Cesari S.R.L. v. Peju Province Winery L.P. et al

Filing 406

MEMORANDUM AND ORDER: Accordingly, defendants' application for leave to serve an expert report to pursue an advice of counsel defense is denied. SO ORDERED. (Signed by Judge Naomi Reice Buchwald on 2/6/2023) (mml)

Case 1:17-cv-00873-NRB Document 406 Filed 02/06/23 Page 1 of 5

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------X
CESARI S.R.L.,
Plaintiff,

MEMORANDUM AND ORDER

- against -

17 Civ. 873 (NRB)

PEJU PROVINCE WINERY L.P., PEJU FAMILY
OPERATING PARTNERSHIP L.P., and PEJU
PROVINCE CORPORATION,
Defendants.
---------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE
By letter on January 9, 2023, counsel to defendants Peju
Province Winery L.P. and Peju Family Operating Partnership, L.P.
(collectively, “Peju” or “defendants”) moved for leave to serve an
expert report to pursue an advice of counsel defense.
394.

See ECF No.

Since the relevance of an advice of counsel defense at the

damages

phase,

where

plaintiff

Cesari

S.R.L.

(“Cesari”

or

“plaintiff”) is only seeking disgorgement, was not obvious to the
Court, the Court directed defendants to furnish case authority
describing how an advice of counsel defense would impact the
remaining issue of disgorgement and an offer of proof.
No.

396.

The

Court

defendants’ submission.

also

permitted

plaintiff

to

See ECF

respond

to

See ECF No. 399. 1

Although the Court did not authorize additional submissions, defendants filed
a reply on February 1, 2023, see ECF No. 401, and plaintiff filed a sur-reply
1

1

Case 1:17-cv-00873-NRB Document 406 Filed 02/06/23 Page 2 of 5

In their letter of January 20, 2023, defendants cite to their
twelfth affirmative defense, raised in their answer to plaintiff’s
amended complaint:
Plaintiff’s
claims
and
recovery
are
barred
or
diminished, in whole or in part, by virtue of the legal
advice the Peju Defendants received from its prior
trademark counsel, Scott Gerien, beginning in or about
January 2016, which included, inter alia, neither the
identification of Plaintiff’s trademark LIANO as an
obstacle, nor potential obstacle, to Peju’s proposed use
or registration in the United States of the trademark
LIANA in International Class 33, nor that a prior entity
identified as “Peju Province” had previously filed a
trademark application with the United States Patent and
Trademark Office for LIANA in International Class 33 on
February 10, 2003 and which, in turn, became the subject
of an inter-partes decision by the TTAB in July 2004.
See ECF No. 397 at 2.

Defendants assert that expert testimony on

the inadequacy of their counsel’s advice “does not go to the issue
of liability, [rather] it goes to the issue of willfulness which,
in turn, may be relevant in mitigating the amount of damages
awarded to plaintiff.”
omitted).

Id. (internal citations and quotations

However, defendants cite no case authority in this

Circuit permitting an advice of counsel defense to reduce profits
at the disgorgement phase of a trademark case.

See e.g., Star

Indus., Inc. v. Bacardi & Co., 412 F.3d 373, 388 (2d Cir. 2005)
(considering whether the defendant acted in “good faith” in the

on February 2, 2023, see ECF No. 402. In their reply, defendants requested
oral argument on their application. See ECF No. 401 at 1. Because the parties’
letters provide sufficient information to resolve this dispute, defendants’
request is denied.

2

Case 1:17-cv-00873-NRB Document 406 Filed 02/06/23 Page 3 of 5

liability phase); W.W.W. Pharm. Co. v. Gillette Co., 984 F.2d 567,
575 (2d Cir. 1993) (same); Cuisinarts, Inc. v. Robot-Coupe Intern.
Corp., 580 F. Supp. 634, 637 (S.D.N.Y. 1984) (considering only
unjust enrichment and deterrence rationales for accounting); see
also ECF No. 400-1 (plaintiff’s chart distinguishing authorities
cited in defendants’ letter).
Moreover, the Court has repeatedly reminded the parties that,
at this stage, the Court must assess profits as set forth in 15
U.S.C. § 1117(a):
In assessing profits the plaintiff shall be required to
prove defendant’s sales only; defendant must prove all
elements of cost or deduction claimed . . . . If the
court shall find that the amount of the recovery based
on profits is either inadequate or excessive the court
may in its discretion enter judgment for such sum as the
court shall find to be just, according to the
circumstances of the case. Such sum in either of the
above circumstances shall constitute compensation and
not a penalty.
15 U.S.C. § 1117(a); see also ECF No. 391 at 1.

As defendants

acknowledge, in Romag Fasteners, Inc v. Fossil, Inc., the Supreme
Court

clarified

that

a

“showing

of

willfulness”

“precondition” to awarding profits in trademark cases.
1492, 1496-97 (2020).

is

not

a

140 S. Ct.

Nevertheless, “a trademark defendant's

mental state is a highly important consideration in determining
whether an award of profits is appropriate,” id. at 1497, as an
“award

of

profits

for

innocent

3

or

good-faith

trademark

Case 1:17-cv-00873-NRB Document 406 Filed 02/06/23 Page 4 of 5

infringement would not be consonant with the ‘principles of equity’
referenced in § 1117(a),” id. at 1498 (Sotomayer, J., concurring).
Here, however, the issue of good faith has already been
resolved in the context of defendants’ own motion for summary
judgment.

Indeed, in the Court’s August 3, 2022 Memorandum and

Order, the Court held that “Peju did not use the LIANA mark in
good faith,” in light of the following conduct:
[B]etween 2005 and 2007, Peju continued to use the LIANA
mark despite actual knowledge of Cesari’s first-in-time
registered trademark, Cesari’s opposition to Peju’s use
of the LIANA mark, and the TTAB’s ruling that Peju’s
mark was likely to cause confusion with Cesari’s mark
. . . . Even assuming the Peju daughters were unaware of
the original dispute with Cesari when they sought to
resurrect the LIANA brand in 2014, Peju was put on notice
of Cesari’s registered mark and opposition in August
2016, when Cesari filed a request for an extension of
time to oppose the 2016 Application. Cesari then sent
Peju a cease-and-desist letter in November 2016.
In
January 2017, Cesari apprised Peju of the TTAB’s prior
determination that the LIANA mark was likely to cause
confusion with Cesari’s mark.
Peju nevertheless
continued to use the LIANA mark. It wasn’t until July
2018 — one and a half years after this action was
commenced — that Peju finally terminated its use of the
LIANA brand.
ECF No. 372 at 37-39 (internal citations omitted). 2
Defendants’

suggestion

that

the

Court’s

decision

on

defendants’ own summary judgment motion was based on an undeveloped
record does not withstand even cursory analysis.

See ECF No. 397

The Court is reminded by defendants’ submissions that it was Anthony Peju who
signed the 2016 application to register the “LIANA” mark. See ECF No. 372 at
10.
2

4

Case 1:17-cv-00873-NRB Document 406 Filed 02/06/23 Page 5 of 5

at 3.

Not only was the fact that defendants had sought advice of

counsel from Gerien reflected in the Court’s decision, but the
Court’s bad faith finding was also well-supported by other actions
of defendants having nothing to do with Gerien’s advice.

See ECF

No. 372 at 9-10, 37-39; see also Cuisinarts, 580 F. Supp. at 638
(“[T]aking

counsel's

advice

does

not

ipso

facto

and

in

all

circumstances shield the actor from the consequences of his act.
Full and accurate disclosure must be made to counsel . . .
Otherwise counsel’s advice is a sham, a smokescreen set up to mask
the actor's real intent.”)
Beyond that, even if an expert might be appropriate, which it
is not here, the evidentiary proffer does not contain any proposed
testimony which cannot be provided by fact witnesses and does not
intrude on the Court’s role as the ultimate decision maker.
Accordingly, defendants’ application for leave to serve an
expert report to pursue an advice of counsel defense is denied.
SO ORDERED.
Dated:

New York, New York
February 6, 2023
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NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

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