Summary
reducing award of statutory damages from $25,000 to $7,500 where plaintiff did not offer proof of its actual damages
Summary of this case from Sands v. Fan Fest News, LLC.Opinion
99 Civ. 1404 (LLS)(AJP)
July 11, 2000
REPORT AND RECOMMENDATION
Plaintiff Starbucks commenced this action on February 24, 1999 by filing the Summons and Complaint, and an Amended Summons and Complaint was filed in April 1999 and served, on, inter alia, defendants Little Rickie Productions, Inc. and Freaks New York Inc. (see Dkt. No. 1: Compl.; Dkt. No. 9: Amended Compl.; Dkt. No. 10: Affs. of Service; Dkt. No. 13:7/27/99 Default Judgment.) This action stems from defendants' sale of T-shirts created by defendant Aaron Morgan that infringes Starbucks' copyrighted and trademarked "Siren Logo," by replacing the phrase "Starbucks Coffee" with the phrase "Fuck Off." (Dkt. No. 9: Amended Compl. Exs. A-D.)
On July 27, 1999, Judge Stanton entered a default judgment against Little Rickie and Freaks, permanently enjoining them from infringing Starbucks' "Siren Logo," and referred the matter to a Magistrate Judge for an inquest as to damages. (Dkt. No. 7/27/99 Default Judgment.)
For the reasons set forth below, the Court recommends an award of $7,500 against each of Little Rickie and Freaks.
FACTS
"Where, as here, 'the court determines that defendant is in default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.'" Chen v. Jenna Lane, Inc., 30 F. Supp.2d 622, 623 (S.D.N.Y. 1998) (Carter, D.J. Peck, M.J.) (quoting 10A C. Wright, A. Miller M. Kane, Federal Practice Procedure: Civil 2d § 2688 at 58-59 (3d ed. 1998)); accord, e.g., King Vision Pay-Per-View, Ltd., Corp. v. New Paradise Restaurant, 99 Civ. 10020, 2000 WL 378053 at *1 (S.D.N.Y. April 11, 2000) (Peck, M.J.), report rec. adopted, slip op. (S.D.N.Y. May 18, 2000) (Pauley, D.J.); Independent Nat'l Distrib., Inc. v. Black Rain Communications, Inc., 94 Civ. 8464, 1996 WL 238401 at *2 (S.D.N.Y. April 4, 1996) (Keenan, D.J. Peck, M.J.).
The Amended Complaint
Starbucks describes itself as "the best-known vendor of specialty coffees in America today" (Amended Compl. ¶ 14) — and its stores certainly are familiar to coffee drinkers and even non-coffee drinkers in New York City. Starbucks has used iterations of its Siren Logo for over 25 years to identify its goods and services. (Id. ¶ 16.) The current Siren Logo has been used continuously by Starbucks since 1992 (Id.¶ 16 Ex. A.) The Siren Logo "consists of an illustration of a mermaid, or 'siren,' wearing a crown, surrounded by a green circular border that contains the words 'Starbucks Coffee' in white block lettering." (Amended Compl. ¶ 16.) The Siren Logo is a registered trademark and, as an original artistic work, has been registered for copyright protection. (Id. ¶ 16 Exs. C-D.)
Defendant Aaron Morgan created a silk screen design, to be used on T-shirts, that differs from the Starbucks Siren Logo in only one respect: the words in the exterior circle were changed from "Starbucks Coffee" to "Fuck Off." (Amended Compl. ¶ 18 Exs. A-B.) Defendants Little Rickie, Freaks and others have sold T-shirts and stickers with the infringing logo. (Amended Compl. ¶ 24.)
The Amended Complaint asserts claims for copyright infringement (Amended Compl. ¶¶ 28-37), trademark dilution under federal and New York law (id. ¶¶ 38-43, ¶¶ 44-47), trademark infringement (id. ¶¶ 48-53), and violations of § 43(a) of the Lanham Act (id. ¶¶ 54-48).
Procedural Background
As noted above, on July 27, 1999, Judge Stanton entered a default judgment against defendants Little Rickie and Freaks, and referred the matter to a Magistrate Judge for an inquest on damages. (Dkt. No. 13:7/27/99 Default Judgment.) Upon reassignment of that reference to me (see Dkt. No. 22), I advised the parties that "[t]he Court will not address the damages inquest as to the defaulting parties [i.e., Little Rickie and Freaks] until the case is settled or otherwise resolved as to all other defendants." (Dkt. No. 24:3/9/00 Memo Endorsed Order.)
Starbucks entered into settlement agreements and consent judgments with all defendants in this action (except defaulting defendants Little Rickie and Freaks). (See, e.g., Dkt. Nos. 20, 25, 26, 27, 29: Consent Judgments as to the non-defaulting defendants; see also Schoenberg 6/9/00 Aff. ¶ 20; Schoenberg 6/19/00 Letter to Court, enclosing settlement agreements with non-defaulting defendants.)
By Order dated May 25, 2000, the Court held that since the action was settled against all defendants except defaulting defendants Little Rickie and Freaks, it was appropriate to hold the inquest; that it would be held on written submissions unless any party requested a hearing; and that Starbucks' papers were to be submitted by June 9, 2000 and defendants' opposition papers by June 23, 2000. (Dkt. No. 30:5/25/00 Order.) Starbucks timely submitted its papers on June 9, 2000. (See Dkt. Nos. 31-33.) Neither Little Rickie nor Freaks has submitted any opposition papers.
DISCUSSION
The Second Circuit has approved the holding of an inquest by affidavit, without an in-person court hearing, "'as long as [the Court is] ensured that there was a basis for the damages specified in the default judgment.'" Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. Conti Commodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)); accord, e.g., King Vision- Pay-Per-View, Ltd., Corp. v. New Paradise Restaurant, 99 Civ. 10020, 2000 WL 378053 at *1 (S.D.N.Y. April 11, 2000) (Peck, M.J.), report rec. adopted, slip op. (S.D.N.Y. May 18, 2000) (Pauley, D.J.); Chen v. Jenna Lane, Inc., 30 F. Supp.2d 622, 624 (S.D.N.Y. 1998) (Carter, D.J. Peck, M.J.); see also, e.g., Semi Conductor Materials, Inc. v. Agriculture Inputs Corporation, 96 Civ. 7902, 1998 WL 388503 at *8 (S.D.N.Y. June 23, 1998) (Kaplan, D.J. Peck, M.J.).
The owner of a registered copyright that has been infringed can elect to recover statutory damages in lieu of actual damages. 17 U.S.C. § 504(c)(1). Such damages are available without proof of plaintiff's actual damages or proof of any damages. See, e.g., 4 M. Nimmer D. Nimmer, Nimmer on Copyright § 1404[A] (1999 ed.); 2 William F. Patry, Copyright Law Practice § 1170 (1994).
Starbucks seeks statutory damages of $25,000 against each of Little Rickie and Freaks. (Schoenberg 6/9/00 Aff. ¶ 19; Starbucks 6/9/00 Br. at 6.) Starbucks has waived its right to attorney's fees and costs. (See Starbucks 6/9/00 Br. at 6.)
The Court has reviewed the "confidential" settlement agreements that Starbucks entered into with each of the non-defaulting defendants. (See 6/19/00 Schoenberg Letter to Court, enclosing settlement agreements.) The largest amount in any of the settlement agreements is $5,000. (Id.) Because Little Rickie and Freaks defaulted, while the other defendants appeared in and then settled the action, the Court believes it appropriate to increase the amount by fifty percent.
Accordingly, I recommend that the Court enter judgments against defaulting defendants Little Rickie and Freaks for statutory copyright damages in the amount of $7,500 each (and include in the final judgment the injunctive relief already included in the original default judgment).
FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Louis L. Stanton, 500 Pearl Street, Room 2250, and to my chambers, 500 Pearl Street, Room 1370. Any requests for an extension of time for filing objections must be directed to Judge Stanton. Failure to file objections will result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993), cert. denied, 513 U.S. 822, 115 S.Ct. 86 (1994); Roldan v. Racette, 984 F.2d 85, 89 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir.), cert. denied, 506 U.S. 1038, 113 S.Ct. 825 (1992); Small v. Secretary of Health Human Servs., 892 F.2d 15, 16 (2d Cir. 1989); Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72, 6(a), 6(e).
SERVICE
Mr. Schoenberg is to serve this Report and Recommendation on defendants Little Rickie and Freaks and file an affidavit of service with the Court.