CHAPTER 195

FORMERLY

HOUSE BILL NO. 299

AN ACT TO AMEND TITLE 6, DELAWARE CODE, BY AMENDING CHAPTER 33 RELATING TO TRADEMARKS, BRANDS AND LABELS.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Title 6, Chapter 33, by deleting Section 3314 in its entirety and replacing it as follows:

"§ 3314. Remedies, including injunctions against forged or counterfeited trademarks, service marks, or copyrighted or registered designs.

(a) The State of Delaware finds and declares that the citizens of this State have a right to receive those goods and services which they reasonably believe they are purchasing or for which they contract. The State further finds that the manufacture and sale of counterfeit goods or goods which are not what they purport to be and the offering of services through the use of counterfeit service marks constitutes a fraud on the public and results in economic disruption to the legitimate businesses of this State. Moreover, those individuals and businesses doing business in Delaware who have, through their labors, developed intellectual property rights associated with their goods or services sold to the public, also deserve protection. In order to protect the citizens of this State and those who do business in this State, it is necessary to take appropriate actions to remove counterfeit goods from the channels of commerce and prevent the manufacture, sale, and distribution of such goods or the offering of such services through the use of counterfeit service marks.

() As used in this Chapter, the term 'forged or counterfeited trademark, service mark, or copyrighted or registered design' means (I) any mark or design which is identical to, substantially indistinguishable from, or an imitation of a trademark, service mark, or copyrighted or registered design which is registered for those types of goods or services with the Secretary of State pursuant to this Chapter or registered on the Principal Register of the United States Patent and Trademark Office or registered under the laws of any other state, whether or not the offender knew such mark or design was so registered or protected, if the use by such offender of such trademark, service mark, or copyrighted or registered design has not been expressly authorized by the owner thereof, and (2) any mark or design which is designed to, is reasonably likely to, or does, give the impression that the mark or design, or the good or product to which the mark or design is affixed, is authorized by or produced by an owner of a trademark or service mark or copyrighted or registered design registered under this Chapter or on the Principal Register of the United States Patent and Trademark Office or registered under the laws of any other state.

(a) As used in this Chapter, the terms 'counterfeits' and 'counterfeit goods' mean any product or good bearing or to which is affixed a forged or counterfeited trademark, service mark, or copyrighted or registered design.

(b) As used in this Chapter, 'Court' means the Court of Chancery.

(e) Any owner of a trademark or service mark or copyrighted or registered design registered under this Chapter or on the Principal Register of the United States Patent and Trademark Office or registered under the laws of any other state may proceed by action to enjoin the manufacture, use, display, or sale of any counterfeits or imitations thereof; and the Court may grant such relief, including orders restraining or enjoining such manufacture, use, display, or sale as the Court may deem just and reasonable and the Court may further require the defendants to pay to such plaintiff all profits derived from such wrongful manufacture, use, display, or sale, or both profits and damages.

(f) If, in any action brought under this section, the Court determines that a trademark or service mark or copyrighted or registered design is counterfeit, the Court may order the destruction of all such forged or counterfeited trademarks or service marks or copyrighted or registered designs and all goods, articles, or other matter bearing the forged or counterfeited trademarks or service marks or copyrighted or registered designs, which are in the possession or control of the Court or any party to the action; or, after obliteration of the forged or counterfeited trademark or service mark or copyrighted or registered design, the Court may order the transfer of any of those materials to the State, a civil claimant, a charitable institution, or any other appropriate person.

(g) (1) The Court, upon application, including ex parte application, in an action against persons known or unknown to enjoin either or both (i) the manufacture, use, display, or sale of counterfeits, or (ii) the unauthorized sale of any goods or products upon the plaintiffs property, whether counterfeit or not, may, as a preliminary matter, order seizure of the counterfeit goods upon a showing of good cause and upon the posting of a bond in an amount deemed appropriate by the Court. If it appears from an ex pat application that there is good reason for proceeding without notification to the defendant (including, for example, that the defendant may flee with or without the allegedly counterfeit goods or that the identity of the defendant is unknown), the Court may proceed ex parte. In determining 'good cause', the Court may grant an order of seizure in advance of such unlawful acts where they are reasonably anticipated to occur and the plaintiff demonstrates a particular need for such advance relief. A copy of the order of seizure shall be served at the time of seizure upon any person from whom seizure is effected. The order shall specifically set forth:

(i) The date or dates on which the seizure is ordered to take place;

(ii) A description of the goods to be seized;

(iii) The identity of the persons or class of persons to effect seizure, which persons may include officers of the Court, police officers and other law enforcement officials, persons licensed under Chapter 13 of Title 24, and such other persons as the Court may, in its discretion, decide are appropriate;

(iv) A description of the location or locations at which seizure is to occur; and

(v) A hearing date not more than ten court days after the last date or which seizure is ordered at which any person from whom goods are seized ma) appear and seek release of the seized goods.

(2) The persons effecting seizure shall seize those articles which are in the judgment of such persons, described in the order.

(0) The order of seizure shall include a statement advising the person from whom the goods are seized that a bond has been filed and informing such person of the right ft object to the bond, at the hearing called for in the order, on the grounds that the surety o the amount of the bond is insufficient.

(h)(1) Any applicant who causes seizure of goods which are subsequently determined not to be counterfeits shall be liable, except as provided in subsections (h)(2 and (h)(3) below, in an amount equal to the following:

(i) Any direct damages proximately caused to any person having financial interest in the seized non-counterfeit goods; provided however, that in the event of a claim for lost profits, such damages may only be awarded upon showing that the amount sought is reasonable and not speculative;

(ii) Costs incurred in defending against seizure of non-counterfeit goods; and

(iii) Upon a showing that the person causing the seizure to occur acted in bad faith, expenses, including reasonable attorneys fees expended in defending against the seizure of any non-counterfeit or non-infringing goods.

(2) If in the course of seizing the non-counterfeit goods, counterfeit goods were also seized, no damages may be recovered unless the Court concludes that such a result would be grossly inequitable.

(3) If the non-counterfeit goods were seized on the plaintiffs property, no damages may be recovered unless the person from whom such goods were seized demonstrates to the Court that the sale of such goods was authorized in writing by the plaintiff and the sale otherwise complied with all applicable laws.

(4) A person seeking a recovery pursuant to this subsection may join any surety on a bond posted pursuant to this section, and any judgment of liability shall bind the person liable and the surety jointly and severally; provided, however, that the liability of the surety shall be limited to the amount of the bond.

(i) The enumeration of any right or remedy in this Chapter shall not affect a person's right to prosecute under any penal law of this State or the laws of any other State or Federal Government."

Approved July 16, 1997