## Facts

- Gucci owned trademarks and trade dress associated with GUCCI luxury handbags, including the “Jackie-O” model.
- Daffy’s, an off-price retailer, bought 594 handbags from a supplier it viewed as reputable, paying roughly $238–$250 per bag.
- Before selling, Daffy’s attempted to verify authenticity: a Gucci outlet clerk examined a bag and said it was genuine, and Gucci’s repair center accepted, repaired, and returned a bag without raising authenticity concerns.
- The handbags were later determined to be counterfeit but were highly convincing, including to Gucci personnel.
- After receiving Gucci’s cease-and-desist demand, Daffy’s stopped selling the bags, cooperated, and adopted a policy not to sell Gucci products.
- Gucci sued under the Lanham Act and sought, among other remedies, a consumer recall, an accounting of Daffy’s profits, and additional injunctive relief.
- The district court found infringement but deemed Daffy’s an “innocent infringer” and denied a recall, profits, and further injunctions beyond Daffy’s cessation and remedial measures.

## Issues

1. Whether the district court abused its discretion by refusing to order a post-sale consumer recall of counterfeit handbags.
2. Whether Gucci was entitled to an accounting of Daffy’s profits despite the finding that Daffy’s infringement was not willful.
3. Whether the district court erred in denying broader forward-looking injunctive relief beyond Daffy’s voluntary cessation and policy changes.

## Decision

- The Third Circuit affirmed the judgment.
- The court held the district court did not abuse its discretion in denying a consumer recall.
- The court held the district court did not abuse its discretion in denying an accounting of profits.
- The court held the district court did not abuse its discretion in declining to impose additional injunctive restrictions where future infringement was unlikely.

## Legal Principles

- Lanham Act remedies such as recall orders, profit awards, and injunctions are equitable and reviewed on appeal for abuse of discretion.
- A consumer recall is an extraordinary remedy; courts may deny recall where the defendant acted in good faith, stopped sales promptly, and ongoing confusion is unlikely.
- An accounting of profits under 15 U.S.C. § 1117 is not automatic; the infringer’s culpability, including lack of willfulness, can weigh strongly against disgorgement.
- Injunctive relief is aimed at preventing future infringement and confusion; when a defendant has ceased the challenged conduct and the record shows low likelihood of recurrence, broader injunctions may be unnecessary.

## Conclusion

The Third Circuit upheld limited Lanham Act remedies against an off-price retailer that unknowingly sold highly deceptive counterfeit Gucci handbags, concluding that equitable factors supported denying a recall, denying profit disgorgement absent willfulness, and declining further injunctive relief where the retailer had already stopped sales and future infringement was unlikely.


Gucci Am., Inc. v. Daffy’s, Inc., 354 F.3d 228 (3d Cir. 2003)