In the

United States Court of Appeals

For the Seventh Circuit

No. 08-1569

GABBANELLI ACCORDIONS & IMPORTS, L.L.C.,

Plaintiff-Appellee,

v.

DITTA GABBANELLI UBALDO DI ELIO GABBANELLI,

Defendant-Appellant.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 02 C 4048—James B. Zagel, Judge.

ARGUED JANUARY 21, 2009—DECIDED JULY 30, 2009

Before POSNER, FLAUM, and WOOD, Circuit Judges.

POSNER, Circuit Judge. This suit under the Lanham Act,

15 U.S.C. §§ 1051 et seq., grows out of a protracted family

dispute over trademarks. The district judge, on the plaintiff’s motion for summary judgment, awarded the plaintiff, which we’ll call “American Gabbanelli,” a permanent

injunction, damages, and attorneys’ fees. The defendant,

which we’ll call “Italian Gabbanelli,” appeals.
2 No. 08-1569

American Gabbanelli began life in the mid-1960s as the

U.S. distributor for the predecessor of Italian Gabbanelli, a

manufacturer of accordions in Italy. In 1996 and 1997

American Gabbanelli obtained registered U.S. trademarks

on the name “Gabbanelli” for use on accordions and

began importing accordions designed to its specifications and manufactured by Italian Gabbanelli and other

companies. In 1999 American Gabbanelli sued Italian

Gabbanelli in an Italian court, complaining about the

Italian company’s using the Internet domain name

www.gabbanelli.com and advertising the Gabbanelli

trademark over the Internet. The defendant won that

suit, which was followed by two more trademark suits

in the Italian court, one by each of the parties.

The parties settled their differences (they thought!)

later that year by an agreement that gave American

Gabbanelli the exclusive right to use the Gabbanelli mark

in North America and Italian Gabbanelli the exclusive

right to use it in Italy. The agreement provided that “any

further controversy” would be resolved by arbitration

conducted in Italy in the Italian language, with each

party to appoint an arbitrator and the two arbitrators to

appoint a third arbitrator, who would be the chairman

of the arbitration panel.

A “further controversy” soon arose and each party

appointed an arbitrator. But for unexplained reasons the

third arbitrator has never been appointed and no arbitration has ever been conducted. Instead, Italian Gabbanelli

filed another suit in the Italian court, in May 2002,

seeking a transfer of American Gabbanelli’s U.S. trade-
No. 08-1569 3

marks to it. Recently that court issued its judgment, and

it is in Italian Gabbanelli’s favor.

The present suit was filed by American Gabbanelli in

January 2002 in a federal district court in Texas and

charges Italian Gabbanelli with infringing American

Gabbanelli’s U.S. registered trademarks. There was a

change of venue to the district court in Chicago, and

several months later Italian Gabbanelli, though unrepresented by counsel, wrote a letter to the district court

contending that the arbitration clause in the agreement

settling the original Italian litigation barred the court

from exercising jurisdiction over American Gabbanelli’s

suit. The district judge rejected the contention after Italian

Gabbanelli finally retained counsel (see below). Having

filed suit itself (the Italian suit to which we referred

earlier) rather than proceed in arbitration, Italian

Gabbanelli can hardly be heard to complain about its

opponent’s having done the same thing. True, Italian

Gabbanelli could not invoke arbitration before the third

arbitrator was appointed. But if the reason the third

arbitrator was not appointed was that American

Gabbanelli’s arbitrator had refused to cooperate with

Italian Gabbanelli’s arbitrator in picking the third arbitrator, Italian Gabbanelli could have sought relief in the

Italian court for breach of the arbitration clause. It has

sought such relief, in still another suit, but we have not

been told what the ground of that suit is, or its outcome.

The issue of the effect of the arbitration clause on the

present lawsuit is in any event not jurisdictional. A

person who having agreed to arbitrate instead brings a
4 No. 08-1569

suit has broken his contract, and the breach can be

pleaded as a defense to his suit. But even if the defense

is sound, it no more deprives the court of jurisdiction

than a defense based on any other contractual forumselection clause would. Scherk v. Alberto-Culver Co., 417

U.S. 506, 518-20 (1974); Baltimore & Ohio Chicago Terminal

R.R. v. Wisconsin Central Ltd., 154 F.3d 404, 408-09 (7th

Cir. 1998); cf. CIGNA HealthCare of St. Louis, Inc. v. Kaiser,

294 F.3d 849, 852-53 (7th Cir. 2002); Lloyd v. HOVENSA,

LLC, 369 F.3d 263, 272 (3d Cir. 2004); Reynolds Jamaica

Mines, Ltd. v. La Societe Navale Caennaise, 239 F.2d 689, 694

(4th Cir. 1956). This is apparent from the fact that parties

to an arbitration agreement can always waive the agreement and decide to duke out their dispute in court,

Grumhaus v. Comerica Securities, Inc., 223 F.3d 648, 650-51

(7th Cir. 2000); Cabinetree of Wisconsin, Inc. v. Kraftmaid

Cabinetry, Inc., 50 F.3d 388, 389-91 (7th Cir. 1995); Hoxworth

v. Blinder, Robinson & Co., 980 F.2d 912, 925-27 (3d Cir.

1992)—which in effect is what happened in this case. So

not only is there no jurisdictional obstacle; there is no

contractual (or for that matter any other) obstacle. Italian

Gabbanelli waived its right to insist on arbitration by

bringing suit upon a “further controversy” between the

parties in violation of the arbitration clause in its settlement agreement with American Gabbanelli.

The letter challenging the district court’s jurisdiction

was sent, as we said, in July 2002. In October the court

stayed further proceedings pending the outcome of the

Italian suit that Italian Gabbanelli had filed earlier that

year. In May 2005, with the Italian court not yet having

rendered a decision, the district judge became impatient
No. 08-1569 5

and lifted the stay. American Gabbanelli promptly served

Italian Gabbanelli with requests for admission, essentially

asking it to admit liability on all the plaintiff’s trademark claims. The defendant had 30 days to respond. Fed.

R. Civ. Pro. Rule 36(a)(2), (3), (4). In October 2005, months

later, without having responded to the requests for admission, Italian Gabbanelli finally hired a law firm and

the firm entered an appearance in the case.

American Gabbanelli moved for summary judgment.

After delays while the parties contested the (nonexistent)

jurisdictional issue, Italian Gabbanelli filed its opposition

to the motion for summary judgment in June 2007.

But having missed the deadline for responding to the

request for admissions it was deemed to have made the

requested admissions. Fed. R. Civ. P. 36(a)(3); Fabriko

Acquisition Corp. v. Prokos, 536 F.3d 605, 607 (7th Cir.

2008); Hadley v. United States, 45 F.3d 1345, 1347-48 (9th Cir.

1995). So when the defendant moved to be permitted

to withdraw the admissions and substitute affidavits

contradicting them, the judge denied the motion and

the grant of summary judgment followed swiftly.

Italian Gabbanelli had no excuse for ignoring its opponent’s request for admissions long, long past the deadline. Though a small company, it has lawyers in Italy who

could have put it in touch with an American law firm

when it was sued back in 2002. And a law firm did finally

make an appearance for it in October 2005—yet waited

almost two years after that before moving to rescind the

admissions. The excuse that the arbitration clause required

the request for admissions in an American lawsuit to be in
6 No. 08-1569

Italian is frivolous; the defendant’s initial letter, objecting

to the suit, was in English. The district judge was not

required to rescind the admissions, United States v. 2204

Barbara Lane, 960 F.2d 126, 129-30 (11th Cir. 1992), and, with

the admissions thus a part of the evidentiary record the

grant of summary judgment in favor of the plaintiff was

inevitable.

But what about the recent Italian judgment in Italian

Gabbanelli’s favor? The company had tried, before the

appeal was argued, to submit it directly to us, but we

directed that it instead be submitted to the district judge,

with a request that he make it a part of the record, as in

United States v. Ramirez, 421 F.3d 159, 167 (2d Cir. 2005).

An American court can take judicial notice of a foreign

judgment, Hilton v. Guyot, 159 U.S. 113, 205-06 (1895);

Mike’s Train House, Inc. v. Lionel, L.L.C., 472 F.3d 398, 411-12

(6th Cir. 2006); United States v. Garland, 991 F.2d 328, 332-34

(6th Cir. 1993), but in most cases (not all—see, e.g., Crockett

v. Hulick, 542 F.3d 1183, 1188-89 n. 3 (7th Cir. 2008);

Ruvalcaba v. Chandler, 416 F.3d 555, 563 n. 2 (7th Cir. 2005);

Dickerson v. Alabama, 667 F.2d 1364, 1367-68 (11th Cir.

1982)) the sensible procedure is first to lodge it with the

trial court, as in the Ramirez, Train House, and Garland

cases, and that is the usual practice. See also Ennis v.

Smith, 55 U.S. 400, 430-31 (1852); Lloyd v. American Export

Lines, Inc., 580 F.2d 1179, 1188-90 (3d Cir. 1978). The

significance of a foreign judgment for pending litigation depends obviously on its meaning, which will require an accurate translation if, as in this case, the judgment was rendered by a court in a non-English-speaking

country. And because the United States is not a signatory
No. 08-1569 7

to any treaty governing recognition of foreign judgments,

Alessandro Barzaghi, “Recognition and Enforcement of

United States Judgments in Italy,” 18 N.Y. Int’l L. Rev. 61,

65 (2005), the significance of the foreign judgment will

depend on a variety of other considerations as well,

having to do with the reliability of the foreign proceeding for determining the parties’ rights. See Restatement (Third) of Foreign Relations Law § 482 (1987). Some of

those considerations, such as adequacy of notice, are also

best treated as matters of fact because their accurate

determination can benefit from compliance with the

rules of evidence. See Fed. R. Civ. P. 44.1; Twohy v.

First National Bank, 758 F.2d 1185, 1192-94 (7th Cir. 1985).

Although Italian Gabbanelli did as we directed and

asked the district judge to add the Italian judgment to

the record, he refused. His ground was that the

company was trying to get him to find facts while the

case was on appeal and jurisdiction over the case had

therefore shifted to the court of appeals. We could have

been clearer, but our intention was to order a limited

remand to give the parties an opportunity to supplement the record with the judgment (and pertinent interpretive materials), which might assist us in deciding the

appeal, as in Seetransport Wiking Trader Schiffarhtsgesellschaft

MBH & Co. v. Navimpex Centrala Navala, 989 F.2d 572,

583 (2d Cir. 1993).

No matter. Because the Italian judgment postdates the

American one, it cannot be pleaded as res judicata, or, so

far as we can see, do anything else to advance Italian

Gabbanelli’s cause. It is more likely that the American
8 No. 08-1569

judgment, at least once the defendant has exhausted its

appellate remedies (an essential condition, as we are about

to see), could be pleaded as res judicata in the Italian

litigation, assuming that the Italian litigation has not

yet concluded—that appellate remedies remain unexhausted. Although the parties haven’t bothered to tell us

anything about the Italian doctrine of res judicata, our

own research reveals that the Italian doctrine (on which

see Article 2909 of the Italian Civil Code; Enrico Zattoni,

“Some Comparative Reflections on Issue Preclusion in

Civil Cases: Collateral Estoppel and Giudicato Sull

‘Eccezione’,” 41-44 (L.L.M. thesis, Harvard Law School,

Apr. 1992); and Barzaghi, supra, 69-70, 85-88, 95), unlike

the American, does not accord res judicata effect to a

judgment, whether domestic (that is, Italian) or foreign,

until appellate remedies have been exhausted. Spier v.

Calzaturificio Tecnica, S.p.A. WL 200651, at *1-2 (S.D.N.Y.

Dec. 3, 1990); Barzaghi, supra, at 85; Andrea Bonomi, “The

Italian Statute on Private International Law,” 27 Int’l J.

Legal Information 247, 266-67 (1999).

It is true that American courts apply the American

doctrine of res judicata even to a foreign judgment of a

nation like Italy that would not treat an American judgment the same way. Restatement, supra, § 481, comment d;

Restatement (Second) of Conflict of Laws § 98 (1971); Richard

W. Hulbert, “Some Thoughts on Judgments, Reciprocity,

and the Seeming Paradox of International Commercial

Arbitration,” 29 U. Pa. J. Int’l L. 641, 642-44 (2008). And

so the fact that the Italian judgment is not final in the

sense of appellate remedies having been exhausted is not
No. 08-1569 9

important. But what is important is that it was rendered after the judgment of the district court.

The Italian judgment in short is a red herring in this

appeal. Italian Gabbanelli’s challenge to liability fails.

But it has a legitimate grievance concerning the

damages that the district judge awarded—$151,200 in lost

profits plus statutory damages of $500 per infringing

accordion. The latter award is the focus of contention.

The Lanham Act authorizes statutory damages only in

cases in which the violation of the Act takes the form

of using a “counterfeit” mark, § 1117(c)—“a spurious

mark which is identical with, or substantially indistinguishable from, a registered mark,” § 1116(d)(1)(B)(ii); see

also §§ 1117, 1127—as distinct from cases in which the

mark is placed on the defendant’s product with the

trademark owner’s consent but the product is then distributed through an unauthorized channel. Louis P. Petrich,

“Preliminary Injunctions and Temporary Restraining

Orders in Copyright and Trademark Infringement Cases:

The Trademark Counterfeiting Act,” 326 PLI/Pat 499, 570-

71 (1991). For example, a product licensed to be sold only

in Europe but sold in the United States under the licensor’s

trademark would be a “grey market” good rather than a

good sold by means of a “counterfeit” mark. Id. But Italian

Gabbanelli placed the Gabbanelli mark on accordions made

by a company that was not authorized to manufacture

accordions for sale in the United States under the

Gabbanelli name; this made its use of the name counterfeiting. Idaho Potato Commission v. G & T Terminal

Packaging, Inc., 425 F.3d 708, 722 (9th Cir. 2005).
10 No. 08-1569

However, statutory damages may be awarded only in

cases in which compensatory damages are not awarded

for the same violation. 15 U.S.C. §§ 1117(c), (d); Derek

Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 699 (9th

Cir. 2008); Twin Peaks Productions, Inc. v. Publications Int’l,

Ltd., 996 F.2d 1366, 1380-82 (2d Cir. 1993). It is true that

if there are separate violations, the fact that they are

charged in the same case does not preclude an award

of compensatory damages for some of the violations

and statutory damages for others as to which compensatory damages can’t be ascertained or are too slight to

warrant the expense of determining but in which deterrence would be served by a money judgment. Cf. Nintendo

of America, Inc. v. Dragon Pacific Int’l, 40 F.3d 1007, 1010-11

(9th Cir. 1994). But this is not such a case. Both the lost

profits, which are compensatory damages, and the statutory damages pertain to the same accordions that

Italian Gabbanelli sold in violation of American

Gabbanelli’s trademark rights.

A further problem with the damages award is the

amount of statutory damages that can be awarded in the

case of a counterfeit trademark: “not less than $500 or

more than $100,000 per counterfeit mark per type of

goods or services sold, offered for sale, or distributed, as

the court considers just.” 15 U.S.C. § 1117(c). Per “type

of goods”—not per individual item bearing the counterfeit mark. 5 J. Thomas McCarthy, McCarthy on Trademarks

and Unfair Competition § 30:95 (4th ed. 2009).

The damages award must therefore be vacated. The

judgment is affirmed except with respect to that award
No. 08-1569 11

and also the award of attorneys’ fees, which the district

court will have to redetermine at the conclusion of the proceedings on remand.

AFFIRMED IN PART, REVERSED IN PART,

 AND REMANDED WITH INSTRUCTIONS.

7-30-09