Intellectual Property Law

Ninth Circuit Affirms Judgment Sanction and $1M Award Against Counterfeiter

By Michael Atkins

You destroy evidence; you lose.

That’s what the Ninth Circuit concluded when it affirmed the District of Nevada’s sanction of default judgment against alleged counterfeiters Sungale Group, Inc., Sungale Electronics, Ltd., and Amoisonic Electronics, Inc., along with a $1 million award in statutory damages in favor of plaintiff Koninklijke Philips Electronics N.V. Here’s what the Ninth Circuit had to say:

“The district court found that Sungale deliberately destroyed its computer server, and with it electronic records Philips requested; this destruction demonstrated the ‘willfulness, bad faith, and fault’ required to support terminating sanctions. Sungale’s failure to produce requested documents prejudiced Philips, and this failure was not excused by the fact that Philips possessed some of the requested documents by virtue of the U.S. Marshals’ seizure of Sungale’s business records. Finally, the district court initially considered and awarded less severe sanctions and warned Sungale of the possibility of severe sanctions before entering the default judgment against Sungale.

“Neither did the district court abuse its discretion when it awarded $1,000,000 in statutory damages to Philips. Philips elected statutory damages, as permitted by the Lanham Act. The default judgment against Sungale was warranted by Sungale’s willfulness in offering for sale counterfeit goods bearing Philips’s trademark and by Sungale’s ongoing failure to comply with discovery requests, which made proof of actual damages difficult or impossible.”

For additional case background, see STL’s Aug. 21, 2008, post on an earlier Ninth Circuit decision in the case here.

The case cite is Koninklijke Philips Electronics, N.V. v. KXD Technology, Inc., 2009 WL 3059090, No. 08-16794 (Sept. 24, 2009).

Full post as published by Seattle Trademark Lawyer on September 30, 2009 (boomark / email).