In the Courts

September's ruling may be only a temporary setback for the retailers ' Gucci, Balenciaga America Inc., and Yves Saint Laurent America Inc. The case will now be remanded to U.S. District Judge Richard Sullivan in Manhattan for further briefing on post- Daimler jurisdictional issues. Sullivan has sided overwhelmingly with the retailers in the case so far.

In a 2010 trademark infringement complaint, the retailers alleged that they discovered knockoff versions of their pricey handbags being sold at domain names like myluxurybags.com and xpressdesigners.com. The case was assigned to Sullivan, who froze Bank of China accounts associated with the counterfeiters behind the phony websites. After Sullivan entered the injunction, the retailers subpoenaed information relating to the bank accounts from Bank of China, which was not a defendant in the case. The bank refused to turn over documents, asserting that doing so would violate Chinese bank secrecy laws.

Sullivan rejected that argument and entered an injunction in 2012 requiring the bank to comply with the subpoena and the asset freeze order. The judge concluded that it is well-established that he had general jurisdiction over Bank of China because of its continuous presence in New York.

The Supreme Court complicated the dispute in January when it decided Daimler . In that case, the high court dismissed a lawsuit against the German carmaker over the alleged role of its Argentine subsidiary in that country's “dirty war.” Critically, the court held that Daimler did not have sufficient “affiliations” with New York to subject it to general jurisdiction in the state.

Based on Daimler , the Second Circuit on Sept. 17 instructed Sullivan to reconsider whether he can order Bank of China's compliance. “In light of Daimler , decided only this year, the district court erred in finding that BOC is properly subject to general jurisdiction,” the panel wrote.

In a related order, the Second Circuit also vacated a similar injunction that U.S. District Judge Naomi Reice Buchwald entered in a parallel dispute involving Tiffany & Co. and Bank of China, as well as other banks. The same attorneys handled that case. ' Jan Wolfe, The Litigation Daily

Daimler Ruling Hangs over Chinese Counterfeiting Case

The U.S. Supreme Court's January ruling in Daimler AG v. Bauman arose from claims of torture, kidnapping and murder in Argentina. But the decision holds promise for foreign defendants in all kinds of cases, as an appeals court illustrated Sept. 17 in a battle over funds held by alleged Chinese counterfeiters at Bank of China Ltd.

In a win for Gucci America Inc. and other luxury retailers, the U.S. Court of Appeals for the Second Circuit affirmed an injunction freezing funds that the counterfeiters deposited in Chinese bank accounts through Bank of China. But the panel vacated a follow-on order requiring BOC to abide by with the injunction and hand over bank records. The Second Circuit cited Daimler , which limited the jurisdiction of U.S. courts over foreign companies, ruling that more fact-finding is needed to determine whether the district court can order BOC to comply.

September's ruling may be only a temporary setback for the retailers ' Gucci, Balenciaga America Inc., and Yves Saint Laurent America Inc. The case will now be remanded to U.S. District Judge Richard Sullivan in Manhattan for further briefing on post- Daimler jurisdictional issues. Sullivan has sided overwhelmingly with the retailers in the case so far.

In a 2010 trademark infringement complaint, the retailers alleged that they discovered knockoff versions of their pricey handbags being sold at domain names like myluxurybags.com and xpressdesigners.com. The case was assigned to Sullivan, who froze Bank of China accounts associated with the counterfeiters behind the phony websites. After Sullivan entered the injunction, the retailers subpoenaed information relating to the bank accounts from Bank of China, which was not a defendant in the case. The bank refused to turn over documents, asserting that doing so would violate Chinese bank secrecy laws.

Sullivan rejected that argument and entered an injunction in 2012 requiring the bank to comply with the subpoena and the asset freeze order. The judge concluded that it is well-established that he had general jurisdiction over Bank of China because of its continuous presence in New York.

The Supreme Court complicated the dispute in January when it decided Daimler . In that case, the high court dismissed a lawsuit against the German carmaker over the alleged role of its Argentine subsidiary in that country's “dirty war.” Critically, the court held that Daimler did not have sufficient “affiliations” with New York to subject it to general jurisdiction in the state.

Based on Daimler , the Second Circuit on Sept. 17 instructed Sullivan to reconsider whether he can order Bank of China's compliance. “In light of Daimler , decided only this year, the district court erred in finding that BOC is properly subject to general jurisdiction,” the panel wrote.

In a related order, the Second Circuit also vacated a similar injunction that U.S. District Judge Naomi Reice Buchwald entered in a parallel dispute involving Tiffany & Co. and Bank of China, as well as other banks. The same attorneys handled that case. ' Jan Wolfe, The Litigation Daily