J&J Subsidiary Wins $18 Million Judgment Against Surgical Tool Counterfeiter

On Friday, July 21, an Illinois district court ruled that a Pakistani employee of a medical device distribution company infringed on Ethicon’s trademark when he bought, marketed and sold counterfeit Ethicon devices. Ethicon is a subsidiary of Johnson & Johnson and won an $18 million default judgment.

Ethicon first filed a complaint against the defendant Mudassar Shah in July 2020 and alleged federal and state trademark infringement of five different trademarks. The laundry list of accusations also included trademark dilution, false advertising, common law unjust enrichment, common law tortious interference with contract, and breach of settlement agreement.

The J&J subsidiary argued that it was entitled to significant damages, and Shah failed to plead or defend against the lawsuit according to the district court.

The district court judge had harsh words for the defendant and wrote, “defendant Shah has entirely failed to plead, or otherwise defend in this action, despite being properly served by Ethicon.”

Ethicon has an annual revenue of $4.9 billion and sells a variety of surgical products, including two of the infringed trademarked products Surgicel and Ligaclip.

Motion to Vacate and Failure to Appear

The Pakistani national filed a motion to vacate the default; however, the district court denied this motion on March 29, 2022.

“Shah had failed to establish good cause for his default or that he had a meritorious defense to the action,” wrote the district court.

Subsequently, Ethicon asked the district court for a default judgment and filed a permanent injunction against the defendant.

After receiving email notification both from Ethicon and the court, Shah failed to appear before the court on December 20, 2022.

Partially as a result of the defendant’s failure to appear in court, the district court ruled in favor of Ethicon on all claims and ruled that Shah has to pay the company $18 million in statutory damages.

Consequences

In addition to the heavy financial penalty, the district court also barred Shah from purchasing, selling, distributing, marketing, manufacturing, or using any product under the Ethicon trademark, whether it is authentic or counterfeit.

The injunction also enjoined the defendant from a variety of activities including diluting Ethicon’s trademarks, falsely representing himself as connected to Ethicon, using a false description to represent goods as being Ethicon Products, or assisting any company that is attempting to carry out similar activities.

According to the U.S. Chamber of Commerce, counterfeit products cost the U.S. economy upwards of $500 billion a year. Johnson & Johnson has taken an aggressive stance to fight against counterfeiting in recent years including joining Gilead Sciences in pursuing legal action against counterfeiting “kingpins” that allegedly sold counterfeited versions of HIV medications.

According to Johnson & Johnson, “these counterfeit products pose serious patient and consumer safety risks and are a global health issue known to health organizations worldwide.”

District Judge John Robert Blakely ruled in the case. Ethicon and Johnson & Johnson were represented by Geoffrey Potter, partner at Patterson Belknap Webb & Tyler LLP.

Johnson & Johnson also made headlines last week after a jury ruled that the company had to pay a California man $18 million after he alleged the company’s talcum-based powders for giving him cancer.