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Italian Manufacturer Infringed U.S. Accordion Seller's Mark

by Thomas Long, Legal Editor, CCH Trademark Law Guide  

Summary judgment in favor of a U.S.-based distributor of accordions on its trademark infringement claims against an Italian accordion manufacturer has been affirmed by the U.S. Court of Appeals in Chicago. A permanent injunction barring the manufacturer from using the mark "Gabbanelli" on accordions in the United States was affirmed, although the court vacated an award of damages to the distributor and remanded the case for redetermination of the proper amount of monetary relief.

The distributor began selling Gabbanelli-branded accordions in the United States for the predecessor of the Italian manufacturer in the mid-1960s. In 1996 and 1997, the distributor obtained trademark registrations for the Gabbanelli name and began importing accordions designed to its specifications and manufactured by other companies, in addition to the Italian manufacturer.

In 1999, the distributor sued the manufacturer in an Italian court for using the Internet domain name gabbanelli.com and advertising the Gabbanelli mark on the Internet without authorization. The manufacturer won that suit, and then each party filed an additional trademark suit in Italian court, which were settled. The settlement agreement gave the distributor the exclusive right to use the Gabbanelli name in North America and the manufacturer the exclusive right to use it in Italy.

In January 2002, the distributor filed the current lawsuit in a federal district court in Texas, accusing the manufacturer of infringing the distributor's U.S.-registered Gabbanelli marks. The district court found the manufacturer liable for trademark infringement.

Arbitration Agreement

The distributor was not required to submit its claims to arbitration pursuant to a clause in the settlement agreement in the previous Italian litigation between the parties, the court said. After the settlement was reached, the Italian manufacturer had filed another lawsuit in Italy, seeking transfer of the distributor's U.S. trademarks to the manufacturer. By filing this suit, the manufacturer waived its right to insist on arbitration.

In addition, the judgment in that Italian lawsuit --which granted the manufacturer's request for transfer of the U.S. marks --postdated the American district court judgment in the current case and therefore did not affect the finding of trademark infringement, according to the court.

Damages

The district court erred by awarding both $151,000 in lost profits and statutory damages of $500 per infringing accordion sold in the United States by the Italian manufacturer, the appellate court determined. Statutory damages may be awarded only in cases in which compensatory damages are not awarded for the same violation.

The lost profits award constituted an award of compensatory damages, the court said. In addition, the Lanham Act provided for statutory damages of "not less than $500 or more than $100,000 per counterfeit mark per type of goods or services sold," not per individual item bearing the counterfeit mark.


Gabbanelli Accordions & Imports, L.L.C., 7th Cir., 61,471.