New York Court Pierces Corporate Veil to Get at Individual Counterfeiter / Infringer of Burberry Products

A New York court recently pierced the corporate veil and refused to dismiss Burberry Limited / Burberry USA's complaint against an accused counterfeiter.

Burberry commenced the action against Asher Horowitz, the sole owner and officer of Designers Imports, which operated www.designersimports.com. Burberry alleged that in order to frustrate the enforcement of an earlier counterfeiting / trademark judgment, Horowitz dissipated Designers' assets by depleting its funds and conveying www.designersimports.com to RTC Fashion Inc.

It was undisputed that Horowitz was the sole shareholder, officer and director of Designers and the sole shareholder, officer and director of RTC. The allegations regarding Horowitz's domination and control of Designers included:

  • He purchased Burberry's merchandise (for sale by Designers) with his personal American Express credit card;
  • He used Designers' American Express business credit card to buy household and personal items;
  • He caused Designers to secure a loan during the prosecution of the trademark action, with a security agreement that encumbered all of Designers' assets;
  • Designers' web site announced that it was leased and managed by RTCF;
  • The address for Designers' American Express business credit card was changed to the same address as RTC's;
  • Horowitz licensed www.designersimports.com to RTC for a nominal annual fee;
  • Horowitz depleted Designers' bank accounts;
  • Horowitz caused the launching of RTC's web site www.fashion58.com, selling the same merchandise as www.designersimports.com; and
  • RTC filed an assumed name certificate with the Department of State in the name of Designers Imports.

In Burberry Ltd. v RTC Fashion Inc., 2012 N.Y. Misc. LEXIS 4099 (N.Y. Sup. Ct. Aug. 17, 2012) [enhanced version available to lexis.com subscribers], the Supreme Court, New York County, refused to dismiss the complaint against Horowitz. In piercing the corporate veil, the court noted that:

  • the evidence was sufficient to support an allegation of the use of corporate funds for personal use at both Designers and RTC;
  • Designers' dormancy diminished the importance of its separate physical and financial position from RTC; and
  • Horowitz's conveniently-timed creation of RTC, licensing of www.designersimports.com to RTC, and taking Designers' name for RTC together were intended to maintain continuity in the marketplace while placing obstacles in plaintiffs' attempts to execute judgment in the federal trademark action.

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