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No Error in Default Judgment Award Against Operator of Website Selling Counterfeit Goods

Thursday, December 5, 2013
By Tamlin H. Bason

Dec. 3 --The district court did not commit reversible error when it declined to vacate a default judgment against a defendant who was found liable for wilful trademark infringement for operating a website that sold counterfeit Louis Vuitton products, the U.S. Court of Appeals for the Eleventh Circuit held Dec. 2 (Louis Vuitton Malletier, S.A. v. Mosseri, 11th Cir., No. 12-12501, 12/2/13).

The defendant sought a vacatur of the more than $330,000 judgment under Fed. R. Civ. P. 60(b). He argued that he was not subject to the district court's jurisdiction because he is a New York resident who had never conducted business in Florida.

The Eleventh Circuit rejected the defendant's argument. The evidence clearly established that the defendant was affiliated with websites that sold counterfeit merchandise to Florida residents and therefore the defendant was within the reach of Florida's long-arm statute, the appeals court held.

Defendant Makes No Appearance At Trial
Louis Vuitton Malletier S.A. is a French fashion house that has been producing luxury consumer goods, including apparel and accessories, since 1854. It has been marketing its goods in the United States since 1893.

Louis Vuitton vigilantly polices its marks by cutting down on counterfeit products that are sold both in brick and mortar stores and online. In 2010, the company noticed that two websites--pendoza.com and lazata.com--were selling Louis Vuitton handbags at a significantly reduced price. Louis Vuitton determined that the merchandise being sold on the websites was fake and it subsequently filed a trademark infringement suit in the U.S. District Court for the Southern District of Florida.

Louis Vuitton sought--and was given--permission to seek expedited discovery in order to identify the operators of the website. It was ultimately able to determine that Brooklyn, N.Y., resident Joseph Mosseri was affiliated with the websites.

Louis Vuitton filed an amended complaint naming Mosseri as a defendant. Mosseri was served but never responded to the complaint. However, one day before Mosseri's response was due, an attorney claiming to represent Mosseri contacted Louis Vuitton's counsel and requested additional time to respond. Louis Vuitton's counsel agreed to the request, but no motion for an extension was ever filed by Mosseri. Mosseri also failed to file an answer to the complaint, leading the court to find Mosseri in default.

Louis Vuitton then moved for an entry of default judgment. It sought, under Section 35 of the Lanham Act, 15 U.S.C. § 1117(c), $18,000 in statutory damages for each of the nine marks that were wilfully infringed. The district court granted the motion, ordering Mosseri to pay $324,000 in statutory damages, $9,135 in attorneys' fees and an additional $2,567 in investigative costs. The district court also issued a permanent injunction barring Mosseri from selling any of the subject marks, and ordering that the websites be turned over to Louis Vuitton.

Three months after the default judgment issued, Mosseri filed a motion to vacate the judgment pursuant to Rule 60(b)(4). He claimed that he had never been served and that he was not subject to the district court's jurisdiction. Mosseri later withdrew his argument that he had not been served.

The district court held an evidentiary hearing after which it denied Mosseri's motion to vacate. Louis Vuitton demonstrated that Mosseri had continuous contact with the state of Florida and therefore he was subject to the state's long-arm statute, the court held. Mosseri appealed.

Jurisdiction Proper Under Lovelady
Section 48.193 (1)(a)(2) of Florida's long-arm statute permits jurisdiction over a nonresident defendant who commits a tort outside the state that causes injury inside the state.

In Licciardello v. Lovelady, 544 F.3d 1280, 544 F.3d 1280, 544 F.3d 1280 (11th Cir. 2008)(203 PTD, 10/21/08), the Eleventh Circuit held that a Tennessee defendant's use of the plaintiff's trademarked name and pictures on a website accessible in Florida was sufficient to establish personal jurisdiction over the defendant in that forum. Accordingly, “Lovelady guides our analysis here,” Judge Frank M. Hull said.

“[U]under Florida law, a nonresident defendant commits 'a tortious act within [Florida]' when he commits an act outside the state that causes injury within Florida,” the court said, quoting Lovelady.

As a result, the court said that it was immaterial where Mosseri was located when he created the websites or posted the infringing materials online. “For purposes of § 48.193(1)(a)(2), the issue is whether Mosseri's tortious acts caused injury in Florida,” the court said.

Lovelady says the tort of trademark infringement caused injury and thus 'occurred in Florida by virtue of the website's accessibility in Florida,' ” the court said. As a result, it found Florida's long-arm statute satisfied because Mosseri caused injury in Florida both by operating a website that was accessible in Florida, and by selling infringing materials to Florida residents.

'Fully Interactive' Site Supports Personal Jurisdiction
The court next considered whether the district court's exercise of personal jurisdiction deprived Mosseri of due process.

The court noted that there were two separate tests to determine if a defendant purposefully availed himself of the privilege of conducting business in the forum, which is a necessary showing for the exercise of personal jurisdiction over a foreign defendant.

The effects test, set forth by the U.S. Supreme Court in Calder v. Jones, 465 U.S. 783 (1984), looks to whether an out-of-state defendant engaged in purposefully directed conduct that amounted to “express aiming” at the forum.

“In Lovelady, this Court concluded the defendant's use of the Florida plaintiff's trademarked name and picture on a website accessible in Florida 'satisfied the Calder effects test for personal jurisdiction,' ” the court said. However, the court declined to determine whether Louis Vuitton had satisfied the effects test because it determined that the record established that Mosseri has sufficient minimum contacts with the state, satisfying the traditional purposeful availment test.

In this case, the court found that Louis Vuitton established Mosseri's minimum contacts by demonstrated that pendoza.com was a fully interactive website accessible in Florida, and by showing that at least some infringing goods were sold to residents in Florida.

“We are not saying that the mere operation of an interactive website alone gives rise to purposeful availment anywhere the website can be accessed,” the court said. “But we are saying purposeful availment for due process was shown here because, in addition to his fully interactive 'pendoza.com' website accessible in Florida, Mosseri had other contacts with Florida--through selling and distributing infringing goods through his website to Florida consumers--and the cause of action here derives directly from those contacts.”

Finding the district court's exercise of personal jurisdiction appropriate, the Eleventh Circuit affirmed the refusal to vacate the default judgment.

The opinion was joined by Judge Beverly B. Martin and Judge Robert L. Hinkle of the U.S. District Court for the Northern District of Florida, sitting by designation.

Louis Vuitton was represented by Stephen M. Gaffigan, Fort Lauderdale, Fla. Mosseri was represented by Michael I. Santucci of Santucci Priore, PL, Fort Lauderdale, Fla.


Text is available at http://www.bloomberglaw.com/public/document/Louis_Vuitton_Malletier_SA_v_Joseph_Mosseri_Docket_No_1212501_11t.

To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com

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