Opinion
19cv02564 (PGG) (DF)
12-20-2023
SAMSONITE IP HOLDINGS S.ar.l. and SPECULATIVE PRODUCT DESIGN, LLC, Plaintiff, v. SHENZHEN LIANGYIYOU E-COMMERCE CO., LTD. a/k/a SHENZHEN LIANGYIYOU ELECTRONIC COMMERCE CO., LTD. a/k/a SHENZHEN CITY LIANGYIYOU E-COMMERCE LIMITED COMPANY a/k/a SHENZHEN CITY LIANGYIYOU ELECTRONIC COMMERCE LIMITED COMPANY d/b/a LIOEO, d/b/a LIOEO US, d/b/a LIO US, and JOHN AND JANE DOES A-Z UNIDENTIFIED; and XUZ COMPANIES 1-10 UNIDENTIFIED, Defendants.
REPORT AND RECOMMENDATION
DEBRA FREEMAN UNITED STATES MAGISTRATE JUDGE.
TO THE HONORABLE PAUL G. GARDEPHE, U.S.D.J:
By their Second Amended Complaint, plaintiffs Samsonite IP Holdings S.ar.l (“Samsonite”) and Speculative Product Design, LLC (“Speck”) (collectively, “Plaintiffs”) seek injunctive and monetary relief against defendant Shenzhen Liangyiyou E-Commerce Co., Ltd. a/k/a Shenzhen Liangyiyou Electronic Commerce Co., Ltd. a/k/a Shenzhen City Liangyiyou E-Commerce Limited Company a/k/a Shenzhen City Liangyiyou Electronic Commerce Limited Company d/b/a Lioeo, d/b/a Lioeo US, d/b/a LIO U.S. (“Defendant” or “SLEC”) for violations of the United States Copyright Act, 17 U.S.C. § 101 et seq., the Digital Millennium Copyright Act (the “DMCA”), 17 U.S.C. § 512(f)); the Lanham Act, 15 U.S.C. § 1051, et seq.; the New York General Business Law (the “NYGBL”) §§ 349 and 350; and state common law. (Second Amended Complaint, dated May 7, 2019 (“2d Am. Compl.”) (Dkt. 18).) This case is currently before this Court for a report and recommendation as to the amount of damages that Plaintiffs should be awarded, on those claims, after a grant of default judgment against Defendant. (Dkts. 37, 38.) For the reasons stated below, I respectfully recommend that Plaintiffs be awarded $150,000.00 in statutory damages for Defendant's infringement of Plaintiffs' copyright, $1,045,363.62 as disgorgement of Defendant's profits for Defendant's infringement of Plaintiffs' trade dress, and pre-judgment interest on those damages at the rate set out in 28 U.S.C. § 1961(a), in an amount to be calculated by the Clerk of Court from the date of the filing of the operative pleading to the date of entry of final judgment. I additionally recommend that Plaintiffs be awarded $56,132.62 in attorneys' fees and $2,009.40 in litigation costs.
BACKGROUND
A. Factual Background
Given Defendant's default, the well-pleaded allegations contained in the Complaint, as summarized below, are deemed to be true, except for those allegations relating to damages. (See Discussion, infra, at Section I(A); see also, e.g., Guaman v. J&C Top Fashion, Inc., No. 14cv8143 (GBD) (GWG), 2017 WL 111737, at *1 (S.D.N.Y. Jan 11, 2017).) The facts set out below are taken from the Second Amended Complaint, and, where indicated, from Plaintiffs' Proposed Findings of Fact and Conclusions of Law, dated March 31, 2020 (“Proposed Findings”) (Dkt. 43).
Samsonite is the owner of, and Speck is the “worldwide licensee of, certain rights of copyright and trade dress in and to the packaging and design of Plaintiffs' iGuy® Cases,” which are cases for portable electronic devices. (2d Am. Compl. ¶¶ 11-12.) These copyright and trade dress rights are among Samsonite's “most important” and valuable assets. (Id. ¶¶ 12-13; Proposed Findings, at § I ¶ 12.) As relevant here, Samsonite owns copyright registrations for both the design of the iGuy® Cases and the packaging insert for the iGuy® brand tablet case. (2d Am. Compl. ¶ 15.) Specifically, Samsonite owns U.S. Copyright Registration No. VA2-036-476, registered June 15, 2016, for the design of the iGuy® Cases, and U.S. Copyright Registration No. VA2-036-473, registered June 16, 2016, for the packaging insert for the iGuy® brand tablet case (collectively, the “Samsonite Copyrights”). (Id.; see also id., Exs. A, B.)
Plaintiffs' Proposed Findings are divided into two main sections, with separate paragraph numbering: Section I (starting at page 2) constitutes Plaintiffs' “Proposed Findings of Fact” and Section II (starting at page 9) constitutes their “Proposed Conclusions of Law.” This Court notes, however, that, in their designation of subsections, Plaintiffs have apparently made an error in their numbering, as, under Section II, while Plaintiffs start with a first subsection “A” (at page 10), they then, seemingly mistakenly, revert to Roman numerals thereafter - such that the subsections that should have been marked as “B” through “E” (beginning at page 15) are instead marked as “II” through “V.” To avoid any confusion, this Court will not cite herein to any subsections in Plaintiffs' Proposed Findings, but rather only to the main Sections “I” and “II,” and to the paragraphs thereunder.
Samsonite also owns trade dress rights “in and to the unique and inherently distinctive configuration and design of the iGuy® Case” (the “iGuy® Case Trade Dress”) (2d Am. Compl. ¶ 19), and the iGuy® Packaging (the “iGuy® Packaging Trade Dress”) (id. ¶ 20) (collectively, the “iGuy® Trade Dress”). The iGuy® Case Trade Dress consists of “a rectangular-shaped cover, resembling a human, with a rectangular orifice for insertion of a tablet, with two oblong protrusions at the base of the rectangular body of the case that resemble human legs, and conical, elongated protrusions, extending from each side of the cover that resemble arms.” (Id. ¶ 19.) The iGuy® Packaging Trade Dress consists of a white cardboard insert, featuring a stylized, winking “smiley face,” that fits within the rectangular orifice intended for insertion of a tablet. (Id. ¶ 20.) Plaintiffs claim that the iGuy® Cases and packaging designs include an “original and inherently distinctive design, shape, and overall appearance.” (Id. ¶ 13.)
Plaintiffs have used the iGuy® Trade Dress since at least 2011. (Id. ¶ 21.) Due to broad media exposure and the ongoing promotion and sale of products bearing the iGuy® Trade Dress, Plaintiffs argue that the trade dress has “acquired distinctiveness” and has developed “a strong secondary meaning among consumers,” such that consumers “immediately identify Samsonite as the exclusive source of products bearing the iGuy® Trade Dress.” (Id.) According to Plaintiffs, this signifies goodwill of “incalculable value.” (Id.) The iGuy® Trade Dress is “nonfunctional,” because the various design elements are not essential to the use or purpose of a tablet case, do not affect the cost or quality of the tablet case, and do not place competitors at a “significant non-reputation-related disadvantage.” (Id. ¶ 25.) Rather, the design elements serve to create a “unique and distinct appearance” that is “visually appealing and source-identifying.” (Id.)
The award-winning iGuy® Cases have generated “considerable revenues” for Plaintiffs. (Id. ¶ 22.) Plaintiffs have extensively advertised and marketed products bearing the iGuy® Trade Dress throughout the United States, “primarily at trade shows, in print media,” and through their websites and social media accounts. (Id. ¶ 23.) As a result, consumers have come to identify this protective case as signifying “high-quality products originating from Samsonite.” (Id. ¶ 24.)
In 2012, the iGuy® cases received the “Tablet2Cases Golden Case Awards winner for Best Case for Kids.” (2d Am. Compl. ¶ 24.)
Defendant SLEC designs, manufactures, imports, warehouses, distributes, offers for sale, and sells various products, including covers for tablets. (Id. ¶ 27.) SLEC sells these products both on Amazon.com (“Amazon”) and on its own website, www.lioeoglobal.com. (Id.) Plaintiffs allege that, “long after Samsonite obtained exclusive rights” in both the copyright and trade dress of the iGuy® Case and Packaging, SLEC “deliberately designed, manufactured, imported, advertised, promoted, purchased, distributed, sold and/or offered for sale, without authorization or license from Plaintiffs, infringing products” that were “identical, substantially similar and indistinguishable from, and confusingly similar to” Plaintiffs' protected designs. (Id. ¶ 28; id., Ex. D.) SLEC's infringing case design features a “rectangular shaped cover, resembling a human, with a rectangular orifice for insertion of a tablet, with two oblong protrusions” that resemble human legs at the base of the rectangular body, and “conical, elongated protrusions” that resemble human arms, extending from each side of the case. (2d Am. Compl. ¶ 28.) In addition, SLEC's packaging for its case design includes a white cardboard insert, featuring a stylized, winking “smiley face,” that fits “within the orifice intended for insertion of a tablet” (id. ¶ 29; id., Ex. E), and is allegedly “identical and substantially similar to that featured in the iGuy® Insert” (2d Am. Compl. ¶ 29).
SLEC's case and packaging will collectively be referred to herein as the “Infringing Products.”
In light of these similarities, Plaintiffs argue that SLEC's infringing case and packaging designs are likely to cause consumers to believe mistakenly that Plaintiffs “authorized, sponsored, approved, endorsed, and/or licensed” the SLEC products, or that the Infringing Products are in some way “affiliated, associated, or connected with” Plaintiffs. (Id. ¶ 31.) The Second Amended Complaint also alleges that Defendant's products are of lesser quality and are priced substantially lower than Plaintiffs' products; in terms of price, Plaintiffs allege that, while iGuy® Cases have a retail price of $39.99; Defendant's similar products “retail for as low as $12.99.” (Id. ¶ 30.) Plaintiffs assert that SLEC was aware that Samsonite's protected case and packaging designs were Samsonite's original creations at the time that SLEC first “designed, manufactured, imported, offered for sale, and/or sold its infringing products” and that SLEC displayed images of the Infringing Products on its website. (Id. ¶¶ 32, 33; Ex. D.)
Upon discovering that SLEC was selling these products on Amazon, Plaintiffs submitted multiple Notices of Infringement to Amazon, pursuant to the DMCA, and requested that Amazon disable access to these listings. (2d Am. Compl. ¶ 34; Ex. F.) In response, SLEC submitted multiple fraudulent counter-notices to Amazon, falsely stating that the products offered by SLEC did not infringe Plaintiffs' protected designs and that the infringing listings had been removed or disabled by Amazon as a result of mistake or misidentification. (2d Am. Compl. ¶ 35.) More specifically, according to Plaintiffs, “SLEC made misrepresentations to the effect that . . . [it] had the lawful right to distribute and sell its Infringing Products, pursuant to a license to an unidentified Chinese design patent and based upon SLEC's ownership of a trademark registration in the United States for the word mark LIOEO.” (Id. ¶ 36.) Plaintiffs contend that SLEC's license for the Chinese design patent regarding the case design at issue is invalid (id. ¶ 37), and that SLEC's registered word mark “LIOEO” is irrelevant to the present action because Plaintiffs' Notices of Infringement were “premised solely upon Plaintiffs' rights of copyright in and to the iGuy® Case Design” (id. ¶ 38).
Each time Amazon received the fraudulent counter-notices from SLEC, Amazon restored access to SLEC's infringing listings. (Id. ¶ 39.) This circular pattern - of Plaintiffs' submitting Notices of Infringement to Amazon, Defendant's submitting counter-notices, and Amazon's restoring access to the infringing listings in reliance upon Defendant's false submissions -occurred multiple times. (Id.) Plaintiffs contend that Defendant has demonstrated that it willfully engaged in its infringing activity, as it continued to engage in that activity after receiving no fewer than 22 Notices of Infringement, beginning in May 2018, and as it “flagrantly submitted knowingly false Counter-Notices.” (Proposed Findings, at § II ¶¶ 13-14.)
B. Procedural History
Plaintiffs filed their initial Complaint in this action on March 21, 2019 (Dkt. 1), asserting claims for copyright infringement under the Copyright Act, material misrepresentations under the Digital Millennium Copyright Act, federal trade-dress infringement and unfair competition under the Lanham Act, deceptive acts and practices under the NYGBL, and trademark infringement and unfair competition under New York State common law. (See generally Dkt. 1.) On April 8, 2019, Plaintiffs filed a First Amended Complaint (Dkt. 12), although they apparently served neither their original Complaint nor their first amended pleading on Defendant. On May 7, 2019, Plaintiffs filed a Second Amended Complaint (Dkt. 18), and, on June 12, 2019, they served Defendant with an Amended Summons and the Second Amended Complaint. (Dkt. 21.)
When Defendant then failed to move, answer, or otherwise respond to the Second Amended Complaint, Plaintiffs requested that a default be entered against Defendant (see Dkts. 25, 26), and, on July 10, 2019, the Clerk of Court issued a Certificate of Default (Dkt. 27). On August 19, 2019, the Honorable Paul G. Gardephe, U.S.D.J., issued an Order To Show Cause (“OSC”), directing Defendant to appear before the Court on September 13, 2019, to show cause why a default judgment and permanent injunction should not be entered against it. (Dkt. 28.) The OSC further directed that any written response by Defendant should be served and filed no later than September 9, 2019. (Id.) Immediately following the Court's issuance of the OSC, Plaintiffs filed a number of additional papers, supporting their request for the issuance of a default judgment and permanent injunction. (See Memorandum of Law in Support of Plaintiffs' Motion for a Default Judgment and Permanent Injunction, Post-Judgment Discovery and Other Relief, dated Aug. 6, 2019 (“Pl. Mem.”) (Dkt. 29); Declaration of Margarita Wallach in Support of Request for Entry of Default as to Corporate Defendant, dated Aug. 6, 2019, and exhibits thereto (Dkt. 30); Declaration of Jill Briggs, dated Aug. 6, 2019, and exhibits thereto (Dkt. 31); Proposed Default Judgment and Permanent Injunction Order (Dkt. 32).) On August 21, 2019, Plaintiffs filed a Certificate of Service, confirming that both the OSC itself and Plaintiffs' supporting papers had been served on Defendant. (Dkt. 33.)
Defendant did not appear before the Court on September 13, 2019 (Dkt. 35) or otherwise respond to the OSC (see generally Dkt.), and, on November 4, 2019, Judge Gardephe entered an Order of Default and Permanent Injunction (“Default Order”) (Dkt. 37). In the Default Order, Judge Gardephe found Defendant liable for copyright infringement under the Copyright Act, for violations of the DMCA, for trade dress infringement and unfair competition under the Lanham Act and under Sections 349 and 350 of the NYGBL, and for violations of New York common law. (See id., at 6.)
Judge Gardephe then referred the matter to this Court for a damages inquest. (Dkt. 38.) On February 28, 2020, this Court issued a Scheduling Order, directing Plaintiffs to file and serve on Defendant Proposed Findings of Fact and Conclusions of Law, together with a supporting affidavit or declaration, no later than March 31, 2020. (Dkt. 41.) This Court further directed Defendant to submit its response, if any, to Plaintiffs' submissions no later than April 30, 2020. (Id.)
On March 31, 2020, Plaintiffs made the required submissions. (See Proposed Findings; Declaration of Margarita Wallach in Support of Plaintiffs' Proposed Findings of Facts and Conclusions of Law, dated Mar. 31, 2020 (“Wallach Decl.”) (Dkt. 44); Declaration of [Annasara Purcell of] Amazon.com Regarding Business Records, dated Sept. 18, 2019 (“Amazon Decl.”) (Dkt. 45).) In their Proposed Findings, Plaintiffs specifically request that they be awarded total damages in the amount of $3,442,021.15, consisting of:
(1) $150,000.00 in statutory damages pursuant to Section 104 of the Copyright Act;
(2) $3,136,090.86 in treble damages pursuant to Section 1117 of the Lanham Act; and
(3) $155,930.29 in attorneys' fees and costs, to which Plaintiffs claim entitlement under Section 1117 of the Lanham Act and as damages pursuant to the DMCA (Section 512(f) of the Copyright Act).(See Proposed Findings, at 21.) In addition, Plaintiffs request that they be awarded pre-judgment interest, compounded annually, at the rate of nine percent per annum, calculated from January 1, 2018 through the date of entry of final judgment, and post-judgment interest pursuant to 28 U.S.C. § 1961. (See id.)
As, in their inquest submissions, Plaintiffs have only requested an award of damages under the Copyright Act, the DMCA, and the Lanham Act, this Court will limit this Report and Recommendation to an assessment of the propriety of such damages, and will not address whether Plaintiffs might also, or alternatively, be entitled to damages under state law.
On April 1, 2020, Plaintiffs filed a Certificate of Service, confirming that they had served Defendant with a copy of this Court's Scheduling Order, as well as with copies of Plaintiffs' Proposed Findings and supporting papers. (Dkt. 46.) To date, however, Defendant has neither responded to Plaintiffs' submissions nor requested a damages hearing. (See generally Dkt.)
DISCUSSION
I. APPLICABLE LEGAL STANDARDS
A. Default Judgment
“[D]efault is an admission of all well-pleaded allegations against the defaulting party.” Vermont Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004) (citation omitted). Although a “‘default judgment entered on well-pleaded allegations in a complaint establishes a defendant's liability,'” it does not reach the issue of damages. Bambu Sales, Inc. v. Ozak Trading, Inc., 58 F.3d 849, 854 (2d Cir. 1995) (quoting Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 69 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363 (1973)). In conducting a damages inquest, the Court accepts as true all of the factual allegations of the complaint, except those relating to damages. Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981).
A plaintiff must therefore substantiate a claim with evidence to prove the extent of damages. See Trehan v. Von Tarkanyi, 63 B.R. 1001, 1008 n.12 (S.D.N.Y. 1986) (plaintiff must introduce evidence to prove damages suffered, and the court will then determine whether the relief flows from the facts (citing Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974))). The burden is on the plaintiff to “introduce sufficient evidence to establish the amount of damages with reasonable certainty,” RGI Brands LLC v. Cognac Brisset-Aurige, S.A.R.L., No. 12cv1369 (LGS) (AJP), 2013 WL 1668206, at *6 (S.D.N.Y. Apr. 18, 2013) (citations omitted), report and recommendation adopted, 2013 WL 4505255 (Aug. 23, 2013), although the plaintiff is entitled to all reasonable inferences in its favor based on the evidence submitted, see U.S. ex rel. Nat'l Dev. & Constr. Corp. v. U.S. Envtl. Universal Servs., Inc., No. 11cv730 (CS), 2014 WL 4652712, at *3 (S.D.N.Y. Sept. 2, 2014) (adopting report and recommendation). Where a defaulting defendant has not made any submission on a damages inquest, the Court must assess whether the plaintiff has provided a sufficient basis for the Court to determine damages, see Transatl. Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997), and the Court may determine the adequacy of the plaintiff's damages claim based on its submitted proofs alone, see, e.g., Garden City Boxing Club, Inc. v. Hernandez, No. 04cv2081 (LAP), 2008 WL 4974583, at *4-5 (S.D.N.Y. Nov. 24, 2008) (adopting report and recommendation, and determining the adequacy of plaintiff's damages claim based solely on its submitted proofs where defendant had neither responded to plaintiff's submissions with respect to its claimed damages nor requested a hearing).
While the Court may hold a hearing to assess the amount of damages that should be awarded on default, see Fed.R.Civ.P. 55(b)(2) (court may conduct hearings on damages as necessary), the Second Circuit has consistently held that “[b]y its terms, [Rule] 55(b)(2) leaves the decision of whether a hearing is necessary to the discretion of the district court,” Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989); accord Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993) (judges are given “much discretion” to determine whether an inquest hearing need be held); Action S.A. v. Marc Rich & Co., 951 F.2d 504, 508 (2d Cir. 1991) (Fed. R. Civ. P. 55(b)(2) “allows but does not require . . . a hearing” (citations omitted)).
B. Damages Available for Copyright Infringement, Under the Copyright Act
Under the Copyright Act, a plaintiff may elect to recover an award of statutory damages for each infringed work, in lieu of an award of actual damages. 17 U.S.C. § 504(c). In cases of innocent infringement, statutory damages may range from $750 to $30,000 per work infringed, “as the court considers just,” id., and “are available without proof of [a] plaintiff's actual damages or proof of any damages,” Reservoir Media Mgmt., Inc. v. Craze Prods., No. 13cv1847 (GHW), 2015 WL 5692105, at *5 (S.D.N.Y. Sept. 28, 2015) (internal quotation marks and citation omitted).
The award may be as high as $150,000 per work, if the court finds that the infringement was willful. 17 U.S.C. § 504(c). Generally, a copyright holder seeking to prove that a copier's infringement was willful must show that the infringer “had knowledge that its conduct represented infringement or . . . recklessly disregarded the possibility.” Twin Peaks Prods., Inc. v. Publ'ns Int'l, Ltd., 996 F.2d 1366, 1382 (2d Cir. 1993) (citing Fitzgerald Pub. Co., Inc. v. Baylor Pub. Co., Inc., 807 F.2d 1110, 1115 (2d Cir. 1986)). Where a defendant has defaulted, however, it “is deemed to be a willful infringer by virtue of its default.” CJ Prod. LLC v. Your Store Online LLC, No. 11cv9513 (GBD) (AJP), 2012 WL 2856068, at *3 (S.D.N.Y. July 12, 2012), report and recommendation adopted, 2012 WL 4714820 (Oct. 3, 2012).
District courts have broad discretion to set the amount of the award within the statutory limits. Fitzgerald Pub. Co., 807 F.2d at 1116-17; see also Reservoir, 2015 WL 5692105, at *5. When determining the appropriate amount of statutory damages to award for copyright infringement, courts may consider: “(1) the infringer's state of mind; (2) the expenses saved, and profits earned, by the infringer; (3) the revenue lost by the copyright holder; (4) the deterrent effect on the infringer and third parties; (5) the infringer's cooperation in providing evidence concerning the value of the infringing material; and (6) the conduct and attitude of the parties.” Bryant v. Media Right Prods., Inc., 603 F.3d 135, 144 (2d Cir. 2010).
C. Damages Available for Trade Dress Infringement and Unfair Competition, Under the Lanham Act
Pursuant to the Lanham Act, “a trademark owner may choose to recover either actual or statutory damages.” Microban Products Company v. Iskin Inc., No. 14cv5980 (RA) (DF), 2016 WL 4411349, at *5 (S.D.N.Y. Feb. 23, 2016), report and recommendation adopted, 2016 WL 4411414 (Aug. 18, 2016); see 15 U.S.C. § 1117(a), (c); see also Life Indus. Corp. v. Ocean Bio-Chem, Inc., 827 F.Supp. 926, 932 (E.D.N.Y. 1993) (analyzing damages for trade dress infringement under the same statutory scheme as that available for trademark infringement).
1. Actual Damages Pursuant to 15 U.S.C. § 1117(a)
Section 1117(a) of the Lanham Act governs the award of “actual damages” and “provides that a successful plaintiff under the [A]ct shall be entitled, ‘subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) costs of the action.'” Microban, 2016 WL 4411349, at *5 (citing Hilton v. UK Fragrances, Inc., No. 12cv6346 (JFB), 2014 WL 794304, at *1 (E.D.N.Y. Feb. 25, 2014) (adopting report and recommendation and quoting 115 U.S.C. § 1117(a))).
To establish a “defendant's profits,” the plaintiff has the burden to “prove defendant's sales only; defendant must prove all elements of cost or deduction claimed.” 115 U.S.C. § 1117(a). If the court finds that the amount of the recovery based on profits is “either inadequate or excessive[,] the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case.” Id.
In assessing “damages sustained by the plaintiff” (“sustained damages”), the court may “enter judgment, according to the circumstances of the case, for any sum above the amount found as [] damages, not exceeding three times such amount.” Id. To establish its sustained damages, a plaintiff typically must show that it has lost profits on its own sales. Malletier v. Artex Creative Int'l Corp., 687 F.Supp.2d 347, 356 (S.D.N.Y. 2010) (adopting report and recommendation and noting that, in order for a plaintiff “to recover [its own] ‘lost profits,' [the plaintiff] must prove lost sales with specificity”).
Any judgment entered pursuant to Section 1117(a) should, however, be compensatory, not punitive, in nature. 115 U.S.C. § 1117(a).
2. Treble Damages Pursuant to 15 U.S.C. § 1117(b)
In contrast, where a court finds that a defendant's violations were willful, the Lanham Act allows for an award of punitive damages, pursuant to 15 U.S.C. § 1117(b). See Sara Lee Corp. v. Bags of New York, Inc., 36 F.Supp.2d 161, 165 (S.D.N.Y. 1999) (noting that Section 1117(b) is intended to penalize defendants in order to deter potential counterfeiters); see also Sream, Inc. v. Khan Gift Shop, Inc., No. 15cv2091 (KMW) (DF), 2016 WL 1130610, at *6 (S.D.N.Y. Feb. 23, 2016) (“Section 1117(b) [] directs courts to treble [damages awarded under Section 1117(a)] where the defendant's conduct was willful.”), report and recommendation adopted, 2016 WL 1169517 (Mar. 22, 2016). Indeed, pursuant to Section 1117(b), “if the use of a counterfeit mark was intentional[,] ‘the court shall, unless the court finds extenuating circumstances, enter judgment for three times [the demonstrated] profits or damages, whichever amount is greater, together with a reasonable attorney's fee ....'” Malletier, 687 F.Supp.2d at 356 (quoting 15 U.S.C. § 1117(b)); see also Audemars Piguet Holding S.A. v. Swiss Watch Intern., Inc., 42 F.Supp.3d 540, 541 (S.D.N.Y. 2014) (finding that treble damages are also available for intentional infringement of a plaintiff's trade dress). Thus, “[u]nlike [Section] 1117(a), which merely permits trebling of [a] [p]laintiff's sustained damages at the court's discretion, [Section] 1117(b) requires trebling of any damages” awarded under Section 1117(a) - including [the] defendant's profits - “upon a finding of willfulness, and absent extenuating circumstances.” Sara Lee Corp., 36 F.Supp.2d at 165 (emphasis in original); see also Tiffany & Co. v. Costco Wholesale Corp., 971 F.3d 74, 83 n.3 (2d Cir. 2020) (“15 U.S.C. § 1117(b) instructs the court to award treble profits or damages for a knowing and intentional violation involving the use of a counterfeit mark” (emphasis added)).
3. Statutory Damages Pursuant to 15 U.S.C. § 1117(c)
Section 1117(c) supplements Sections 1117(a)-(b), which provide for compensatory and punitive damages that are explicitly tied to and limited by the actual profits generated or damages caused by the illegal activity. Sream, 2016 WL 1130610 (citing Sara Lee Corp., 36 F.Supp.2d at 165). As discussed above, Section 1117(a) instructs courts to award damages equal to the defendant's profits, any damages sustained by the plaintiff, and the costs of the action, Sream, 2016 WL 1130610, at *6, and Section 1117(b) then directs courts to treble those damages or profits where the defendant's conduct was willful, id. Congress added
Section 1117(c) in 1996, in recognition of the fact that trademark counterfeiters frequently do not keep and sometimes purposely destroy sales records, making a determination of actual damages difficult, if not impossible. See Guess?, Inc. v. Gold Center Jewelry, 997 F.Supp. 409, 411 (S.D.N.Y.1998) (citing S.Rep. No. 177, 104th Cong., 2d Sess. (1995)). Neither of the two subsections of Section 1117(c) provides any specific criteria for determining the amount of statutory damages that may be awarded, see 15 U.S.C. § 1117(c)(1), (2), but, instead, each subsection simply authorizes such awards “as the court considers just,” thereby affording courts “broad discretion” to determine the amount of damages appropriate to achieve the Lanham Act's dual goals of compensation and deterrence, see Sara Lee, 36 F.Supp. at 166.
D. Attorneys' Fees and Costs, Under the Copyright Act, the DMCA, and the Lanham Act
A prevailing party may recover reasonable attorneys' fees and costs under the Copyright Act and the DMCA, as well as under the Lanham Act.
1. Fee Provisions of the Copyright Act and the DMCA
Section 505 of the Copyright Act permits a district court, in its discretion, to award reasonable attorneys' fees and costs to the prevailing party in a copyright infringement case. See 17 U.S.C. § 505; see also Knitwaves, Inc. v. Lollytogs Ltd., 71 F.3d 996, 1011 (2d Cir. 1995). Although “there is no precise rule or formula for making fee determinations under [Section] 505,” Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994), “district courts may consider such factors as (1) the frivolousness of the non-prevailing party's claims or defenses; (2) the party's motivation; (3) whether the claims or defenses were objectively unreasonable; and (4) compensation and deterrence.” Bryant, 603 F.3d at 144 (citing Fogerty, 510 U.S. at 534 n.19). “The third factor - objective unreasonableness - should be given substantial weight.” Id. (internal citation omitted).
Similarly, where a plaintiff prevails on its claims for certain violations of the DMCA, the court will again have discretion to award fees and costs. See 17 U.S.C. § 1203(b)(4), (5) (permitting such an award for violations of 17 U.S.C. § 1201 (circumvention of copyright protection systems) and 17 U.S.C. § 1202 (integrity of copyright management information)); see also Farrington v. Sell It Social, LLC, No. 18cv11696 (JPC), 2020 WL 7629453, at *3 (S.D.N.Y. Dec. 21, 2020) (citing 17 U.S.C. §§ 505, 1203(b)). In exercising its discretion, courts may again consider factors such as “frivolousness, motivation, objective unreasonableness . . . and the need in particular circumstances to advance considerations of compensation and deterrence.” Zalewski v. Cicero Builder Dec., Inc., 754 F.3d 95, 108 (2d Cir. 2014) (citing Fogerty, 510 U.S. at 534 n.19).
Apart from the fact that a court is permitted, under the Copyright Act, to shift attorneys' fees and costs to the prevailing party, the portion of the DMCA that is codified at 17 U.S.C. § 512(f) expressly allows for a plaintiff to recover attorneys' fees and costs as a component of a damages award, where the plaintiff demonstrates that it suffered injury as the result of misrepresentations in a counter-notice that caused a service provider to replace or restore access to infringing material. Specifically, Section 512(f) provides:
(f) Misrepresentations. - Any person who knowingly materially misrepresents under this section -
(1) that material or activity is infringing, or
(2) that material or activity was removed or disabled by mistake or misidentification,
shall be liable for any damages, including costs and attorneys' fees, incurred by the alleged infringer, by any copyright owner or copyright owner's authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.17 U.S.C. § 512(f) (emphasis added).
2. Fee Provisions of the Lanham Act
Both Sections (a) and (b) of the Lanham Act also provide for an award of attorneys' fees. See 15 U.S.C. § 1117(a)-(b). Pursuant to Section 1117(a), a court may award reasonable attorneys' fees to the prevailing party “in exceptional cases.” 15 U.S.C. § 1117(a). If, however, the court finds that a defendant willfully infringed the plaintiff's mark, designation, or trade dress, then, pursuant to Section 1117(b), the court “shall” enter a judgment for “a reasonable attorney's fee.” 115 U.S.C. § 1117(b); see also Elements/Hill Schwartz, Inc. v. Gloriosa Co., No. 01cv904 (DLC), 2002 WL 31133391, at *3 (S.D.N.Y. Sept. 26, 2002) (awarding attorneys' fees for Defendants' willful infringement of Plaintiffs' trade dress).
3. Reasonableness Requirement For an Award of Fees and Costs
Once a court decides that an award of attorneys' fees is appropriate, the court must “ensure that the award is reasonable.” Sheldon v. Plot Commerce, No. 15cv5885 (CBA) (CLP), 2016 WL 5107072, at *18 (E.D.N.Y. Aug. 26, 2016), report and recommendation adopted, 2016 WL 5107058 (Sept. 19, 2016). The party seeking attorneys' fees bears the burden of demonstrating that its requested fees are reasonable, see Blum v. Stenson, 465 U.S. 886, 897 (1984), and, to meet this burden, the party must provide the Court with contemporaneous time records that “specify, for each attorney, the date, the hours expended, and the nature of the work done.” N.Y. State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983).
When determining reasonable attorneys' fees, the Court begins by using the “lodestar method” to calculate a “presumptively reasonable fee.” Millea v. Metro-N. R. Co., 658 F.3d 154, 166 (2d Cir. 2011). The lodestar is “the product of a reasonable hourly rate and the reasonable number of hours required by the case.” Id. To determine whether an hourly rate is reasonable, courts will “compare it to prevailing market rates ‘for similar services by lawyers of reasonably comparable skill, experience and reputation.'” Whitehead v. Mix Unit, LLC, 17cv9476 (VSB) (JLC), 2019 WL 384446, at *5 (S.D.N.Y. Jan. 31, 2019) (quoting Gierlinger v. Gleason, 160 F.3d 858, 882 (2d Cir. 1998)), report and recommendation adopted, 2019 WL 1746007 (Apr. 18, 2019). Additionally, the court should consider the prevailing community's rates in the district in which it sits for the reasonableness of counsel's rates. See Reiter v. MTA New York City Transit Auth., 457 F.3d 224, 232 (2d Cir. 2006). To determine whether the number of hours billed is reasonable, the court should consider if, “at the time the work was performed, a reasonable attorney would have engaged in similar time expenditures.” Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992) (citation omitted).
Recoverable costs may include, inter alia, filing fees and reasonable process server fees. Rosendo v. Everbrighten Inc., No. 13cv7256 (JGK) (FM), 2015 WL 1600057, at *9 (S.D.N.Y. Apr. 7, 2015) (discussing reasonable costs to be awarded under 17 U.S.C. § 505), report and recommendation adopted, 2015 WL 4557147 (July 28, 2015).
II. DAMAGES TO WHICH PLAINTIFFS ARE ENTITLED
A. Damages Under the Copyright Act
Plaintiffs seek $150,000.00 in statutory damages (the maximum statutory award allowable, under Section 504(c) of the Copyright Act, for the copyright infringement of any one protected work) for “Defendant's plainly willful infringement of the copyright for the iGuy® Insert.” (Proposed Findings, at § II ¶ 7.) Plaintiffs do not seek statutory damages (or, seemingly, any damages) for infringement of their copyright for design of the iGuy® Cases; rather, as discussed below, they seek damages solely under the Lanham Act for Defendant's unauthorized sales of similarly designed cases.
Awards of statutory damages under the Copyright Act serve two purposes -compensatory and punitive. Fitzgerald Pub. Co., 807 F.2d at 1117. “At the punitive end of the scale, the statutory maximum is typically reserved for ‘truly egregious conduct such as where a defendant has been adjudged to have willfully infringed, yet continued the same pattern of behavior in contravention of court order.'” Malibu Media, LLC v. Baker, No. 18cv3263 (JGK) (BCM), 2020 WL 3978302, at *6 (S.D.N.Y. June 18, 2020) (quoting EMI Apr. Music Inc. v. 4MM Games, LLC, No. 12cv2080 (DLC) (JLC), 2014 WL 325933, at *5 (S.D.N.Y. Jan. 13, 2014), report and recommendation adopted, 2014 WL 1383468 (Apr. 7, 2019)), report and recommendation adopted, 2020 WL 3972736 (July 13, 2020). High statutory damages are also frequently awarded where defendants have “profit[ted] significantly despite repeated notices that they are infringing on the plaintiff's copyright.” Hollander Glass Texas, Inc. v. Rosen-Paramount Glass Co., Inc., 291 F.Supp.3d 554, 560 (S.D.N.Y. 2018), report and recommendation adopted, 2019 WL 416327 (Feb. 1, 2019). While the Copyright Act does not specify what factors should be considered when assessing the amount of a statutory damages award, courts generally consider: “(1) the infringer's state of mind; (2) the expenses saved, and profits earned, by the infringer; (3) the revenue lost by the copyright holder; (4) the deterrent effect on the infringer and third parties; (5) the infringer's cooperation in providing evidence concerning the value of the infringing material; and (6) the conduct and attitude of the parties.” Bryant, 603 F.3d at 144.
As an initial matter, Plaintiffs have made the threshold showing of entitlement to statutory damages under 17 U.S.C. § 504(c) because Defendant is deemed to have admitted liability by virtue of its default. Vermont Teddy Bear Co., 373 F.3d at 246; See Default Order. In its Order, the Court found that Plaintiffs' copyrights, including for the design of the iGuy® Insert, were valid and protectible. (Default Order ¶¶ 1-2.) The Court also found that Defendant had “deliberately copied, designed, manufactured, imported, advertised, promoted, purchased, distributed, sold and/or offered for sale, without authorization or license from Plaintiffs, infringing products bearing designs that are identical, substantially similar to and indistinguishable from . . . Samsonite's Protected Designs ....” (Default Order ¶ 7), and specifically found that the packaging for Defendant's Infringing Products included a white cardboard insert that was “identical,” or “substantially similar” to that featured in the iGuy® Insert” (id.). The Court additionally found that Defendant had maintained “multiple listings on Amazon.com offering for sale and selling its Infringing Products,” and had “repeatedly submitted false counter-notices to Amazon.com in which Defendant knowingly made material misrepresentations contending that the Infringing Listings were removed by mistake or misidentification because Defendant was authorized to sell its Infringing Products.” (Id. ¶ 8.) Thus, not only may this Court presume “willful” infringement by the fact of Defendant's default, see CJ Prod. LLC, 2012 WL 2856068, at *3, but Plaintiffs' factual allegations, which the Court accepted in its Default Order, describe conduct that is sufficiently knowing and ongoing to establish such willfulness, see Zlozower v. Barlotta, No. 11cv1555 (RER), 2012 WL 13098709, at *4 (E.D.N.Y. Apr. 3, 2012) (“[T]o show willful infringement of a copyright, a plaintiff must prove that a defendant acted with ‘actual aware[ness]' or ‘reckless disregard' of the infringing activity” (quoting Island Software & Computer Serv. v. Microsoft Corp., 413 F.3d 257, 263 (2d Cir. 2005))); see also Philpot v. Music Times LLC, No. 16cv1277 (DLC) (DF), 2017 WL 9538900, at *5 (Mar. 29, 2017) (stating that a defendant acts with actual awareness or reckless disregard where he “engages in infringing activity after receiving warning that the activity constitutes infringement”), report and recommendation adopted, 2017 WL 1906902 (May 9, 2017).
Where a defendant defaults, it may be difficult for the court to ascertain certain facts needed to determine the expenses saved and profits earned by defendant (the second Bryant factor) or, relatedly, the revenue lost by the plaintiff (the third Bryant factor). Sadowski v. Render Media Inc., No. 17cv9045 (PGG) (JLC), 2020 WL 1178629, at *4 (S.D.N.Y. Mar. 10, 2020), report and recommendation adopted, 2020 WL 5968668 (Oct. 8, 2020). Even in the event of a defendant's default, however, a court may still “infer [defendant's] state of mind from its default (factor one) and evaluate factors such as the deterrent effect on [the defendant] and third parties (factor four)” and the cooperation and conduct of the defendant (factors five and six). Id. Further, a finding that a defendant acted willfully skews many of these factors in the plaintiff's favor. See, e.g., Design Pics, Inc. v. PBH Networks, Inc., No. 20cv1096 (MKB) (JO), 2021 WL 74088 (E.D.N.Y. Jan. 8, 2021).
The first factor - the infringer's state of mind - favors the plaintiff where the defendant's conduct was willful. Id., at *4. As Defendant's conduct here is deemed willful even by virtue of its default, CJ Prod. LLC, 2012 WL 2856068, at *3, this factor weighs in Plaintiffs' favor. In evaluating the fourth factor, deterrent value, courts consider “the parties' conduct, the ‘infringer's cooperation in providing evidence[,]' and ‘the infringer's state of mind.” Conan Properties Int'l LLC v. Sanchez, No. 17cv162 (FB), 2018 WL 4522099, at *32 (E.D.N.Y. June 8, 2018), report and recommendation adopted as modified, 2018 WL 3869894 (Aug. 15, 2018) (citing Bryant, 603 F.3d at 144). In Conan, the defendant left infringing images online after receiving “takedown notices” and then stopped responding to the plaintiffs' communications. Id., at *33. The Court stated that that was “the kind of behavior that copyright law seeks to deter,” and determined that this factor weighed in the plaintiffs' favor in determining damages. Id. Here, where Plaintiffs repeatedly sent Notices of Infringement and Defendant not only continued to sell the Infringing Products, but also sent false counter-notices, this factor similarly weighs in Plaintiffs' favor. With regard to the fifth and sixth factors, a defendant's default indicates its “lack of cooperation,” Design Pics Inc., 2021 WL 74088, at *4, and courts have found these factors to weigh in favor of a high statutory damages award where a defendant behaves willfully, Spin Master Ltd. V. 13385184960@163.com, 18cv10524 (LGS), 2020 WL 2614766, at *4 (S.D.N.Y. May 22, 2020) (“the infringer's cooperation in providing evidence and the conduct of the parties favors Plaintiffs because Defendants were found to be willful in their infringement”).
As noted above, where a defendant's infringement was willful, a court has discretion to award statutory damages up to $150,000.00. Bryant, 603 F.3d at 139. Here, Defendant's default, coupled with the nature of their conduct, warrants the maximum statutory damages award. See McCurry v. Accessory Network Grp., LLC, No. 15cv9779 (PGG) (KNF), 2016 WL 11620045, at *4 (S.D.N.Y. Oct. 5, 2016) (recommending that plaintiff's request for $150,000 in statutory damages be granted, where defendant continued to display photograph after having received cease and desist letters), report and recommendation adopted, 2019 WL 4142491 (Aug. 30, 2019); Hounddog Productions L.L.C. v. Empire Film Group, Inc., 826 F.Supp.2d 619, 631-32 (S.D.N.Y. 2011) (granting plaintiff's request for $150,000 in statutory damages in copyright case where, prior to lawsuit, defendant received notice that it no longer had authorization to use copyright).
Accordingly, I recommend awarding Plaintiffs statutory damages for Defendant's willful infringement of Plaintiffs' copyright in the iGuy® Insert, in the amount of $150,000.00. This maximum statutory award is appropriate given Defendant's willfulness, as established by its default, as well as by its receipt of multiple notices of its infringing conduct and its repeated submission to Amazon of false counter-notices.
B. Damages Under the Lanham Act
Plaintiffs also seek recovery of Defendant's profits pursuant to Section 1117(a) of the Lanham Act, for Defendant's allegedly willful infringement of the trade dress of the iGuy® Case and the iGuy® Insert, in violation of 15 U.S.C. § 1125(a). (2d Am. Compl. ¶ 2; Proposed Findings, at § II ¶¶ 35-48.) According to records received from Amazon, Defendant's revenue from all of the Infringing Products that it sold on Amazon was $1,045,363.62. (See generally Amazon Decl., Ex. A.) In the absence of any showing by Defendant of its expenses, Plaintiffs apparently maintain that this full amount of Defendant's sales revenue should be considered its “profits” under the law. (Proposed Findings, at § II ¶ 40 (citing Hilton v. Int'l Perfume Palace, Inc., No. 12cv5074 (JFB) (GRB), 2013 WL 5676582, at *6 (E.D.N.Y. Oct. 17, 2013) (“In the case of a default, ‘a plaintiff is entitled to recover a defaulting defendant's proven gross revenue with no reductions for expenses.'”)).) Further, Plaintiffs assert that, in light of Defendant's “willfulness,” they should be awarded damages of treble that amount - totaling $3,136,090.86 -as the maximum amount permitted under Section 1117(a). (See Proposed Findings, at § II ¶¶ 1, 39-42; see also 15 U.S.C. § 117(a) (“In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount.”).)
As an initial matter, Plaintiffs have made the threshold showing of entitlement to SLEC's profits under 15 U.S. § 1117(a) because, as noted above, SLEC has admitted Plaintiffs' allegations of trade-dress infringement by virtue of its default. See BeautyBank, Inc. v. Harvey Prince LLP, No. 10cv955 (DAB) (GWG), 2011 WL 671749, at *4 (S.D.N.Y. Feb. 24, 2011) (citing Malletier v. Carduci Leather Fashions, Inc., 648 F.Supp.2d 501, 504 (S.D.N.Y. 2009)), report and recommendation adopted, 2011 WL 1483969 (Apr. 18, 2011). Further, as with Plaintiffs' copyright infringement claim, Defendant's trade-dress infringement may be deemed to have been willful in light of its default. Tiffany (NJ) Inc. v. Luban, 282 F.Supp.2d 123, 124 (S.D.N.Y. 2003); Gucci America, Inc., v. MyreplicaHandbag.com, No. 07cv2438 (JGK), 2008 WL 512789, at *3 (S.D.N.Y. Feb. 26, 2008) (“When a defendant has defaulted, then by virtue of its default it is deemed to be a willful infringer.”). Judge Gardephe also found that “Defendant's conduct in infringing the Samsonite Protected Designs” - which includes the trade dress for the iGuy® case and insert, (Default Order ¶ 3) - “[was] willful, knowing and intentional.” (Id., ¶ 9).
As with a copyright violation, where a defendant continues the use of an infringing mark (or trade dress) after receiving notice from plaintiff, the violation may be found willful. See Landstar System, Inc. v. American Landstar Logistics Corp., No. 15cv7179 (KAM) (VMS), 2019 WL 2256760 (E.D.N.Y. Jan. 8, 2019) (“Defendants were willful in their continued infringing use of [plaintiff's] mark after receiving notice from [plaintiff]”), report and recommendation adopted, 2019 WL 1199389 (Mar. 13, 2019). This Court notes, however, that the Notices of Infringement that Plaintiffs claim to have sent to Defendant were allegedly sent “pursuant to the DMCA” (Proposed Findings § I, ¶ 29) and were “premised solely upon Plaintiffs' rights of copyright in and to the iGuy® Case Design” (2d Am. Compl. ¶ 38) (emphasis added). While, based on Plaintiffs' allegations, Defendant has been found to have been on notice that it was infringing Plaintiffs' copyrights, the pleaded allegations do not provide a similar factual predicate for the Court to find that Defendant was on notice that it was also infringing Plaintiffs' trade dress.
As for the amount of Defendant's profits that it seeks to recover, Plaintiffs have submitted a declaration from Annasara Purcell (“Purcell”), corporate counsel of Amazon, indicating that, based on Amazon's sale records, Defendant benefitted from its infringing use of Plaintiffs' distinctive trade dress by earning $1,045,363.62 in revenue from its sales of the products at issue. (See Amazon Decl.) Purcell has certified the accuracy of a spreadsheet setting out Defendant's profits from the Infringing Products, based upon records that Amazon maintains concerning the sales of each company or entity that sells products through the Amazon website. (Id. ¶ 3.) This Court finds this spreadsheet to contain a reasonable estimation of Defendant's sales and (in the absence of any evidence of Defendant's deductible expenses) of its ill-gotten profits. See BeautyBank, 2011 WL 671749, at *5 (where a defendant has not provided any information regarding its costs or deductions, Plaintiff is entitled to a presumption that the total amount of sales reflects defendant's profits). As Defendant has defaulted, Plaintiffs are entitled to recover Defendant's profits with no reductions for expenses. Hilton, 2013 WL 5676582, at *6 (citing Harris v. Fairweather, No. 11cv2152 (PKC) (AJP), 2012 WL 5199250, at *2 (S.D.N.Y. Oct. 19, 2012)).
Plaintiffs further contend that they are entitled to recover three times the amount of Defendant's profits under 15 U.S.C. § 1117(a), “given Defendant's willful conduct.” (Proposed Findings § II, ¶ 42.) Under 15 U.S.C. § 1117(a), however, where “a plaintiff seeks to recover its [sustained damages], the statute permits a court to award up to three times the plaintiff's damages,” but “where a plaintiff seeks to recover the defendant's ‘profits,' the statute does not permit trebling.” BeautyBank, 2011 WL 671749, at *5.
Although Plaintiffs may, alternatively, have chosen to seek treble damages under 15 U.S.C. § 1117(b) (directing that, in the absence of “extenuating circumstances,” a court should enter judgment for three times such profits, if the violation consists of “intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark . . . in connection with the sale, offering for sale, or distribution of goods or services”), see BeautyBank, 2011 WL 671749, *6 (citing 15 U.S.C. § 1117(b)), Plaintiffs have not invoked Section 1117(b) for this purpose, either in their inquest submissions or in their Second Amended Complaint. (See generally Proposed Findings, 2d Am. Compl.) As the Court should not award damages against a defendant - particularly in the default context -- on a basis not sought by the plaintiff, I recommend that treble damages not be awarded in this instance. Cf. Fed.R.Civ.P. 54(c) (providing that “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings”).
Accordingly, I recommend that Plaintiffs be awarded $1,045,363.62 under the Lanham Act, representing Defendant's demonstrated profits, but not treble that amount.
So as to avoid a duplicative recovery, courts within this Circuit have declined to allow separate awards of statutory damages - under the Lanham Act and the Copyright Act -for infringements relating to the same product. See, e.g., TigerCandy Arts, No. 09cv6215 (GBD) (FM), 2012 WL 760168, at *5 (S.D.N.Y. Feb. 23, 2012), report and recommendation adopted, 2012 WL 1948816 (May 30, 2012); Tu v. TAD Sys. Tech. Inc., No. 08cv3822 (SLT) (RML), 2009 WL 2905780, at *4 (E.D.N.Y. Sept. 10, 2009). In this case, however, Plaintiffs do not seek statutory damages under both the Lanham Act and the Copyright Act; rather, they seek statutory damages under the Copyright Act and Defendant's profits under the Lanham Act. (See generally Proposed Findings.) In cases such as this, courts have found “no double recovery bar where the plaintiff seeks statutory damages under the Copyright Act and disgorgement of the infringer's ill-gotten profits under the Lanham Act.” Tu, 2009 WL 2905780, at *4; see Viacom Int'l, Inc. v. Fanzine Int'l, Inc., No. 98cv7448 (RCC), 2001 WL 930248, at *3-6 (S.D.N.Y. Aug. 16, 2001); LyonsP'ship, L.P. v. AAA Entm't, No. 98cv0475 (DAB) (MHD), 1999 WL 1095608, at *8-10 (S.D.N.Y. Dec. 3, 1999). Therefore, this Court finds that it is appropriate for Plaintiffs here to recover both statutory damages under the Copyright Act and Defendant's profits under the Lanham Act.
C. Attorneys' Fees and Costs
Plaintiffs also request an award of $142,387.06 in attorneys' fees and $13,543.23 in costs, pursuant to the DMCA (as recoverable damages) and under the Lanham Act (as the prevailing parties). (Proposed Findings, at § II ¶¶ 51-52.) In light of the fact that this Court is recommending the maximum statutory award for copyright infringement, and that Plaintiffs have not demonstrated that they suffered a separate, distinct injury under the DMCA as a result of Defendant's false counter-notices, I recommend the Court exercise its discretion to award Plaintiffs fees and costs based on the fact that they have prevailed in this action, and that Defendant's willfulness renders this an “exceptional” case under 15 U.S.C. § 1117(a). Under applicable standards, however, Plaintiffs' attorneys' fees and costs may only be awarded to the extent that Plaintiffs have met their burden of demonstrating that the fees and costs were reasonably incurred, see Blum, 465 U.S. at 897; Broadcast Music, Inc. v. Prana Hospitality, Inc., 158 F.Supp.3d 184, 202 (S.D.N.Y. 2016), and, in this case, Plaintiffs have largely failed to meet that burden.
1. Compensable Attorneys' Fees in This Case
a. Reasonable Rates
Plaintiffs' counsel, Margarita Wallach (“Wallach”), who has been primarily responsible for this litigation, states that she is a partner in the firm of McCarter & English, LLP (the “Firm”). (Wallach Decl. ¶¶ 1, 21.) As of the time of Plaintiffs' fee application, Wallach had approximately 22 years of experience with intellectual property matters, and her standard billing rate ranged from $600 to $625 per hour. (Id. ¶ 22.) She reports that she spent 63.4 hours working on this matter and that her fees totaled $38,375.00 (id.), suggesting that, in this case, she employed an average billing rate of approximately $605 per hour.
Several attorneys and support staff of the Firm assisted Wallach with this litigation. (See generally Wallach Decl.) Based on Plaintiffs' submissions, Irene Hurtado (“Hurtado”) is special counsel at the Firm, and specializes in intellectual property matters. (Id. ¶ 23.) As of the time of Plaintiffs' application, Hurtado had 20 years of experience and billed at a rate of between $500 and $520 per hour. (Id.) Hurtado reportedly spent 129.84 hours working on this matter, and her fees totaled $65,325.06 (id.), suggesting that she billed her time in this case at the average rate of $503 per hour.
Plaintiffs also seek fees for three associates with the Firm - Alice Pang (“Pang”), Jin Wang (Wang”), and Aya Cieslak-Tochigi (“Cieslak-Tochigi”) - as well as one former associate - Kritika Bharadwaj (“Bharadwaj”) - each of whom are represented to have specialized in in intellectual property matters. At the time of Plaintiffs' application, Pang had about nine years of experience and billed at the rate of $460 to $495 per hour. (Id. ¶ 24.) For her work on this case, Plaintiffs request $25,988.70 for 56.29 hours of work (id.), at an average rate of approximately $462 per hour. Wang, who is apparently fluent in Chinese, assisted with review and translation of Defendant's Chinese website. (Id. ¶ 25) At the time of the application, Wang had 10 years of experience and billed at an hourly rate of $480. (Id.) For her work on this case, the Firm billed 2.5 hours at that rate, incurring fees of $1,200.00. (Id.) At the time of the application, Cieslak-Tochigi had approximately seven years of experience, and her standard hourly rate was $405. (Id. ¶ 26.) Cieslak-Tochigi spent 4.2 hours on this matter, at her standard rate, incurring fees of $1,701.00. (Id.) Finally, at the time of the application, Bharadwaj had approximately nine years of experience, and her standard hourly rate was $400. (Id. ¶ 27.) For her work on this matter, Plaintiffs request $3,080.00 for 7.7 hours of work, billed at Bharadwaj's standard rate. (Id.)
Plaintiffs further seek fees for the time spent on the case by Mabel Andrews (“Andrews”), a paralegal at the Firm, specializing in intellectual property matters, who, at the time of Plaintiffs' application, had approximately 12 years of experience and a standard hourly rate of $245. (Id. ¶ 28.) For Andrews' work on this case, Plaintiffs request $6,254.80 for 27.34 hours (id.), reflecting an average rate of approximately $229 per hour. Plaintiffs also seek fees for the time spent on the matter by James Greenstone (“Greenstone”), a reference librarian, who, at the time of the application, had approximately 29 years of experience and a standard hourly rate of $185. (Id. ¶ 29.) Greenstone reportedly spent 2.5 hours on this matter, billing his time at his standard rate, for a total of $462.50. (Id.)
In support of their claim for attorneys' fees, Plaintiffs have submitted not only an attorney declaration, but also contemporaneous time records, the law firm's website biographies for each attorney and staff member who worked on the case, and a chart showing average rates charged by intellectual property attorneys in the New York City area. (See Wallach Decl., and exhibits thereto.) Additionally, Plaintiff's have submitted the Firm's invoices to Plaintiffs - invoices that, according to counsel, “consist of, or were derived from, contemporaneous time records” maintained by the Firm. (Wallach Decl. ¶ 30; Ex. 4.) The invoices state the date on which the services were performed; which attorney, paralegal, or reference librarian provided the service; the hours spent; the nature of the work performed; and the cost of the work performed. (See Wallach Decl., Ex. 4.)
Despite this documentation (including the chart of counsel rates in New York City (see Wallach Decl. ¶ 19; see also id., Ex. 2)), this Court finds that certain of the rates being requested are higher than those typically awarded in this District for work by lawyers and support staff of comparable levels of experience. In copyright cases, courts in this district have generally approved rates ranging from $400 to $735 per hour for partners, see, e.g., Broadcast Music Inc. v. Pamdh Enterprises, Inc., No. 13cv2255 (KMW), 2014 WL 2781846, at *7 (S.D.N.Y. June 19, 2014) (collecting cases), rates ranging from $200 to $450 per hour for associates, see, e.g., Prana Hospitality, 158 F.Supp.3d at 202 (collecting cases), $200 per hour for paralegals, see Pamdh Enterprises, Inc., 2014 WL 2781846, at *7, and $125 to $180 per hour for reference librarians, Bumble and Bumble, LLC v. Pro's Choice Beauty Care, Inc., No. 14cv6911 (VEC) (JLC), 2016 WL 658310, at *9 (S.D.N.Y. Feb. 17, 2016), report and recommendation adopted, 2016 WL 1717215 (Apr. 27, 2016).
As Wallach's charged rate in this case of $605 per hour falls within the range typically awarded for partners, and as she has had over 20 years of experience, I recommend acceptance of that rate. Similarly, I recommend that Hurtado's charged rate of $503 per hour be accepted as reasonable for an attorney serving “of counsel,” as it falls between the rates typically approved for partners and those typically approved for associates. I recommend, however, that, with the exception of Bharadwaj's rate (which, at $400 per hour for an associate with nine years of experience appears reasonable), the rates charged by the associates who worked on the case be somewhat reduced. In this regard, I recommend that Pang's rate be reduced from $462 to $450 per hour (based on her nine years of experience); that Wang's rate be reduced from $480 to $300 per hour (as, despite her 10 years of experience, it has been represented that her role in this case was largely to translate website information, work that does not itself involve the provision of legal analysis); and that Cieslak-Tochigi's rate be reduced from $405 to $375 per hour (based on her seven years of experience). I also recommend that Andrews' rate be reduced to the more typical paralegal rate of $200 per hour, and that Greenstone's rate be reduced slightly, to $180 per hour, to bring it in line with the rates typically awarded for senior reference librarians.
This Court notes that, even where a requested hourly rate would ordinarily be found appropriate for an attorney of a certain level of skill and experience, the court may reduce that rate if records show that the work actually performed by that attorney could have been performed by someone more junior. See, e.g., Torres v. City of New York, No. 18cv3644 (LGS) (KHP), 2020 WL 6561599, at *7 (S.D.N.Y. June 3, 2020), report and recommendation adopted, 2020 WL 4883807 (Aug. 20, 2020). In this case, as discussed below, the Firm staffed the matter with a team of senior attorneys, and the most senior attorneys on the team performed most of the work on the matter. In these circumstances, I recommend that the Court not attempt to adjust each attorney's billing rate to account for this issue, but rather acknowledge the issue as one reason why an overall percentage reduction in counsel's hours would be justified.
b. Reasonable Hours
As for the number of hours that the Firm spent on this case, this Court notes that it is extremely difficult to justify the amount of time reportedly expended, given that the case never proceeded past a default. Although six attorneys billed time to the case, the vast bulk of that time was billed by three of them (Wallach, Hurtado, and Pang), all reportedly experienced counsel. Despite the fact that the underlying facts of this case are fairly straightforward, these three senior attorneys billed nearly 250 hours among them, merely to investigate the facts in advance of any discovery; to prepare, amend, and eventually serve a pleading; and to seek a default judgment. Overall, if the time of the remaining three attorneys and the support staff are added in, Plaintiffs are seeking to recover for close to 300 hours of attorney and staff time.
Generally, “[t]he time and labor required for seeking a judgment by default . . . based on the defendant's failure to plead or otherwise defend, as well as the level of skill required to perform the legal tasks in connection with it, are . . . de minimis.” Days Inn Worldwide, Inc. v. Amar Hotels, Inc., No. 05cv10100 (KMW) (KNF), 2008 WL 2485407, at *10 (S.D.N.Y. June 18, 2008) (stating that “[n]o reasonable paying client would be willing to pay $20,057.54 in attorney fees, for a simple [trademark] case . . . involving a settled area of law and no complex issues, in which the defendant failed to plead or otherwise defend,” and reducing attorneys' fees by 75 percent).
This Court recognizes that this case may have presented some procedural obstacles, resulting from the need to serve a foreign defendant and to translate certain documents into Chinese. Still, the disproportionately high number of hours spent on the case given its posture, combined with the Firm's top-heavy staffing (with six attorneys, yet no junior associates, and with the most senior attorneys performing the majority of the work), calls for a significant reduction in the fees that have been requested.
When a court concludes that the number of hours expended by counsel has been excessive, it may forego reviewing the timekeepers' individual time entries, and instead apply “an across-the-board percentage reduction in compensable hours.” Malletier, 687 F.Supp.2d at 362-63 (S.D.N.Y. 2009). In this case, the number of hours the Firm billed far exceeds that approved in similar cases. See Hollander Glass Texas, 291 F.Supp.3d at 563 (finding that a total of 88.8 hours on a case with copyright and trademark claims involving two defendants, where one of the defendants defaulted, was excessive, and recommending reduction of the number of hours to 64.3); Malletier, 687 F.Supp.2d at 362-63 (finding that “expenditure of 56.5 hours” on a straightforward trademark infringement action where defendants defaulted was excessive, warranting a 15 percent reduction); Days Inn Worldwide, 2008 WL 2485407, at *9 (“[t]he Court finds it astounding and incredible that 95.1 hours were expended by five attorneys in an action as straightforward as this . . .”); International Council of Shopping Centers, Inc. v. Info Quarter, LLC, No. 17cv5526 (AJN), 2019 WL 2004029, at *6 (S.D.N.Y. May 7, 2019) (finding that spending a total of 36.71 hours on an intellectual property case in which defendant defaulted was appropriate).
An across-the-board reduction may also be made where counsel's time entries are vague, see, e.g., Harley v. Nesby, No. 08cv5791 (KBF) (HBP), 2012 WL 1537881, at *12 (S.D.N.Y. May 2, 2012) (reducing attorneys' fees for vague billing entries reflecting correspondence, telephone calls, or legal research on generalized subject matters), where multiple attorneys billed time for the same task, see Sanrio Co., Ltd., v. Teng Fei Trading Inc., No. 04cv5430 (BMC) (MDG), 2007 WL 9718371 (E.D.N.Y. Sept. 4, 2007) (recommending an across-the-board reduction of 50% in the number of hours billed where many of the time entries for multiple attorneys describe the same work “which could have been performed by one attorney”), report and recommendation adopted, 2008 WL 11429612 (Sept. 27, 2008); General Elec. Co. v. Compagnie Euralair, S.A., No. 96cv884 (SAS), 1997 WL 397627, at *6 (S.D.N.Y. July 3, 1997) (reducing the fee request by 50% for excessive and duplicative hours billed), or where tasks performed by partners or senior associates could have been performed by a junior associate or paralegal, see E.S. v. Katonah-Lewisboro Sch. Dist., 796 F.Supp.2d 421, 431-32 (S.D.N.Y. 2011) (“A court may make [across-the-board percentage] reductions when attorneys engage in less skilled work, like filing and other administrative tasks [such as] faxing and mailing documents, making copies, filing, scanning, preparing documents for electronic filing ....”).
Here, not only are a large number of the submitted attorney time records both blockbilled (with multiple tasks clustered under single time entries) and heavily redacted (see generally Dkt. 44-5), significantly limiting this Court's ability to review them, but numerous entries are vague, referring, for example, to “research,” without specifying the nature or subject matter of that research (see, e.g., id. at ECF 4 (“research on Amazon and DMCA Action”); id., at ECF 50 (“research” and “engaged in research”)). In addition, many of counsel's entries are duplicative, such that it appears that multiple attorneys billed for the same task. For just one example, on July 29, 2019, Andrews billed some amount of time (how much is unclear, given that the entry is block-billed) to “review[ing] Judge Gardephe's individual rules and requirements for entry of default judgment,” while, two days later, Hurtado similarly billed a portion of her time to a “review of Judge's rules concerning procedure for filing order to show cause for default judgment.” (Id., at ECF 32.) Finally, the submitted time entries reflect that certain ministerial tasks, which could have been handled by a junior attorney or even a paralegal, were instead handled by senior counsel. This Court sees no reason, for example, why an attorney like Hurtado, with 20 years of experience, should command a senior attorney rate for performing tasks related to the service and filing of papers. (See, e.g., id., at ECF 29 (billing 0.7 hours to “attention of filing of request for certificate of default and supporting papers, email to defendant serving copy of same”); id., at ECF 50 (billing 0.8 hours to “finalizing service of injunction on defendant”).)
As Dkt. 44-5 does not contain page numbers, this Court will herein reference particular pages of this document by citing to the page numbers affixed to the document by the Court's Electronic Case Filing (“ECF”) system.
Based on the vague, duplicative, and largely inscrutable nature of many of counsel's time entries, the extremely top-heavy manner in which this case was staffed, and the fee totals that courts in this District have typically awarded in cases involving defaults, this Court concludes that an across-the-board reduction of 60 percent of counsel's stated hours would be appropriate. This would reduce the Firm's overall time on the matter to slightly under 120 hours, which is still high for case in which the defendant never appeared, and would result in the lodestar calculation shown below:
Timekeeper
Reasonable Rates
Reasonable Hours [stated hours less 60%]
Recoverable Fees
Margarita Wallach
$605/hour
x 25.36 hours
= $15,342.80
Irene Hurtado
$503/hour
x 51.94 hours
= $26,125.82
Alice Pang
$450/hour
x 22.52 hours
= $10,134.00
Jin Wang
$300/hour
x 1.00 hours
= $300.00
Aya Cieslak-Tochigi
$375/hour
x 1.68 hours
= $630.00
Kritika Bharadwaj
$400/hour
x 3.08 hours
= $1,232.00
Mabel Andrews
$200/hour
x 10.94 hours
= $2,188.00
James Greenstone
$180/hour
x 1.00 hours
= $180.00
Total: $56,132.62
This Court finds no reason to depart from this lodestar calculation, and therefore recommends that Plaintiffs be awarded $56,132.62 in attorneys' fees, as the prevailing parties in a case where the defendant's willfulness has been established by its default.
2. Compensable Costs
The DMCA and the Lanham Act also entitle Plaintiffs to recover certain reasonable costs, which may include filing fees and reasonable process server fees. Rosendo, 2015 WL 1600057, at *9. In this instance, Plaintiffs seek to recover $13,543.23 in costs (Proposed Findings, at § II ¶ 52), including “the filing fee, fees arising from investigation services, service on Defendant in the U.S., and attempts to serve Defendant under the Hague Convention” (id.). In addition, Plaintiffs argue that, but for Defendant's misrepresentations in its counter-notices, Plaintiffs would not have been required to file several Notices of Infringement or to have brought this suit, in order to ensure that the infringing listings remained disabled. (Id. ¶ 32.)
Specifically, Plaintiffs' break down their requested costs as follows: $420 for filing fees (Dkt. 44-5, at ECF 16, 56); $216.4 for photocopies (id., at ECF 34-48); $47.88 for transcripts (id., at ECF 48); $1.60 for PACER fees (id., at 69); $1,323.52 for FedEx costs (id., at ECF 16-69); $985.33 for “Professional Services” (id., at 36); $4,820 for “translation services” (id., at ECF 26); and $5,728.50 for “library research” (id., at ECF 34, 43).
Many of these costs are compensable. See Rosendo, 2015 WL 1600057, at *9 (filing fees are compensable); Duke v. County of Nassau, 97cv1495 (JS), 2003 WL 23315463, at *6 (E.D.N.Y. Apr. 14, 2003) (“Courts have continuously recognized the right for reimbursement of costs such as photocopying, postage, [and] transportation”); Boissan v. Banian Ltd., 221 F.R.D. 378, 379 (E.D.N.Y. 2004) (filing fees and transcript fees are compensable); Harley, 2012 WL 1537881, at *13 (approving request for “PACER costs”). Accordingly, I respectfully recommend that Plaintiffs be awarded costs for filing fees, photocopying, postage (FedEx), transcripts, and PACER fees.
It is proper, however, for a court to properly deny a request for costs that is vague or insufficiently descriptive. Tri-Star Pictures, Inc. v. Unger, 42 F.Supp.2d 296, 307 (S.D.N.Y. 1999); see also Whitehead v. Mix Unit, LLC, No. 17cv9476 (VSB) (JLC), 2019 WL 384446, at *6 (S.D.N.Y. Jan. 31, 2019) (noting that a party is not entitled to full recovery of costs if it does not provide the court with adequate substantiation (citing Sanchez v. Jyp Foods, Inc., No. 16cv472 (JLC), 2018 WL 4502008, at *17 (S.D.N.Y. Sept. 20, 2018)), report and recommendation adopted, 2019 WL 1746007 (Apr. 18, 2019). In Tri-Star Pictures, the court held that a request for “out-of-pocket expenses” was too vague to be compensable where the party did not “enumerate or describe these ‘out-of-pocket' expenses.” Id. The court similarly refused to award costs for a private investigator, where the party did not “explain why the special services of a private investigator were necessary.” Id.
Here, certain of Plaintiffs' requested costs - specifically their claimed costs for “professional services,” “translation services,” and “library research” - are similarly described too vaguely to permit this Court to recommend their inclusion in a fee award.
Plaintiffs' request for compensation for “professional services” is accompanied by no explanation whatsoever as to the type of services in question, much less why the costs were reasonably incurred.
Plaintiffs' request for the costs of “translation services” also lacks sufficient explanation. While reimbursement for translation services is not categorically inappropriate, see Close-Up Intern., Inc., v. Berov, No. 02cv2363 (DGT), 2007 WL 4053682, at *10 (E.D.N.Y. Nov. 13, 2007), and while certain translation costs may, in fact, have been reasonably required in this case (such as, perhaps, the cost of using a certified translator to translate documents into another language for purposes of service under the Hague Convention), Plaintiffs have not provided any description of the translation services for which they needed to retain an outside professional. Rather, with respect to the issue of translation, Plaintiffs have only asserted that Wang was an appropriate member of the attorney team in this case because she was, herself, able to translate documents. Additionally, where courts have allowed costs for translation services, the party seeking such costs have typically provided receipts setting forth the costs incurred, see Close-Up Intern., 2007 WL 4053682, at *10, which Plaintiffs have not done in this case.
Finally, with respect to Plaintiffs' costs for “library research,” this Court notes that each entry simply states, “Library Research” with a corresponding date and cost, but without support from any attached receipts. While costs for legal research are recoverable in some cases, see, e.g., Canada Dry Delaware Valley Bottling Co. v. Hornell Brewing Co., Inc., No. 11cv4308 (PGG), 2013 WL 6171660, at *8 (S.D.N.Y. Nov. 25, 2013), courts in this Circuit have declined to award such costs in the absence of sufficient documentation, see D 'Annunzio v. Ayken, Inc., No. 11cv3303 (WFK) (WDW), 2015 WL 5308094 (E.D.N.Y. Sept. 10, 2015); see also Century 21 Real Estate LLC v. Bercosa Corp., 666 F.Supp.2d 274, 300 (E.D.N.Y. 2009).
Excluding these three categories of requested costs, I recommend that Plaintiffs be awarded $2009.40 in costs - covering filing fees, FedEx costs, photocopies, transcripts, and PACER fees.
D. Pre-Judgment and Post-Judgment Interest
Plaintiffs also seek prejudgment interest on their awarded damages, “compounded annually, to be calculated at the rate of 9% from January 1, 2018 (the first day of the year in which Plaintiffs have evidence of Defendant's infringement) until the date of entry of final judgment in this matter,” as well as post-judgment interest. (Proposed Findings, at § II ¶ 50.) Although they do not provide the basis for the interest rate they request, this Court assumes that Plaintiffs are relying on the New York prejudgment interest rate, See N.Y. C.P.L.R. § 5004, although the New York statute does not provide for prejudgment interest to be compounded, see id. Moreover, Plaintiffs have provided no justification for the application of the New York rate in this instance, as opposed to the federal (post-judgment) rate, set out in 28 U.S.C. § 1961(a), which has, at times, been applied by courts in this District when awarding prejudgment interest on damages awarded on federal claims. See, e.g., Cengage Learning, Inc. v. Shi, No. 13cv7772 (VSB), 2017 WL 1063463 (S.D.N.Y. Mar. 21, 2017) (awarding prejudgment interest in a copyright and trademark case “in accordance with the rate set forth in 28 USC 1961”); but see, e.g., Bumble and Bumble, 2016 WL 658310, at *12 (recommending application of 9% rate in trademark case). Ultimately, “[w]here a court awards prejudgment interest, ‘it is within the trial court's discretion to choose what rate to apply.'” Bumble and Bumble, 2016 WL 658310, at *11 (quoting GTFM, Inc. v. Solid Clothing, No. 01cv2629 (DLC), 2002 WL 31886349, at *4 (S.D.N.Y. Dec. 26, 2002)).
On the question of whether prejudgment interest should be awarded at all, the Copyright Act does not expressly provide for prejudgment interest, and the decision as to whether such interest should be awarded also lies within the court's discretion. Dweck v. Amadi, No. 10cv2577 (RMB) (HBP), 2011 WL 3809907, at *6 (S.D.N.Y. July 26, 2011); report and recommendation adopted, 2011 WL 3809891 (Aug. 29, 2011). “[S]everal judges in this District have concluded that such an award is appropriate,” EMI Apr. Music, 2014 WL 325933, at *9 (collecting cases), although they have differed as to the date from which such interest should run, see, e.g., Dweck, 2011 WL 3809907, at *6 (recommending award of prejudgment from the date of the filing of the action); Broad. Music, Inc. v. R. Bar of Manhattan, Inc., 919 F.Supp. 656, 661 (S.D.N.Y. 1996) (awarding prejudgment interest from the date of first infringement).
Under the Lanham Act, the decision to award prejudgment interest is also within the discretion of the court, but “‘is normally reserved for exceptional cases.'” John Wiley & Sons, Inc. v. Book Dog Books, LLC, 327 F.Supp.3d 606 (S.D.N.Y. 2018) (quoting Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247, 263-64 (2d Cir. 2014)). “Exceptional” circumstances, warranting a prejudgment interest award, may be demonstrated by showing that the defendant engaged in willful infringement or acted in bad faith. See, e.g., Philip Morris USA Inc. v. U.S. Sun Star Trading, Inc., No. 08cv0068 (KAM) (JO), 2010 WL 2133937, at *14 (E.D.N.Y. Mar. 11, 2010) (finding prejudgment interest appropriate where defendants “not only acted willfully, but [defendant's] attempts to frustrate the judicial process make the case exceptional”), report and recommendation adopted, 2010 WL 2160058 (May 27, 2010); Johnson & Johnson Consumer Companies, Inc. v. Aini, 540 F.Supp.2d 374, 396-97 (E.D.N.Y. 2008) (awarding prejudgment interest where defendant acted with willful blindness); cf. Schatzki v. Weiser Capital Mgmt., LLC, No. 10cv4685 (RWS), 2014 WL 630650, at *2 (S.D.N.Y. Feb. 18, 2014) (recognizing availability of prejudgment interest for statutory damages, but declining to award it where plaintiff did not establish that defendant acted willfully or in bad faith, finding that “[a]s such, there are no ‘exceptional' circumstances that justify an award of prejudgment interest on the trademark claim”), aff'd sub nom., BPP Wealth, Inc. v. Weiser Capital Mgmt., LLC, 623 Fed.Appx. 7 (2d Cir. 2015).
Under the circumstances of this case, as discussed above, where Defendant's copyright and trade-dress infringement should both be deemed willful, I recommend that Plaintiffs be awarded prejudgment interest on both their Copyright Act and Lanham Act damages. I further recommend that, as Plaintiffs' first two pleadings were never served on Defendant, such interest be calculated from May 7, 2019, the date the Second Amended Complaint was filed. Finally, I recommend that, as Plaintiffs have not demonstrated a justification for the higher rate provided under state law, prejudgment interest be calculated at the rate provided for in 28 U.S.C. § 1961(a), compounded as set forth therein, to be calculated by the Clerk of Court, through the date of the entry of final judgment.
Post-judgment interest, as governed by 28 U.S.C. § 1961(a), is mandatory on awards in civil cases, from the date of entry of the judgment to the date when the judgment is satisfied. See, e.g., Trustees of the New York City Dist. Council of Carpenters Pension Fund v. Golden Dev. & Constr. Corp., No. 17cv1051 (VSB) (JLC), 2017 WL 2876644, at *6 (S.D.N.Y. July 6, 2017), report and recommendation adopted, 2017 WL 3309737 (S.D.N.Y. Aug. 2, 2017). The amount of any such interest will be dictated by the statute, and will, of course, be dependent on when the judgment is satisfied. Accordingly, I recommend that the judgment simply reference Plaintiffs' entitlement to such interest, pursuant to the terms of 28 U.S.C. § 1961(a).
III. POST-JUDGMENT DISCOVERY
Plaintiffs also request that this Court order post-judgment discovery to assist Plaintiffs in enforcing the judgment. (Proposed Findings, at § II ¶¶ 59-61.) On this point, Plaintiffs urge that “[n]onparties are likely to have information concerning the location of Defendant's assets which could aid in satisfying a judgment.” (Id. ¶ 60.)
While it may well be that post-judgment discovery would assist Plaintiffs in enforcing a judgment in this case, this Court sees no reason why the Court need act, at this time, to order any such discovery. “Discovery of a judgment debtor's assets is conducted routinely under the Federal Rules of Civil Procedure,” First City, Texas-Houston, N.A. v. Rafidain Bank, 281 F.3d 48, 54 (2d Cir. 2002), and Rule 69, which governs post-judgment discovery, allows a judgment creditor to engage in such discovery without express leave of court, See Fed.R.Civ.P. 69(a)(2) (“In aid of the judgment or execution, the judgment creditor . . . may obtain discovery from any person - including the judgment debtor - as provided in these rules or by the procedure of the state where the court is located.”). Indeed, Rule 69 has been interpreted to permit judgment creditors “wide latitude in using the discovery devices provided by the Federal Rules in postjudgment proceedings.” Gibbons v. Smith, No. 01cv1224 (LAP), 2010 WL 582354, at *3 (S.D.N.Y. Feb. 11, 2010) (citing Fed.R.Civ.P. 69(a)(2)). As set out in Rule 69, a judgment creditor may also utilize any discovery procedures that are authorized by the forum state, in aid of execution of the judgment. Fed.R.Civ.P. 69(a)(2).
As relevant here, Article 52 of the New York Civil Practice Law and Rules would provide Plaintiffs with additional means of obtaining relevant information, in aid of enforcement of the judgment. See N.Y. C.P.L.R. §§ 5223, 5224.
If Plaintiffs serve appropriate post-judgment discovery requests under Rule 69 and are met with resistance, then they may move to compel responses. See, e.g., Servaas Inc. v. Republic of Iraq, No. 09cv1862 (RMB), 2013 WL 5913363 (S.D.N.Y. Nov. 4, 2013). At this time, however, I recommend that the Court decline to issue any order regarding post-judgment discovery.
CONCLUSION
For the foregoing reasons, I respectfully recommend that the Court enter final judgment against Defendant in the following amounts:
(1) Damages in the total amount of $1,195,363.62, representing:
(a) $150,000.00, under the Copyright Act, as statutory damages for Defendant's direct infringement of Plaintiffs' copyrights; plus
(b) $1,045,363.62, under the Lanham Act, as disgorgement of Defendant's profits for infringement of Plaintiffs' protected trade dress;
(2) Pre-judgment interest on the damages set forth in paragraph (1), above, calculated by the Clerk of Court, at the rate set out in 28 U.S.C. § 1961(a), for the period from May 7, 2019 to the date of the entry of final judgment;
(3) Attorneys' fees in the amount of $56,132.62; and
(4) Costs in the amount of $2,009.40.
I further recommend that the Court note in the judgment that Plaintiffs will be entitled to postjudgment interest pursuant to the terms of 28 U.S.C. § 1961(a).
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6 (allowing three (3) additional days for service by mail). Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Paul G. Gardephe, United States Courthouse, 40 Foley Square, Room 2204, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Gardephe. FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140, 155 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Canadair Ltd., 838 F.2d 55, 58 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).
Plaintiffs' counsel is directed to serve a copy of this Report and Recommendation on Defendant by means reasonably calculated to reach it, and to file proof of such service on the Docket of this action, no later than April 30, 2021.