Boardwalk Counterfeit Suits Closed

OCEAN CITY — The last of the multi-million civil suits filed against a dozen individual Boardwalk businesses for selling counterfeit Coach merchandize was settled out of court this week after each of the other 11 defendants defaulted last month and were ordered to pay $10,000 each in damages to the company.

Coach Inc. and Coach Services, Inc., last August filed suits in U.S. District Court against a dozen individual Boardwalk stores for allegedly marketing and selling counterfeit knock-offs of the company’s famous, and expensive for that matter, handbags, dresses, accessories and other goods. In early June, 11 of the defendants were found in default after not responding to the civil suit and were ordered to pay $10,000 each to the company.

The last defendant, the Maytalk store on the Boardwalk, had responded to the suit and was not found in default. This week, the case against Maytalk was formally dismissed after it came to light the store owners and their representatives had reached a settlement agreement with Coach, the terms of which were private.

The suits were seeking $2 million in damages from each of the 12 defendants, or a total of roughly $24 million. However, it was determined early in the proceedings getting $2 million from each of the defendants would have been akin to getting blood out of a stone. Instead, 11 of the 12 defendants never responded to the suit and were found in default.

The suits were filed last August after a Coach investigator entered several Boardwalk stores on June 19 and allegedly found the counterfeit goods displayed prominently and offered for sale. In one example, the Coach investigator entered the Maytalk store on the Boardwalk and allegedly observed 21 counterfeit Coach products in plain view that were offered for sale. In that example, the investigator was able to purchase a knock-off Coach handbag for $75, a product typically sold by the company for as much as $300.

In another example cited, the Coach investigator entered the Beachbreak store on the Boardwalk and allegedly observed 20 counterfeit products on display and was able to purchase a Coach handbag for $60. In that case, the store clerk at least advised the undercover detective the handbag was not real, according to the complaint.

The investigator entered 12 Boardwalk stores and reported similar outcomes, according to the suit. The other defendants, in no particular order, included Hot Topik, Ocean Reef, Summer Breeze, Surf Beachwear, The Fashion Shop, Ocean Waves, Sunset Beachwear, Oceanfashion Boutique, New York New York, and the Jewel of the Ocean.

In addition to the compensatory and punitive damages of $10,000 awarded to Coach from each of the 11 defendants that defaulted, U.S. District Court Judge Catherine C. Blake enjoined the defendants from, “manufacturing, importing, advertising, marketing, promoting, supplying, distributing, offering for sale, or selling any products which bear the Coach trademarks, the Coach trade dresses or the Coach design elements,” according to the judge’s order.

The judge also enjoined the defendants from “engaging in any other activity constituting unfair competition with Coach, or acts and practices that deceive customers, the public and/or trade including without limitation the use of designations and design elements associated with Coach.”

The order also prohibits the defendants from “engaging in any other activity that will cause the distinctiveness of the Coach trademarks to be diluted,” and to “recall from any distributors and retailers and to deliver to Coach for destruction or other disposition all remaining inventory of infringing products.”

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