Statutory Damages Provide Key Enforcement Mechanism to Curb Counterfeiters

By: Nicholas J. Nowak, Matthew M. Zuziak, Will Rodenberg, and Charles Hawkins

In Volkswagen Grp. of Am., Inc. v. Verotec Wheels, Inc., No. 19-24838-CIV, a federal magistrate judge in the Southern District of Florida ordered a counterfeiter to pay more than $1.1 million in statutory damages, attorney’s fees, and costs to Volkswagen and Audi for willful trademark infringement, false designation of origin, counterfeiting, and trademark dilution under the Lanham Act. The court also awarded additional damages upon finding the defendants liable for design patent infringement.

I. Background

Volkswagen and Audi filed suit against Verotec Wheels, Inc., and its CEO, Andy Varona, in November 2019, alleging that Verotec and Mr. Varona used an eBay account to sell counterfeit Audi wheel sets bearing the world-famous Audi rings logo. After more than a year of fact discovery, Volkswagen and Audi moved for summary judgement on all counts. Their motion also sought a finding that, under 15 U.S.C. § 1117(c), they were entitled to statutory, rather than actual damages, as well as a finding that the case was “exceptional” under subsection (a) of that statute, entitling Volkswagen and Audi to attorney’s fees. The court granted the motion with respect to the question of Verotec and Mr. Varona’s liability for trademark infringement, counterfeiting, false designation of origin, and trademark dilution, citing “overwhelming” photographic and documentary evidence demonstrating that the defendants used the eBay account in question to sell wheel sets that bore marks that were identical to Audi’s trademarked rings. The court tabled Volkswagen and Audi’s request for statutory damages and attorney’s fees, deciding to resolve these issues after a bench trial, in order to have an “opportunity to observe firsthand Mr. Varona’s credibility (or lack thereof) for those factual issues on which he did not contradict his prior testimony with a later-filed affidavit.”