The opinion of the court was delivered by: Leisure, District Judge.
Gianni Versace, S.p.A. (hereinafter "Gianni") seeks an order,
pursuant to Federal Rule of Civil Procedure 60(a), to modify a
preliminary injunction entered by the Honorable Sidney H. Stein,
United States District Judge, in Gianni Versace, S.p.A. v.
Alfredo Versace and Foldom Int'l (U.S.A.), Inc. (hereinafter the
"Foldom Action"). For the following reasons, Gianni's motion to
modify the preliminary injunction is dismissed as moot because
the Court clarifies that the preliminary injunction entered by
Judge Stein applies extraterritorially.
Gianni is a world-famous design house founded in the 1970s by
the late Italian designer, Mr. Gianni Versace. Gianni owns a
number of famous trademarks incorporating the name "Versace," as
well as its signature "Medusa" trademarks. A.V. By Versace, Inc.
(hereinafter "A.V.") is a Texas corporation originally formed by
Mr. Alfredo Versace (hereinafter "Mr. Versace"), Anthony
Pellegrino, and Patrick Marano. A.V. is a manufacturer of
clothing and athletic shoes bearing the trademarks "A.V. By
Versace" and "Alfredo Versace," pursuant to an alleged license
with Mr. Versace, an Italian citizen and United States resident
The factual background of this action has been set forth in
greater detail in this Court's January 28, 1997, Memorandum
Order, see A.V. by Versace, Inc. v. Gianni Versace, S.p.A., No.
96 Civ. 9721, 1997 WL 31247, at *1 (S.D.N.Y. Jan.28, 1997),
familiarity with which the Court assumes. In December 1996, A.V.
commenced an action (hereinafter the "A.V. Action") against
both Gianni and Mr. Versace after its customer, Kinney Shoe
Corporation, received a "cease and desist" letter from Gianni's
attorneys alleging that Kinney's sales of "A.V. By Versace" and
"Alfredo Versace" clothing and shoes infringed various Gianni
trademarks. As to Gianni, A.V. sought (1) declaratory relief,
declaring that its products do not infringe Gianni's registered
trademarks; (2) injunctive relief, enjoining Gianni from sending
further "cease and desist" letters to A.V.'s customers; and (3)
damages, under theories of unfair competition and tortious
interference with contract. See id. Against Mr. Versace, A.V.
requested (1) declaratory relief, ruling that (a) it has the sole
right to use the mark "Alfredo Versace," and (b) if the mark is
registered in the United States, it must be assigned the
registration; and (2) compensatory and punitive damages. See
On January 28, 1997, this Court denied A.V.'s request for a
preliminary injunction against the two defendants that would have
prohibited both from using the mark "Alfredo Versace," based on
A.V.'s failure to demonstrate a likelihood of irreparable harm.
See id. at *2-*3. Gianni subsequently filed counterclaims, a
cross-claim, and third-party claims of trademark infringement and
unfair competition against A.V. and third-party defendants
Anthony Pellegrino and Patrick Marano. See A.V. by Versace, Inc.
v. Gianni Versace, S.p.A., No. 96 Civ. 9721, 1998 WL 832692, at
*1 (S.D.N.Y. Dec.1, 1998).
II. The Foldom Action and Judge Stein's Preliminary
On January 8, 1998, Gianni filed a separate lawsuit against Mr.
Versace and Foldom International (U.S.A.), Inc. (hereinafter
"Foldom"), alleging trademark infringement, unfair competition,
and trademark dilution in violation of the Lanham Act,
15 U.S.C. § 1114(l), 1125(a), and 1125(c); trademark dilution, pursuant
to New York General Business Law § 360-l; and trademark
infringement and unfair competition under New York common law.
See Foldom Compl. ¶ 1. Gianni claimed that Mr. Versace and
Foldom were manufacturing and selling products that infringed
Gianni's registered trademarks, and/or licensing or franchising
such infringing trademarks. See id. ¶ 17. These products
allegedly included men's and women's suits, jeans, tee-shirts,
sweaters, active wear, handbags, leather goods, and packaging
bearing the names "AV Versace," "Versace by A.V.," or "Alfredo
Versace." Id. ¶ 18. By its complaint, Gianni sought a
preliminary injunction enjoining Mr. Versace and Foldom from
using "its trademarks or trade dress or any designation so
similar as likely to cause confusion, mistake or deception,"
including "Alfredo Versace," "A.V. by Versace," "Versace by A.V."
and "A. Versace." Id. ¶ A. In addition, Gianni sought
compensatory and punitive damages. See id. ¶ C, E-G. The case
was originally assigned to the Honorable Sidney H. Stein.
On February 4, 1998, Judge Stein granted Gianni's request for a
preliminary injunction, issuing his decision from the bench.
See Feb. 4, 1998 Conf. Tr. at 3-17. Judge Stein instructed
Gianni to submit a proposed preliminary injunction to the Court
by February 5, 2000, and to model its proposal after the
injunction issued in Gucci v. Gucci Shops, Inc., No. 83 Civ.
4453, 1988 WL 75263 (S.D.N.Y. July 13, 1988). See id. at 16-18.
After Judge Stein issued the injunction, the parties sought
clarification of a few issues. See id. at 19-32. First, counsel
for Mr. Versace and Foldom asked Judge Stein if they could rely
on the requirements of the Gucci preliminary injunction until
he signed the preliminary injunction in the present case. See
id. at 19. Judge Stein responded, "to the extent that [this
order is] broader than the Gucci order, the answer is no."
Id. Next, defense counsel raised the issue of the injunction's
extraterritorial application. See id. at 21. Although never
definitively ruling on the injunction's extraterritorial
application at this hearing, Judge Stein made a few points clear
regarding the injunction. First, Judge Stein recognized the
Court's power to enjoin defendants' licensing and franchising
activities abroad. See id. ("To the extent that [Mr. Versace]
is directing things be done . . . I have jurisdiction to stop him
from doing things."). Second, Judge Stein noted that, with regard
to the injunction's
extraterritorial application, defendants had the burden to prove
that their foreign activities were not subject to the injunction.
See id. ("I think [Gianni's attorneys] are right [about the
injunction applying to defendants' activities abroad.] I will let
[defendant's attorneys] convince me otherwise."). Third, after
further discussion, Judge Stein held that "[i]n the absence of [a
clear holding from the Second Circuit], the proposed preliminary
injunction should cover licensing in the States. For licenses to
be entered abroad, let's see what the cases say." Id. at 24.
Finally, Judge Stein directed the parties to submit applicable
case law to him for a final determination of the injunction's
extraterritorial application. See id.
Between February 4 and February 9, 1998, both parties submitted
letter briefs and proposed orders arguing their respective
positions on the issue of the Court's power to enjoin defendants'
activities abroad. See Affidavit of Theodore C. Max., Esq.,
sworn to on May 23, 2000 (hereinafter "Max Aff."), ¶¶ 14-17 & Ex.
C-F. On February 5, 1998, counsel for Gianni submitted a proposed
preliminary injunction and cover letter which argued that the
injunction should cover defendants' allegedly infringing conduct
outside the United States. See id., Ex. C. The following day,
February 6, 1998, counsel for Mr. Versace and Foldom submitted a
letter to Judge Stein detailing their proposed changes to the
order submitted by Gianni. See Max. Aff. ¶ 16 & Ex. D. In this
letter, defense counsel argued that the injunction should be
limited to defendants' activities within the United States and
therefore proposed adding the phrase "in the United States" three
times in paragraph 12, once in paragraph 14, and once in
paragraph 15. See id. Further, defense counsel contended that
these changes were necessary "to clarify the issue that this
order is not preventing our client from conducting businesses in
foreign countries which may allow him to use his name or a
variation thereof as a trademark." Letter from John F. Kaley,
Esq., to the Court, dated Feb. 6, 1998, at 2 (Max.Aff., Ex. D).
Each party filed additional objections to the other side's
proposals over the next four days. See Max. Aff. ¶¶ 17-18 & Ex.
On February 10, 1998, Judge Stein signed the preliminary
injunction. See Prelim. Inj., dated Feb. 10, 1998 (hereinafter
"Prelim. Inj."). The injunction did not incorporate defendants'
proposed additions of the phrase "in the United States," in
paragraphs 12, 14, or 15. See id. The injunction did, however,
refer to the United States in paragraph 8. See Prelim. Inj. ¶
8. Paragraph 8 appears to be a verbatim adoption of the original
proposal submitted by Gianni. See Proposed Prelim. Inj,
attached as Ex. B to Theodore C. Max letter to the Court, dated
Feb. 5, 1998. This paragraph — the subject of the present motion
[d]efendants, their officers, agents, servants,
employees, representatives, licensees, and attorneys,
and all persons in active concert or participation or
privity with any of them who receive actual notice of
this Order, are hereby enjoined, pendente lite, in
the United States of America from registering,
attempting to register, using, advertising,
marketing, licensing, franchising, promoting or
authorizing the use of any of the Versace Trademarks,
Versace Trade Dress, or the Medusa Designs, as or as
part of a trademark, service mark, business name, or
trade name for any product, service, or business, or
in such a manner as to create the impression that
such name, logo or symbol is the trade name or
business name of any designed, manufacturer,
distributor, retailer or other business or trademark
or service mark for any product or service. . . .
Prelim. Inj., ¶ 8. With the exception of paragraph 8, however, no
other provision of the Order includes any geographic limitation.
See id.; Max. Aff. ¶ 18.
Under the [preliminary injunction], may Alfredo
Versace sign a license agreement while present in his
office in New York licensing a foreign entity or
concern (e.g., a Japanese or Korean company) to
distribute goods bearing the trademark AV Versace or
Alfredo Versace outside the United States, in, for
example, a country where Alfredo Versace has rights
to manufacture and distribute goods bearing either of
Id. at 2. Judge Stein denied defendants' request for
clarification by Memorandum Endorsement on ...