Lorillard Tobacco Co. v. Elston Self Serv. Wholesale Grocs., Inc., No. 03 C 4753, Slip Op. (N.D. Ill. Jun. 9, 2009) (Gottschall, J.).
Judge Gottschall granted in part and denied in part defendants’ motion for summary judgment regarding plaintiff’s Deceptive Trade Practices Act and fraud* claims regarding sales of recirculated Newport cigarettes. Plaintiff claimed that defendants purchased cigarettes from retailers to take advantage of plaintiff’s discount program and resold those recirculated cigarettes to other entities, sometimes recurring a second relate for those purchases. Plaintiff further alleged that some of the recirculated cigarettes were old and stale. But the Court held that the accrued recirculation and sale of record that cigarettes could not make a Deceptive Practices Act claim because of the likelihood of confusion requirement. Like in the trademark law, likelihood of confusion as to origin. But plaintiff did not allege that there was any common confusion regarding that plaintiff was the source of the cigarettes. Confusion as to whether the cigarettes were first or second hand was irrelevant.
* This post does not address the fraud claims.

Continue Reading Likelihood of Confusion Same for Deceptive Trade Practices & Trademarks

Lorillard Tobacco Co. v. Elston Self Service Wholesale Groceries, Inc., No. 03 C 4753, Slip Op. (N.D. Ill. May 13, 2008) (Ashman, Mag. J.).
Judge Ashman granted in part plaintiff Lorillard’s motion to strike defendant Elston’s expert report. Lorillard alleged that Elston, in violation of the Lanham Act and state law, knowingly bought and sold counterfeit Newport cigarettes. Elston offered an expert to opine on three general subjects: (1) customs and practices in the cigarette industry; (2) Elston’s cigarette purchasing history; and (3) whether the prices of the allegedly counterfeit cigarettes would have made it obvious to Elston that the cigarettes were counterfeit.
The Court held that the expert’s seven years in the cigarette industry and subsequent consulting were sufficient to qualifying him as an expert in the custom and practice of the industry. But the Court struck the remainder of the expert’s opinions. His opinions regarding Elston’s purchasing history were based solely on produced documents. And the jury could glean the same information from its review of the documents. The expert’s opinions regarding Elston’s subjective reaction to the price difference were struck because they were beyond both the expert’s expertise and his personal knowledge.

Continue Reading Opinions Beyond Expert’s Expertise Struck

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.

Continue Reading Counterfeiting Statutory Damages are up to $1M/Trademark

Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 0844, 2008 WL 954161 (N.D. Ill. Apr. 8, 2008) (Cole, Mag. J.).
Judge Cole denied plaintiff’s motion for inspection and seizure of assets in its trademark counterfeiting case. The Court previously entered judgment for plaintiff – click here for more about this case in the Blog’s archives. Plaintiff brought this motion seeking to identify and seize cash, checks and other financial instruments to satisfy the judgment. The Court held that the motion essentially sought a search warrant directed by plaintiff and utilizing Federal Marshals:
The reality is that the motion is tantamount to a request for a search warrant for Lorillard to enter and search the home of Ray and Sandra Hazemi and the business premises of Montrose Wholesale Candies and Sundries, Inc. (which is owned by them) and for permission to seize any cash, checks or other negotiable instruments belonging to the Hazemis and Montrose and to seize or at least copy all of their financial and accounting records. Nothing in the Motion, itself, suggests that the search and seizure will be accomplished by anyone other than Lorillard. It is not until one looks at the Proposed Order granting the motion that there is even a motion of United States Marshals. But even then, it is Lorillard, through its counsel of record, who is to carry out the search and seizure. The Marshals are merely to accompany Lorillard.
The Court held that the Federal Rules of Civil Procedure did not authorize search warrants. The Court further held that the request was not like a seizure of counterfeit goods, which was authorized by 15 U.S.C. § 1116(d)(1)(A), because it sought a post-judgment search to satisfy a judgment.

Continue Reading Federal Rules Do Not Authorize Civil Search and Seizure

Capitol Indemnity Corp. v. Elston Self Serv. Wholesale Grocs., Inc., No. 04 C 6536, 2008 WL 696919 (N.D. Ill. Mar. 13, 2008) (Pallmeyer, J.).
Judge Pallmeyer held that the advertising injury claim in plaintiff Capitol Indemnity’s (“CI”) insurance policy required that it defend defendants the “Elston Grocery” defendants in the underlying trademark infringement, unfair competition and Illinois Deceptive Trade Practices Act (“IDTPA”) claims. In the underlying litigation, Lorillard Tobacco accused Elston Grocery of selling counterfeit Newport cigarettes using Newport cigarette advertisements.
The advertising injury clause covered infringement of “copyright, title, or slogan” and “[m]isappropriation of advertising ideas.” The Court held that “title” does not mean just the title of a work, but also encompasses, among other things, trademarks and names. CI, therefore, had a duty to defend Elston Grocery against Lorillard’s trademark infringement claims. A duty to defend was also created by the trademark infringement claims because they accused Elston Grocery of misappropriating Lorillard’s advertising ideas – its trademarks and advertisements.
CI argued that there was an exclusion for allegedly intentional acts. But the Court held the exclusion did not apply, even though Lorillard pled intent, because intent was not required for trademark infringement.
Additionally, it did not matter that the policy covered only compensatory damages. Lorillard sought punitive damages, but they would only be awarded if compensatory damages were awarded. So, the punitive damages exclusion did not alter CI’s duty to defend.
Finally, the Court declined to rule on indemnity because Lorillard’s claims had not been finally resolved. An indemnity ruling regarding an ongoing case was inappropriate because it would be an advisory opinion.

Continue Reading Advertising Injury Insurance Policy Covers Trademark Claims

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.

Continue Reading $2.5M Statutory Damages Award Set Without Hearing

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.

Continue Reading Fee Petitions Must be Detailed and Supported