Memorandum Of Law In Support Of Snyder's Motion For Reconsideration

We respectfully submit that the Court has relied on flawed and questionable authority to support its finding that Plaintiff's claims asserting Civil liability for false or fraudulent registration under 15 USC §1120, Wrongful Seizure under 15 USC §1116(d)(11), Constitutional violations under 18 USC §1983/Bivens, Abuse of process under Virginia State Law and Conversion/Trespass to Chattels under Virginia State Law are barred by claim preclusion. For the reasons set forth below, Plaintiffs' contend that they have stated viable claims for relief under

15

USC §1120, 15 USC §1116(d)(11), 18 USC §1983/Bivens under Federal Law, Abuse of process, and Conversion/Trespass to Chattels under Virginia State Law, and request that the Court amend its Order to permit them to proceed on those causes of action and to amend

any deficiencies in their

causes of action so they might be fully heard and decided upon their merits after the parties have had an opportunity to conduct discovery and investigate their claims. II.

PROCEDURAL BACKGROUND

This action was originally filed on December 8, 2008 [Docket, No. 1].

Without having been

1

served with a

responsive pleading, Plaintiff's filed a First Amended Complaint on February 20, 2009 [Docket, No. 2] Fed. R. Civ. P. 15(a). Defendant DVF filed a motion to dismiss the FAC on April 22, 2009 [Docket, No. 22], which Plaintiff's opposed [Docket, No. 29].

Law Defendant's filed a motion to

dismiss the FAC on April 30, 2009 [Docket, No. 26], which Plaintiff's opposed [Docket, No. 29].

On May 7, 2009,

Plaintiff's voluntarily dismissed their claims against Conde Nast, the New Yorker and Larissa MacFarquar [Docket, No. 31]. On October 9, 2009 the Court granted all defendant's motions on all claims, with prejudice [Docket, No. 51]. On October 29, JUDGMENT pursuant to FRCP 58 in favor of Defendants against Plaintiffs was recorded on the docket. [Docket 52, 53] III.

FACTUAL ALLEGATIONS IN THE FIRST AMENDED COMPLAINT

As noted in the Amended Complaint, the Snyders and DVF have previously engaged in litigation before this Court regarding Catherine Snyder’s selling of goods bearing the Diane von Furstenberg mark on eBay. DVF registered Trademark Reg. No. 2276188, the mark

2

“Diane Von Furstenberg,” (“the ‘188 mark”) in 1999. Am. Compl.

51. On December 4, 2006, DVF filed the prior case

against Catherine Snyder under seal. Am. Compl.

17;

Compl., [Docket No. 1], Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356. As pled in the FAC, DVF, in a sworn declaration, overstated it's use of the Diane von Furstenberg mark on goods when procuring the '188 registration.

DVF, in sworn

declarations, overstated it's use of the Diane von Furstenberg mark on goods in both it's five year and ten year renewal applications.1

Am. Compl. 52,53,56,5 58.

DVF

knew when it signed its declaration 's for the registration and renewal of the '188 registration, the mark was not used on all of the goods listed in the notice of allowance. Am. Compl 54,59.

DVF knew when it signed its declaration 's

for the registration of and renewal for the '188 registration, overstatement of the marks use on goods would jeopardize the validity of the registration.2

These

knowingly incorrect allegations of current use constitute fraud on the Trademark office, as material misstatements made with the intent of inducing the Trademark office to rely on them and to register the trademark in a manner 1 [EXHIBIT No. 1] 2 [EXHIBIT No. 2] 3

which was not justified by the facts of the matter. Am. Compl. 66.

A registration procured in the USPTO by false

or fraudulent declaration or representation, oral or in writing, or by any false means constitutes fraud on the USPTO, rendering the resulting registration void

ab

initio, Put another way, having no legal force. Am. Compl. 13 Upon an ex parte hearing before this Court on December 7, 2006, DVF obtained a Temporary Restraining Order against Catherine Snyder and a search and seizure order for her place of business, which was her residence. Compl. 17; Order Dec. 7, 2006, [Docket No. 17], Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356.

DVF and Law

Defendant's submitted the '188 registration to assert the Courts jurisdiction over ex parte seizure Orders under 15 USC 1116(d) of the Lanham. Act.

Am. Compl.13; [Docket

No.1, 3 - 10, 17], Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356.

Additionally, DVF and Law Defendant's

submitted the '188 registration with the December 4, 2006 Complaint as a basis for statutory damages in the amount $1 Million Dollars per registered mark. Am. Compl. 49 [Docket No. 1], Diane von Furstenberg Studio v. Snyder, No. 1:06cv-1356. 4

Although Law Defendants and Von Furstenberg represented that they had thoroughly investigated Catherine Snyder, they made a number of false statements to this Court in their request for the seizure order and TRO. Am. Compl. 19, 20.

Examples of these false statements, which

Law Defendants and Von Furstenberg could readily have verified, include allegations that Catherine Snyder and unnamed defendant's were all part of common operation, operating from various locations in Virginia and distributing products mainly through a store. Am. Compl. 21; [Docket No. 8] Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356. alleged

Moreover, DVF and Law Defendants

that if provided advance notice of an impending

legal action, Catherine Snyder would dispose of, or hide evidence and ignore an order restraining assets, while simultaneously draining her bank account. Am. Compl. 22; [Docket No. 8, 10, 17] Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356.

DVF and Law Defendant's failed

to inform the Court that it's investigation of Mrs. Snyder found that the Snyder's de facto, had “assets worth going after”.3

Dvf and Law Defendant's made these false

statements in an intentional effort to mislead the Court, 3

[EXHIBIT No. 3] 5

by characterizing Mrs. Snyder as a “fly by night”, who if given advanced notice of an impending legal action, would likely flee the Court's jurisdiction. Am. Compl. 22; Fed. R. Civ. P. 65(a)(1);

[Docket No. 8, 10, 17] Diane von

Furstenberg Studio v. Snyder, No. 1:06-cv-1356.

In

September 2006, Diane Von Furstenberg, on behalf of defendant Von Furstenberg Studio, stated in a Wall Street Journal interview it is her belief that “Laws are created to intimidate people [with the threat of litigation].”

Am.

Compl. 45. During the course of the raid, the attorneys for DVF, acting on DVF’s behalf, having been authorized to assist in the execution of the search and seizure,4 took control of the operation,5 and not only exceeded the scope of the seizure order in the items they seized, but did so in front of a reporter that they brought into the Snyders’ home. Am. Compl. 25, 29, 33, 35-36.

About five months after the

home invasion, the Snyder's learned that the women stationed in front of their door on Dec. 8, 2006, was a reporter for the New Yorker Magazine.

Am. Compl. 29, 32,

47. Richard Snyder was not named in the Complaint, nor 4 [EXHIBIT No. 4] 5 [EXHIBIT No. 5]

[EXHIBIT No. 6] 6

was he mentioned in any way on the search and seizure order.[Docket No. 1, 17] DVF’s behalf,

The attorneys for DVF, acting on

froze assets in a

bank account in which

Richard Snyder held sole ownership and two bank accounts in which Mr. Snyder held half ownership rights, which were not subject to this Court’s asset freeze.

Am. Compl. 48.

[Docket No. 134] Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356.6 Shortly after entering the Snyders’ home Law Defendant Lewin, knowing that the Snyders were not represented by counsel and knowing that Mr. Snyder was not a party to the action, informed Mr. Snyder that there was a hearing before this Court on December 22, 2006 in that matter, but that the Snyders need not attend, and encouraged Mr. Snyder to contact Law Defendants quickly to resolve the matter. Am. Compl. 42 [Docket No. 1, 17] Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356.

Before leaving the Snyders'

home Law Defendants left a stack of papers, which were required to be personally served, in the Snyders’ kitchen. Am. Compl. 42 On September 10, 2007, this Court entered partial summary judgment, finding liability as to the claims 6 [EXHIBIT No. 7] 7

against Catherine and entering a permanent injunction, but denying summary judgment as to contributory infringement against Richard Snyder and setting the issue of willfulness and damages for trial. Mem. Op., [Docket No. 79], Order, [Docket No. 80], Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356. On September 20, 2007, DVF moved to voluntarily dismiss it's claims for willfulness and contributory infringement. On September 24, 2007 This Court issued it's Order dismissing DVF's claims of willfulness and contributory infringement with prejudice.

See Mot.

Voluntarily Dismiss, [Docket No. 89]; Supplemental Br. Supp., [Docket No. 90]; Order September 24, 2007, [Docket No. 93], Diane von Furstenberg Studio v. Snyder, No. 1:06cv-1356.

Upon the hearing on damages, judgment was entered

against Catherine Snyder for infringement in the amount of $100,000.00. Order Oct. 23, 2007, [Docket No. 106], Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356. On October 9, 2008 DVF issued a Garnishment Summons to, inter alia, Navy Federal Credit Union.

A garnishment

hearing was held on November 7, 2008.

At the November 7,

2008 hearing DVF argued, because Virginia Code 34-1, excludes liability arising from an intentional tort that 8

Mrs. Snyder was not entitled to her Virginia Homestead Exemption. 2008.

This Court issued an Order on November 12,

[Docket No. 134], Diane von Furstenberg Studio v.

Snyder, No. 1:06-cv-1356. held:

The November 12, 2008 Order

(a) That Richard Snyder's interests in the Snyder's

Navy Federal Credit Union accounts, attached on December 08, 2006 and on October 9, 2008, respectfully,

were not

subject to garnishment by DVF; (b) after reviewing this Court's October 23, 2007

memorandum and opinion Order on

damages and taking into consideration the fact that DVF voluntarily dismissed it's claims that Catherine Snyder had acted willfully and in bad faith, the Court ruled that Mrs. Snyder was entitled to her Homestead exemption and, (c) This Court ordered Navy Federal Credit Union to pay DVF $2,588.17 from account [x] and $858.25 from account [y]. IV. A.

ARGUMENT

This Motion to Reconsider Is Proper Pursuant to Fed. R. Civ. P. 58(a), 59(e) & 6(a) The Fourth Circuit has held that a Rule 59(e) motion

should be granted only in one of three circumstances: "(1) to accommodate an intervening change in controlling law; (2) to account for new evidence not available at trial; or (3) to correct a clear error of law or prevent manifest 9

injustice." Pacific Life Ins. Co. v. American Nat'l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998). Every judgment and amended judgment must be set forth on a separate document.

Fed. R. Civ. P. 58(a)(1).

“Judgment is entered for purposes of the Federal Rules of Civil Procedure when it is set forth on a separate document.” Fed. R. Civ. P. 58(b)(2).

The Fourth Circuit

has determined that entry of judgment is not completed until it is recorded on the docket pursuant to Rule 58. Albert L. Wilson v. Edward Murray, 806 F.2d 1232 (4th Cir. 1986) (citing Berman v. Schweiker, 1293 n. 8 (7th Cir.1983); 6A Moore's Federal Practice p 58.05, at 58-234 (2d ed. 1983); 11 Wright & Miller, Federal Practice and Procedure § 2785 (1973)).

Judgment was entered, pursuant

to Rule 58 on October 29, 2009 [Docket No. 52,53], so this motion is appropriate procedurally.

Furthermore, it is

timely, having been filed within the ten-day deadline set in Fed. R. Civ. P. 59(e). See also, Fed. R. Civ. P. 58(a); Fed. R. Civ. P. 6(a); see Alston v. MCI Telecom Corp. 84 F.3d 705; 68 Empl. Prac. Dec. P 44 (4th Cir. 1996); “Under the Federal Rules of Civil Procedure, the ten-day time period does not include Saturdays, Sundays, or legal holidays. Fed. R. Civ. P. 6(a).” 10

Plaintiff respectfully contends that, in dismissing the FAC with prejudice, the Court committed clear errors of law, and that if the Order is not amended, the Snyders will suffer a manifestly unjust result. B. Plaintiff (Snyder) In the Current Action Was the Defendant In the Previous Infringement Action The Oct. 9, 2009 Order dismisses Plaintiffs' claims with prejudice “because they are barred by the doctrine of claim preclusion.”.

We respectfully submit that these

holdings are legally erroneous, as the Court bases it's analysis of claim preclusion, on the flawed premise that Catherine Snyder was the Plaintiff in the previous action, when in fact, she was the Defendant in DVF's previous infringement action. As we demonstrate below, the general rule of claim preclusion is that a plaintiff who has prosecuted one action against a defendant and obtained a valid final judgment is barred by res judicata from prosecuting another action against the same defendant where (a) the claim in the second action is one which is based on the same factual transaction that was at issue in the first; (b) the plaintiff seeks a remedy additional or alternative to the one sought earlier; and (c) the claim is of such a nature

11

as could have been joined in the first action. In it's October 9, 2009 Order, This Court relies on Supreme Court and Fourth Circuit caselaw for it's claim preclusion argument.

However, in each of the cases cited

by the Court in it's analysis7, the plaintiff in the second action was also the plaintiff in the first action. For example, in Dionne v. City of Baltimore, William Dionne prosecuted claims against the Mayor and City Council of Baltimore in a state administrative proceeding. Subsequent to the state administrative proceeding, Dionne filed Section 1983 claims against the Mayor and City Council of Baltimore in Federal Court.

Thus, for the

purposes of claim preclusion; Dionne was the plaintiff in the Federal 1983 [second] action and he was the plaintiff in the state administrative [first] action. Dionne v. City of Baltimore, 40 F.3d 677 (4th Cir. 1994). Further, in Meekins v. United Transp. Union, 946 F.2d 1054, 1057 (4th Cir. 1991) the plaintiff in the second action was the plaintiff in the first action, in Pueschel 7 See Dionne v. City of Baltimore, 40 F.3d 677 (4th Cir. 1994); Rivet v. Regions Bank of La., 522 U.S. 470, 476 (1998) (quoting Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981))Pueschel, 369 F.3d at 355 (quoting In re Varat Enters., Inc., 81 F.3d 1310, 1316 (4th Cir. 1996)); Peugeot Motors of Am., Inc. v. E. Auto Distribs., Inc., 892 F.2d 355, 359 (4th Cir. 1989) (quoting Brown v. Felson, 442 U.S. 127, 131 (1979)). Pittston Co. v. United States, 199 F.3d 694, 704 (4th Cir. 1999); Martin v. Am. Bancorporation Ret. Plan, 4 07 F.3d 643, 650 (4th Cir. 2005) 12

the plaintiff in the second action was the plaintiff in the first action, in Pittston the plaintiff in the second action was the plaintiff in the first action, in Brown the plaintiff in the second action was the plaintiff in the first action, and so forth. Thus, the cases This Court cites when making it's claim preclusion argument are inapposite here, because Catherine Snyder was the not the plaintiff in the first action, she was, in fact, the defendant in the first action. Accordingly, it is County Fuel v. Equitable Bank Corporation that is analogous to the case at bar.

In

County the Fourth Circuit held that a defendant in a previous action, between the same parties, was not barred under res judicata principles, by it's failure to

assert

an available claim against the plaintiff as a basis for affirmative relief in the prior litigation.

Moreover, the

Court found that although it certainly lay with the defendant in the previous action, to object to the plaintiff's claim as a matter of defense and to join with its objection a counterclaim for declaratory relief in the prior litigation, the "better and decidedly majority view [was] that the failure to interpose such an available counterclaim does not, as a matter of res judicata, bar its 13

subsequent assertion as an independent claim for relief. County Fuel v. Equitable Bank Corporation 832 F.2d 290 (4th Cir. 1987) (citing Restatement (Second) Judgments Sec. 22(a)).

A compulsory counterclaim rule, of course would

have not have the same effect.

Where a compulsory

counterclaim exists, it provides an exception to the basic rule of non-preclusion. Restatement (Second) Judgments Sec. 22(2)(a). Additionally, the preclusive result would occur had Mrs. Snyder asserted a counterclaim against DVF in the first action and then attempted to bring a subsequent action against DVF based on the same transaction forming the basis of her counterclaim.

Wright & Miller, 18 Federal

Practice and Procedure § 4414. Although claim preclusion bars a plaintiff in the previous action from bringing a claim against the same defendant in a new litigation resolved by a prior judgment, the doctrine does not, however apply to all claims that were raised or could have been raised by a defendant in the prior litigation. Canon, 2007 WL 1555394, (E.D. Va. May 21, 2007) (citing Pittston Co. v. United States, 199F.3d 694, 704 (4th Cir. 1999)).

In such a situation, the defendant's

claims in the subsequent action are not precluded unless a 14

statute required the defendant to bring his claims in the original action.

"Apart from compulsory counterclaim

rules, . . . the traditional conclusion has been that purely defensive use of a theory does not preclude a later action for affirmative recovery on the same theory. Restatement (Second) of Judgments § 22 (1982) (Restatement); Wright & Miller, 18 Federal Practice and Procedure § 4414.

Moreover, in Painter the 4th Circuit

held "absent a compulsory counterclaim rule, a pleader is never barred by res judicata from suing independently on a claim that he refrained from pleading as a counterclaim in a prior action" Painter, 863 F.2d at 331 (4th Cir. 1988). (see also8) The rationale for the general rule applying to defendants who elected not to assert a counterclaim in the prior action is that "the defendant should not be required to assert his claim in the forum or the proceeding chosen by the plaintiff but should be allowed to bring suit at a

8“Claim Preclusion or res judicata is limited in its application to those matters which the parties under their pleadings and the issue joined in the former action might legitimately have controverted and have had decided by the verdict and judgment and has never been so extended as to compel one party having several different causes of action against another to join them in one action because they were of such a character that the law would permit their union.” Quoting 'A Treatise On The Law of Judgments: Including The Doctrine of Res Judicata; Vol 2 by Henry Campbell Black' 15

time and place of his own selection."

Restatement § 22

cmt. a. The Oct. 9, 2009 opinion, argues "Plaintiffs do not argue that they were in some way denied the opportunity to raise their claims in the previous action." October 9, 2009 Order *14. With all due respect to this Court, had Mrs. Snyder raised a claim in the previous action, by necessity it would have been raised in the form of a counterclaim. As set out above, the proper analysis for the purpose of

preclusion in the instant case, is whether a statute

required Mrs. Snyder to interpose the Snyder's current claims in DVF's previous infringement action. way, if

Put another

the Snyder's current claims were to be interposed

in the prior proceeding, does Fed. R. Civ. P. 13(b) permit an independent claim for relief, or does Fed. R. Civ. P. 13(a) bar the Snyder's instant action? C. The Snyder's Claims Are Not Compulsory Under Fed. R. Civ. P. 13(a), Nor Are the Snyder's Claims Compulsory Under Fourth Circuit Law In the 4th circuit a compulsory counterclaim relates back to the time of the filing of complaint.

the plaintiff's

See Kirkpatrick v. Lenoir County Board 216 F.3d

380 (4th Cir. 2000) (citing Burlington Indus. v. Milliken & Co., 690 F.2d 380, 389

(4th Cir. 1982) (holding that "the 16

institution of plaintiff's suit tolls or suspends the running of the statute of limitations governing a compulsory counterclaim").

Dvf filed its complaint in the

previous trademark action on December 4, 2006. Because the set of facts forming the Snyder's claims did not exist on December 4, 2006, under the 4th Circuits tolling analysis the Snyder's claims were not compulsory. Moreover, in Sue & Sam Mfg. Co. v. B-L-S Const. Co. , 538 F.2d 1048, 1051- 1053 (4th Cir. 1976), the 4th circuit identified four inquiries that help in determining whether a counterclaim is compulsory: (1) Are the issues of fact and law raised in the claim and counterclaim largely the same? (2) Would res judicata bar a subsequent suit on the party's counterclaim, absent the compulsory counterclaim rule? (3) Will substantially the same evidence support or refute the claim as well as the counterclaim? and (4) Is there any logical relationship between the claim and counterclaim? "A Court need not answer all these questions in the affirmative for the counterclaim to be compulsory." Painter, 863 F.2d at 331. Instead, the test works "less like a litmus, more [like] a guideline." Id. Of course, the "underlying thread" to each inquiry is "evidentiary similarity," and "where . . . the same evidence will 17

support or refute both the claim and counterclaim, the counterclaim will almost always be compulsory." Q International Courier, Inc. v. Smoak 441 F.3d 214 (4th Cir.2006) (citing Painter v. Harvey, 863 F.2d 329, 331 (4th Cir.1988)). Here,

(internal citation omitted). likelihood of confusion was at the heart of

DVF's trademark infringement claim, whereas the heart of the Snyder's current claim is the abusive manner in which DVF and law defendants prosecuted DVF's previous action. Therefore, the issues of fact and law in the instant case are not similar, the evidence needed to sustain the Snyder's claim does not overlap with the evidence needed to sustain DVF's trademark claim, and there is no logical relationship between the two actions.

Thus, applying the

4th Circuit criteria, the Snyder's current claims were not compulsory counterclaims to DVF's infringement action and the Snyder's are not precluded from bringing their claims in an action independent from DVF's previous action. Painter, F.2d at 331-332 (4th Cir. 1988). D. The Post Seizure Hearing Was Not The Proper Venue To Raise The Snyder's Current Claims Section 1116(d)(10) of the Lanham Acts provides that a hearing with notice to the defendant must be held no later

18

than fifteen days after the order is issued. Vuitton v. White 945 F.2d 569.

Pursuant to subsection 1116(d)(9), the

defendant is to be served with the Order just before execution of the seizure, service of the Order will constitute notice to the defendant of the upcoming hearing. (emphasis added) Joint Statement 1711[H 12082]. As pled in the Snyder's FAC, before leaving the Snyders' home on December 8, 2006, Law Defendants left a stack of papers, which were required to be personally served, in the Snyders’ kitchen.

Am. Compl. 42.

of process is the procedure employed to give

Service

legal notice

of a Courts 's exercise of its jurisdiction over that person, so as to enable that person to respond to the proceeding before the Court.

Usually, notice is furnished

by delivering a set of Court documents (process) to the person to be served.

Proper service of process initially

establishes personal jurisdiction over the person served. Personal service is service of process directly (in hand) to the party named on the summons, complaint or petition. In most lawsuits in the United States, personal service is required to prove service. See Fed. R. Civ. P. 5(c)(d). Catherine Snyder was not served with the Court's Dec. 7, 2006 Order before it's execution as mandated by section 19

1116(d)(9) of the Lanham Act.9

Moreover, Mrs. Snyder was

not personally served with the The Court's Order on December 8, 2006 as required by Fed. R. Civ. P. 5(b)(2)(A) (i).10 As set out above, service of the seizure Order constitutes notice to the defendant of the Post Seizure hearing,11 thus DVF failed to provide Catherine Snyder with notice of the December 22, 2006 post seizure hearing. Richards v. Jefferson County, 517 US 793, 798 (1996).

As

the Supreme Court explained in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306(1950), the right to be heard ensured by the guarantee of due process "has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear or default, acquiesce or contest." Id., at 314; Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985); Schroeder v. City of New York, -21371 U.S. 208, 2123 (1962).

Because Mrs.

Snyder did not receive notice of the impending post seizure 9 [EXHIBIT No. 8] 10 See Docket Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356: No docket entry for Return Of Service of the Court's Dec. 7, 2006 Order. Notwithstanding that Mrs. Snyder was not personally served with the Dec. 4, 2006 Complaint, RETURN OF SERVICE Executed as to Catherine Snyder served on 12/8/2006, answer due, 12/28/2006 was entered onto the docket on 12/22/2006 [Docket No. 22] Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356. 11 See Docket Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356: No docket entry for Notice of Hearing docketed as to the Dec. 22, 2006 post seizure hearing 20

hearing, she could not choose for herself whether to appear at the Dec. 22, 2006 hearing or to waive that right by not appearing.

Moreover, as Mrs. Snyder was dressing herself

on Dec. 8th, Law Defendant Lewin, knowing that the Snyders' were not represented by counsel and knowing that Mr. Snyder was not a party to the action, informed Mr. Snyder that there was a hearing before this Court on December 22, 2006 in that matter, but that the Snyders need not attend, and encouraged Mr. Snyder to contact Law Defendants quickly to resolve the matter. Am. Compl. 42. The purpose of the post seizure hearing under the Lanham Act is to restore due process to a defendant, who has not had an opportunity to be heard previously, in the matter.

At the hearing, DVF had the burden of showing

that the seizure order was justified and that it continued to be justifiable to hold Catherine Snyder's goods, personal documents and bank accounts.

If DVF were unable

to show that continuation of the seizure order and TRO with asset freeze was justified, however, the seizure order and TRO with asset freeze should have been dissolved. Id. In Beltronics, the Court held the dissolution of the seizure order [was] warranted on the grounds that the Court was not satisfied that defendants would destroy, move, 21

hide, or otherwise make the seized goods inaccessible, or that an order other than an ex parte seizure order would not be adequate to ensure that Beltronics would have adequate remedies if defendants are ultimately found to have infringed Beltronics’ trademark. Beltronics USA, Inc. v. Midwest Distrib. LLC 522 F.Supp.2d 1318b(D. Kan. 2007). At the Post Seizure Hearing the Beltronics Court dissolved the seizure on the grounds that Beltronics had not made the showings required by §1116(d)(4)(B)(i) & (vii), and directed Beltronics to return the seized goods to defendants. Id.

Defendants also contended that the

scope and conduct of the seizure was abusive and that Beltronics violated the order in several respects in the manner in which it was carried out.

The Court stated as

such, defendant's remedy was a cause of action for wrongful seizure as provided in 15 U.S.C. § 1116(d)(11) (“A person who suffers damage by reason of a wrongful seizure under this subsection has a cause of action against the applicant for the order under which such seizure was made . . . .”). Id. See Waco Int’l, Inc. v. KHK Scaffolding Houston Inc., 278 F.3d 523, 531 (5th Cir. 2002) (noting that § 1116(d) (11) is the statute that governs whether a seizure order is

22

wrongful); Martin’s Herend Imports, Inc. v. Diamond & Gem Trading United States of Am. Co., 195 F.3d 765, 774-75 (5th Cir. 1999). Thus, to the extent that defendants argued that the wrongful seizure constituted grounds for any form of affirmative relief other than dissolution of the seizure order, their motion was denied at that procedural [post seizure hearing] juncture.

The Court went on to say

defendant's were, of course, free to pursue their counterclaim against Beltronics for wrongful seizure pursuant to § 1116(d)(11). Id. Further, the Court held that “it is 15 U.S.C. 1116(d) (11) that governs whether a seizure order is wrongful, rather than section 1116(d)(4), which merely set forth the factors a Court is to consider in determining whether to grant an application for such an order.

The wrongful

seizure provision of the Lanham Act is not in section 1116(d)(4) but in section 1116(d)(11). Thus, section 1116(d)(11) and its supporting legislative history establish the standards by which wrongful seizure claims may be pursued, and section 1116(d)(4) has nothing to do with those standards.” Id. Waco International vs. KHK Scaffolding E.

278 F.3d 523. CLAIMS II – VII ARE NOT DEFENSES TO 23

TRADEMARK INFRINGEMENT UNDER 15 U.S.C. 1115(b) In it's Oct. 9, 2009 Order This Court argues; “Not only does res judicata bar counterclaims that were raised and fully litigated, it prevents litigation of all grounds for, or defenses to, recover that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding.” Canon U.S.A., Inc. v. Lease Group Resources, Inc., 2007 WL 1555394, at (E.D. Va. May 21, 2007) (quoting Peugeot Motors of Am., Inc. v. E. Auto Distribs., Inc., 892 F.2d 355, 359 (4th Cir. 1989)).

The Snyder's wrongful seizure claim is

not a defense to trademark infringement, it is a separate statutory cause of action under 15 U.S.C. § 1116(d)(11)12 of the Lanham Act.

Likewise, none of the claims enumerated

in Counts III through VII in the current action are defenses to trademark infringement under the Lanham Act. See 15 USC 1115.

Thus, the doctrine of claim preclusion

"A person who suffers damage by reason of a wrongful seizure under this subsection has a cause of action against the applicant for the order under which such seizure was made, and shall be entitled to recover such relief as may be appropriate, including damages for lost profits, cost of materials, loss of good will, and punitive damages in instances where the seizure was sought in bad faith, and, unless the Court finds extenuating circumstances, to recover a reasonable attorney’s fee. The Court in its discretion may award prejudgment interest on relief recovered under this paragraph, at an annual interest rate established under section 6621 (a)(2) of title 26, commencing on the date of service of the claimant’s pleading setting forth the claim under this paragraph and ending on the date such recovery is granted, or for such shorter time as the Court deems appropriate." 12

24

does not bar the Snyder's from asserting their claims in a separate cause of action. F. Fraud On The USPTO Is Not Only a Defense to Trademark Infringement It Is An Affirmative Claim Under 15 U.S.C. § 1120 And The Snyders Are Not Barred From Asserting Them In An Independent Claim For Relief Although Mrs. Snyder is barred in the present case from asserting fraud as a defense, which might have been interposed in the earlier litigation, it would not follow that her claim for damages would likewise be barred. Mercoid 320 U.S. 680; 64 S.Ct. 278; 88 L.Ed. 396 (1944). That claim for damages is more than a defense; it is a separate statutory cause of action that is based on civil liability for false or fraudulent registration under 15 U.S.C. § 1120, which provides: "Any person who shall procure registration in the Patent and Trademark Office of a mark by a false or fraudulent declaration or representation, oral or in writing, or by any false means, shall be liable in a civil action by any person injured thereby for any damages sustained in consequence thereof." Additionally, “the fact that it might have been asserted as a counterclaim in the prior suit by reason of Rule 13(b) of the Rules of Civil Procedure, does not mean

25

that the failure to do so renders the prior judgment res judicata as respects it.”

Mercoid United States Supreme

Court February 7, 1944 320 U.S. 680; 64 S.Ct. 278; 88 L.Ed. 396 (citing Virginia-Carolina Chemical Co. v. Kirven, 215 U.S. 252, 30 S.Ct. 78, 54 L.Ed. 179; Larsen v. Northland Transportation Co., 292 U.S. 20, 54 S.Ct. 584, 78 L.Ed. 1096. And see Scott, Collateral Estoppel by Judgment, 56 Harv.L.Rev. 1, 26-28; Restatement of the Law of Judgments, § 58). The case is then governed by the principle that where the second cause of action between the parties is upon a different claim the prior judgment is res judicata not as to issues which might have been tendered but 'only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered.' See Mercoid

(citing Cromwell v. County of Sac,

94 U.S. 351, 353, 24 L.Ed. 195. And see Russell v. Place, 94 U.S. 606, 24 L.Ed). V. THE FOLLOWING MATTERS WERE NOT DETERMINED IN DVF's PREVIOUS ACTION Catherine and Richard Snyder respectfully move this Court to amend the Oct. 9, 2009 Order and correct erroneous findings of fact contained therein. With all due respect to this Court, the Court in the

26

previous case, Diane von Furstenberg Studio v. Snyder did not make the following determinations: 1.

The Court did not determine that the 54 dresses

seized from the Snyder's home on December 8, 2006 were counterfeit at that procedural juncture as stated in the Court's Oct. 9, 2009 Order. See Oct. 9, 2009 Order *4 “The Law Defendants recovered fifty-four counterfeit DVF dresses during the search.” In fact, the Court's September 10, 2007 Summary Judgment Memorandum Opinion,13 makes a single reference to the dresses seized, which follows: "On December 8, 2006, the Order was executed upon Defendants’ address in Herndon, Virginia, and Plaintiffs seized a number of dresses bearing DVF marks, along with a computer and financial records." It should be noted that the Court does not use the word counterfeit in it's description of the dresses seized from the Snyder's home on Dec. 8, 2006. Thus, the Court did not determine the fifty-four Diane von Furstenberg dresses seized on Dec. 8, 2006 at that procedural juncture. Moreover, the Court did not, at any juncture prior to summary judgment in the

procedural matter of Diane

von Furstenberg Studio v. Snyder, determine that the Diane von Furstenberg dresses seized from the Snyder's home on 13[Exhibit No. 9] 27

Dec. 8, 2006, were in fact, counterfeit Diane von Furstenberg dresses. 2. The Snyder’s did not argue, in the previous action,that the "Diane von Furstenberg" mark registered under Reg. No.2276188 was not currently used in commerce in the previous action. See Oct. 9, 2009 Opinion *11, “the Snyders argued that the marks were not “currently used in commerce.””14

Notwithstanding that DVF referenced a single

trademark registration number in both it's complaint15 and it's memorandum of law in support of summary judgment,16 DVF astonishingly demanded the Court award it $2 Million dollars in damages- $1 Million dollars each for the 'Diane von Furstenberg' mark registered under Reg. No.2276188 and $1 Million dollars for the 'DVF' mark.

The DVF mark is

registered with the USPTO under a wholly different Registration number.17 More importantly, not one of the dresses seized from the Snyder's home on December 8, 2006 bore the DVF mark. It is in that context that Mrs. Snyder argued that not only had Mrs. Snyder not used the DVF mark in commerce, but it was her belief that DVF did not use the 'DVF' mark in 14[EXHIBIT No. 10] 15[Docket No.1] Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356 16[Docket No.65] Diane von Furstenberg Studio v. Snyder,No. 1:06-cv-1356 17[EXHIBIT No. 11] 28

on dresses either.18 3. DVF did not "file[d] an action in this Court against the Snyder's," DVF filed an action in this Court against Catherine Snyder.

Notwithstanding that DVF and law

defendants knew Richard Snyder's identity prior to filing it's action on December 4, 2006, defendants failed to name Mr. Snyder in it's action against Mrs. Snyder.

Moreover,

DVF did not amend it's complaint to add a claim for contributory infringement against Mr. Snyder, nor was Mr. Snyder ever served with a Complaint in the previous action.19

In fact, Mr. Snyder first learned of DVF's

contributory infringement claim against him when DVF moved for Summary Judgment on August 15, 2007.

18 [EXHIBIT

No. 11] 19 [Docket] Diane von Furstenberg Studio v. Snyder, No. 1:06-cv-1356 No Docket Entry showing (1) an Amended Complaint, or (2) Return of Service as to Richard Snyder 29