Burberry Can't Sue to Recover $2.5M From Counterfeiter

British high fashion heritage brand, Burberry was shot down by a New York federal Court of Appeals this past week after seeking to file suit against the owner of a company responsible for selling counterfeits, a company Burberry sued three years ago. A three-judge panel for the U.S. Court of Appeals for the Second Circuit held last Wednesday that it Burberry is not permitted to pursue a case against Asher Horowitz, whose company Designers Imports USA lost a  $2.5 million trademark counterfeiting case in 2007, initially brought by Burberry in 2007.

Turns out, Designers Imports has failed to pay more than $2.5 million in damages, interest and attorney's fees (the amount ordered in the 2010 lawsuit), and as a result, Burberry filed suit involving the same allegations, products and conduct but instead of Designers Imports, it named Horowitz as the defendant. The only problem is: Burberry's legal counsel knew (and has known since 2005) that Horowitz was the owner and CEO of Chester, NY-based Designers Imports when it filed the original lawsuit. And according to the ruling, Burberry cannot bring claims against him now that it could have brought in its initial suit, especially as the British company has failed to “offer any reason why it could not have joined Horowitz as a defendant in the earlier action."

Last week's ruling is the result of an appeal of Judge Paul Crotty's (of the Southern District of New York) decision from December 2012, which granted Horowitz's motion to dismiss the case, finding Burberry's claims were barred by res judicata (the legal doctrine that establishes that a matter may not be relitigated once it has been judged on the merits). So, since Burberry had filed essentially the same lawsuit against Designers Imports (subject to a final judgement in 2010), it was not permitted to pursue legal action against Horowitz, and the Court of Appeals has upheld that ruling. This doesn't mean that Burberry is out of luck as to the $2.5 million damages amount it is entitled to. It just has chosen the wrong way of going about it. More to come ...