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Famous handbag maker hits local retailers with lawsuits

March 31, 2010

In an effort to crack down on knockoffs, famous handbag designer Coach Inc. has hit at least three local retailers with trademark-infringement lawsuits.

The two most recent suits, filed March 24 in U.S. District Court of Southern Indiana, are against My Walk-In Closet of Greenwood and Novedades Latina on the south side of Indianapolis.

New York-based Coach sued a mall kiosk operator called Cellaxs on Dec. 11.

The complaints in each case are similar: Coach alleges trademark infringement, copyright infringement, counterfeiting and forgery, among other counts. The company demands $1 million per counterfeit mark per type of infringing item, such as a handbag or wallet. As an alternative, the company demands defendants pay Coach all the profits realized from the sale of infringing or counterfeit goods, plus treble damages.

"This is Coach getting very serious about stopping counterfeiting and infringing materials out there," Coach General Counsel Nancy Axilrod said.

Catherine Vesely, owner of My Walk-In Closet, 350 S. Madison Ave., could not be reached for comment Wednesday.

Zadia Caban, owner of Novedades Latina, 4202 S. Meridian St., Suite E, said she was not aware of the lawsuit. However, she said her store does not sell Coach or fake Coach goods. The store sells perfume, jewelry and some clothing. She said the only wallets she sells are a Mexican brand of men’s leather goods.

"This is like using a sledgehammer to swat a mosquito that's already incapacitated," said Gregory Gadsen, an Indianapolis attorney with Indianapolis-based law firm Lee Cossell Kuehn & Love who represents Cellaxs owner Rafik Howlader.

Coach, which designs everything from home goods to sunglasses, has global annual sales in excess of $3 billion.

The company calls its legal crackdown "Operation Turnlock," a reference to the signature turning lock on its high-end handbags. Axilrod said the company has spent $1 million or more to file 160 cases in the past 15 months. Coach has netted some six-figure settlements, she said, but the company is also using the lawsuits as a general deterrant.

Gadsen said Coach's tactic is unusual because, at least in his client's case, the company didn't bother with any preliminary correspondence. "Given the size of the complaint, it would've been nice to receive a cease-and-desist letter," he said. "My client wasn't aware he was selling anything that had a Coach name. He was surprised."

Gadsen said he's met with Alejandro Valle, Coach's attorney in Indiana, and hopes to reach a settlement, though he expects it would be well under six figures.

According to the complaint against Cellaxs, an unidentified investigator visited kiosks at Muncie Mall, Tippecanoe Mall in Lafayette and at Washington Square Mall on the east side of Indianapolis last summer. He or she bought snap-on cell phone covers with a Coach label that cost $15 to $23—much less than the suggested retail price of $70. The investigator sent the goods back to Coach in New York, which verified that they were not authentic.

On Feb. 26, an investigator stopped in My Walk-In Closet and bought a Coach-labeled handbag for $72.50 and a pair of sunglasses for $34.50, the complaint against the store said. The average retail price for those items is $325 and $185, respectively.

Also on Feb. 26, an investigator visiting Novedades Latina paid $49.99 apiece for Coach-labeled wallets. The real thing costs an average of $200. According to the Coach complaint, a secret shopper went back to the south-side store two days later and bought a knockoff handbag for $130.

Axilrod declined to say how many investigators Coach employs, or how the company decides where to look. The company sells its goods only through its own retail and factory outlets, Macy's and Bloomingdale's.

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