On Appeal From the United States District Court For the Eastern District of Pennsylvania; D.C. Civil Action Nos. 90-7232, 90-7233.
Stapleton, Scirica, and Aldisert, Circuit Judges.
In these consolidated cases, we must decide an issue of first impression: is an order denying an application under 15 U.S.C. § 1116(d) for an ex parte seizure order appealable? We hold that such an order constitutes a denial of a form of injunction and is immediately appealable pursuant to 28 U.S.C. § 1292(a)(1). We also conclude that the district court's refusal to grant a seizure order in this case was an abuse of discretion.
Louis Vuitton, through affiliated companies, makes and sells high quality luggage, handbags, and related items. Its merchandise has been advertised and distributed throughout the United States for over fifty years, and it holds trademarks not only in its name, but also in distinctive arrangements of its initials. The value of Vuitton's reputation and trademark has been recognized and misappropriated by others. Vuitton claims that it has begun over a thousand cases for counterfeiting and related frauds in the last fifteen years.
Vuitton has had a problem with counterfeiting in Philadelphia since at least 1983. In October 1989, Vuitton filed a counterfeiting action in the Eastern District of Pennsylvania against several street vendors, many of whom openly admitted that their merchandise was not authentic. At the beginning of that case, Vuitton made an ex parte request for a seizure order pursuant to 15 U.S.C. § 1116(d) and for a temporary restraining order; the district court granted only a portion of the temporary restraining order relief sought and denied the seizure order. Only one defendant appeared in response to the order to show cause for the preliminary injunction, which was granted without opposition. None of the defendants responded to further notice; permanent injunctive relief was entered by default on February 20, 1990.
Vuitton observed that counterfeiting activity on the streets of Philadelphia declined for only a few months after the first action. Therefore, it commenced these two actions on November 13, 1990. The Lee action was brought against street vendors, at least four of whom had been served with the injunctive order in the first action, and the White action was brought against a wholesaler and her salesperson. As related actions, both cases were assigned to the district judge who had heard the first action.
Again, Vuitton moved ex parte in each case for a temporary restraining order and a seizure order. In both cases, the district court granted the temporary restraining order, denied the seizure order, and set a date for the preliminary injunction hearing. Working from a form of order apparently supplied by Vuitton, the district court in both cases found that Vuitton met all the criteria for issuance of an ex parte seizure order, except that the court crossed out the finding that "the entry of any order other than an ex parte seizure order will not serve to adequately achieve the objectives underlying the Trademark Counterfeiting Act of 1984[.]" App. at 196, 204.
Once Vuitton learned that it had been denied the seizure order, it decided not to pursue the case further in the district court. It asked the district court to cancel the preliminary injunction hearing, so that defendants would not be served and it could attempt to pursue an ex parte appeal. In its order canceling the hearing, the district court gave a brief explanation for its refusal to issue the requested seizure orders:
Plaintiff failed to demonstrate at the conference with the court on November 13th, 1990 that an order other than an ex parte seizure order is not adequate to achieve the purposes of section 32 of the Lanham Act. Nor did plaintiff demonstrate an immediate and irreparable injury will occur if such seizure is not ordered. The Court's judgment is not to subject U.S. Marshals to the risks of making a seizure on the streets where plaintiff has access to the awesome other powers of the Court, including its injunctive and contempt authority to protect the trademarks.
Vuitton filed timely notices of appeal and attempted to serve defendants with its brief and appendix after its requests to appeal ex parte were denied by this court.*fn1 Its motion to consolidate the two cases for appeal was granted.
At the threshold, we must determine whether this court has appellate jurisdiction to review the district court's denial of an application for a 15 U.S.C. § 1116(d) seizure order. Ordinarily, we review only final orders of the district court, which this clearly is not. However, 28 U.S.C. § 1292(a)(1) authorizes immediate appellate review of district court orders "granting, continuing, modifying, refusing, or dissolving injunctions, or refusing to dissolve or modify injunctions", and Vuitton claims that because a § 1116(d) seizure order is a type of injunction, § 1292(a)(1) applies. We agree.*fn2
Consistent with their calling, professional counterfeiters and dealers in counterfeit goods generally are not upstanding citizens. This presents a major obstacle to trademark owners trying to protect their marks. As one commentator has described the situation,
Experience in hundreds of cases has shown that it is extremely likely that a counterfeiter, upon being apprised of the institution of a lawsuit by the trademark owner, will conceal his infringing merchandise and either destroy or conceal all records relating to this merchandise, thereby ...