David Donoghue : Chicago IP Litigation Blog

Lorillard v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 4844, 2008 WL 1775512 (N.D. Ill. Apr. 17, 2008) (Aspen, J.).

Judge Aspen adopted Magistrate Judge Cole's Report and Recommendation, denying defendants' Fed. R. Civ. P. 59(e) motion to alter the Court's judgment against defendants – click here to read more about that Report and click here to read more about this case in the Blog's archives. The Court awarded plaintiff Lorillard $2.5M in statutory damages for defendants’ sales of counterfeit cigarettes using Lorillard's trademarks. Defendants objected to, among other things, a statutory damages award in excess of $1M. Defendants argued that 15 U.S.C. § 1117(c)(2) only allowed $1M in statutory damages per type of goods sold. Because this case only involved one type of goods, cigarettes, defendants argued statutory damages could not exceed $1M. But the Court held that the limitation was $1M per counterfeit mark per type of good. Because Lorillard alleged five counterfeit marks were used, the statutory damages limit was $5M. 

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For Your Ease Only, Inc. v. Calgon Carbon Corp., No. 02 C 7345, 2007 WL 3357631 (N.D. Ill. Nov. 13, 2007) (Andersen, J.).

Judge Andersen denied plaintiff’s motion for a turnover order regarding payments made by third party Home Shopping Network (“HSN”) to purchase defendants’ anti-tarnish jewelry boxes that infringe plaintiff’s patent. In June 2007, the Court entered a $2.1M default judgment against defendants Mark Schneider (“Schneider”) and Product Concepts Company (“PCC”). After the Court entered the judgment, Schneider transferred his supply of the infringing jewelry boxes from PCC, which he controlled, to Sevenquest, which Schneider also controlled. The Court held that this transfer evidenced a sufficient number of the “badges of fraud” set forth in 740 ILCS 160/5(b) to be presumed fraudulent. Among others, the transfer was to Schneider (an insider), Schneider retained control of the products after the transfer, Schneider concealed the transfer, Schneider was sued before he made the transfer, the transfer constituted substantially all of the assets and Schneider moved to Costa Rica after making the transfer.

But the Court held that Sevenquest’s later transfer of the jewelry boxes to Anewco, who sold the boxes to HSN, did not evidence sufficient badges of fraud. Anewco, owned by Schneider’s brother-in-law Douglas Fournier (“Fournier”), received no immediate consideration for the jewelry boxes. But Fournier testified that he had an oral contract with Schneider granting Fournier control of the jewelry box business in three years, and that Fournier performed substantial sourcing and sales work based upon the oral agreement. Because Sevenquest’s transfer of the jewelry boxes to Anewco appeared to be in good faith, the Court did not void the transfer to Anewco. And because HSN, therefore, held no assets of defendants, the Court denied the turnover order. 

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Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 4844, 2007 WL 2580491 (N.D. Ill. Sep. 10, 2007) (Cole, Mag. J.).

Judge Cole recommended awarding plaintiff $2.5M in statutory damages. The Court had previously entered a Fed. R. Civ. P. 37(b) default judgment against defendants for sales of counterfeit Newport cigarettes in violation of the Lanham Act.* The Court recommended that a damages hearing was not necessary because of defendants’ four year pattern of avoiding discovery obligations leading to a default judgment, including failing to produce damages documents. Having actively avoided producing the information for four years, defendants were not now entitled to seek opportunities to present evidence in their defense. Furthermore, the Court reported that a $2.5 M award was reasonable. $2.5M was half of plaintiff’s estimate of defendants’ infringing sales and it was half of the potential $1M statutory award for each of the five marks defendants infringed.

* For more on this case, see the Blog’s archives.

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Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 03 C 4844, Slip Op. (N.D. Ill. Jul. 27, 2007) (Cole, J.).*

Judge Cole recommended granting plaintiff Lorillard Tobacco’s (“Lorillard”) petition for attorneys fees, but reduced the requested fees by about $80,000. Lorillard received a default judgment against defendants in 2006 and, as a result, brought this petition seeking its fees and costs. The Court’s opinion is an excellent guide for anyone preparing a fee petition. The Court refused to consider Lorillard’s costs because although Lorillard submitted a list of costs, it did not total the costs or discuss them in its petition and supporting declaration. Next, the Court accepted most of the costs for the four attorneys whose billing rates were explained in the supporting declaration, but denies any fees for the other nineteen people whose fees were not explained in the declaration. The Court notes that these nineteen people could be partners, associates or paralegals, but the Court cannot assess the reasonableness of their rates or billed activities without knowing their roles. And even for the four, the Court notes that it would have preferred some explanation of each attorney’s experience in past Lanham Act cases, in order to judge whether the attorneys’ billing rates were commensurate with their experience. 

Finally, the court refused a subset of the fees for the four attorneys that were inadequately described, unnecessarily billed by multiple attorneys or clerical in nature. For example, the Court disallowed two eighteen minute bills for attorneys reviewing a one-sentence minute order changing the date of a status hearing.

Practice tip: Generate thorough bills and have someone with perspective on a case do a sanity check to make sure your client is not being billed for unreasonable work or duplicative efforts. Also, when preparing a fee petition, make sure to support the rates and fees billed by all attorneys and paralegals with detailed affidavits.

*  You can read a copy of the opinion here.

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