Intermediary between Supplier and Internet Seller Found Liable for Counterfeit Chloe Handbags

Intermediary between Supplier and Internet Seller Found Liable for Counterfeit Chloe Handbags

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 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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