Daffy’s, Inc. (defendant) purchased bags from a third party that it believed to be made by Gucci America, Inc. (plaintiff). In fact, the bags were counterfeit. However, the bags were very good counterfeits in that a Gucci store clerk and a Gucci repair warehouse could not identify them as counterfeit bags. Gucci sent Daffy’s a cease-and-desist letter. Daffy’s voluntarily stopped selling the counterfeit bags and adopted a policy of not selling Gucci products. Gucci sued Daffy’s for trademark infringement. The district court held that Daffy’s was guilty of infringement. However, the court found Daffy’s to be “an innocent infringer” and declined to order a recall or an injunction. Gucci appealed.