When Gidatex filed suit against Campaniello Imports Ltd. for trademark infringement in 1997, their counsel called upon Kessler International to help build the case. Though the defendant wanted to exclude the private investigator’s testimony, the United States District Court of the Southern District of New York affirmed the right of litigants to employ undercover investigators and praised them as an effective enforcement tool for proving unfair competition.

For 20 years, Campaniello was the licensed dealer of Saporiti Italia furniture in the United States. When Gidatex, the furniture’s manufacturer, terminated the license, Campaniello continued to sell the Saporiti Italia furniture it had in stock. Gidatex alleged that Campaniello continued to display signs and advertisements with the Saporiti Italia trademark as a way to entice customers into its store even after its contract with the brand was terminated. To prove this bait-and-switch scheme, Gidatex’s counsel retained Kessler International’s investigators to pose as interior designers and electronically record conversations with the Campaniello salespeople.

In December 1997, Kessler investigator Susan Peterson visited the Campaniello showroom in New York City on two occasions and taped conversations with two separate saleswomen. Ms. Peterson noticed that the Saporiti Italia insignia was the only sign on the store’s façade. When she asked for a Saporiti catalog, she was provided catalogues of other furniture companies and was instructed that Saporiti Italia “doesn’t exist anymore…it dissolved.”

Investigators also visited the Campaniello warehouse in Long Island City in March 1998 where they witnessed Saporiti Italia furniture for sale and Campaniello delivery vehicles visibly displaying the Saporiti Italia trademark.

The defendant, Campaniello Imports Ltd., moved for an order in limine precluding Gidatex from offering the investigator’s testimony, reports, and tape recordings. Campaniello alleged that the PIs used their “superior legal knowledge” to manipulate the sales clerks under the Lanham Act. They also alleged that the plaintiff’s counsel violated the codes of Professional Responsibility set forth by the American Bar Association through Disciplinary Rule 1-102(A)(4) prohibiting lawyers from “circumventing a disciplinary rule through actions of another” and “engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.”

United States District Judge Siera A. Screindlin denied the motion for several reasons. In response to DR 1-102(A)(4), she wrote that, “hiring investigators to pose as consumers is an accepted technique and not a misrepresentation.” Investigators acting as consumers would not trick salespeople into making statements they would not normally make. There was no risk of low-level employees divulging information protected by attorney-client privilege.

The use of investigators is a powerful and often necessary tool to uncover unfair business practices and trademark abuse according to the court. Gidatex had every right to use Kessler International to prove that Campaniello did not comply with its “cease and desist” letter. It was because of the investigator’s professionalism and proper handling of the situation that their tape recordings and testimony were permissible after a challenge from the defense to preclude their evidence.

Despite the outcome of this case, investigations involving pretexting are still an unresolved area of law. In other cases, lawyers have been sanctioned and evidence has been excluded. The Gidatex trial highlights the importance of hiring sophisticated investigators who are knowledgeable about current laws and know the ramifications of faulty investigatory practices.

Kessler International has been providing top-notch, lawful, comprehensive trademark/intellectual property investigations for over 25 years. Visit our website at http://www.investigation.com/intellectual_property.htm to learn more.

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