BBK Tobacco & Foods, LLP v. 7th St Village Farm Inc.

Background

BBK Tobacco & Foods, LLP, doing business as HBI International, owns RAW trademarks and sells RAW rolling papers and accessories, including rolling trays. Galaxy VI Corp., doing business as Galaxy Wholesale, operated a smoke-supply store. In an earlier ruling, the court found Galaxy liable under the federal trademark statute known as the Lanham Act after an investigator bought one counterfeit package of RAW King Size Slim rolling papers for $2 and one counterfeit RAW rolling tray for $10.

BBK then moved for summary judgment on damages. It elected statutory damages instead of proving actual damages and requested $600,000, attorneys’ fees, and a permanent injunction. Galaxy did not file a legal memorandum or a response to BBK’s statement of facts. The court nevertheless considered an affidavit from Said Ghnaim to the extent it complied with the evidence rules.

Statutory Damages

The Lanham Act allows a trademark owner to elect statutory damages in counterfeit-mark cases. The court evaluated the requested amount using seven factors: the infringer’s saved expenses and profits, the trademark owner’s lost revenue, the value of the marks, the scale of the infringement, whether the conduct was innocent or willful, the defendant’s cooperation with record production, and deterrence.

The evidence showed that Galaxy operated one store, that only one sale of counterfeit goods was documented, and that Galaxy’s infringement was not shown to be willful. Galaxy’s incomplete records justified accounting for some uncertainty, but poor recordkeeping alone did not support BBK’s requested amount. The RAW brand had substantial consumer recognition, but the scale of the proven infringement was modest and the evidence of actual harm was limited.

BBK argued that each counterfeit product infringed four trademarks and sought $75,000 per trademark for each of two types of goods. The court rejected that calculation because the record did not show which trademarks appeared on which product. The evidence showed that one trademark could have been infringed by the counterfeit rolling tray and one different trademark could have been infringed by the counterfeit rolling papers. The court therefore awarded $15,000 for each of two trademark-and-product categories, totaling $30,000.

Attorneys’ Fees

The Lanham Act permits attorneys’ fees in an “exceptional” case—one that stands out because of the strength of a party’s position or the unreasonable way the case was litigated. BBK relied on Galaxy’s weak litigation position, delayed discovery responses, and inadequate summary-judgment submissions.

The court found Galaxy’s discovery conduct and briefing inadequate, but concluded that these problems did not make the case exceptional. The court also noted that Galaxy had successfully prevented summary judgment on the issue of willfulness. The court therefore did not find the case exceptional and did not award attorneys’ fees.

Permanent Injunction

The court found that a permanent injunction was warranted because counterfeit products could mislead consumers and cause harm that would be difficult to measure with money. Monetary relief would not adequately compensate for possible losses of goodwill and customers, Galaxy could not complain about losing the ability to sell infringing products, and the public has an interest in avoiding deception about the source and quality of goods.

Disposition

Judge Barbara Moses granted BBK’s motion for summary judgment as to damages in part. Judgment was entered for BBK Tobacco & Foods, LLP, doing business as HBI International, and against Galaxy VI Corp., doing business as Galaxy Wholesale, for $30,000 on the first and second claims. Galaxy was permanently enjoined from selling, offering for sale, or distributing rolling papers, rolling trays, or other smoking products bearing counterfeit reproductions of BBK’s registered trademarks. The court did not award attorneys’ fees and directed the Clerk of Court to terminate the action.