Simone Ubaldelli opened a business, Italian Only, through
which he bought items from Italy and sold them to US retail stores. Ubaldelli entered into an agreement with Rebecca Rushing, the agent for Queen Bee of Beverly Hills, LLC, whereby he agreed to seek out designer bags for resale on the
Queen Bee website. The profits were deposited into a joint account in the name
of "Queen Bee of Beverly Hills," which Ubaldelli and Rushing split
between the two of them.
Queen Bee's website allegedly sold counterfeit handbags bearing
the Chloé trademark, and in 2006, Chloé initiated a trademark infringement action against Queen
Bee and Ubaldelli.
In August 2010, the Second Circuit resolved a jurisdictional
dispute and remanded to the Southern
District of New York. Chloe
v. Queen Bee of Beverly Hills, LLC, 571 F. Supp. 2d 518 (S.D.N.Y.
2008) [enhanced version available to lexis.com subscribers], rev'd, 616 F.3d 158 (2d Cir.
N.Y. 2010) [enhanced version / unenhanced version available from lexisONE Free Case Law]. On
remand, Chloé moved for partial summary judgment on liability against Simone
Ubaldelli. On August 19, in Chloe v.
Queen Bee of Beverly Hills, LLC, 2011 U.S. Dist. LEXIS 94000 (S.D.N.Y. Aug.
19, 2011) [enhanced version], the court granted Chloé's motion.
The motion depended upon two questions: 1) whether any
substantive infringement occurred in Queen Bee's activity; and 2) whether
Ubaldelli could be held individually liable for that infringing activity. Addressing
the first question, the court held that Queen Bee's
activities clearly constituted infringement.
As for the second question, a corporate officer could be
held personally liable under the Lanham Act for trademark infringement and
unfair competition if the officer was a moving, active, conscious, force behind
a corporation's infringement. Chloé argued that, along with Rushing, Ubaldelli
made the decisions as to what Queen Bee would acquire for the purpose of
selling to the public and, as a result, was a moving, active, conscious force
behind any sales of counterfeit goods. Even drawing all reasonable inferences in
Ubaldelli's favor, the court agreed. Although Ubaldelli was not Queen Bee's sole
shareholder and did not control all of its business decisions, he was clearly a
participant in the infringing behavior. As noted by the court:
Ubaldelli's primary role for
Queen Bee was to meet with his source, Guido, and ascertain which types of
designer handbags were available and for what prices. With this information, he
would contact Rushing to decide which bags to purchase. The goal was to
determine which bags would generate the most profit by reselling them. If they found that certain brands were
particularly popular with customers, Ubaldelli would purchase more bags with
those brands. In fact, Ubaldelli explained that he bought greater amounts of
Chloé handbags specifically because they sold well. Once he purchased the
handbags, Ubaldelli would ship them to Rushing for her to sell through Queen
Bee and they would split any profits. These facts demonstrate that Ubaldelli
was a moving, active, conscious force behind Queen Bee's conduct, and, as such,
is liable for its infringement.
(citations omitted)
Ubaldelli argued that he was not Queen Bee's officer or director
and, therefore, was not liable for its trademark infringement. The
court rejected this argument, holding that:
... officer or director status
is not a prerequisite to individual liability. Instead, "[t]he only
crucial predicate to [an individual's] liability is his participation in the
wrongful acts." Whether Ubaldelli was an officer for Queen Bee does not
determine his liability; rather it is his participation in the infringing
conduct that is determinative.
....
Here, whether Ubaldelli can
be considered an officer of Queen Bee is not an issue that is essential to
finding him liable, as courts have found
that corporate employees, regardless of their officer status, can be held
individually liable for the torts they commit, such as trademark infringement,
on behalf of a corporation.
(citations omitted)
....
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