Clarifying the Burden of Proving Trademark-Use Authorization in Gray-Market Goods: A Commentary on AL Infinity LLC v. Spalter (2d Cir. 2025)

1. Introduction

The Second Circuit’s summary order in AL Infinity LLC v. Spalter, et al., No. 24-1412 (2d Cir. July 15, 2025), vacates a district-court judgment that had granted summary judgment to the defendants in a trademark-counterfeiting dispute involving “gray-market” Altec Lansing speakers. Although issued as a non-precedential “Summary Order,” the decision is significant for its careful exposition of which party bears the evidentiary burden, at the summary-judgment stage, to prove or negate a manufacturer’s authorization to use a trademark.

The litigation pits:

  • AL Infinity LLC – current owner of the ALTEC LANSING mark, plaintiff-appellant.
  • Crown Cell Inc., along with employees Herschel Spalter and Isser Boyarsky – defendants-appellees and on-line resellers of the goods in question.
  • Westview Industries, Inc. – Crown Cell’s supplier, brought in as a third-party defendant for indemnity and contribution.

The core dispute is whether the Altec Lansing-branded speakers sold by Crown Cell were “authentic” (lawfully manufactured by an authorized entity) or “counterfeit” (manufactured without authority).

2. Summary of the Judgment

The district court (Judge Buchwald, S.D.N.Y.) had granted summary judgment to Crown Cell, holding that AL Infinity had failed to prove that the Chinese manufacturer, Shenzhen Fenda Technology Co., Ltd. (“Fenda”), lacked authorization to produce the speakers. The court treated the information as “uniquely within [AL Infinity’s] control” and, because no proof of unauthorized manufacture surfaced, concluded that all five of AL Infinity’s federal and state claims fell.

On appeal, the Second Circuit vacated that judgment and remanded. Key holdings:

  1. AL Infinity’s sworn affidavit that it never authorized Fenda to manufacture the particular models created a genuine issue of material fact.
  2. Historic documents showing that Fenda and Westview were once authorized suppliers or representatives did not shift the ultimate burden onto AL Infinity to prove termination of those relationships.
  3. Crown Cell could still attempt, on remand, to marshal admissible evidence that the speakers were produced under a valid, unrevoked authorization, but the current record could not sustain summary judgment in its favor.

3. Analysis

3.1 Precedents Cited and Their Influence

  • 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400 (2d Cir. 2005) – sets out the four-factor test for trademark infringement that the panel restates.
  • Atlas Air, Inc. v. Int’l Bhd. of Teamsters, 943 F.3d 568 (2d Cir. 2019) – cited for the standard of de novo review of summary-judgment decisions.
  • Zivkovic v. Laura Christy, LLC, 137 F.4th 73 (2d Cir. 2025) – discussed in a jurisdictional aside regarding voluntary dismissal of remaining claims.

The panel also leans heavily on the Lanham Act’s definitions in 15 U.S.C. §§ 1114, 1116, 1117, 1127, specifically noting the statutory carve-out for goods manufactured with authorization.

3.2 The Court’s Legal Reasoning

  1. Plaintiff’s Prima Facie Burden: AL Infinity had to show (a) ownership of a valid mark and (b) defendants’ unauthorized use in commerce. By submitting an affidavit that no license existed in 2016-17 and that the SKUs had not been in the product line since 2012, AL Infinity made out this prima facie showing.
  2. Shifting of the Burden of Production: Once the plaintiff demonstrated a plausible lack of authorization, the burden shifted to Crown Cell to rebut that claim with concrete evidence (e.g., extant licenses, chain-of-title of leftover stock, etc.). The panel emphasizes that historic documents suggesting past authority do not, standing alone, invalidate AL Infinity’s evidence of current non-authority.
  3. Weight and Admissibility of Evidence: • The 2004 Fenda–Altec MOU and 2009 Fenda–Plantronics agreement were limited supplier contracts. They prohibited Fenda from independently selling Altec Lansing products. • The 2009 Westview–Plantronics amendment actually terminated Westview’s authority to solicit orders for Altec Lansing goods. • Additional settlement correspondence proffered by Crown Cell was excluded under Fed. R. Evid. 408.
  4. Faulty District-Court Assumption: The district court assumed that AL Infinity possessed (and withheld) definitive proof of terminated licenses. The Second Circuit corrects this, noting Crown Cell’s burden to produce evidence affirmatively showing ongoing authorization once AL Infinity has plausibly denied it.

3.3 Potential Impact of the Judgment

Even as a non-precedential order, the decision will likely be cited for its persuasive authority in several contexts:

  • “Gray-Market” Goods Litigation: Clarifies that an IP owner need not trace and negate every historical license in order to survive summary judgment; a credible denial of current authorization forces the reseller/manufacturer to prove existing rights.
  • Summary-Judgment Practice: Reinforces that the movant (here, Crown Cell) bears the burden to demonstrate the absence of material fact. Suppositions about a plaintiff’s control over evidence do not suffice.
  • Lanham Act Counterfeiting Exception: Interprets § 1117(b)(1) narrowly, requiring contemporaneous authorization at the time of manufacture – a significant point for leftover inventory sales and liquidation scenarios.
  • Third-Party Claims & Appellate Jurisdiction: Offers a practical illustration of how the dismissal of contingent indemnification claims can perfect a partial judgment for appeal under 28 U.S.C. § 1291.

4. Complex Concepts Simplified

  • Gray-Market Goods: Authentic-looking products obtained outside authorized distribution channels. They may or may not be infringing depending on origin and consent.
  • Counterfeiting vs. Infringement: All counterfeits infringe, but not all infringement is counterfeiting. Counterfeits are “spurious marks” identical or virtually identical to a registered mark and made without authorization at the time of manufacture.
  • Burden of Production vs. Burden of Persuasion: • Production – duty to come forward with some evidence; • Persuasion – duty to convince the trier of fact. The Second Circuit’s order speaks to the production burden at the summary-judgment phase.
  • Fed. R. Evid. 408: Bars admission of settlement negotiations to prove liability or invalidity of a claim, which undercut Crown Cell’s reliance on certain emails.

5. Conclusion

AL Infinity LLC v. Spalter underscores a practical yet often overlooked principle: in gray-market trademark disputes, once the mark owner credibly disavows any extant authorization, the reseller bears the evidentiary burden to prove that such authorization existed at the relevant time. The Second Circuit faulted the district court for flipping that burden and for equating historic, limited-purpose agreements with blanket, perpetual manufacturing rights. Going forward, litigants defending gray-market sales in the Second Circuit will need a robust evidentiary record—clear licenses, dated purchase orders, or other contemporaneous documents—to avoid trial. Even as a summary order, the decision provides persuasive guidance likely to shape both litigation strategy and due-diligence practices in the consumer-goods sector.