The U.S. Court of Appeals for the Third Circuit, affirmed the decision of the district court, refusing to issue an ex parte seizure order of counterfeit goods, finding that the trademark owner did not provide sufficient evidence that an ex parte seizure order was the only adequate way to preserve evidence. Lorillard Tobacco Company v. Bisan Food Corp. Case No. 03-3151 (3rd Cir. July 28, 2004).
Lorillard Tobacco Company, the owner of the Newport brand of cigarettes, filed suit against three retail establishments selling counterfeit Newport cigarettes in New Jersey and requested the court grant an ex parte seizure order against each establishment. The district court refused.
Lorillard argued that the granting of the ex parte order was required as each defendant had an incentive to destroy the goods as they could be used to prove their liability under various criminal statutes, including the New Jersey Unfair Cigarette Sales Act, federal criminal laws relating to trafficking in counterfeit goods and tax evasion.
In reviewing the case, the Third Circuit held that the district court did not err, finding that ex parte seizure orders are only to be granted when no other order is adequate. In other words, the court ruled that the plaintiff must provide evidence to show that a defendant will not comply with a different order.
In distinguishing this case from its recent holding in the Vuitton case, the Third Circuit stated that an ex parte order was appropriate in extreme cases such as Vuitton where the defendant street vendors did not show up in court even after having been served. However, an ex parte seizure order will not be deemed the only available remedy unless other evidence is presented to show that other orders have been disobeyed.
With regard to Lorillard’s argument that the defendants had an incentive to destroy the goods, the Third Circuit ruled that the statute requires more than just incentive. Rather, the district court noted that the statute states that the person "would destroy, move, hide, or otherwise make such matter inaccessible to the court…" The court reasoned that if Lorillard’s arguments are accepted, the granting of an ex parte seizure order would become standard in all cases involving counterfeit cigarettes, rather than only in extreme cases.
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