Chanel, Inc. v. Sea Hero

234 F. Supp. 3d 1255, 2016 U.S. Dist. LEXIS 189191, 2016 WL 8678031

Opinion

ORDER

BETH BLOOM, UNITED STATES DISTRICT JUDGE ■

THIS CAUSE is before the Court upon Plaintiff Chanel, Inc.’s (“Plaintiff’), Motion for Entry of Final Default Judgment Against Defendants, ECF Np. [29] (“Motion”), filed on April 25, 2016. Á Clerk’s Default, ECF, No. [26], was entered against Defendants on April 20, 2016, as Defendants failed to appear, answer, or otherwise plead to the' Complaint,k ECF No. [1], despite having been served. See Plaintiffs Motion for Clerk’s Entry of Default, ECF No. [25]; Executed Return of Summons, ECF Nos. [23]—[24]. The Court has carefully considered the Motion, the record in this case, the applicable law; and is otherwise fully advised. For the following reasons, Plaintiffs Motion is GRANTED.

I. Introduction

Plaintiff, sued Defendants for trademark counterfeiting and infringement under § 32 of the Lanham Act, 15 U.S.C. § 1114; false designation of origin under § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); common-law unfair competition; and common law trademark infringement.- The Complaint alleges that Defendants ’áre promoting, advertising, distributing, offering for sale and selling. goods bearing counterfeits and confusingly, similar imitations of Plaintiffs registered, trademarks within the Southern District of Florida through the e-commerce stores operating under their seller identification names identified on Schedule “A” attached to Plaintiffs Motion for Entry of Final Default Judgment (the “Seller IDs”). See Motion at 14.

Plaintiff further asserts that Defendants’ unlawful activities have caused and will continue to cause irreparable injury to Plaintiff because Defendants have (1) deprived Plaintiff of its right to determine the manner in which its trademarks are presented to the public through merchandising; (2) defrauded the public into thinking Defendants’ goods are goods authorized by Plaintiff; (3) deceived the public as to Plaintiffs association with Defendants’ goods and the websites that market and sell the goods; and (4) wrongfully traded and capitalized on Plaintiffs reputation and goodwill, as well as the commercial value of Plaintiffs trademarks.

In its Motion, Plaintiff seeks the entry of default final judgment against Defendants¹ in an action alleging trademark counterfeiting and infringement, false designation of origin, common-law unfair competition, and common law trademark infringement. Plaintiff further requests that the Court (1) enjoin Defendants from producing or selling goods that infringe its trademarks; and (2) award statutory damages.

Pursuant to Federal Rule of Civil Procedure 55(b)(2), the Court is authorized to enter a final judgment of default against a party who has failed to plead in response to a complaint. “[A] defendant’s default does not in itself warrant the court entering a default judgment.” DIRECTV, Inc. v. Huynh, 318 F.Supp.2d 1122, 1127 (M.D. Ala. 2004) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). Granting a motion for default judgment is within the trial court’s discretion. See Nishimatsu, 515 F.2d at 1206. Because the defendant is not held to admit facts that are not well pleaded or to admit conclusions of law, the court must first determine whether there is a sufficient basis in the pleading for the judgment to be entered. See id.; see also Buchanan v. Bowman, 820 F.2d 359, 361 (11th Cir. 1987) (“[Liability is well-pled in the complaint, and is therefore established by the entry of default.... ”). Upon review of Plaintiffs submissions, it appears there is a sufficient basis in the pleading for the default judgment to be entered in favor of Plaintiff.

II. Factual Background²

Plaintiff is the registered owner of the following trademarks which are valid and registered on the Principal Register of the United States Patent and Trademark Office (the “Chanel Marks”):

[[Image here]]

[[Image here]]

See ECF No. [8-1] at ¶ 5; ECF No. [1-1] (containing Certificates of Registrations of the Chanel Marks at issüe). The Chanel Marks are used in connection with the manufacture and distribution of high quality goods in the categories identified above. See ECF No. [8-1] at ¶¶ 4-5.

Defendants, through the e-commerce stores operating under the Seller IDs have advertised, promoted, offered for sale, or sold goods bearing what Plaintiff has determined to be counterfeits, infringements, reproductions, or colorable imitations of the Chanel Marks. See ECF No. [8-1] at ¶¶ 4, 9, 11-15; ECF No. [1-1]; ECF No. [8-3] at ¶¶ 2-3; ECF No. 8-5 at ¶4; see also ECF No. [8-6],

Although each Defendant may not copy and infringe each Chanel Mark for each category of goods protected, Plaintiff has submitted sufficient evidence showing that each Defendant has infringed, at least, one or more of the Chanel Marks. See ECF No. [8-1] at ¶¶ 9, 11-15. Defendants are not now, nor have they ever been, authorized or licensed to use, reproduce, or make counterfeits, reproductions, or colorable imitations of the Chanel Marks. See id. at ¶¶ 9,13,15.

Plaintiff retained AED Investigations, Inc., a licensed private investigative firm, to investigate the promotion and sale of counterfeit and infringing Chanel branded products by Defendants. See ECF No. [8-1] at ¶ 10; ECF No. [8-3] at ¶3; ECF No. [8-5] at ¶ 3.

Eric Rosaler (“Rosaler”), an officer of AED Investigations, Inc., accessed all of Defendants’ Internet based e-commerce stores operating under their respective Seller IDs, and upon accessing each e-commerce store, Mr. Rosaler’s firm was able to view products bearing Chanel’s trademarks, add products to the online shopping cart, and proceed to a point of checkout. (See ECF No. [8-5] at ¶ 4.) Mr. Rosaler’s firm finalized the purchase of a product bearing counterfeits of, at least, one of the Chanel Marks at issue in this action, via each Seller ID, to be shipped to Mr. Rosaler’s firm’s address in the Southern District of Florida. (Id.; see also ECF No. [8-6].) Each purchase was processed entirely online and at the conclusion of the process, the detailed web page captures reflecting various Chanel branded products Mr. Rosaler’s firm purchased via each Defendant’s Seller ID, were sent to Plaintiffs representative, Adrienne Hahn Sis-barro, for inspection. I'd; see also ECF No. [8-1] at ¶ 11; ECF No. [8-3] at ¶3.

Additionally, Plaintiffs counsel’s firm, Stephen M. Gaffigan, P.A., accessed the Internet based e-commerce stores operating under the Seller IDs, and captured relevant web pages illustrating examples of some of Defendants’ infringement of Chanel’s trademarks at issue via their respective Seller IDs, as well as web pages identifying various foreign countries as the shipping origins for the e-commerce stores operating under each of the Seller IDs, and provided copies of those web page captures³ to Plaintiffs representative, Ms. Hahn Sisbarro, for inspection. See ECF No. [8-1] at ¶¶ 13-14, n.1; ECF No. [8-3] at ¶ 2, n. 1.

Plaintiffs representative reviewed and visually inspected Defendants’ e-commerce stores operating under the Seller IDs, together with all of the items bearing the Chanel Marks offered for sale by Defendants via their Seller IDs, including the detailed web page captures of the Chanel branded goods identified and captured by Rosaler, and determined the products offered for sale were non-genuine, unauthorized versions of Plaintiffs products. See ECF No. [8-1] at ¶¶ 12-15.⁴

III. ANALYSIS

A. Claims

1. Trademark Counterfeiting and Infringement Under IS U.S.C. § 1114 (Count I)

Section 32 of the Lanham Act, 15 U.S.C. § 1114, provides liability for trademark infringement if, without the consent of the registrant, a defendant uses “in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark: which is likely to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. § 1114. In order to prevail on its trademark infringement claim under Section 32 of the Lanham Act, Plaintiff must demonstrate that (1) it had prior rights to the mark at issue; and (2) Defendants adopted a mark or name that was the same, or confusingly similar to Plaintiffs trademark, such that consumers were likely to confuse the two. Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193 (11th Cir. 2001) (citing Lone Star Steakhouse & Saloon, Inc. v. Longhorn Steaks, Inc., 106 F.3d 355, 360 (11th Cir. 1997)).

2. False Designation of Origin Under IS U.S.C. § 1125(a) (Count II)

To prevail on a claim for false designation of origin under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), Plaintiff must prove that Defendants used in commerce, in connection with any goods or services, any word, term, name, symbol or device, or any combination thereof, or any false designation of origin that is likely to deceive as to the affiliation, connection, or association of Defendants with Plaintiff, or as to the origin, sponsorship, or approval, of Defendants’ goods by Plaintiff. See 15 U.S.C. § 1125(a)(1). The test for liability for false designation of origin under 15 U.S.C. § 1125(a) is the same as for a trademark counterfeiting and infringement claim—i.e., whether the public is likely to be deceived or confused by the similarity of the marks at issue. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 780, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992).

3. Common-Law Unfair Competition and Trademark Infringement (Counts III and IV)

Whether a defendant’s use of a plaintiffs trademarks created a likelihood of confusion between the plaintiffs and the defendant’s products is also the determining factor in the analysis of unfair competition under Florida common law. Rolex Watch U.S.A., Inc. v. Forrester, 1986 WL 15668, at *3 (S.D. Fla. Dec. 9, 1986) (“The appropriate test for determining whether there is a likelihood of confusion, and thus trademark infringement, false designation of origin, and unfair competition under the common law of Florida, is set forth in John H. Harland, Inc. v. Clarke Checks, Inc., 711 F.2d 966, 972 (11th Cir. 1983).”); see also Boston Prof'l Hockey Ass’n, Inc. v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004, 1010 (5th Cir. 1975) (“As a. general rule ... the same facts which would support an action for trademark infringement would also support an action for unfair competition.”).

The analysis of liability for Florida common law trademark infringement is the same as the analysis of liability for trademark infringement under § 32(a) of the Lanham, Act. See PetMed Express, Inc. v. MedPets.Com, Inc., 336 F.Supp.2d 1213, 1217-18 (S.D. Fla. 2004).

B. Liability

The well-pled factual allegations of Plaintiffs Complaint properly allege the elements for each of the claims described above. See ECF No. [1], Moreover, the factual allegations in Plaintiffs Complaint have been substantiated by sworn declarations and other evidence and establish Defendants’ liability under each of the claims asserted in the Complaint. Accordingly, default judgment pursuant to Federal Rule of Civil Procedure 55 is appropriate.

C, Injunctive Relief

Pursuant to the Lanham Act, a district court is authorized to issue an injunction “according to the principles of equity and upon such terms as the. court may deem reasonable,” to prevent violations of trademark law. See 15 U.S.C. § 1116(a). Indeed, “[ijnjunctive relief is the remedy of choice for trademark and unfair competition cases, since there is, no adequate remedy at .law for the injury caused by a defendant’s continuing infringement.” Burger King Corp. v. Agad, 911 F.Supp. 1499, 1509-10 (S.D. Fla. 1995) (citing Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988)). Moreover, even in a default judgment setting, injunc-tive relief is available. See e.g., PetMed Express, Inc., 336 F.Supp.2d at 1222-23. Defendants’ failure to respond or otherwise appear in this action makes it difficult for Plaintiff to prevent further infringement absent an injunction. See Jackson v. Sturkie, 255 F.Supp.2d 1096, 1103 (N.D. Cal. 2003) (“[Djefendant’s lack of participation in this litigation has given the court no assurance that defendant’s infringing activity will cease. Therefore, plaintiff is entitled to permanent injunctive relief.”)

Permanent injunctive relief is appropriate where a plaintiff demonstrates that (1) it has suffered irreparable injury; (2) there is no adequate remedy at law; (3) the balance of hardship favors an equitable remedy; and (4) an issuance of an injunction is in the public’s interest. eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 392-93, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006). Plaintiff has carried its burden on each of the four factors. Accordingly, permanent injunctive relief is appropriate.

Specifically, in trademark cases, “a sufficiently strong showing of likelihood of confusion ... may by itself constitute a showing of a substantial threat of irreparable harm.” McDonald’s Corp. v. Robertson, 147 F.3d 1301, 1306 (11th Cir. 1998); see also Levi Strauss & Co. v. Sunrise Int'l Trading Inc., 51 F.3d 982, 986 (11th Cir. 1995) (“There is no doubt that the continued sale of thousands of pairs of counterfeit jeans would damage LS & Co.’s business reputation and might decrease its legitimate sales.”). Plaintiffs Complaint alleges that Defendants’ unlawful actions have caused Plaintiff irreparable injury and will continue to do so if Defendants are not permanently enjoined. See ECF No. [1]. Further, the Complaint alleges, and the submissions by Plaintiff show, that the goods promoted, advertised, offered for sale, and sold by Defendants are nearly identical to Plaintiffs genuine products and that consumers viewing Defendants’ counterfeit goods post-sale would actually confuse them for Plaintiff’s genuine products. See id. “The net effect of Defendants’ actions will cause confusion of consumers who will believe Defendants’ Counterfeit Goods are genuine goods originating from, associated with, and approved by Chanel.” See ECF No. [1] at 125.

Plaintiff has no adequate remedy at law so long as Defendants continue to operate the Seller IDs because Plaintiff cannot control the quality of what appears to be its products in the marketplace. An award of monetary damages alone will not cure the injury to Plaintiff’s reputation and goodwill that will result if Defendants’ infringing and counterfeiting actions are allowed to continue. Moreover, Plaintiff faces hardship from loss of sales and its inability to control its reputation in the marketplace. By contrast, Defendants face no hardship if they are prohibited from the infringement of Plaintiffs trademarks, which is an illegal act.

Finally, the public interest supports the issuance of a permanent injunction against Defendants to prevent consumers from being misled by Defendants’ products. See Nike, Inc. v. Leslie, 1985 WL 5251, at *1 (M.D. Fla. June 24, 1985) (“[A]n injunction to enjoin infringing behavior serves the public interest in protecting consumers from such behavior.”).

Defendants have created an Internet-based counterfeiting scheme in which they are profiting from their deliberate misappropriation of Plaintiffs rights. Accordingly, permanent injunctive relief prohibiting Defendants from conducting their unlawful activities is appropriate to achieve this end.

D. Statutory Damages for the Use of Counterfeit Marks

In a case involving the use of counterfeit marks in connection with a sale, offering for sale, or distribution of goods, 15 U.S.C. § 1117(c) provides that a plaintiff may elect an award of statutory damages at any time before final judgment is rendered in the sum of not less than $1,000.00 nor more than $200,000.00 per counterfeit mark per type of good. 15 U.S.C. § 1117(c)(1). In addition, if the Court finds that Defendants’ counterfeiting actions were willful, it may impose damages above the maximum limit up to $2,000,000.00 per mark per type of good. 15 U.S.C. § 1117(c)(2). Pursuant to 15 U.S.C. § 1117(c), Plaintiff has elected to recover an award of statutory damages as to Count I of the Complaint.

The Court has wide discretion to determine the amount of statutory damages. PetMed Express, Inc., 336 F.Supp.2d at 1219 (citing Cable/Home Commc’n Corp. v. Network Prod., Inc., 902 F.2d 829, 852 (11th Cir. 1990)). An award of statutory damages is appropriate despite a plaintiffs inability to prove actual damages caused by a defendant’s infringement. Under Armour, Inc. v. 51nfljersey.com, 2014 WL 1652044, at *7, 2014 U.S. Dist. LEXIS 56475, at *22-23 (S.D. Fla. April 23, 2014) (citing Ford Motor Co. v. Cross, 441 F.Supp.2d 837, 852 (E.D. Mich. 2006) (“[A] successful plaintiff in a trademark infringement case is entitled to recover enhanced statutory damages even where its actual damages are nominal or non-existent.”)); Playboy Enter., Inc. v. Universal Tel-A-Talk, Inc., 1998 WL 767440, at *8 (E.D. Pa. Nov. 3, 1998) (awarding statutory damages where plaintiff failed to prove actual damages or profits). Indeed, Congress enacted a statutory damages remedy in trademark counterfeiting cases because evidence of a defendant’s profits in such cases is almost impossible to ascertain. See, e.g., S. REP. NO. 104-177, pt. V(7) (1995) (discussing purposes of Lanham Act statutory damages); see also Petmed Express, Inc., 336 F.Supp.2d at 1220 (statutory damages are “especially appropriate in default judgment cases due to infringer nondisclosure”). This case is no exception.

This Court may award statutory damages “without holding an evidentia-ry hearing based upon affidavits and other documentary evidence if the facts are not disputed.” Perry Ellis Int’l, Inc. v. URI Corp., No. 06-22020-CIV, 2007 WL 3047143, at *1 (S.D. Fla. Oct. 18, 2007). Although the Court is permitted to conduct a hearing on a default judgment in regards to damages pursuant to Fed. R. Civ. P. 55(b)(2)(B), an evidentiary hearing is not necessary where there is sufficient evidence on the record to support the request for damages. See S.E.C. v. Smyth, 420 F.3d 1225, 1232 n.13 (11th Cir. 2005) (“Rule 55(b)(2) speaks of evidentiary hearings in a permissive tone ... We have held that no such hearing is required where all essential evidence is already of record.”) (citations omitted); see also Petmed Express, 336 F.Supp,2d at 1223 (entering default judgment, permanent injunction and statutory damages in a Lanham Act case without a hearing).

Here, the allegations in the Complaint, which are taken as true, clearly establish Defendants intentionally copied the Chanel Marks for the purpose of deriving the benefit of Plaintiffs world-famous reputation. As such, the Lanham Act permits the Court to award up to $2,000,000.00 per infringing mark on each type of good as statutory damages to ensure that Defendants do not continue their intentional and willful counterfeiting activities.

The evidence in this case demonstrates that each Defendant promoted, distributed, advertised, offered for sale, and/or sold goods bearing marks which were in fact counterfeits of at least one of the Chanel Marks. See ECF No. [1], Based on the above considerations, Plaintiff respectfully suggests the Court award statutory damages of $100,000.00 against each Defendant. The award should be sufficient to deter Defendants and others from continuing to . counterfeit or otherwise infringe Plaintiffs trademarks, compensate Plaintiff, and punish Defendants, all stated goals of 15 U.S.C. § 1117(c). The Court finds that this award of statutory damages is just.

E. Damages for False Designation of Origin

Plaintiffs Complaint also sets forth a cause of action for false designation of origin pursuant to § 43(a) of the Lanham Act (Count II). See 15 U.S.C. § 1125(a). As to Count II, the allowed scope of monetary damages is also encompassed in 15 U.S.C. § 1117(c). Accordingly, judgment on Count II is hereby limited to the amount awarded pursuant to Count I and entry of the requested equitable relief.

F. Damages for Common Law Unfair Competition and Trademark Infringement

Plaintiffs Complaint further sets forth a cause of action under Florida’s common law of unfair competition (Count III) and trademark infringement (Count IV). Judgment on Count III and Count IV are also limited to the amount awarded pursuant to Count I and entry of the requested equitable relief.

IV. CONCLUSION

Based on the foregoing, it is hereby ORDERED AND ADJUDGED that Plaintiffs Motion, ECF No. [29], is hereby GRANTED against those Defendants listed in Schedule “A” attached hereto. Final Default Judgment will be entered by separate order.

DONE AND ORDERED in Miami, Florida, this 27th day of April, 2016,

SCHEDULE “A”

DEFENDANTS BY NUMBER AND SELLER ID

2 . The factual background is taken from Plaintiff's Complaint, ECF No. [1], Plaintiff's Motion for Entry of Final Default Judgment Against Defendants, ECF No, [29], and supporting evidentiary submissions.

3 . Some of the printouts reflecting samples of the e-commerce stores operating under the Seller IDs that were captured by the office of Stephen M. Gaffigan, P.A. and provided to Chanel thereafter, were obtained and downloaded using GenuNet Internet Monitoring. True and correct copies of those printouts are encompassed, respectively, in Comp. Ex. A to the Rosaler Declaration and Comp. Ex. A to the Hahn Declaration. See ECF No. [8-1] at ¶ 14; ECF No. [8-3] at ¶ 2, n. 1.

4 . The printouts illustrating examples of Defendants’ infringement of each Chanel Mark at issue in this action were downloaded by both Mr. Rosaler’s firm and Plaintiff's counsel’s office, and provided to Plaintiff thereafter. See ECF No. [8-1] at ¶ 14; ECF No. [8-3] at ¶ 2.