Counterfeit "LUXE" Cream, Online Sales, and a Conflict Check
A Philippine cosmetics company owns the registered mark "LUXE" for skin creams in Class 3. It discovers an online seller offering "LUXE" creams at one-third of the brand owner's price. The packaging is nearly identical, but the seller's version adds "LUXE Beauty" in small type and uses a different address. A test buy yields a product bearing the registered mark and poor-quality cream. The online listing shows 4,000 units sold. The brand owner's lawyer sends a demand letter. The seller responds through counsel, offers to stop selling, but refuses to disclose its supplier. The brand owner wants to seize inventory, stop online sales, recover damages, and possibly file criminal charges. The same lawyer also represents the seller in an unrelated collection case. Separately, the brand owner has a pending application for "LUXE BEAUTY" in Class 3, which may be cited against its own registered mark.
1. Distinguish trademark infringement from unfair competition on these facts and outline the civil and criminal remedies.
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Infringement requires a valid registered mark, use in commerce, and a likelihood of confusion. The brand owner has a registration for "LUXE" in Class 3, and the seller's use of the same word on identical goods, with imitation packaging, strongly supports confusion. Unfair competition does not require a registered mark; it targets passing off, false designation of origin, and deceptive selling. The seller's nearly identical packaging and "LUXE Beauty" add-on can support both theories. Civil remedies include a complaint for injunction, damages, accounting of profits, destruction of infringing goods, and attorney's fees. The brand owner may also seek a preliminary injunction or temporary restraining order to stop online sales. Criminal remedies are available under the IP Code for willful infringement and unfair competition, but the brand owner should coordinate with the prosecutor and present proof of registration, sales, and deception. The pending "LUXE BEAUTY" application is not a defense to the seller's infringement; however, the brand owner should review whether that application creates a self-collision or should be amended or abandoned.
2. What evidence and provisional remedies should counsel pursue, and what practical limits apply to seizing inventory?
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Counsel should preserve the test-buy evidence with a written chain of custody: screenshots with timestamps, the order confirmation, payment receipts, the delivered package, and a notarized affidavit describing the purchase. A second test buy may help show continuing sales. Counsel should also capture the listing's sales volume, seller name, product reviews, and any statements about affiliation. For provisional relief, the brand owner can apply for a preliminary injunction or TRO in court, and it can send platform takedown notices under the online marketplace's IP policy. Customs recordation may help intercept imports if the supplier can be identified. Seizing inventory requires legal process; a private party cannot simply raid the seller's stock. If criminal proceedings are contemplated, counsel should coordinate with law enforcement and the prosecutor. The seller's refusal to disclose the supplier is a gap, but it does not prevent civil relief. Counsel should also avoid overclaiming; damages and profits must be tied to evidence, not merely the listing's 4,000-unit figure.
3. Can the same lawyer continue to represent the brand owner while representing the seller in the unrelated collection case? What should counsel do?
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This is a conflict-of-interest problem. The lawyer would be acting for the brand owner against the seller in the infringement matter while also representing that same seller in a collection case. Even if the collection case is unrelated, the lawyer owes the seller loyalty and confidentiality, and the infringement matter is directly adverse. Under professional-responsibility rules, a lawyer may not represent conflicting interests except with informed written consent from all affected clients after full disclosure, and even then only if the lawyer reasonably believes the representation will not be materially limited. Here, the lawyer may learn the seller's supplier information or litigation strategy in the collection case, and the brand owner may want to use it. The safer course is to decline the infringement representation, withdraw from the collection case, or refer one matter to separate counsel. The lawyer should also check whether the firm's other lawyers are screening the matter. If the lawyer continues without consent, the conflict can taint the case and lead to discipline.