Zig-Zag® Orange’s $3.1 Million in Damages Against Online Counterfeiters

On Thursday, May 24, a Venable team won $3.1 million in damages, fees, and costs, from a default judgment against 14 groups of online counterfeiters with e-commerce stores selling counterfeit Zig-Zag® Orange. Zig-Zag® Orange is a flagship product of Venable clients North Atlantic Operating Company, Inc. and National Tobacco Company, L.P. (“North Atlantic”), who exclusively distribute such products in the United States. The online counterfeiters operated on e-commerce platforms, such as eBay and DHGate.

In granting default judgment, and issuing damages, fees, and costs, on North Atlantic’s Lanham Act claims, the Honorable Terrence G. Berg, Chief Judge of the U.S. District Court for the Eastern District of Michigan, highlighted the specific need for deterrence justifying six-figure statutory damages (multiplied by the 14 groups of online counterfeiters) and six-figure attorneys’ fees awards, stating that the exact copying of Zig-Zag® Orange, in an attempt to trick consumers, was “the most egregious form of [trademark] infringement . . . .”

The defaulting defendants in this action attempted to dupe U.S. consumers by imitating the packaging, and contents of authentic Zig-Zag® Orange cartons and booklets, and offering them for sale under the guise that they were distributed by North Atlantic Operating Company, Inc., or were “Made in France” – when they were not.

The damages award is a wake-up call to online counterfeiters who choose to ignore lawsuits as “it is unfair to a plaintiff that it must watch its trademarks suffer infringement, pursue legal remedies, prove its case, and then be frustrated in it[s] attempts to obtain information as to its damages by the same defendants’ dilatory and non-responsive tactics.”

In addition to statutory, Judge Berg permanently enjoined the defendants from selling counterfeit Zig-Zag® products and awarded North Atlantic attorneys’ fees, costs, and investigative fees related to the case. Together, the total recovery awarded per counterfeiting group is over $223 thousand dollars in damages, fees, and costs, and over $3.1 million for all defaulted defendants.

With this win, North Atlantic reaffirms its zero tolerance approach to counterfeiting of its products.

Venable advised North Atlantic Operating Company, Inc. and National Tobacco Company, L.P. with a team including Marci Ballard (Picture), Viki Danta, and Maria Sinatra

Involved fees earner: Marcella Ballard – Venable LLP; Victoria Danta – Venable LLP; Maria Sinatra – Venable LLP;

Law Firms: Venable LLP;

Clients: North Atlantic Operating Company, Inc.; National Tobacco Company LP;

Author: Ambrogio Visconti