Facts

Plaintiff Jivago Inc., a perfume manufacturer, retained the services of defendants Michael Hurey and his law firm, Kleinberg & Lerner, LLP, for advice concerning the handling and possible sale of approximately 30,000 counterfeit bottles of perfume bearing Jivago's trademark. The counterfeit perfumes were originally seized in Texas by U.S. Customs in 2005.

PLAINTIFF'S CONTENTIONS:
Jivago contended that Hurey and Kleinberg & Lerner committed malpractice in advising plaintiff concerning the handling and possible sale of approximately 30,000 counterfeit bottles of perfume bearing Jivago's trademark. Jivago contended that its sale of most of the seized goods, based on this advice, dramatically reduced the value of the ensuing trademark infringement lawsuit filed by defendants in federal court in New York.

Jivago contended that its recovery of approximately $1,150,000 from the sale of the seized goods for $317,000 in 2007 and the settlement of the underlying lawsuit for approximately $935,000 in 2008 did not approach the damages ranging from $13.2 million to $27 million which would have been recovered from the underlying case defendants "but for" the alleged malpractice of defendants.

Plaintiff called an intellectual property attorney, Antonio Sarabia, who testified that defendants failed to meet the standard of care in representing plaintiff and that their alleged negligence drastically reduced the value of the underlying lawsuit.

Plaintiff also called a forensic accountant, Jeffrey Kinrich, to opine that the various categories of damages recoverable under the Lanham Act in the underlying action ranged from a low of approximately $13.2 million to a high of approximately $27 million.

DEFENDANTS' CONTENTIONS:
Hurey and Kleinberg & Lerner contended that their advice to plaintiff concerning the disposition of the seized counterfeit perfume bottles, as well as their subsequent handling of the underlying trademark infringement lawsuit, met the standard of care of an intellectual property attorney in all respects. Defendants contended that the $1,150,000 recovery via plaintiff's sale of seized goods, following their lawful release to Jivago from Customs, coupled with the settlement which was negotiated by successor counsel, Greenberg Traurig, in the underlying action, was an optimal result in a case with a maximum value of $1 million.

The defense contended that plaintiff could never have been awarded or collected damages in the underlying action exceeding the actual recovery of $1,150,000 due to the lack of evidence of counterfeit sales by the alleged counterfeiters and defendant counterfeiters' ability to satisfy a higher judgment and/or willingness to pay more in settlement.

Defendants called an intellectual property/trademark counterfeiting lawyer, Anthony Keats, who testified that the advice rendered by defendants concerning the disposition of the seized counterfeit products and their handling of the underlying matter met the standard of care of an intellectual property lawyer in all respects and that the total recovery of $1,150,000 by Jivago exceeded the maximum value of the underlying lawsuit and was thus an optimal result.

Defendants also called a forensic account, Christian Tregillis, who testified that Jivago could not have recovered any damages in the underlying action for lost profits, loss of company value and/or profit disgorgement, given the absence of evidence of counterfeit sales by the underlying case defendants, and that the actual recovery of $1,150,000 Jivago obtained exceeded any possible damage recovery.

Settlement Discussions

A mediation was conducted in November 2009 before Hon. Charles Legge, retired. Plaintiff, early in the case, made a settlement demand of $1,750,000 which defendants allowed to lapse. At a settlement conference conducted by the court shortly before trial, plaintiff demanded $850,000 and defendants offered $175,000 with indications that they would pay up to $500,000 if plaintiff would reduce its demand accordingly. Plaintiff refused to reduce its demand and the case proceeded to trial.

Result

The jury returned a verdict for the defense.

Deliberation

three hours

Poll

9-3 (for defense)

Length

five weeks