Fashion Boutique v. Fendi USA

1. Fashion Boutique v. Fendi USA The case of improper evidence supporting plaintiff’s claims and their subsequent appeal of District Court’s decision

2. Overview of previous case • In October 1996, Fashion Boutique brought a case against Fendi USA Inc. and Fendi Stores Inc. on the premise that the fall in their sales and the subsequent closing of its retail operations was the result of Fendi’s misrepresentation of the quality and authenticity of the products sold at Fashion Boutique. • Fashion Boutique claims violation of Lanham Act 15 which prohibits misrepresentation of another person's goods or services in “commercial advertising or promotion,” and violation of New York law on product disparagement and slander.

3. Overview of previous case ctd. • Fashion Boutique’s claims were based on “rumors” and on statements from the undercover investigators it hired to pose as shoppers. However in the “evidence” provided by Fashion Boutique, none of the interactions by the Fendi employees did initiate the conversations about Fashion Boutique. • Fendi USA moved for summary judgment on the Lanham Act claim. This was granted by the District Court.

4. Current Case overview • The current case concerns the appeals made by Fashion Boutique against the District Court on what they believe were errors on the side of the court, these were: • Granting the defendant’s motion for partial summary judgment based on plaintiff’s Lanham Act claim • Abusing its discretion in excluding the plaintiff’s expert testimony on the value of business lost • Instructing the jury that damages on slander were limited to the reputation injury in the minds of the three customers

5. The Arguments Fendi • Claims that Fashion Boutique’s argument does not fall under Lanham Act claim of misrepresentation in “commercial advertising or promotion” Fashion Boutique • Claims that their proof of disparaging comments by defendant and rumors of selling fake and inferior merchandise, falls under “commercial advertising or promotion” • The court improperly limited the damages to be recovered for slander and general damages • The exclusion of expert testimony was crucial as his value estimate is essential in calculating damages

6. Central Dispute • In this case, the main issue at hand is the definition of “commercial advertising and promotion”. What is the definition of commercial advertising and promotion, and exactly what can be classified as commercial advertising and promotion?

7. Case Overview • On the four part test set forth in the Gordon & Breach I, the court adopted the elements that the alleged representation made by Fendi, according to Fashion Boutique, was a commercial speech, for the purpose of influencing customers to buy defendant’s good/services and that the representations must be disseminated sufficiently to the relevant purchasing public. The Court of Appeals subsequently decided that the District Court had not abused its discretion in excluding the evidence of rumors. Thus, Fashion boutique failed to put forth sufficient evidence.

8. Case Overview ctd. • Based on unproven policy, the assumption made by the expert that a campaign of disparagement caused the sales of Fashion Boutique to decline, was denied. • Furthermore, Fashion Boutique only had proof that one customer heard defamatory statements from Fendi’s sales person. Hence the falling sales cannot be attributed to one testimony. • As a result, the Court agrees with the District Court that no causal relationship can be proved.

9. Case Overview ctd. • Assessing the court’s restriction on general damages for slander to the plaintiff’s business reputation in the mind of the person to whom the slanderous statement was made, the Court of Appeals decided to once again, agree with the District court. • The damages rewarded to the plaintiff were restricted as each slanderous statement was made only to an individual customer at Fendi and the degree of circulation of statements, made by Fendi, was not proven and hence had to be speculated by the jury.

10. The Court of Appeals fully agrees with the previous decisions made by the District Court of southern New York. Conclusion

11. Source: Justia Law USA About IPR Plaza IPR Plaza is a web-based platform that bridges the gap between IP law, accounting, tax, transfer pricing and valuation by providing general and profession-specific information on intangibles, as well as, quantifiable valuation models. IPR Plaza is empowered by different leading IP advisory firms. IPR Plaza is headquartered in the Netherlands with representation in other major countries.