Counterfeit Nail Polish Seized at Trade Show Ordered Destroyed, Broad Injunction Issued

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Hand & Nail Harmony Inc. v. Guangzhou Shun Yan Cosmetics Co. Ltd., D. Nev., No. 2:12-cv-01212-JCM-PAL, 10/10/12

  • Key Holding: Trademark owner secures a broad injunction against Chinese manufacturers of counterfeit nail polish.

By Tamlin H. Bason

Counterfeit nail care products that were seized at a trade show were ordered destroyed after the U.S. District Court for the District of Nevada determined Oct. 10 that the plaintiff was entitled to a preliminary injunction preventing the future manufacture and distribution of the knockoff products (Hand & Nail Harmony Inc. v. Guangzhou Shun Yan Cosmetics Co. Ltd., D. Nev., No. 2:12-cv-01212-JCM-PAL, 10/10/12).

The court determined that the plaintiff was likely to succeed in its Lanham Act claims against Chinese individuals and businesses that were operating “wholesale distribution businesses which are manufacturing, offering for sale and selling nail polishes, nail care preparations and LED lamps bearing counterfeit and infringing trademarks and/or trade dress in violation of Plaintiffs' respective rights.”

Goods Seized at Popular Beauty Trade Show
Hand & Nail Harmony Inc., a California corporation, and Nail Alliance LLC, a Delaware limited liability company, manufacture and sell “an enormously successful line of patent-pending, soak-off gel polishes and other nail care applications in a wide variety of colors under the brand name GELISH.”

The companies spend millions of dollars each year promoting the products through advertising, and by attending trade shows in the United States and throughout the world.

Nail Alliance owns numerous federal trademark registrations for terms associated with the Gelish products. Harmony is the exclusive licensee of all of the trademarks and trade dress rights associated with the goods.

On July 9, two weeks before a large Las Vegas trade show, Harmony filed a trademark infringement suit against 1,000 Doe defendants that, according to the complaint, manufactured and sold counterfeit products bearing the Gelish mark. The complaint alleged that the defendants are “opportunistic, sophisticated counterfeiters and itinerant vendors that sell Chinese-made or other rip-offs of the GELISH goods at trade shows around the world.”

The complaint sought a temporary restraining order permitting the seizure of any counterfeit Gelish goods at the upcoming trade show.

The court granted the TRO, ordered Harmony to post $5,000 bond, and said it would hear arguments on Harmony's motion for a preliminary injunction on Aug. 3.

Pursuant to that TRO, numerous counterfeit Gelish goods were seized by the U.S. Marshals Service at the Las Vegas trade show. Subsequently, none of the defendants appeared for the Aug. 3 hearing.

Harmony Entitled to Preliminary Injunction
The court noted that in many ways Harmony's successful line of products attracted the attention of counterfeiters. This was particularly true with regards to the Las Vegas trade show, Cosmoprof North America.

“Cosmoprof North America is the premier trade show in the United States beauty industry,” the court said. “Last year, Cosmoprof was attended by more than 25,000 visitors from 105 countries.” The show was in fact “an irresistible venue for Defendants' counterfeiting activities,” the court said.

The merchandise seized at the show was “identical in every material aspect to genuine GELISH goods,” the court said. Because the counterfeit goods look identical to the Gelish products, and in fact bear the Gelish mark, Harmony argued that it would suffer irreparable harm if the defendants were not enjoined from selling the counterfeit goods. Judge James C. Mahan agreed. He said:

Plaintiffs have well-founded fears that more Counterfeit Merchandise will appear in the marketplace; that consumers may be misled, confused, and disappointed by the quality of these products, resulting in consequent injury to Plaintiffs' reputation and goodwill; and that Plaintiffs may suffer loss of sales for their genuine products.

The court accordingly granted a broad injunction. With respect to the goods seized at the trade show, the court ordered that all such goods “be destroyed, disposed of, or maintained at the sole discretion of Plaintiffs.”

Among other things, the defendants were also ordered to refrain: “From manufacturing, importing, advertising, promoting, offering to sell, selling, distributing, or transferring any products bearing any of the GELISH marks … or the trade dress associated with the GELISH goods, above, or any confusingly similar mark, other than those actually manufactured or distributed by Plaintiffs.”

Harmony and Nail Alliance are represented by Alejandro J. Fernandez of Feldman Gale, Tampa, Fla. None of the defendants has made an appearance.

By Tamlin H. Bason

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