Comments on: Diversion, yes, but no

By: PostRank – Law

PostRank – Law — Mon, 30 Nov 2009 03:27:18 +0000

Diversion, yes, but no http://bit.ly/524Kq5 #postrank #law

By: Ron Coleman

Ron Coleman — Mon, 30 Nov 2009 02:43:00 +0000

Tal, that’s a great idea if indeed you really want to discover which distributors are “diverting” product. But Dick Troll’s point, and Judge Wexler’s point, was that the manufacturers mainly don’t — they’re happy to sell the stuff, and to prosecute selectively when they have to do so either for show (i.e., to satisfy non-cheating distributors or “approved” retailers) or to shut down one particularly high-profile or hated “unauthorized” retailer. As you put it, to do otherwise “may not be economically feasible.”

As to the tortious interference claim against the retailers, that’s a crock; there’s almost never legally cognizable inducement. Unfortunately for some Eastern District defendants (and their families and, um, creditors), however, some judges are not particularly interested in the “legally cognizable” part.

By: Ron Coleman

Ron Coleman — Mon, 30 Nov 2009 02:09:28 +0000

Yes, and that is the subtext of my post. It is true that I think Judge Wexler was right on the law here. But I am also quite confident that L’Oreal can do no right in that courtroom at this point. And that is somewhat troubling — because that’s the point I reached in the other case of my own, but also because even as a legal realist it hurts to watch law being made that way.

By: anon

anon — Mon, 30 Nov 2009 01:46:11 +0000

The 2007 decision mentioned that counsel for L’Oreal (later replaced with Weil Gotshal) drafted a criminal indictment, which they sent to the US Attorney’s Office in an attempt to leverage a criminal case into a settlement. That strikes me as the type of [jerk]y move that will get your client launched in your case, and in other cases, for more than a few years.

By: Tal Benschar

Tal Benschar — Fri, 27 Nov 2009 14:16:52 +0000

The recent Davidoff case in the SDNY shows the way of how to deal with this. You put serial numbers on the product allowing you to trace who the distiutor is. If you find the “diverted” goods, you then terminate that distributor. If the serial number is rubbed off, then the item is counterfeit (assuming there is some bona fide use for either QC, recalls, or stopping counterfeits).

Of course, you have to be willing to terminate distributors. That may not be economically feasible.

(Also, BTW, while “diverted” goods are still genuine in terms of trademark law, there still can be a breach of contract claim, as well as tortious intereference with contract if someone induced the breach.)