Judge Moves Forward with Damages Inquest in Abbott Labs Counterfeit Case

Eastern District of New York Judge Carol Bagley Amon issued an opinion Wednesday against H&H Wholesale Services, Inc. in a case initiated by Abbott Laboratories, Abbott Diabetes Care Sales Corp., and Abbott Diabetes Care Inc., regarding unlawful sale of Abbott’s international FreeStyle diabetes test strips. The court found that “the distribution chains involving (the) multiple defendants that trafficked the same infringing box(es)” of diabetes test strips “are interweaving.”

Defendants in the action include Able Wholesalers of Tennessee LLC, Massalah Trading U.S.A., Ltd., Matrix Distributors, Inc., Drugplace, Inc., Save Rite Medical.com LLC, Dream Cereal, Inc., Value Wholesaler, Inc., Adelphia Supply USA, and Primed Pharmaceuticals LLC.

The decision held that during “the same time in which Abbott was preparing its motion for summary judgment, Abbott commenced a related action” against H&H “for their sale of international FreeStyle (diabetes test) strips repackaged in counterfeit U.S. packaging.” The court recognized that in that action, a “Court authorized search of H&H’s premises,” “resulted in the seizure of their email server,” which revealed that H&H “had engaged in a calculated pattern of discovery misconduct” “that amounted to a fraud on the Court.”

In the present action, “Abbott moved for case-ending sanctions” against H&H, and following a report and recommendation by Magistrate Judge Bloom recommending that the court grant the motion, the court entered default judgment against H&H.

The court determined that “the decision of whether to enter a final judgment against some but fewer than all of the parties” is left to their discretion. Federal Rule 54(b) provides that the court may direct the entry of final judgment on H&H, but not the other parties, if “the court expressly determines that there is no just reason for delay.”

The district court ultimately found “no just reason for delay,” because of the “serious risk that (H&H) will dissipate their assets prior to final judgment and collection.” Abbott claimed that H&H indeed took steps “to protect their assets from collection.” H&H did “not respond to this allegation.” The court also recognized that because of the “ongoing global pandemic,” the court “expects a substantial delay before a jury trial may be conducted for the non-defaulting defendants.”

The court held that “all of the defaulting and non-defaulting defendants (with minimal exception) have already been found liable for trademark infringement.” However, the court had not yet determined “which defendants may be jointly and severally liable with which other defendants, and for what boxes.”

Ultimately, the court determined that the “damages inquest and entry of final judgment” against H&H “should precede the trial of the non-defaulting defendants.” The court further directed the parties “to file briefing and relevant documentary evidence regarding the proper calculation and amount of damages to be entered” against H&H.  H&H was found “liable for willful infringement as a matter of law.”

H&H is represented by Robert C. Gottlieb & Associates PLLC. Abbott is represented by Patterson Belknap Webb & Tyler LLP.