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2nd
DISTRICT COURT OF APPEAL CASE NO. B234753Appeal from Superior Court Case No. BC460511
IN THE COURT OF APPEAL
OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION PENDING________________________________
TRE MILANO, LLC,
Appellant,
vs.
AMAZON.COM, INC., et al.
Respondents
__________________________________
Appeal from the Superior Court of California
County of Los Angeles, Central District, Department 17
The Honorable Richard E. Rico, presiding
__________________________________
APPELLANTS OPENING BRIEF__________________________________
TANTALO & ADLER LLPThomas J. Peistrup, SBN 213407
Michael S. Adler, SBN 190119
1901 Avenue of the Stars, Suite 1000Los Angeles, California 90067-6012
Tel: (310) 734-8695 | Fax: (310) 734-8696
Attorneys for Appellant Tre Milano, LLC
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2nd
DISTRICT COURT OF APPEAL CASE NO. B234753Appeal from Superior Court Case No. BC460511
IN THE COURT OF APPEAL
OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION PENDING________________________________
TRE MILANO, LLC,
Plaintiff and Appellant,
vs.
AMAZON.COM, INC., et al.
Defendants and Respondents
__________________________________
Appeal from the Superior Court of California
County of Los Angeles, Central District, Department 17
The Honorable Richard E. Rico, presiding
__________________________________
APPELLANTS OPENING BRIEF__________________________________
TANTALO & ADLER LLPThomas J. Peistrup, SBN 213407
Michael S. Adler, SBN 190119
1901 Avenue of the Stars, Suite 1000Los Angeles, California 90067-6012
Tel: (310) 734-8695 | Fax: (310) 734-8696
Attorneys for Appellant Tre Milano, LLC
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TABLE OF CONTENTS
I. INTRODUCTION .......................................................................................................... 1
II. STATEMENT OF APPEALABILITY & TIMELY APPEAL ................................... 7
III. STANDARD ON APPEAL ......................................................................................... 8
IV. BACKGROUND ..................................................................................................... 9
A. Tre Milano Sells a Highly Successful Line of Hair Appliances
under the Federally-Registered InStyler Trademark. ................................ 9
B. Amazon Claims to Have Three Sales Channels, All of which
Originate from an Amazon Product Page that Makes
Extensive Use of the InStyler Trademark. .............................................. 10
1. Amazon Direct Sales. ...................................................................... 12
2. Fulfilled by Amazon Sales. ......................................................... 12
3. Amazon Marketplace Third Party Sales. ........................................ 14
C. Amazon Fails to Appropriately Address Known Counterfeit
Goods Originating From Unverifiable Sources. ........................................ 15
D. A Consumer Was Burned by a Counterfeit InStyler Purchasedon Amazon.com Nearly Two Weeks After Tre Milano
Notified Amazon that the Seller was Selling Counterfeits. ....................... 17
E. Despite Actual Notice, Amazon Continues to List and Process
Sales of Counterfeit InStylers in each of its Sales Channels. ................. 19
1. Amazon Itself Has Sold Made Direct Sales of
Counterfeit InStylers. ...................................................................... 20
2. Fulfilled by Amazon Sales. ......................................................... 21
3. Amazon Marketplace Sales. ............................................................ 22
F. There Are Material Differences Between Amazon and eBay. ................... 24
G. Tre Milano is Suffering Irreparable Harm From Negative
Feedback in Which the Shortcomings of Counterfeit InStylers
are Attributed to the Genuine Product. ...................................................... 28
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1. Amazon Counterfeits Are of Inferior Quality, with a
High Fault Rate and an Unacceptable Risk of Injury to
Consumers. ...................................................................................... 28
2. Consumers Post Negative Reviews of the InStyler
Based on Poor Quality Fakes. ......................................................... 29
3. Counterfeit Amazon InStylers Deceive Even
Professional Reviewers. .................................................................. 31
V. THE TRIAL COURT ERRED IN FAILING TO ENJOIN AMAZON
FROM ASSISTING THE SALE OF FAKE INSTYLER
PRODUCTS .......................................................................................................... 32
A. Amazon Is Liable as a Direct Infringer Because Amazon
Itself Is Using the Registered InStyler Mark In Connection
With the Sale of Counterfeit Goods. .......................................................... 32
1. Any Person Who Uses a Mark In Connection With
Any Offering for Sale, Distribution, or
Advertising Infringes Regardless of Who Nominally
Makes the Sale. ............................................................................... 32
2. The Safe Harbor Provisions of the Lanham Act
Confirm That Liability Extends To Any Party Using
the Mark Even to Facilitate a Sale. ................................................. 35
3. Amazon Is Liable BecauseItIs Using the RegisteredInStyler Mark. .............................................................................. 38
4. The Lanham Act is a Strict Liability Statute as to
Counterfeit Goods. .......................................................................... 40
B. Even If Amazons Actions Were Evaluated Under a
Contributory Infringement Theory, Amazon Would Still Be
Liable Because It Was Required, But Failed, to Take
Reasonable Steps to Prevent Infringement. ............................................... 42
1. A Party Who Has Sufficient Knowledge of Possible
Infringement and Has the Ability to Control Such
Infringement May Be Held Contributorily Liable. ......................... 42
2. Amazon Is Contributorily Liable. ................................................... 45
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VI. THE BALANCE OF HARDSHIPS TILTS STRONGLY IN FAVOR
OF THE INJUNCTION. ....................................................................................... 50
A. Continued Sales of Counterfeits will Cause Tre Milano
Irreparable Harm. ............................................................................ 50
B. These Counterfeit Products Threaten the Consuming
Public At Large ............................................................................... 51
C. Amazon Has Not Identified Any Specific Harm that
Would Overcome the Interests in Favor of the
Injunction. ....................................................................................... 52
VII. CONCLUSION ........................................................................................................ 54
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TABLE OF AUTHORITIES\
Cases
Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174
F.3d 1036 (9th Cir. 1999) ......................................................................... 51
Century 21 Real Estate Corp. v. Century 21 Real Estate, Inc., 929 F.2d 827
(1st
Cir. 1991) ....................................................................................... 4, 40
Fendi Adele S.R.L. v. Filenes Basement, Inc., 696 F.Supp.2d 368
(S.D.N.Y. 2010) ....................................................................................... 54
Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th
Cir. 1996) 38, 43, 45
Getty Petroleum Corp. v. Aris Getty, Inc., 55 F.3d 718 (1st
Cir. 1995) ...... 35
GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199 (9th
Cir. 2000) ............ 50
Gucci America, Inc. v. Duty Free Apparel, Ltd., 286 F.Supp.2d 284
(S.D.N.Y. 2003) ....................................................................................... 41
Gucci America, Inc. v. Frontline Processing Corp., 721 F.Supp.2d 228
(S.D.N.Y. 2010) ................................................................................... 5, 43
Hard Rock Caf Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143
(7th
Cir. 1992) .............................................................................. 38, 40, 43
Huong Que, Inc. v. Luu, 150 Cal. App. 4th 400 (2007). ............................... 9
In re Charlisse C., 45 Cal. 4th 145 (2008) .................................................... 8
Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 102
S.Ct. 2182, 72 L.Ed2d 606 (1982) .................................................... 42, 45
Jay Bharat Developers, Inc. v. Minidis, 167 Cal.App.4th
444 (2008) ......... 50
Levi Strauss & Co. v. Shilon, 121 F.3d 1309 (9th
Cir. 1997) ...................... 34
Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980 (9th
Cir.
1999) .................................................................................................. 42, 45
Lorillard Tobacco Co. v. Amouris Grand Foods, Inc., 453 F.3d 377 (6th
Cir. 2006) ..................................................................................... 38, 40, 51
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Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., -- F.3d --, 2011 WL
4014320 (9th Cir. Sept. 9, 2011) ...................................................... passim
Miller Brewing Co. v. Carling OKeefe Breweries of Canada, Ltd., 452
F.Supp. 429 (W.D.N.Y. 1978) .......................................................... 34, 37
O'Connell v. Superior Court, 141 Cal.App.4th 1452 (2006) ........................ 8
Patsys Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209 (2nd
Cir. 2003)..... 53
Phillip Morris U.S.A. Inc. v. Shalabi, 352 F.Supp.2d 1067 (C.D.Cal 2004)
..................................................................................................... 40, 41, 52
Saxlehner v. Siegel-Cooper Co., 179 U.S. 42 (1900) .................................. 40
Sealy, Inc. v. Easy Living, Inc., 743 F.2d 1378 (9th
Cir. 1984) ................... 47
Tiffany (NJ) Inc. v. eBay, Inc., 576 F.Supp.2d 463 (S.D.N.Y. 2008) .. 25, 39,
48
Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93 (2nd
Cir. 2010) ................. passim
Tisch Hotels, Inc. v. Americana Inn, Inc., 350 F.2d 609 (7th
Cir. 1965) ..... 40
Wolfard Glassblowing Co. v. Vanbraght, 118 F.3d 1320 (9th
Cir. 1997) ... 53
Statutes
15 U.S.C. 1114(1) ...................................................................................... 37
15 U.S.C. 1114(1)(a) ................................................................... 1, 4, 33, 35
15 U.S.C. 1114(2) ...................................................................................... 35
15 U.S.C. 1114(2)(A) ................................................................................ 36
18 U.S.C. 2320 .......................................................................................... 51
Cal. Code Civ. Proc. 904.1(6) .................................................................... 8
Cal. Penal Code 350(a) (2) ........................................................................ 51
Louis Vuitton S.A. v. Spencer Handbags Corp, 597 F.Supp. 1186 (E.D.N.Y.
1984) ........................................................................................................ 51
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Other Authorities
4 McCarthy on Trademarks and Unfair Competition 25:10 (4th
ed. 2011)
................................................................................................................. 51
4 McCarthy on Trademarks and Unfair Competition 25:26 (4
th
ed. 2011)................................................................................................................. 34
Rules
Cal. Rule of Court 8.104(a) ........................................................................... 8
Cal. Rule of Court 8.204(d) ........................................................................... 2
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I. INTRODUCTIONTre Milano LLC, (Tre Milano) has sued Amazon for
marketing, advertising, storing, selling, and shipping counterfeit
InStyler hair irons (and Tre Milano has documented numerous such
(sales). Tre Milano hereby appeals from the trial courts denial of
preliminarily injunction precluding the sale of such counterfeits. Tre
Milano sought the preliminary injunction not only because the
counterfeit products threaten Tre Milanos hard-earned reputation for
quality (and they do), but as demonstrated by a fake InStyler from
Amazon that literally blew up in the hands of an unsuspecting
consumer these fake appliances also endanger the safety of the
consuming public.
Under the federal Lanham Act, Amazon is a direct infringer of
Tre Milanos federally-registered InStyler trademark because
Amazon itself actively uses Tre Milanos mark in connection with the
marking, advertising, sale and fulfillment of counterfeit InStyler hot
irons (InStylers). Federal law defines trademark infringement as
any unauthorized use of a registered trademark in connection with
the sale, offering for sale, distribution, oradvertising of any goods
or services. 15 U.S.C. 1114(1)(a) (emphasis added). Here, it is
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undisputed and indisputable that every single sale of an InStyler
through Amazon.com begins on the InStyler Product Page created
and maintained by Amazon. [1 JA 260-66].1
As the Court can see, the Amazon.com Product Page makes
extensive use of Tre Milanos registered InStyler trademark. While
(as explained more fully below) Amazon purports to maintain three
separate sales channels on its Amazon.com website,
2
1 For the Courts convenience, the Amazon.com InStyler Product
Page is attached to this brief as Exhibit 1. Cal. Rule of Court
8.204(d).
they all begin at
the Product Page where Amazonitselfuses the InStyler mark to
describe the products and direct consumers to its various sales
channels. Moreover, all three separate sales channels involve
Amazons use of the InStyler mark as part of Amazons actions in
processing payment for all sales made via Amazon.com.
2 Amazon describes its three nominally-separate sales channels as:
(1) direct sales by Amazon itself; (2) sales by Amazon
Marketplace sellers using Amazon's advertising and paymentprocessing services and Fulfilled by Amazon (i.e., warehoused
and shipped by Amazon in addition to being marketed and
processed by Amazon); and (3) sales by Amazon Marketplace
sellers using Amazon's advertising and payment processing
services that are shipped by the sellers themselves. [1 JA 65:3-28.]
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In other words, despite Amazons attempt to shift all
responsibility to third party sellers, the evidence clearly shows that
Amazonitselfis using the InStyler mark in connection with the
advertising, offering for sale, and distribution of counterfeit InStyler
products. This is true whether it is Amazons own sales or the sales
on Amazon.com for Amazon Marketplace sellers (out of which
Amazon gets a cut). As the user of the registered InStyler mark,
Amazon is therefore a direct infringer of Tre Milanos mark.3
Unfortunately, the court below erroneously reached the legal
conclusion that Amazon merely facilitated the sale of counterfeit
goods and therefore was not a direct infringer. [2 JA 458 (Appealed
Order).] In so reasoning, the court below apparently accepting
Amazon's claim that it does not actually sell the goods because it
does not take formal title to Amazon Marketplace sales.
This was clear reversible legal error because, as explained
above, the Lanham Act does not impose direct infringement liability
3In fact, while Amazons marketing and advertising of counterfeit
products alone constitute trademark infringement, Amazon goes
further: it also processes the sales, warehouses the products, and
ships them to its customers in its own direct Amazon channel and
Fulfilled by Amazon channel.
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only on the seller of an infringing product. 15 U.S.C. 1114(1)(a).
Instead, as even Amazon has acknowledged,4
The trial court additionally committed legal error when it ruled
that Amazon was not a contributory infringer. Under the Lanham
Act, a party is liable for contributory trademark infringement where:
(i) a direct infringer uses the goods or services of the defendant; (ii)
the defendant knows or has reason to know that such goods and
services are being used for infringement; and, (iii) the defendant has
the ability to control such infringement, but does not. Louis Vuitton
Malletier, S.A. v. Akanoc Solutions, Inc., -- F.3d --, 2011 WL 4014320
at *3 (9th Cir. Sept. 9, 2011).
the Lanham Act creates
a strict liability regime where anyuse of a registered mark in
connection with a counterfeit sale gives rise to liability, including uses
involving advertising or marketing. Id; see also Century 21 Real
Estate Corp. v. Century 21 Real Estate, Inc., 929 F.2d 827, 829 (1st
Cir. 1991). Because the undisputed facts show that Amazon uses the
mark in connection with advertising, marketing, offering for sale, and
distributing the counterfeit product, Amazon is strictly liable.
4 See Reporters Transcript (RT) 5:22-24.
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With respect to contributory infringement, the only issue in
dispute was the second prong Amazons knowledge. The trial court
concluded that a generalized knowledge of infringement is not
sufficient to establish contributory liability, it apparently assumed that
the only way for Tre Milano to satisfy that prong was to show willful
blindness. [Appealed Order, 2 JA 459 (citingTiffany (NJ) Inc. v.
eBay Inc., 600 F.3d 93, 110 (2nd
Cir. 2010) (Tiffany)).]
The trial court was clearly wrong. Willful blindness may be
one way but it is not the only way to establish that a defendant
knows or has reason to know that it is participating in the
advertising, marketing, sale, or distribution of infringing goods.5
Here, for example, there was no need to resort to the doctrine of
willful blindness because the undisputed evidence shows that Amazon
5 In fact, the Tiffany decision and others confirm that actual
knowledge of particularized listings is sufficient to establish
liability, regardless of whether there is also willful blindness.
Tiffany, 600 F.3d at 109;Hard Rock Caf Licensing Corp. v.
Concession Servs., Inc., 955 F.2d 1143, 1151 (7th
Cir. 1992)
(contributory liability will be found based on reason to knoweven if a party is not willfully blind); Gucci America, Inc. v.
Frontline Processing Corp., 721 F.Supp.2d 228, 249 (S.D.N.Y.
2010) (explaining that willful blindness is also sufficient in the
absence of particularized information about listings that likely
infringe).
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has actual knowledge with respect to the verysuppliers and sellers of
counterfeit InStylers about which Tre Milano has complained. The
evidence further shows that Amazon has regularly continued to
market, advertise, offer for sale, process sales, store, and ultimately
ship infringing products from its own warehouses for weeks and even
months after Tre Milano specifically identified particular suppliers
and sellers for Amazon.
Because of its legal error of misconstruing the standard for
contributory infringement, the trial court improperly likened
Amazons conduct to that of eBay. [Appealed Order, 2 JA at p. 459,
quotingTiffany, 600 F.3d at 110 for the proposition that eBay did
not ignore the information it was given about counterfeit sales on its
website.] However, the eBay case depended on two separate
findings: first, the eBay was not generally a willful infringer and
second, that eBay acted on specific information byautomatically
removing questionable products withintwenty-four hoursof any
objection. Tiffany, 600 F.3d at 99. In other words, eBay was not
liable for contributory infringement because it acted promptly when
put on notice. Id. Amazon, by contrast, is recalcitrant: Amazon takes
weeks or months to respond after it receives notice and in fact fails
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to respond at all in more than a quarter of the cases. Meanwhile,
Amazon continues to advertise and fulfill counterfeit sales despite
having knowledge of the counterfeit nature of the products.
Finally, although the trial court did not evaluate the balance of
hardships because of the legal errors noted above, the evidence clearly
establishes that the balance tilts in favor of the requested injunction.
On the one hand, Tre Milano has established that its reputation is
seriously threatened by sales of fake InStyler products from a source
that bills itself as reputable. Tre Milano has also established that the
consuming public is at risk from such counterfeit products, such as the
exploding fake InStyler that Amazon processed almost two weeks
after Tre Milano provided specific notice that the particular Amazon
Marketplace seller at issue was trafficking in counterfeit product. [1
JA 99-100, 90.] On the other hand, Amazon has presented no viable
reason why it should be allowed to continue marketing, advertising,
offering for sale, selling, storing, or shipping counterfeit InStyler
products.
II. STATEMENT OF APPEALABILITY &TIMELY APPEAL
This appeal arises from the trial courts July 20, 2011 Order
denying Tre Milanos motion for preliminary injunction. An order
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denying a motion for preliminary injunction is immediately
appealable. Cal. Code Civ. Proc. 904.1(6).
Tre Milanos Notice of Appeal was filed on July 26, 2011 (six
days after issuance of the subject order), and therefore is clearly
timely. Cal. Rule of Court 8.104(a).
III. STANDARD ON APPEALDenial of a request for preliminary injunction is generally
reviewed under an abuse of discretion standard. O'Connell v.
Superior Court, 141 Cal.App.4th 1452, 1463 (2006) (citations
omitted). However, the Court of Appeal reviews the trial courts
application of law de novo, and a material error of law necessarily
constitutes an abuse of discretion. In re Charlisse C., 45 Cal. 4th 145,
159 (2008). In addition, while the trial courts underlying factual
determinations are typically reviewed for substantial evidence. [t]o
the extent that the trial court's assessment of likelihood of success on
the merits depends on legal rather than factual questions, [appellate]
review is de novo. O'Connell, 141 Cal.App.4th at 1463 (2006)
(citations omitted).
This appeal concerns a ruling wholly dependent upon the trial
courts misapplication of applicable law, and hence is subject to this
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Courts independent, de novo, appellate review. Huong Que, Inc. v.
Luu, 150 Cal. App. 4th 400, 408 (2007).
IV. BACKGROUNDA. Tre Milano Sells a Highly Successful Line of Hair
Appliances under the Federally-Registered InStylerTrademark.
Tre Milano designs, creates and markets innovative hair care
appliances. [1 JA 64:16-26.] Its most popular product is the
InStyler rotating hot iron, which straightens, curls, polishes and
styles hair in ways unlike prior or competing products. [Id.]
Compared to other electrical hair appliances, the InStyler rotating
iron has an innovative design that prevents the risk of scorching hair
associated with traditional flat irons. The product operates through
the calibrated coordination of electrical, electronic and mechanical
components resulting in internal operating temperatures of nearly 400
degrees. [1 JA 69:10-13, 69:24-25.]
Consequently, Tre Milano is highly attuned to the quality and
safety of its InStyler product. Tre Milano has obtained product
safety certification for the InStyler from ETL, and the InStyler
conforms to UL Standard 859 and CSA specifications. [1 JA 68:14-
23; 69:24-70:3.] Tre Milano also regularly reviews the design of the
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InStyler product to determine what possible modifications might
improve its operation and safety, keeps careful control over the
manufacture of its InStyler product, and maintains a tightly-
controlled distribution chain. [1 JA 69:26-70:1.]
Tre Milano has extensive trademark rights under state and
federal law, including federal trademark registration No. 3,496,525
and California registration No. 114550 for the InStyler mark. [1 JA
64:16-26, 108-112.]
B. Amazon Claims to Have Three Sales Channels, All ofWhich Originate from an Amazon Product Page that
Makes Extensive Use of the InStyler Trademark.
Amazon purports to differentiate between three sales
channels: (1) Direct Amazon.com sales, through which Amazon
markets and advertises the product, offers the product for sale, stores
the product (which it holds title to), processes the sale, and ships the
goods to the consumer, (2) Amazon Marketplace sales Fulfillment
by Amazon, whereby Amazon markets and advertises the product,
offers the product for sale, stores the product for the third party seller,
processes the sale, and ships the goods to the consumer, and (3) (3)
Amazon Marketplace sales Fulfilled by Third Party, whereby
Amazon markets and advertises the product, offers the product for
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sale, and processes the sale, with the third party itself storing and
shipping the goods to the consumer.
Regardless of the Amazon channel through which the product
is sold, however, all sales originate from the same Amazon Product
Page that Amazon itself creates and maintains. The Amazon Product
Page for each product offered for sale by Amazon generally contains
photographs of the product, a description of the product, user-
generated reviews of the product, manufacturer-supplied advertising
copy, and a unique Amazon Standard Identification Number (an
ASIN). [1 JA 65:13-28, 260-66.]
As the Court can see in Exhibit 1 to this brief, the Amazon
Product Page for the InStyler makes extensive use of the Tre
Milanos InStyler trademark and photographs of the authentic and
legitimate InStyler packaging, identifying the product as originating
from Tre Milano even when the product offered by sale on Amazon
is, in fact, counterfeit. [1 JA 260-66; see also 1 JA 171-73, 182-84,
192-95, 2 JA 350-56, 366-68, 390:12-13.] Thus it is clear that
Amazon which creates and maintains this Product Page actively
uses Tre Milanos InStyler mark to describe the counterfeit products
being sold via that Product Page. [See, e.g., 2 JA 350-56, 366-68,
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402.]
As discussed below, as a sale progresses beyond the Product
Page, Amazon provides various additional services for each of its
allegedly separate sales channels. These various Amazon services
also contribute to the sales of counterfeit items on its websites.
1. Amazon Direct Sales.Amazon direct sales are traditional retail sales by which all
aspects of the transaction marketing, advertising, sale, payment
processing, invoicing, shipping, customer service, warranty service
and returns are carried out by Amazon. As noted above, the
consumer begins any purchase of an InStyler by accessing Amazons
Product Page. The transaction is completed on the Amazon website,
payment is rendered to Amazon, and the goods are shipped by
Amazon from one of its warehouses in Amazon packaging. Amazon
Super Saver shipping rates apply and the purchase is eligible for
loyalty programs such as Amazon Prime. [See, e.g., 1 JA 123-24,
171-73, 182-84, 192-95.]
2. Fulfilled by Amazon Sales.Fulfilled by Amazon is a service by which Amazon
Marketplace sellers ship inventory to Amazon warehouses for sale
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through Amazon.com. Fulfilled by Amazon sellers pay a
commission to Amazon to use the service, and Amazon provides an
accounting. [See generally 2 JA 403 (Get Started with Fulfilled by
Amazon video and FBA Fulfillment Tour videos, marked as Exs.
270 & 271 respectively); see also 1 JA 260-66.]
Once inventory is received by Amazon, Amazon frequently
commingles that inventory with goods from other suppliers. [See
generally Stickerless, Commingled Inventory video (Ex. 272 on
CD-ROM at 2 JA 403); see also 2 JA 404-406 (video captures about
commingling practice).]
While there are differences in the manner by which the goods
are acquired by Amazon, there is no difference in the use of the
InStyler mark between Fulfilled by Amazon and Amazons
own direct sales: the consumer starts the transaction at Amazons
InStyler Product Page and completes the transaction on
Amazon.com. [See, e.g., 1 JA 81:6-9, 260-66, 2 JA 402.]
All aspects of the Fulfilled by Amazon transaction are carried
out by Amazon. [Id.] In fact, from the customers perspective,
Fulfilled by Amazon is indistinguishable from Amazon direct sales:
the transaction is completed on the Amazon website, payment is
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rendered to Amazon, the goods are shipped from an Amazon
warehouse in Amazon packaging, Amazon Super Saver shipping
rates apply, and the purchases are eligible for loyalty programs such
as Amazon Prime. [Id.; see also 2 JA 403 (videos marked as Exs.
270 & 271); 2 JA 389:26-390:5.]6
3. Amazon Marketplace Third Party Sales.Finally, Amazon provides marketing, advertising, and extensive
support services for Amazon Marketplace sellers who fulfill sales
on their own. As with Fulfilled by Amazon vendors, these sellers
list their inventory for display on the InStyler Product Page. [1 JA
65:13-15.] As with the other two sales channels, the consumer
starts the transaction by accessing Amazons Product Page. [See, e.g.,
1 JA 171-73, 182-84, 192-95.] The consumer also purchases the
goods through the checkout process on Amazon.com, makes
payments through Amazon.com using his or her Amazon.com
6 Amazon asserts that Fulfilled by Amazon is distinguishable from
direct sales primarily in that Amazon does not take formal legaltitle of the inventory that it takes into its possession. Even if true,
however, that is a distinction without a difference either to the
customer, who receives the exact same consumer experience as an
Amazon direct sale, or to the Lanham Act, since Amazons use of
the registered InStyler mark is the same.
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account, and receives a receipt from Amazon.com. [1 JA 65:15-28.]
The only perceivable distinctions from the perspective of the
consumer are that the product is shipped directly by the seller, and the
seller is responsible for customer service (including returns). [Id.]7
Nevertheless, even though Amazon explains that the product is
provided from the inventory of the third party seller, Amazon still
expressly guarantees the quality of the goods. Specifically,
Amazon.com provides that:
We want you to buy with confidence anytime
you purchase products on Amazon.com. That
is why we guarantee purchases from Amazon
Marketplace, Auctions, zShops, and Merchant
sellers. The condition of the item you buy and
its timely delivery are guaranteed under theAmazon A-to-Z program.
[1 JA 103.]
C. Amazon Fails to Appropriately Address KnownCounterfeit Goods Originating From UnverifiableSources.
Amazon purports to maintain a process for trademark owners to
report suspected counterfeit items sold on Amazon.com, but it is
7 Notably, this communication takes place entirely through the
Amazon messaging system, which hides all identifying
information about the seller. [1 JA 65:15-28.]
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notable primarily for Amazons indifference to the rights of trademark
owners. Upon identifying suspected counterfeits, trademark owners
are instructed to send their Notices of Claimed Infringement
(NOCIs) to Amazons copyright agent so that Amazon can take
action. Since the beginning of 2010, Tre Milano has sent Amazon
more than 300 NOCIs relating to apparently counterfeit InStylers. [1
JA 60:8-10.]
Amazon has reacted slowly, if at all, to Tre Milanos
notifications. In contrast to the systems on true marketplace sites
like eBay or Craigslist (both of which have automatically removed
counterfeit items nearly immediately after notice from Tre Milano),
Amazon often takes weeks or even months to respond. [1 JA 60:28-
61:1.]
Amazon admits that it has often required Tre Milano to submit
duplicate notifications because Amazon failed to respond to an
original notification. [1 JA 304:9-10 (Stressing that only 85 (27%)
[of Tre Milanos NOCIs] were for listings that Amazon.com failed to
remove after initial notice.); see also 1 JA 60:8-16.]
Moreover, despite Amazon's vague and generic claims of
diligence, Amazon has been able to provide accurate contact
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information for only one of the thirteen Amazon Marketplace sellers
initially named as co-defendants in this case. [2 JA 392:21-24]
Indeed, Amazon admitted that it had no contact information
whatsoever for two of these thirteen defendants even though one of
these was a Fulfilled by Amazon seller for whom Amazon was
warehousing and shipping counterfeit goods. [2 JA 392:18-20,
394:14-24, 398.] Of the remaining Amazon Marketplace sellers,
Amazon had inaccurate contact information for ten of them, including
incomplete addresses, apparently fake names, and (in one case) the
address of a Kroger supermarket. [2 JA 392:21-393:18, 399-400.]
D. A Consumer Was Burned by a CounterfeitInStyler Purchased on Amazon.com Nearly
Two Weeks After Tre Milano Notified Amazon
that the Seller was Selling Counterfeits.
On March 2, 2011, Tre Milano notified Amazon that a
Marketplace seller called Success Store was using Amazon's
marketing, advertising, and payment processing system to sell fake
InStylers. [1 JA 61:8-13, 100.]
Almost two weeks later, an individual named Pete Day went to
the Amazon website and, through Amazons Product Page, bought a
purported InStyler for his wife in a Third Party Sale from Success
Store. [1 JA 44:11-14, 45:2-8 (Pete Day Dec.), 90.] Mr. Day made
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his payment to Amazon and received his receipt from Amazon. [1 JA
45:2-8, 90.] He knew that the product was not coming directly from
the inventory of Amazon.com, but he did not realize that there was
any possibility that the product sold on Amazon.com could be fake.
[1 JA 44:22-25.]
As Tre Milano had expressly warned, the purported InStyler
product Mr. Day received and which Amazon.com had marketed,
advertised, offered for sale, and processed the sale for Success Store
was, in fact, counterfeit. [1 JA 71:24-73:4.]
Soon after receiving the fake InStyler, Mr. Days wife, Jodi,
was doing her hair when the product exploded in her hand. [1 JA
45:13-17 (Pete Day Dec.), 1 JA 48:26-49:1 (Jodi Day Dec.).] The
explosion burned Ms. Days hand and vaporized portions of the
products internal wiring. [1 JA 45:28-46:2, 49:7-10, 91-93, 95-96
(photos).]
Although her injuries were terrible enough, Ms. Day was lucky
it was not worse: only the fact that the fake Amazon.com InStyler
happened to be plugged into her computers surge protector prevented
a house fire (or an even greater explosion). [1 JA 45:24-27, 49:2-6.]
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E. Despite Actual Notice, Amazon Continues to List andProcess Sales of Counterfeit InStylers in each of its
Sales Channels.
Amazon continues to sell and fulfill products involving
Amazon Marketplace sellers who are known traffickers of fake
InStyler products. In fact, Amazon has brazenly continued to sell
fake InStylers for sellers even after they were named as co-defendants
in this action.
For example, Tre Milano notified Amazon on March 14, 2011
that a Fulfilled by Amazon seller that goes by the name OnxyBay
was trafficking in counterfeit InStylers. [1 JA 62:1-6, 271-72.] But
Amazon continued to fulfill sales for OynxBay for at leastthree
more months, when a test buy by Tre Milano at the end of May
confirmed that Amazon was still marketing, advertising, warehousing,
and shipping counterfeit product from OnyxBay. [1 JA 71:24-73:4,
81:18-82:10.]
Even more egregious is the case of Kafonika, another
Fulfillment by Amazon seller. In that instance, Tre Milano did
more than just provide a standard NOCI (although it also did that). [1
JA 273.] After two weeks of inaction by Amazon, Tre Milano named
Kafonika as a defendant in this lawsuit. [1 JA 5:6-10.]
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Nevertheless, Amazon continued to sell and fulfill on behalf of
Kafonika, and even shipped a counterfeit Kakonika InStyler to
Tre Milanos litigation counsel three days later. [1 JA 269-70, 71:24-
73:4.] 8
These are not isolated instances. Amazon continued through the
filing of the preliminary injunction motion to provide services to
Marketplace sellers notwithstanding express notice from Tre Milano
in the form of NOCIs and the filing of this suit that specific
sellers were believed to be selling counterfeit goods. [1 JA 77:13-24.]
Indeed, as explained below, counterfeit sales have occurred on each of
Amazons purported sales channels.
1. Amazon Itself Has Sold Made Direct Sales ofCounterfeit InStylers.
Despite its efforts to avoid liability by playing up the allegedly
distinct sales channels, Amazon itself has sold counterfeit InStylers
directly to customers. [1 JA 52:10-25, 57:16-58:5.]
8Amazon was still fulfilling orders for purported InStylers from the
inventory of its co-defendant Media Liquidations up to the eve
of Tre Milanos Motion for Preliminary Injunction, nearly three
weeks after that enterprise was named as a defendant. [1 JA
77:13-15.]
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Amazon has acknowledged that it has ongoing problems with
its own inventory being mixed with third party inventory at Amazon
warehouses. [1 JA 53:8-12.] Amazon does not vet the inventories of
Fulfillment by Amazon marketplace sellers to ascertain if the goods
are legitimate, and Amazon has acknowledged that it has made direct
sales of InStylers from those inventories. [1 JA 54:5-11, 66:13-20.]
In fact, the Fulfilled by Amazon enrollment web pages and videos
confirm that commingling is standard operating procedure at Amazon.
[See, generally, 2 JA 403 (Stickerless, Commingled Inventory video
marked as Ex. 272 on CD-ROM), see also 2 JA 404-406.] Because
Fulfilled by Amazon inventory is not necessarily segregated,
products purportedly direct from Amazon include counterfeits
because the Fulfilled by Amazon channel contains so much
counterfeit product.
2. Fulfilled by Amazon Sales.Between the time Tre Milano commenced this suit and filed its
motion for a preliminary injunction, Tre Milano made test purchases
from each of the four Fulfilled by Amazon sellers with InStyler
listings during this period: Kafonika, Media Liquidations,
EveryDayGiftGivers and OnyxBay. [1 JA 77:3-7, 80:23-82:10,
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83:5-25, 86:1-87:16; 1 JA 167, 169, 176, 190, 196; 1 JA 71:24-73:4.]
Every single purported InStyler purchased from these Fulfilled
by Amazon sellers was counterfeit. [1 JA 77:3-7; 1 JA 71:24-
73:4.] Moreover, purchases from two of these sellers took place long
after Tre Milano had notified Amazon that the respective sellers were
trafficking in counterfeit InStylers. [1 JA 271-72, 273-74 (NOCIs); 1
JA 167, 169, 196.]
Each of these InStyler purchases was made by going to
Amazon.com. [1 JA 81:6-9, 82:1-4, 83:16-19, 86:12-15, 87:7-10.]
Each purchase was initiated at the InStyler Product Page where
Amazon uses the InStyler mark to describe the appliance. [Id.]
Each purchase was made through Amazon.com by making payment
through an Amazon.com payment account, with a receipt sent from
Amazon.com. [Id.] Finally, each purchase was delivered by Amazon
from an Amazon.com warehouse in Amazon.com packaging. [Id.; 1
JA 168, 170, 177, 191, 197.]
3. Amazon Marketplace Sales.Additional test purchases made during the same period revealed
yet more Amazon Marketplace sellers involved in the sale of
counterfeit InStylers: (i) Aileen X. Nguyen d/b/a This Online Store,
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(ii) Nick Grieco d/b/a Tony,s Loop d/b/a Beach Direct, (iii)
Hotsale1010, (iv) RSB Inc. and (v) Marland. [1 JA 78:21-80:20,
83:28-85:26; 1 JA 162, 164, 166, 179, 181, 186; 1 JA 71:24-73:4.]
Although Tre Milano had sent NOCIs to Amazon with respect
to every one of these sellers prior to purchase, two cases are especially
egregious. One involves Tony,s Loop, which was the subject of a
Tre Milano NOCI to Amazon and is a named defendant in this suit.
[1 JA 62:19-24; 1 JA 277.] Although Amazon initially removed his
account, the individual behind Tony,s Loop simply changed his
Amazon screen name to Beach Direct and Amazon allowed him to
continue selling counterfeit InStylers on Amazon.com. [1 JA 80:3-
14.]
Even more outrageous is Amazons failure to permanently
remove the seller Marland. Tre Milano sent an NOCI to Amazon
regarding Marland on March 7, 2011. [1 JA 61:23-28; 1 JA 269.]
Nearly three months later, on May 29, Tre Milano made a test
purchase from Marland and verified that the unit purchased was
counterfeit. [1 JA 85:10-26; 1 JA 72:16, 72:23-73:4.] Nevertheless,
Marland listings for InStylers continued to periodically appear on
the Amazon site well into June. [1 JA 77:16-18; 1 JA 182.] During
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these three full months, Amazon apparently did nothing to address
this specific Amazon Marketplace seller who traffics in counterfeit
InStylers.
F. There Are Material Differences BetweenAmazon and eBay.
While the trial court apparently found that Amazons conduct
was no different from eBay in terms of contributing to the
infringement by others, the undisputed facts show otherwise. [2 JA
384:1-27.]
As an initial matter, Amazon is different because it is more
directly involved in each sale than eBay. eBay is an auction site that
does nothing more than provide a space in which a seller may post
his or her own description of the items for sale and a mechanism for
bidding. [2 JA 389:20-25.]9
9 See generally Tiffany, 600 F.3d at 97 (Explaining that eBay
operates to connect buyers and sellers and enable transactions,
which are carried out directly between eBay members, and that
eBay provides the venue for the sale [of goods] and support forthe transaction[s], [but] it does not itself sell the items listed for
sale on the site, nor does it ever take physical possession of
them.) (emphasis added) (quoting Tiffany (NJ) Inc. v. eBay, Inc.,
576 F.Supp.2d 463, 475 (S.D.N.Y. 2008)).
eBay does not describe the item or
provide pictures of the proposed item. [2 JA 390:7-9.] Moreover,
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eBay allows a trademark holder to create and maintain an About Me
page for the express purpose of informing consumers about the
products at issue, and that certain items (such as Tiffany products) are
particularly likely to be counterfeit. Tiffany, 600 F. 3d at 99-100
(citingTiffany (NJ) Inc. v. eBay, Inc., 576 F.Supp.2d 463, 479
(S.D.N.Y. 2008)).
Here, by contrast, Amazon itselfcreates the Product Page that
describes the products as legitimate InStylers and Amazon provides
the photographs of legitimate InStyler packaging to reinforce
Amazons representation that the products sold via that page are
actual InStylers. Amazon in no way suggests that the descriptions
come from third parties or that the descriptions are only as reliable as
the third party offering the goods. Moreover, while Amazon itself
internally recognizes that the InStyler is currently being counterfeited
in high volumes, Amazon provides no such warning to the public. [2
JA 302:24-25 (long before this suit, Amazon.com identified InStylers
as high risk, defined as currently being counterfeited in high
volumes).] To the contrary, rather than warning the public, Amazon
instead expressly guarantees the items sold via all channels on
Amazon.com. [1 JA 103.]
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Additionally, whereas eBay does not require use of any
particular payment system, Amazon requires use of the Amazon.com
payment system to process any purchase through any Amazon
channel. [2 JA 389:20- 390:5; 2 JA 403 (FBA Fulfillment Tour
video).] Amazon also expressly warehouses and ships products for
third parties, whereas eBay does not warehouse or ship any products
for third parties.Id. As a result, numerous of the counterfeits at
issue in this case have been physically handled and delivered by
Amazon itself. See, e.g., 1 JA 168, 170, 177, 191, 197 (photos).
Finally, of course, Amazon also provides customer service for the
Fullfilled by Amazon sales.
Turning to the question of Amazons responsiveness to
questions of legitimacy, the undisputed facts again reflect significant
differences between Amazon and eBay:
1. eBay invariably removes questionable listings within
twenty-four hours (and typically within one to two hours) of
objection by the trademark holder. [2 JA 390:15-19; see also Tiffany,
600 F.3d at 99.] By contrast, Amazon frequently takes months to
respond and, in more than a quarter of cases, does not respond at all
until at least a second notice from Tre Milano. [2 JA 390:20-26.]
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2. eBay always promptly provides the contact information
for the seller after any question about the sellers legitimacy. [2 JA
391:3-6; see also Tiffany, 600 F.3d at 99.] By contrast, Amazon
absolutely refuses to provide contact information for its Amazon
Marketplace sellers. [2 JA 391:7-8.]
3. To prevent sales from taking place before trademark
holders can react, eBay prohibits short auctions on highly-
counterfeited items and allows trademark holders to pre-inspect
potential auctions of such items before the auctions go live. Tiffany,
600 F.3d 93, 100. By contrast, despite admitting that it knows the
InStyler is frequently counterfeited, Amazon provides no advance
notice before it advertises, sells and even ships counterfeit InStyler
products via its Fulfilled by Amazon and Amazon Marketplace
programs. [2 JA 302:24-25 (long before this suit, Amazon.com
identified InStylers as high risk, defined as currently being
counterfeited in high volumes); 2 JA 390:20-26.]
4. eBay maintains at least 200 employees who focus
exclusively on anti-counterfeiting efforts. While Amazon attempts to
finesse the issue by noting that it has anti-fraud employees, there is
no evidence that any of those employees focus exclusively even
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principally on anti-counterfeiting efforts. In fact, reading between the
cleverly drawn lines, it is clear that the anti-fraud employees are
principally charged with avoiding bad debt risk and that any anti-
counterfeiting is merely incidental to their primary purpose. [2 JA
338:7-10 (My teams primary responsibilities are to reduce bad debt
risk to Amazon and protect the buying experience by ensuring third
party sellers comply with our policies and meet our performance
standards.).]
In sum, the evidence shows that Amazon does not in fact take
the steps that eBay has taken to allow trademark holders like Tre
Milano to protect their trademark rights. Instead, Amazon moves
slowly (if at all) to address issues while continuing in the meantime to
use the InStyler mark to sell and facilitate the sales of counterfeit
InStyler products.
G. Tre Milano is Suffering Irreparable HarmFrom Negative Feedback in Which the
Shortcomings of Counterfeit InStylers Are
Attributed to the Genuine Product.
1. Amazon Counterfeits Are of InferiorQuality, with a High Fault Rate and anUnacceptable Risk of Injury to
Consumers.
As noted above, at least one counterfeit sold by Amazon
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exploded in the hand of an Amazon customer, and other consumers
have complained of burns or other injuries. [1 JA 45:10-46:2 (P. Day
Dec.); 1 JA 48:26-49:10 (J. Day Dec.); 1 JA 67:25-68:5.] More
generally, counterfeit InStylers typically are of poor quality, with
substandard components not designed to withstand the heat or
mechanical functionality involved in the sophisticated, patented
InStyler design. [1 JA 67:12:20, 68:14-23.] Moreover, like most
counterfeit InStylers, all ofthe counterfeits purchased through
Amazon since inception of this suit lack the heat shield attachment
which is a key safety component included with every genuine
InStyler. [1 JA 67:15-16; 1 JA 71:12-13, 73:3-4.] As a result, these
fake products not only have a high fault rate but also present an
unacceptable risk of injury to consumers.
2. Consumers Post Negative Reviews of theInStyler Based on Poor Quality Fakes.
Unlike sites such as eBay, Amazon customers are invited to
provide reviews that are attributed to the product sold and not to the
seller. [1 JA 67:8-9.] As a result, dozens of Amazon consumers have
given the InStyler 1-Star reviews based entirely on problems with
Amazon and its Marketplace sellers, including the sale of used or
broken InStylers or lack of communications from Amazon or the
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sellers. [Id.; 1 JA 67:9-12; 1 JA 77:4-5.] Many more of the negative
reviews reflect the high fault rate inherent to counterfeit appliances.
[1 JA 67:12-13; 1 JA 286.]
One illustrative complaint on the Amazon website, giving Tre
Milanos InStyler a 1-Star review, reads as follows:
These people are liars. I ordered the instyler for a good
price. The reason why I order from Amazon is to pay
less. ... The sellers are GDHDMI. They sent me a thing
that looked like an instyler, it was the exact thing but
BOOTLEG!!!! it was a fake. It was much fatter and a lotof plastic and it made a pop sound on the first try an
didn't work. I thought it was a real instyler until I actually
purchased one from ULTA. I noticed it wasn't. It was a
rip off. No one sould [sic] order from them. [1 JA 241-
242; see also 1 JA 67:21-24.]
This review is noteworthy not only because the consumer was astute
enough to recognize that she had received a counterfeit InStyler, but
also because Tre Milano had provided multiple notices to Amazon
about this very seller. In fact, Tre Milano sent three separate NOCIs
to Amazon demanding the Amazon halt GDHDMIs counterfeit sales
beginning in November 2009, a full threemonths prior to the
publication of this 1-star review for the InStyler. [1 JA 54:17-
55:18; 1 JA 138-147 (NOCIs re GDHDMI).] In other words, Amazon
had actual notice that GDHDMI was selling counterfeit InStylers, but
it did not block GDHDMIs sales and then, to compound the harm,
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Amazon allowed a consumer to post a disparaging 1-star review of
the InStyler based upon a product that Amazon knows to be
counterfeit. Moreover, this review remains on Amazon.com to this
day, two years after Amazon was given notice.
3. Counterfeit Amazon InStylers DeceiveEven Professional Reviewers.
Even professional consumer reviewers have falsely assumed
that a product purchased via Amazon must be genuine. For
example, in late 2010, Tre Milano learned of a disparaging video
review of the InStyler posted by AOL on one of the principal AOL
web pages. [1 JA 67:25-68:5; 1 JA 77:26-78:7.] The AOL reviewer
concluded that the product she purchased was unsafe and even
attributed specific physical injuries sustained from its use to supposed
design flaws with the InStyler product. [Id.] Upon examination of
the video review, Tre Milano determined that the reviewer had
purchased a counterfeit InStyler sold through Amazon.com. [Id.; 1
JA 259 (AOL/WalletPop Retraction).] In other words, this review and
the unjustified negative publicity for Tre Milanos InStylers resulted
entirely from the sale of counterfeit products on Amazon.com.
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V. THE TRIAL COURT ERRED IN FAILING TO ENJOINAMAZON FROM ASSISTING THE SALE OF FAKE
INSTYLER PRODUCTS
The trial court made two legal errors in this matter. First,the
trial court wrongly concluded that Amazon could not be a direct
infringer merely for facilitating the sales of counterfeit products
even though Amazon is using the InStyler mark itself. Second, the
trial court wrongly concluded that Amazon could not be a
contributory infringer because it was not shown (on the preliminary
record) to be willfully blind to the possibility of counterfeit sales. As
discussed below, Amazon is also a contributory infringer because it
has assisted in sales of counterfeit product for weeks and months with
specific knowledge of infringing product.
A. Amazon Is Liable as a Direct Infringer BecauseAmazon Itself Is Using the Registered InStyler MarkIn Connection With the Sale of Counterfeit Goods.
1. Any Person Who Uses a Mark In ConnectionWith Any Offering for Sale, Distribution,
or Advertising Infringes Regardless of Who
Nominally Makes the Sale.
At the hearing on Tre Milanos motion for a preliminary
injunction, the trial court erroneously accepted Amazons argument
that it was not a direct infringer because Amazon purportedly never
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held legal title to the counterfeit items being sold via Amazon.com.10
Specifically, the Lanham Act expressly provides liability for
any person who, without the consent of the registrant:
However, the plain language of the Lanham Act makes clear that legal
title isnot necessary for direct liability. 15 U.S.C. 1114(1)(a).
Uses in commerce any reproduction, counterfeit, copy,
or colorable imitation of a registered markin connection
with the sale, offering for sale, distribution or
advertising of any goods or services on or in connection
with which such use is likely to cause confusion, or tocause mistake, or to deceive.
15 U.S.C. 1114(1)(a) (emphasis added).11
As Professor McCarthy observes, the language is an
intentionally broad definition that means exactly what it says: it
imposes liability for infringement of a registered mark upon any
10 As discussed below, formal title is legally irrelevant to liability
under the Lanham Act. Nevertheless, Tre Milano notes that
Amazon did not produce any evidence to support its assertion that
it never takes legal title to the purported InStylers that Amazon
holds in its possession from Fulfilled by Amazon sellers.
11 As a matter of law, any violation of the Federal Lanham Act is also
a violation of Californias Business and Professions Code Section17200. Cal. Bus. & Prof. Code 17200 et seq.;M2 Software Inc.
v. Madacy Ent., 4231 F.3d 1073, 1089-90 (9th
Cir. 2005);Barquis
v. Merchants Collection Assn., 7 Cal.3d 94, 113 (1972) (Section
17200 applies to any conduct made illegal under any applicable
law).
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person who uses an infringing mark in interstate commerce in
connection with the sales or advertising of goods or services. 4
McCarthy on Trademarks and Unfair Competition 25:26 (4th
ed.
2011) (emphasis in theoriginal).
Indeed, as the Ninth Circuit observed inLevi Strauss & Co. v.
Shilon, 121 F.3d 1309, 1312 (9th
Cir. 1997), there does not even have
to be a sale for a party to infringe under Section 1114(1). InLevi, the
defendant used the Levi Strauss trademarks as part of an offer to sell
counterfeit goods but the goods themselves did not yet exist. 121 F.3d
at 1311. The Ninth Circuit found the matter to be governed by the
clear language of the statute. Id. at 1312. The statute focuses on
the use of the mark rather than the sales transaction itself, which
means that the use of the mark to market, advertise or offer to sell is
infringement even without any actual sales. Id.; see also Miller
Brewing Co. v. Carling OKeefe Breweries of Canada, Ltd., 452
F.Supp. 429, 442 (W.D.N.Y. 1978) (use of the mark alone in U.S.
advertising is actionably infringement notwithstanding the lack of any
U.S. distribution or sales).
The language of the Lanham Act clearly applies on its face to
the conduct of any party such as Amazon who uses a registered mark
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in connection with any counterfeit sale, whether that use is part of the
sale, the advertising, or the distribution. 15 U.S.C. 1114(1)(a); see
also Getty Petroleum Corp. v. Aris Getty, Inc., 55 F.3d 718, 719-720
(1st
Cir. 1995) (defendants liability was direct, for an affirmative
act where it distributed product despite the fact that it did not have
title to the goods at issue).
In sum, the trial court committed plain legal error when it
concluded that Amazons purported lack of legal title insulated it from
liability for direct trademark infringement.
2. The Safe Harbor Provisions of the LanhamAct Confirm That Liability Extends To Any
Party Using the Mark Even to Facilitate a Sale.
Section 1114(2) of Lanham Act includes a safe harbor for a
series of specifically identified third-party users of a registered mark
who would otherwise be liable for infringement under Section
1114(1). 15 U.S.C. 1114(2). Generally speaking, the Section
1114(2) safe harbors extend to innocent third-parties who are
merely paid printers, publishers, or broadcasters of newspapers,
magazines, and the like. 15 U.S.C. 1114(2)(A-D). Upon a showing
of true innocence, these parties are exempt from damages under the
Lanham Act. Id. Notably, those third parties remain subject to
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injunctive relief . Id.12
The text of the first safe harbor is illustrative:
The safe harbor provisions confirm that
those innocent third parties are nevertheless trademark infringers
subject to injunctive relief.
Where an infringer or violator is engaged solely in the
business of printing the mark or violating matter for
others and establishes that he or she was an innocent
infringer or innocent violator, the owner of the right
infringed or person bringing the action under section
43(a) shall be entitled as against such infringer or violator
only to an injunction against future printing.
15 U.S.C. 1114(2)(A). Like the other three safe harbor provisions,
the effect of this safe harbor provision confirms that a truly-
disinterested and innocent third party is still an infringer but limits the
remedies against such an infringer to injunctive relief. 15 U.S.C.
1114(2)(A-D).
The reason that the safe harbors in Section 1114(2) are
necessary is because unauthorized printing or publication of a
12 Amazon does not qualify under any of the safe harbor provisions
of Section 1114(2) in this case since Amazon is not merely a
printer, publisher, broadcaster, or domain-name registrar, muchless one who can claim to be innocent. 15 U.S.C. 1114(2)(A-D).
Moreover, the issue is irrelevant to this appeal since the appeal
involves only injunctive relief. Even under the safe harbor
provisions, innocent third-party printers, publishers, etc. are still
infringers and still subject to injunctive relief. Id.
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registered markis an infringement under Section 1114(1) of the
Lanham Act even though a printer may not itself sell any of the goods
and services being infringed. Put differently, the parties who use the
mark at issue in connection with the advertising, offering for sale, or
distribution of a good are infringers even though innocent publishers,
broadcasters, and the like may never actually sell or have title
themselves to such goods. 15 U.S.C. 1114(1-2); see generally
Miller Brewing, 452 F.Supp. at 442 (W.D.N.Y. 1978) (issuing
injunction to prohibit advertising in the United States notwithstanding
the lack of any possible sales in the United States). This confirms that
the language of the prior section means exactly what it says: useof
themarkalone is infringement even if it only facilitates a sale so long
as that use is in connection with a sale or attempt to sell.
In short, any party (like Amazon) who uses a registered mark
in connection with the sales of counterfeit goods is an infringer. It
does not matter whether the party itself is part of the actual sales
transaction. Although in certain (factually inapposite) circumstances
relief is limited to only injunctive relief, the use of the mark alone
indisputably constitutes direct infringement subject to injunctive
relief. 15 U.S.C. 1114(1)-(2).
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3. Amazon Is Liable BecauseIt Is Using the RegisteredInStyler Mark.
Unlike a web hosting site or even an auction site like eBay,
Amazon maintains the Product Page at issue and Amazon is the party
using the InStyler trademark on its Product Page. Consequently,
Amazon is statutorily liable if it turns out (and it has) that the products
sold in connection with that mark are counterfeit. 15 U.S.C.
1114(1)(a); see generally Lorillard Tobacco Co. v. Amouris Grand
Foods, Inc., 453 F.3d 377, 381 (6th
Cir. 2006) (party who
unknowingly sells counterfeit nevertheless liable for participating in
distribution of same).
In this regard, Amazon differs from a contributory infringer
who merely provides a good or service of assistance to the parties who
directly infringe the mark. Consider, for example, the situation of
swap meet sellers. See e.g., Fonovisa, Inc. v. Cherry Auction, Inc., 76
F.3d 259, 264-65 (9th
Cir. 1996), Hard Rock Caf, 955 F.2d at 1146,
et seq. At a typical swap meet, the manager of the swap meet merely
provides a space for the vendor to sell goods. The manager may be
contributorily liable if it turns out that the vendor is selling counterfeit
goods with the managers knowledge, but the manager unlike
Amazon has not directly used the mark and thus cannot be a direct
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infringer. Likewise, Amazon differs from eBay, which (like the swap
meet) merely provides a space for a vender to offer various products.
[2 JA 389:20-25.] Unlike Amazon, eBay does not maintain its own
Product Page onto which sellers can tag along. [RT 4:17-18
(Amazons description of how Amazon allows third parties to use its
Product Page).] To the contrary, eBay requires that actual sellers
provide their own product descriptions and photographs in each
listing. [2 JA 390:7-13.] Moreover, for highly counterfeited items,
eBay expressly disclaims any responsibility for the accuracy of such
descriptions or pictures. Tiffany (NJ) Inc. v. eBay, Inc., 576
F.Supp.2d 463, 498 (S.D.N.Y. 2008).
By contrast, Amazon uses the InStyler mark as part of its own
efforts to sell InStyler products. As Amazons counsel admitted at
hearing, Amazon then allows various third parties to tag along on
Amazons sales efforts. [RT 4:17-18.] In so doing, Amazon is
plainly telling consumers that in addition to Amazon, these various
third parties are also selling InStyler products. [See, e.g., 1 JA 171-
73, 182-84, 192-95; 2 JA 350-56, 366-68.] Because Amazon itself
provides the product description, there is naturally no disclaimer on
the Amazon website about product descriptions being potentially
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unreliable. As the party who is using the mark, Amazon is therefore a
direct infringer. 15 U.S.C. 1114(1).
4. The Lanham Act is a Strict Liability Statute asto Counterfeit Goods.
Like product liability statutes, the Lanham Act is a strict
liability statute.Lorillard Tobacco Co., 453 F.3d at 381 (6th
Cir. 2006)
(quotingHard Rock Cafe, 955 F.2d at 1152 n.6 (7th
Cir. 1992));
Phillip Morris U.S.A. Inc. v. Shalabi, 352 F.Supp.2d 1067, 1073-74
(C.D.Cal 2004). Courts may enjoin violations of its provisions
regardless of the mental state of the violator. Century 21 Real Estate
Corp., 929 F.2d 827, 829(1st
Cir. 1991) (citingTisch Hotels, Inc. v.
Americana Inn, Inc., 350 F.2d 609, 613 (7th
Cir. 1965); see also 15
U.S.C. 1114(2) (A-D) (safe harbor for innocent printers, publishers,
broadcasters and the like nevertheless permits injunctive relief). This
has been the law in the United States for well over a century.
Saxlehner v. Siegel-Cooper Co., 179 U.S. 42, 43 (1900) (The fact
that the Siegel-Cooper Company acted innocently does not exonerate
it from the charge of infringement.).
Moreover, while Section 1114(1)(a) applies only to uses that
are likely to cause consumer confusion, counterfeit goods are likely to
cause confusion as a matter of law. Philip Morris USA, Inc., 352
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F.Supp.2d at 1073; Gucci America, Inc. v. Duty Free Apparel, Ltd.,
286 F.Supp.2d 284, 287 (S.D.N.Y. 2003). In addition, of course, the
evidence in this case clearly shows that the individuals who are
purchasing from Amazon.com would be and are expecting to purchase
genuine InStyler products and not counterfeits. [2 JA 350-56, 366-
68, 402-06; 1 JA 46:9-47:2; 1 JA 49:18-50; 1 JA 67:25-68:5; 1 JA
77:10- 78:7; 1 JA 259.] In other words,the evidence confirms the
obvious fact that consumers are likely to be confused by any
counterfeit items sold via the Amazon InStyler Product Page.13
13 Although counterfeit goods are inherently confusing, Amazonheightens the confusion among the consuming public by
publishing purported customer images of the InStyler, many of
which have not been posted by actual consumers and do not show
authentic InStylers. Several such photos are, in fact, images of
counterfeit InStylers that originated with known traffickers of
counterfeit, including several such photos from a seller described
as a Trusted 5-Star Seller. Notably, Tre Milano sent four
separate NOCIs to Amazon about this Trusted 5-Star Seller,
more than a year and a half ago, yet his photos of counterfeitInStylers remain posted on the Amazon.com website where they
mislead consumers into believing that the fake InStylers obtained
through Amazon are, in fact, authentic. [ 1 JA 73:14-75:4 (Table)
and 1 JA 199-234 (Customer Images); 1 55:21-56:22 and 1 JA.
148-160 (NOCIS re Stoneledge of Cornwall).]
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B. Even If Amazons Actions Were Evaluated Under aContributory Infringement Theory, Amazon
Would Still Be Liable Because It Was Required, But
Failed, to Take Reasonable Steps to Prevent
Infringement.
Even if Amazon were not directly liable for trademark
infringement under the Lanham Act (and it is), Amazon would
nevertheless be liable for contributory infringement given Amazons
level of knowledge and ability to control matters here.
1. A Party Who Has Sufficient Knowledge ofPossible Infringement and Has the Ability to
Control Such Infringement May Be HeldContributorily Liable.
Liability for trademark infringement extends beyond those who
are direct infringers. Inwood Laboratories, Inc. v. Ives Laboratories,
Inc., 456 U.S. 844, 854, 102 S.Ct. 2182, 72 L.Ed2d 606 (1982). A
party will be liable for trademark infringement as a contributory
infringer where: (a) the party provides a good or service to a direct
infringer; (b) the party knows or has reason to know that the direct
infringer is using the good or service in trademark infringement; and
(c) the party has control over the instrumentality used by the direct
infringer to infringe the plaintiffs mark. Louis Vuitton Malletier, S.A.
v. Akanoc Solutions, Inc., -- F.3d --, 2011 WL 4014320 at *3 (citing
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Inwood, 456 U.S. at 854;Lockheed Martin Corp. v. Network
Solutions, Inc., 194 F.3d 980, 984 (9th
Cir. 1999); see alsoFonovisa,
76 F.3d at 264-65; Tiffany, 600 F.3d at 104.
In its ruling, the trial court focused on the second prong of the
contributory infringementtest because it was the only factor in
dispute. The trial court started with the proposition that a party is not
considered a contributory infringer merely because it has a
generalized knowledge that its services might be used for
infringement. [Appealed Order, 2 JA 459, citing Tiffany, 600 F.3d at
107.] The trial court then erroneously assumed that the only other
way to establish contributory infringement was to show willful
blindness. [Appealed Order, 2 JA 459, citing Tiffany, 600 F.3d at
110 (eBay did not ignore the information it was given about
counterfeit sales on its website.).]14
14 In fact, the Tiffany decision on which the trial court relied actually
provides that some contemporary knowledge of which listings
infringe or will infringe is sufficient to establish liability. Tiffany,600 F.3d at 107. Willful blindness to infringing conduct is also
sufficient, but it is merely an alternative ground if the plaintiff
cannot show contemporary knowledge of infringing listings.Id.;
Hard Rock Caf, 955 F.2d at 1151(contributory liability will be
found based on reason to know even if a party is not willfully
Since the trial court found that
[Footnote continued on next page]
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the limited record did not support a finding of willful blindness, it
concluded that Tre Milano had failed to show the necessary level of
knowledge on Amazons part. [Appealed Order, 2 JA 459.]
The courts ruling with respect to contributory infringement
was erroneous because it overlooks the fact that contributory
infringement lies not simply where a defendant has reason to know
of an infringement. It also lies when, as here, a partyactually knows
of the infringement and still provides services necessary to such
infringement. As discussed below, the undisputed evidence in the
court below showed that Amazon continues sales of counterfeit items
for weeks or months after receiving specific knowledge about specific
sources of counterfeit on Amazon.com. Amazons continued
advertising, processing, warehousing, and shipping after specific
notice is more than sufficient to establish contributory infringement as
well as direct infringement.
[Footnote continued from previous page]
blind); Gucci America, Inc. v. Frontline Processing Corp., 721
F.Supp.2d 228, 249 (S.D.N.Y. 2010) (explaining that willful
blindness is also sufficient in the absence of particularized
information about listings that likely infringe).
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2. Amazon Is Contributorily Liable.As discussed herein, Amazons conduct meets each of the three
prongs required to establish liability under the contributory
infringement standard articulated by the federal courts. Louis Vuitton
Malletier, S.A. v. Akanoc Solutions, Inc., -- F.3d --, 2011 WL 4014320
at *3 (citing Inwood, 456 U.S. at 854;Lockheed Martin Corp. v.
Network Solutions, Inc., 194 F.3d 980, 984 (9th
Cir. 1999); see also
Fonovisa, 76 F.3d at 264-65; Tiffany, 600 F.3d at 104..
a) Amazons Services Are Being Used to SellCounterfeit Products
As to the first prong, the undisputed (and indisputable)
evidence shows that Amazon is providing services that are used to sell
counterfeit products. The primary service consists of Amazons
creation and maintenance of the InStyler Product Page where the
InStyler trademark is used to initiate every single sale. [1 JA 260-
66.] Without such a Product Page, there would be no sales to the
consuming public via Amazon.com.
In addition, however, Amazon also provides the transactional
services at the core of the transaction. The consumer pays Amazon
via the Amazon payment system (using the consumers Amazon.com
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account) for all transactions on Amazon.com, regardless of whether
the sold item originates from Amazon itself, from inventory Fulfilled
by Amazon, or from inventory fulfilled directly by an Amazon
Marketplace seller. In all three cases, Amazons payment handling
services are indispensible to the transaction.
Critically, many of the counterfeit transactions in this case
involve Fulfilled by Amazon sellers. As noted in the fact section,
for every Fulfilled by Amazon test buy, Amazon has delivered a
counterfeit InStyler. [1 JA 77:3-7.] For Fulfilled by Amazon sales,
Amazon does more than just advertise the product and process the
payments. For such sales: (1) Amazon holds the inventory in
Amazons own warehouse; (2) Amazon ships the product in
Amazons boxes; and, (3) Amazon handles all customer service.
b) Amazon Continues to Provide SalesDespite Specific, Particularized
Knowledge of Infringement
Regarding actual notice, the facts are simple: Amazon routinely
continues to provide sales and fulfillment services to Amazon
Marketplace sellers for weeks or even months after Tre Milano has
identified those specific sellers as likely traffickers in counterfeits. [2
JA 390:20-26.] This stands in stark contrast to eBay, which always
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responds in twenty-four hours and more typically responds within one
to two hours and thereby prevents any sale from taking place after
notice. [2 JA 390:15-19.]15
Even the Tiffany decision on which the trial court relied makes
clear that a party will be guilty of contributory infringement if it
continues to provide services after notice that a particular, specified
seller may be selling counterfeits. Tiffany, 600 F.3d at 107-08; see
alsoLouis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., -- F.3d --,
2011 WL 4014320 at *3. This is a different issue than willful
blindness.Id.
Here, the issue is not generalized notice. [See Appealed
Order, 2 JA 459.] Instead, the issue is that Amazon continues to
provide services in connection with the sale of counterfeit goods
despite havingactualand specific notice. As discussed above,
Amazon continues to provide these services for weeks or even months
after notice, rendering it liable for such sales (at a minimum) as a
15 Moreover, because of the auction nature of most sales over eBay, a
response within 24 hours (and particularly a response within 1-2
hours) will typically happen before the end of the auction and will
therefore prevent any actual sale from taking place.
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contributory infringer. Louis Vuitton Malletier, S.A. v. Akanoc
Solutions, Inc., -- F.3d --, 2011 WL 4014320 at *3; see also Sealy,
Inc. v. Easy Living, Inc., 743 F.2d 1378, 1382 (9th
Cir. 1984)
(defendant liable for contributory infringement where it took
inadequate measures to prevent infringement that it otherwise knew
would occur.).
c) Amazon Has Sufficient Ability to Controlthe Instrumentalities At Issue
The undisputed evidence also establishes the third prong of the
contributory infringement test. Cf.Louis Vuitton Malletier, S.A. v.
Akanoc Solutions, Inc., -- F.3d --, 2011 WL 4014320 at *3 (describing
defendants as having direct control over the master switch that kept
[infringing] websites online and available); Tiffany, 600 F. 3d at 97
(eBay simply provides the venue for the sale [of goods] [and]
does not itself sell the items listed for sale nor does it even take
physical possession of them.) (quoting Tiffany (NJ) Inc. v. eBay, Inc.,
576 F.Supp.2d 463, 475 (S.D.N.Y. 2008). Amazon has absolute
control over the InStyler Product Page and has sole discretion about
whether or not to allow specific sellers to have inventory listed on that
page, or to provide any of its other support services. Once Amazon
decides not to permit the sale of purported InStylers by a specific
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Amazon Marketplace seller, no such sale can take place.
Moreover, for Fulfilled by Amazon sales, Amazons control
extends to actual possession of the counterfeit goods. They are in
Amazons warehouses for Amazon employees to ship directly to
consumers. As a result, Amazon can inspect the goods itself.16
Amazon can refuse to accept for sale those products which are
counterfeit, or Amazon can return those goods once it has other reason
to suspect that a specific Amazon Marketplace seller is trafficking in
counterfeit goods. Finally, Amazon can simply refuse to sell or
deliver the counterfeit goods. There is no question that Amazon has
sufficient control and ability to monitor its own services that it can
preclude the sales of counterfeit goods once it decides to do so.
16 In fact, for this very purpose, Tre Milano provided Amazon in
December 2009 with a manual titled How to Tell Its
Counterfeit. The guide was specifically prepared so that a personwithout any specialized experience can readily identify the most
common indicia of counterfeit InStylers, and every counterfeit
purchased from Amazon since inception of this suit has been
determined to be fake using the criteria in that guide. [JA 1 JA
53:8-14; 1 JA 113-122; 1 JA 70:19-71:22; 1 JA 72:23-73:4.]
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VI. THE BALANCE OF HARDSHIPS TILTS STRONGLY INFAVOR OF THE INJUNCTION.
A. Continued Sales of Counterfeits will Cause TreMilano Irreparable Harm.
It has been repeatedly noted that potential trademark violations
create the presumption of irreparable harm because the reputational
harm may be impossible to rectify. Jay Bharat Developers, Inc. v.
Minidis, 167 Cal.App.4th
437, 444 (2008) (citingGoTo.com, Inc. v.
Walt Disney Co., 202 F.3d 1199, 1205 n. 4 (9th
Cir. 2000) (In a
trademark infringement claim, irreparable harm may be presumed
from a showing of a likelihood of success on the merits.).
Here, beyond any presumption, there is concrete evidence that
the InStyler reputation is being harmed by counterfeit products sold
on Amazon.com. Tre Milano has introduced specific evidence
showing that counterfeit product purchased on Amazon.com has
resulted in negative reviews and obviously damaging (and inaccurate)
publicity for the InStyler product. These reviews appear not only on
Amazons own website but on other major websites like AOL. Once
a consumer is erroneously told that the InStyler is poor quality or
potentially dangerous, it is virtually impossible for Tre Milano to
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unring the bell and correct such negative publicity. Any further
sales of counterfeit InStylers on Amazon.com would create
irreparable harm for Tre Milano.
B. These Counterfeit Products Threaten the ConsumingPublic At Large
Beyond the general public interest in avoiding misleading sales
practices in the marketplace, it is clear that counterfeit products can
(and do) represent a threat to public health and safety. 4 McCarthy on
Trademarks and Unfair Competition 25:10 (4th
ed. 2011); see
generally Lorillard Tobacco Co v. Amouris Grand Foods, Inc.., 453
F.3d 377, 383(6th
Cir. 2006) (general public interest strongly in favor
of injunction to prevent consumer confusion and deception in the
marketplace);Brookfield Communications, Inc. v. West Coast
Entertainment Corp., 174 F.3d 1036, 1066 (9th
Cir. 1999). Both the
federal government and the California legislature have addressed
these threats through criminal statutes as well as civil liability. 18
U.S.C. 2320 (Trademark Counterfeiting Act of 1984); Cal. Penal
Code 350(a) (2) (felony for sale of counterfeit goods);Louis Vuitton
S.A. v. Spencer Handbags Corp, 597 F.Supp. 1186, 1193 (E.D.N.Y.
1984) (citing S.Rep. No. 526, 98th
Congress, 2d Sess. 1-5 (1984)
(explaining Congressional concerns that trademark counterfeiting is
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not just an economic injury but a threat to public health and safety).
This case underscores the acute public safety risk of which
Congress and the California legislature expressed such alarm. The
authentic InStyler is an electronically-regulated, mechanically-rotating
electrical appliance that heats to 400 degrees and is used in the
consumers hair. Counterfeiters obviously do not submit their
products to any certification body or consumer safety agency for
examination or approval, and here there is concrete evidence of
consumer injuries. [1 JA 45:10-46:2; 1 JA 48:26-49:10; 1 JA 67:26-
28; 1 JA 77:26-78:7.]
C. Amazon Has Not Identified Any Specific Harm thatWould Overcome the Interests in Favor of the
Injunction.
Although Amazon complains generically that having to live up
to the law will interfere with its business operations, the injunction
seeks only to p