Sunday, June 28, 2009

2d Circuit: Re-sale of goods whose UPC codes are removed or altered can constitute TM infringement

Similar to the 10th Circuit case I posted recently, the 2d Circuit recently issued a decision concerning whether re-sale of materially altered goods under the original trademark can constitute trademark infringement.

In Zino Davidoff SA v. CVS Corp., No. 07-2872 (June 19, 2009), the plaintiff manufactures high-end fragrances. It sells primarily through authorized dealers. Its quality control and anti-counterfeiting programs rely in large part on UPC codes in the bottom of each product. The various information embedded in the codes permits Davidoff to control quality by being able to trace back any defective product so it can implement effective recalls, etc. The unique numbering in the codes also permits Davidoff to detect counterfeit products, since counterfeiters either don’t use such codes or their replicas of the codes don’t conform to the format of the Davidoff codes.

The plaintiff caught CVS selling the products with the UPC codes removed, and sued for trademark infringement, obtaining a preliminary injunction.

The Second Circuit affirmed the injunction, holding that -- regardless of whether the goods were genuine or counterfeit, and regardless of whether the goods are of lesser quality than Davidoff’s product -- the re-sale of these goods with the Davidoff UPC code removed interfered with Davidoff’s legitimate quality control and anti-counterfeiting programs. The court also noted that the removal of the UPC codes was detectable by consumers of such luxury goods, but its decision did not appreciably rely on this ground for sustaining the injunction.

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