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Top Tobacco, L.P. v. Thobani

United States District Court, E.D. Virginia, Richmond Division

October 10, 2019

TOP TOBACCO, L.P., et al., Plaintiffs,
AZIZ THOBANI. et al., Defendants.


          John A. Gibney, Jr., United States District Judge.

         Top Tobacco, L.P., Republic Technologies (NA), LLC, and Republic Tobacco, L.P. brought this action against Aziz Thobani and USA Imports VA, Inc., alleging violations of the Lanham Act and Virginia common law.[1] The plaintiffs served the defendants with the complaint and summons on April 17, 2019. The defendants failed to file responsive pleadings, and the plaintiffs moved for entry of default. Pursuant to Federal Rule of Civil Procedure 55(a), the Clerk entered default on June 17, 2019. The plaintiffs now move for default judgment under Rule 55(b). The Court held a hearing on the motion on October 10, 2019.

         I. BACKGROUND

         The plaintiffs manufacture and distribute TOP- and JOB-brand cigarette rolling papers, two of the best-known and longest-selling cigarette rolling papers in the United States. The plaintiffs maintain federal trademark registrations for the TOP and JOB marks. The plaintiffs have spent significant time and resources marketing their products, and they have developed considerable and valuable goodwill associated with the marks.

         In 2018, the plaintiffs learned that the defendants were selling cigarette rolling papers with TOP- and JOB-brand marks at a discounted price "because they were 'bad.'"[2] (Dk. No. 20-2, ¶ 4.) A laboratory analysis showed that the cigarette rolling papers were counterfeit.

         II. CLAIMS

         When a defendant defaults, the defendant admits the well-pleaded factual allegations in the complaint. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). Thus, in reviewing a motion for default judgment under Federal Rule of Civil Procedure 55(b), courts accept as true plaintiffs' well-pleaded allegations regarding liability. Id. Courts must then determine whether the allegations support the relief sought. Id.

         A. Trafficking in Counterfeit Goods

         To establish a trademark counterfeiting claim under 15 U.S.C. § 1114(1)(a), the plaintiffs must show that "(1) the defendant[s] intentionally used a counterfeit mark in commerce; (2) the defendants] knew that the mark was counterfeit; (3) the use occurred in connection with the sale, offering for sale, or distribution of goods; and (4) the use of the counterfeit mark was likely to confuse consumers." Assoc. Gen. Contractors of Am. v. Stokes, No. 1:11-cv-795 (GBL/TRJ), 2013 WL 1155512, at *3 (E.D. Va. Mar. 19, 2013). "Infringement is willful if a defendant has knowledge that its conduct represented infringement or recklessly disregarded the possibility." Mya Saray, LLC v. Al-Amir, 831 F.Supp.2d 922, 941 (E.D. Va. 2011).

         The plaintiffs' complaint sufficiently alleges the elements of trademark counterfeiting. The plaintiffs' laboratory testing showed that the defendants sold counterfeit TOP- and JOB-brand products, satisfying the first and third elements. Thobani's statement that the counterfeit rolling papers "were 'bad'" and his willingness to sell the rolling papers at a discounted price indicate that he knew that he was selling counterfeit papers, satisfying the second element. (Dk. No. 20-2, ¶ 4); cf. United States v. Zayyad, 741 F.3d 452, 463 (4th Cir. 2014) (noting that selling drugs below wholesale suggests deliberate indifference that goods were counterfeit). The plaintiffs enjoy "a presumption of a likelihood of confusion when the infringing mark is nearly an exact imitation," so their allegations satisfy the fourth element. JUUL Labs, Inc. v. Unincorporated Ass 'n Identified in Schedule A, No.18-cv-01063 (LO/IDD), 2019 WL 1511883, at *3 (E.D. Va. Mar. 20, 2019), report & recommendation adopted, 2019 WL 1510321 (E.D. Va. Apr. 5, 2019).

         B. Trademark Infringement

         To prove trademark infringement under 15 U.S.C. § 1114, the plaintiffs must show that (1) they "own[] a valid and protectable mark;" (2) the defendants used a "re-production, counterfeit, copy, or colorable imitation" of that mark in commerce, without the plaintiffs' consent; and (3) the defendants' use "is likely to cause confusion." Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 259 (4th Cir. 2007). Virginia common law trademark infringement claims require the plaintiffs to prove the same elements as a § 1114 claim. See Swatch AG v. Beehive Wholesale, LLC, 739 F.3d 150, 162 (4th Cir. 2014).

         The plaintiffs own valid trademarks for both TOP- and JOB-brand marks, and the defendants used counterfeit copies of those marks in commerce without the plaintiffs' consent, satisfying the first and second elements. Because the defendants sold cigarette rolling papers with marks nearly identical to the TOP and JOB marks, the plaintiffs receive a presumption of confusion. This satisfies the third element. Accordingly, the plaintiffs have established the elements of trademark infringement under 15 U.S.C. § 1114. Moreover, because the plaintiffs have established ...

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