Second Circuit Upholds Conclusion that Removal of UPCs from Trademarked Products Constitutes Trademark Infringement
Plaintiff Zino Davidoff SA ("Davidoff"), the creator of high-end luxury goods including the COOL WATER branded cologne and fragrance, sued CVS Corporation, a retail drugstore chain, for federal trademark infringement, unfair competition, and trademark dilution, among other things. Originally, Davidoff sought relief only in connection with CVS's alleged marketing of counterfeit Davidoff products.
However, during a court-authorized inspection of undistributed Davidoff products in CVS's inventory, Davidoff discovered 16,600 items on which the UPCs on the packages and labels had been removed. The UPCs had been removed by, among other things, cutting the portion of the box or label on which the UPC appeared, using chemicals to wipe the UPC away and grinding the bottom of the bottles to remove the UPC.
Davidoff then amended its complaint to claim relief based upon CVS's sale of Davidoff products on which the UPC had been removed and moved for a preliminary injunction forbidding the sale of such products. The District Court granted Davidoff's motion for a preliminary injunction, concluding that Davidoff was likely to succeed on the merits of its trademark infringement claims on the theory that CVS's sale of Davidoff branded products with the UPCs removed constituted trademark infringement.
The Second Circuit affirmed the District Court's decision, finding that the injunction was justified on the ground that removal of the UPCs from Davidoff's trademarked products unlawfully interfered with Davidoff's trademark rights, specifically, its ability to control the quality of its products. The Second Circuit relied on an earlier case holding that
a trademark holder is entitled to an injunction against one who would subvert its quality control measures upon a showing that (i) the asserted quality control procedures are established, legitimate, substantial, and nonpretextual, (ii) it abides by these procedures, and (iii) sales of products that fail to conform to these procedures will diminsh the value of the mark.
The Second Circuit agreed with the District Court that Davidoff had satisfied each of these requirements. Davidoff demonstrated adequately that the affixation of the UPC was a legitimate procedure to detect counterfeits, identify defective products and faciliate effective recalls. In addition, the Second Circuit concluded that CVS was selling under Davidoff's mark goods that were materially different from Davidoff's genuine trademarked products. Specifically, the Court concluded that the damage to the packaging caused by the removal of the UPCs--the cutting of the packaging, the application of chemicals to wipe away the UPC, and the grinding of the bottles to remove the UPC--made the goods sold by CVS materially different from Davidoff's genuine trademarked products.
The Second Circuit thus affirmed the District Court's grant of a preliminary injunction to Davidoff.
The Court's opinion in Zino Davidoff SA v. CVS Corp., No. 07-2872, can be found here (PDF, 16 pgs).
