Lessons from AFAB Industrial Services v. Little Chelsea, Inc.
On March 2, 2026, Judge Margaret M. Garnett of the United States District Court for the Southern District of New York entered judgment in favor of our client, Little Chelsea, Inc. d/b/a Chelsea Exclusive (LCI), on all claims in a Lanham Act counterfeiting case.
Background
AFAB Industrial Services, Inc. manufactures and distributes an aerosol product sold under the registered trademark “Maximum Impact.” This federal action arose from a wrongful death and product liability case pending in New York Supreme Court. In connection with that matter, AFAB alleged that two Maximum Impact canisters at issue in the state court action were counterfeit and that LCI — a Manhattan retail store — had sold them.
AFAB brought claims for trademark infringement under 15 U.S.C. § 1114, false designation of origin under 15 U.S.C. § 1125(a), and state-law unfair competition. The case was tried to the bench over four days in February 2026.
What AFAB Had to Prove
To prevail, AFAB was required to establish two things: (1) that the canisters at issue were counterfeit — bearing AFAB’s trademark but not genuine AFAB products; and (2) that LCI sold those specific canisters. The Court found that AFAB failed to carry its burden on both elements.
The Court’s Findings:
Counterfeiting
AFAB’s counterfeiting case depended primarily on a comparison between the canisters at issue and canisters AFAB offered as genuine. The Court identified a foundational evidentiary problem: the “genuine” canisters AFAB presented were not products drawn from commerce at the time of the relevant events. The Court found they were created in 2023 and 2024 for litigation purposes. As the Court stated:
“[T]he Court finds that Farr’s testimony about the differences between the Gopaul Canisters and genuine Maximum Impact canisters is not reliable, because the genuine canisters Farr testified about and that the Court examined were created in 2023 and 2024 solely for the purpose of this litigation.”
The Court concluded that without evidence of what the genuine product looked like at the time of the alleged sale, AFAB could not establish that the canisters at issue were counterfeit.
The Court’s Findings:
Attribution to LCI
Separately, the Court found that AFAB failed to prove LCI sold the canisters at issue. LCI established that it sourced Maximum Impact exclusively through two authorized distributors who obtained the product directly from AFAB. The Court found this supply chain was documented and uncontroverted.
On the question of attribution, the Court held:
“AFAB has not offered any evidence that directly links LCI to the Gopaul Canisters, and the circumstantial evidence AFAB relies upon is insufficient to meet its burden of proof.”
The Court’s Findings:
Spoliation
AFAB sought an adverse inference on the ground that LCI had discarded approximately twelve to thirteen Maximum Impact canisters in April 2021, upon receiving notice of a parallel state court action — nearly two years after the events at issue.
The Court denied the request, finding that AFAB had not demonstrated the discarded canisters were relevant to the claims in this litigation. The Court also noted that AFAB was no longer the product’s manufacturer by the time of the disposal.
“[T]he Court declines to draw an adverse inference against LCI because AFAB has not demonstrated that the discarded canisters were relevant to the claims in this litigation.”
Result
Judge Garnett entered judgment in favor of LCI on all claims. The case is closed.
Observations for Practitioners
Several issues in this case have broader applicability to Lanham Act trademark and counterfeiting defense:
• The evidentiary foundation for a counterfeiting comparison must be airtight. Where the plaintiff cannot produce a genuine product from commerce at the relevant time, a comparison-based counterfeiting theory is vulnerable.
• Documented supply chain provenance is a potent defense. Contemporaneous invoices, distributor relationships, and product flow records can defeat attribution claims even when the authenticity of specific items is disputed.
• Adverse inference arguments require demonstrated relevance. Showing that a party discarded items is not sufficient; the moving party must connect those items to the actual claims at issue, and timing is a factor courts consider.
Sulimani Law Firm PA represented Little Chelsea, Inc. d/b/a Chelsea Exclusive at trial.
For more information, contact us at info@sulimanilawfirm.com or 212.863.9614.
Citation: AFAB Industrial Services, Inc. v. Little Chelsea, Inc. d/b/a Chelsea Exclusive, No. 23-CV-03095 (MMG) (S.D.N.Y. Mar. 2, 2026).