## Facts

- Louis Vuitton S.A. (and Gucci Shops, Inc.) investigated suspected counterfeit sales at K‑Econo Merchandise, a small Chicago shop operated by Pun Yang Lee and In Ka Lee.
- An investigator bought a counterfeit Louis Vuitton camera case for $37.80; a Gucci employee bought a counterfeit Gucci camera case.
- Louis Vuitton and Gucci sued under the Lanham Act seeking injunctive relief and monetary remedies, including profits and enhanced relief for counterfeiting.
- Pursuant to an ex parte seizure order, plaintiffs seized counterfeit Louis Vuitton and Gucci items from the shop.
- Mrs. Lee admitted at deposition that customers had told her before the lawsuit that the goods were counterfeit.
- At trial, the parties stipulated that defendants, with at least constructive notice of plaintiffs’ registrations, “knowingly and wilfully” offered for sale, sold, and distributed counterfeit items.
- Proof of the Lees’ overall sales and profits was limited; the record largely established the investigator’s purchase and the seized counterfeit goods.

## Issues

1. Whether the district court could deny all monetary relief after a stipulation that defendants knowingly and willfully sold counterfeit goods.
2. Whether defendants’ claimed ignorance, small scale, or limited sophistication could justify a zero monetary award under the Lanham Act.
3. How § 1117(a)’s burden-shifting framework for profits applies when evidence of sales and profits is sparse but willful counterfeiting is established.

## Decision

- The Seventh Circuit vacated the denial of monetary relief and remanded for further proceedings.
- The permanent injunction against further infringement remained in effect.
- The court held that, given willful counterfeiting and proof of at least some infringing sales, the district court could not award zero monetary relief based on sympathy or perceived lack of sophistication.
- On remand, the district court was directed to apply the Lanham Act’s remedial framework, including the burden allocation for proving profits and deductions, and to determine an appropriate monetary award.

## Legal Principles

- Under 15 U.S.C. § 1117(a), a trademark plaintiff may recover the defendant’s profits, the plaintiff’s damages, and costs, “subject to the principles of equity.”
- For an accounting of profits, the plaintiff must prove the defendant’s sales; the defendant bears the burden to prove costs or deductions from those sales.
- “Principles of equity” constrain and guide remedy selection but do not permit a court to nullify statutory policies, particularly deterrence and disgorgement in cases of intentional counterfeiting.
- In a willful counterfeiting case with some proven infringing sales, a court must award at least some monetary relief; the amount may be modest, but cannot be zero solely due to the infringer’s small scale.

## Conclusion

The Seventh Circuit required the district court to award some monetary relief for knowing and willful trademark counterfeiting once at least some infringing sales were shown, holding that equitable discretion cannot be used to deny all recovery and thereby undermine the Lanham Act’s deterrent and disgorgement aims.


Louis Vuitton S.A. v. Lee, 875 F.2d 584 (7th Cir. 1989)