A settlement agreement has been reached in a federal lawsuit filed by a New York-based leather goods manufacturer against a Carter County businessman and former political candidate over the sale of knockoff versions of the manufacturer’s products.
According to a joint status report filed Tuesday in U.S. District Court by attorneys representing Coach Inc. and Coach Services Inc., the plaintiffs in the suit, and David K. Hayes of Grayson and Hayes & Co. LLC, doing business as Hay Mart, the parties have reached an agreement to settle all claims in the matter.
Terms of the settlement were not disclosed.
Judge David L. Bunning ordered the parties to file a proposed agreed order of dismissal by Dec. 20. The case had been scheduled to go to trial March 10.
In the suit, filed in May 2011, Coach accused Hayes and his company of trademark and trade dress infringement, unfair competition and trademark dilution. The company sought damages equivalent to $2 million per infringement, or, in the alternative, all of the profits Hayes & Co. reaped from selling counterfeit Coach products.
According to the lawsuit, on Dec. 8, 2010, Coach purchased from Hayes and Co. a black fabric-and-leather handbag “bearing at least four marks subject to Coach registered copyrights and trademarks” for $50. The average retail price for a comparable authentic Coach item is $298, the suit states.
An inspection by Coach revealed the bag was counterfeit and infringed on Coach’s intellectual property for a number of reasons, according to the suit. However, the company said while it found the bag bore a number of similarities to an actual Coach item, the product contained uneven stitching and other flaws and did not meet Coach’s quality standards.
At the time of the handbag purchase, Hayes & Co. also was selling approximately 20 other imitation Coach items, including handbags and wallets, the suit states.
Hayes & Co. has never been an authorized retailer or manufacturer of Coach products, according to the suit. The lawsuit alleges Hayes and Co. has used, and is continuing to use “spurious designations that are identical to, or substantially indistinguishable from” Coach’s trademarks.
Those actions “are likely to create a false impression and deceive consumers, the public and the trade into believing that there is a connection or association between the infringing products and Coach,” the suit states.
Coach was founded more than 60 years as a family-run workshop in Manhattan. Today, the company’s annual worldwide sales total more than $3 billion, according to the suit.
Hayes, who has run for state representative and for Carter County judge-executive, denied Coach’s allegations in a response to the lawsuit.
Hayes’ sister, Sandra Seagraves, also is a defendant in the suit. She filed a counterclaim accusing Coach of “outrageous and aggressive” conduct, which was dismissed in April of last year.
KENNETH HART can be reached at email@example.com or (606) 326-2654.