MANHATTAN (CN) - Fendi and Burlington Coat Factory cannot look to Ashley Reed's insurer to foot the $29 million award they won over counterfeit handbags, a federal judge ruled Wednesday.
Ashley Reed, a New York-based company known for selling off-priced handbags, was found liable for violating the trademarks of the Italian luxury fashion house Fendi in 2010. Because Ashley Reed had supplied such handbags to Burlington Coat Factory, another court later found that Ashley Reed had to indemnify the discount clothier for the more than $248,000 that Burlington owed Fendi.
An appellate court later affirmed that Ashley Reed had to pay triple the damages for five years of violations between 2001 and 2006 under the Lanham Act, which eventually came to be calculated at more than $29.8 million.
In a 17-page decision today, U.S. District Judge Richard Berman refused to let Ashley Reed pass on these bills to its insurer, United States Fidelity & Guaranty Co., under a policy covering "advertising injury."
The advertising was not the issue, according to the ruling.
"Rather, their liability was premised upon their 'offering for sale and selling certain [counterfeit] fashion accessories,'" Berman wrote.
Lawyers for the parties did not immediately respond to a request for comment.