Opinion
1-22-CV-00278-RP
08-09-2023
BVE BRANDS, LLC, Plaintiff v. THE INDIVIDUALS, PARTNERSHIPS, AND UNINCORPORATED ASSOCIATIONS IDENTIFIED ON SCHEDULE “A”, Defendants
HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE.
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
DUSTIN M. HOWELL UNITED STATES MAGISTRATE JUDGE.
Before the Court is Plaintiff BVE Brands, LLC's Motion for Default Judgment, Dkt. 43. After reviewing BVE's motion and the relevant case law, the undersigned issues the following report and recommendation recommending that BVE's motion be granted.
I. BACKGROUND
Plaintiff BVE Brands, LLC, the seller of a kitchen tool for the preparation of brochettes (meats and vegetables on a skewer), initiated this lawsuit against Defendants, the individuals, partnerships, and unincorporated associations set forth in Schedule “A” attached to the complaint, alleging violations of 15 U.S.C. § 1114 (trademark infringement and counterfeiting), 15 U.S.C. § 1125(a) (false designation of origin), 17 U.S.C. § 106 (copyright infringement), unfair competition, and common law trademark infringement. Dkt. 1, at 1-2. Since June 11, 2013, BVE has owned all rights in and to the BROCHETTE EXPRESS trademark, Reg. No. 4,351.262, used to sell and market its kitchen tool. Id. at 4-5. BVE advertises its BROCHETTE EXPRESS product using photographs and a video registered with the U.S. Copyright Office. Id. at 7. Eight of these photographs and one video demonstrating the BROCHETTE EXPRESS product have been registered by BVE. Id.
BVE's products are sold through Amazon.com, its exclusive distributor. Id. at 3. BVE contends that Defendants promote, advertise, sell, and/or offer for online sale inexpensive counterfeit versions of BVE's BROCHETTE EXPRESS products that infringe on BVE's intellectual property rights in the BROCHETTE EXPRESS mark using BVE's copyrighted images. Id. at 8-14. BVE discovered Defendants' infringing activities through its anticounterfeiting program, by which it investigates products found on websites and online marketplace listings and makes test purchases of the counterfeit products. Dkt. 3, at 5-7.
On March 22, 2022, BVE filed its Complaint, as well as an ex parte Motion for a Temporary Restraining Order seeking, among other things, an order authorizing alternate service of process by email and electronic publication to Defendants. Dkts. 1, 3. The District Court granted BVE's motion for a TRO, in part. Dkt. 10. The District Court also entered an order authorizing alternative service of process through e-mail and electronic publication. Dkt. 11. BVE served defaulting Defendants with the Summons and a copy of the Complaint by email communication in compliance with this Court's Order for Alternate Service in May and June 2022. Id. Plaintiff has provided the Certificates of Service. Dkts. 14, 17.
BVE filed a Motion for Preliminary Injunction in July 2022, against all Defendants except Defendants numbered 18, 19, 23, 30, 44, and 54. Dkt. 23. Following a preliminary injunction hearing on October 2022, at which no Defendants appeared, the Court entered a preliminary injunction. Dkt. 37, 38. Plaintiff then filed a motion for entry of clerk's default as to Defendants numbered 1-17, 20-22, 24-29, 31-43, 45-53, and 55-73. The Clerk entered default against each of the Defaulting Defendants on January 6, 2022. Dkt. 38. BVE now moves for default judgment pursuant to Fed.R.Civ.P. 55(b)(2) against these remaining Defendants, and its motion is unopposed. Dkt. 43.
II.LEGAL STANDARD
Under Rule 55 of the Federal Rules of Civil Procedure, federal courts have the authority to enter a default judgment against a defendant that has failed to plead or otherwise defend itself. Fed.R.Civ.P. 55(a)-(b). That said, “[d]efault judgments are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). A party is not entitled to a default judgment simply because the defendant is in default. Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). Rather, a default judgment is generally committed to the discretion of the district court. Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977).
In considering BVE's motion, the Court must determine: (1) whether default judgment is procedurally warranted; (2) whether BVE's complaint sets forth facts sufficient to establish that he is entitled to relief; and (3) what form of relief, if any, BVE should receive. United States v. 1998 Freightliner Vin #: 1FUYCZYB3WP886986 , 548 F.Supp.2d 381, 384 (W.D. Tex. 2008); see also J & J Sports Prods., Inc. v. Morelia Mexican Rest., Inc., 126 F.Supp.3d 809, 813 (N.D. Tex. 2015) (using the same framework).
III.
DISCUSSION
A. Procedural Requirements
To determine whether entry of a default judgment is procedurally warranted, district courts in the Fifth Circuit consider six factors: “[1] whether material issues of fact are at issue, [2] whether there has been substantial prejudice, [3] whether the grounds for default are clearly established, [4] whether the default was caused by a good faith mistake or excusable neglect, [5] the harshness of a default judgment, and [6] whether the court would think itself obliged to set aside the default on the Defendants motion.” Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
On balance, the Lindsey factors weigh in favor of entering a default judgment against the Defendants. Because the Defendants have not filed responsive pleading, there are no material facts in dispute. See Nishimatsu Const. Co., Ltd. v. Hous. Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact.”). The Defendants' failure to appear and respond has ground the adversary process to a halt, prejudicing BVE's interest in pursuing its claim for relief. See J & J Sports, 126 F.Supp.3d at 814 (“Defendants' failure to respond threatens to bring the adversary process to a halt, effectively prejudicing Plaintiff's interests.”) (internal citation and quotation marks omitted). The grounds for default are established: the Defendants were properly served and have failed to appear and participate at all, much less timely file a responsive pleading. See Dkt. 43, at 2. There is no indication that the default was caused by a good faith mistake or excusable neglect. The undersigned therefore finds that default judgment is procedurally warranted.
B. Sufficiency of BVE's Complaint
Default judgment is proper only if the well-pleaded factual allegations in BVE's complaint establish a valid cause of action. Nishimatsu Constr. Co., 515 F.2d at 1206. By defaulting, a defendant “admits the plaintiff's well-pleaded allegations of fact.” Id. In determining whether factual allegations are sufficient to support a default judgment, the Fifth Circuit employs the same analysis used to determine sufficiency under Rule 8. Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The factual allegations in the complaint need only “be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Wooten, 788 F.3d at 498 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). While “detailed factual allegations” are not required, the pleading must present “more than an unadorned, the-defendant-unlawfully-harmed- me accusation.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). BVE asserts causes of action against Defendants for Trademark Infringement and counterfeiting, False Designation of Origin, Unfair Competition, Common Law Trademark Infringement, and Copyright Infringement. Dkt. 1, at 14-20.
1. Trademark: Federal and Common Law Infringement
BVE's first cause of action against Defendants is for Trademark Infringement and Counterfeiting under the Lanham Act, 15 U.S.C. § 1114. Id. at 15. To prevail on a claim for trademark infringement and counterfeiting under the Lanham Act, BVE must show: “(1) [it] possesses] a legally protectable trademark, and (2) [Defendants'] use of this trademark ‘creates a likelihood of confusion as to source, affiliation, or sponsorship.'” Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 450 (5th Cir. 2017) (citations omitted). “A ‘likelihood of confusion' means that confusion is not just possible, but probable.” Mission Pharmacal Co. v. Virtus Pharmaceuticals, LLC, 23 F.Supp.3d 748, 759 (W.D. Tex. 2014). The Fifth Circuit has provided eight non-exhaustive “digits of confusion” for courts to consider in determining whether a likelihood of confusion exists: (1) the type of trademark allegedly infringed; (2) the similarity between the two marks; (3) the similarity of the products or services; (4) the identity of the retail outlets and purchasers; (5) the identity of the advertising media used; (6) the defendant's intent; (7) any evidence of actual confusion; and (8) the degree of care exercised by potential purchasers. Streamline Prod. Sys., 851 F.3d at 453. When a defendant uses a plaintiffs exact mark, “a thorough analysis of the digits of confusion is unnecessary, and a presumption of confusion exists.” Choice Hotels Int'l v. Patel, 940 F.Supp.2d 532, 540 (S.D. Tex. 2013). Trademark infringement claims brought under the Texas common law are analyzed by Fifth Circuit courts using the same standard as applied to Lanham Act claims. See Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 236 (5th Cir. 2010) (“The analysis with respect to [plaintiff's] claims under the Lanham Act will be dispositive of its corresponding claims under Texas law as well.”).
BVE has demonstrated the elements of its trademark infringement claims. BVE pleads that it owns a valid and protectable United States Trademark, BROCHETTE EXPRESS, Registration No. 4,351,262. Dkts. 1, 1-3, at 4-5 and 1-7. BVE also pleads that the BROCHETTE EXPRESS trademark has been in continuous use since its registration on June 11, 2013 (and thus, “incontestable” under 15 U.S.C. § 1115(b)), and has become well known by the public, who identify it as being a high-quality good sponsored and approved by BVE. Dkt. 1, at 5-6.
BVE alleges that Defendants knew of BVE's rights in the BROCHETTE EXPRESS mark, knew they were not authorized to use the mark, and knew their use of the mark is likely to cause and did cause confusion, mistake, and deception among the general purchasing public as to the origin of the counterfeit products. Id. at 10-14. BVE has provided evidence demonstrating each Defendant is using the exact same mark on its respective counterfeit products as the “BROCHETTE EXPRESS” mark and that certain Defendants are using BVE's copyrighted photographs to market the counterfeit products. Dkt. 43-2, at 1, 10-14.
Based on the foregoing, the undersigned finds that BVE's factual allegations and the record before the Court are sufficient to raise BVE's right to relief above a speculative level as to BVE's claim that Defendants violated § 1114 of the Lanham Act. Because the Court applies the same factors to Plaintiffs common law trademark infringement claim as its federal trademark infringement claim, the undersigned likewise finds the Defendants in violation of common law trademark infringement.
2. False Designation of Origin and Unfair competition
BVE's second claim against the Defendants is for false designation of origin. Dkt. 1, at 15. To prevail on a false designation of origin, BVE must prove “(1) The defendant made a false or misleading statement of fact about its product or service; (2) The statement either deceived or had the capacity to deceive a substantial segment of potential customers; (3) The deception was material, in that it was likely to influence consumers' purchasing decisions; (4) The product or service is in interstate commerce; and (5) The plaintiff has been or is likely to be injured as a result of the statement at issue.” Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 495 (5th Cir. 2000).
Courts typically apply a similar analysis in evaluating violations of § 1114 and § 1125 under the Lanham Act. See, e.g., Elvis Presley Enter., Inc. v. Capece, 141 F.3d 188, 193 (5th Cir. 1998) (finding that for the plaintiff to prevail in its trademark infringement claim under §§ 1114 & 1125, “it must show that the Defendants' use of [the mark] creates a likelihood of confusion in the minds of potential consumers as to the source, affiliation, or sponsorship of the Defendant's [product]”).
Here, as noted above, BVE has established that online consumers are likely to be deceived or confused by the similarities of its Brochette Express mark and the copy of the mark used by Defendants, and may purchase Defendants' products because of that confusion to the detriment of BVE's business. Id. at 11. Section 1125 is limited in scope, however, to unregistered marks. Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 236 n.8 (5th Cir. 2010). Plaintiff brings claims related to its registered BROCHETTE EXPRESS Mark. Id. at 7. Nothing in the record indicates that Plaintiff raises a claim relating to an unregistered mark. Therefore, Plaintiff fails to establish its false designation of origin claim.
BVE's third claim is for unfair competition under the Lanham Act. Id. at 17-18. To prevail on a claim for unfair competition under the Lanham Act, a plaintiff must also prove there is a likelihood of confusion. Christus Health Care Syss., Inc. v. American Consultants RX, Inc., No. SA:12-CV-1221, 2014 WL 1092096, at *5 (W.D. Tex. Mar. 18, 2014); 15 U.S.C. § 1125(a)(1). Because the undersigned finds that BVE has satisfied the likelihood of confusion test, Defendants' acts, therefore, violate section 1125(a). See Dkt. 10, at 7-8.
3. Copyright Infringement
BVE's final claim is for copyright infringement. Dkt. 1, at 18-20. For BVE to prevail on its claim of copyright infringement, it must show that: (1) it owns a valid copyright; and (2) the Defendants copied constituent elements of BVE's work that are original. Baisden v. I'm Ready Productions, Inc., 693 F.3d 491, 499 (5th Cir. 2012). Further, § 106 of the U.S. Copyright Act states, in pertinent part that “the owner of copyright under this title has the exclusive rights … to authorize … [reproduction of] … the copyrighted work in copies [and to distribute] … copies … of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending ….” 17 U.S.C. § 106.
BVE has demonstrated the elements of its copyright claim. BVE owns two valid and protectable copyrights, VA 2-188-861 and PAu 4-111-203, related to photographs and a video of its BROCHETTE EXPRESS product. Dkts. 1-4, at 1-5. The Defendants violated the exclusive rights granted to BVE as a copyright owner as provided in § 106 of the Copyright Act by copying, reproducing, uploading, downloading, publicly displaying, and distributing the Copyrighted Photographs to a global audience through their respective internet webstores, without ever obtaining a license or consent from BVE. Dkt. 1, at 1.
BVE's factual allegations and the record before the undersigned are enough to raise BVE's right to relief above a speculative level as to BVE's copyright claim. The undersigned finds that default judgment is substantively warranted as to an entry of judgment as to BVE's copyright claim.
C. Relief
Federal Rule of Civil Procedure 54(c) states that “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c). In other words, the relief prayed for in a complaint defines the scope of relief available on default judgment. Id.
A defendant's default concedes the truth of the allegations of the complaint concerning the defendant's liability, but not damages. United States v. Shipco Gen. Inc., 814 F.2d 1011, 1014 (5th Cir. 1987). Ordinarily, damages will not be awarded without a hearing or a demonstration by detailed affidavits establishing the necessary facts. United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979). However, when the amount of damages or costs can be determined with certainty by reference to the pleadings and supporting documents, and when a hearing would not be beneficial, a hearing is unnecessary. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993). A sum capable of mathematical calculation is one that can be “computed with certainty by reference to the pleadings and supporting documents alone.” Id. At 311.
1. Trademark Damages
A trademark owner may elect to recover statutory damages “not less than $1,000 or more than $200,000 per counterfeit mark,” or if willful, “not more than $2,000,000 per counterfeit mark.” 17 U.S.C. § 1117(c). In its motion for default judgment, BVE alleges that the Defendants acted willfully and seeks statutory damages under the Lanham Act of $100,000.00 against each defaulting defendant. Dkt. 43, at 13-14.
The Lanham Act does not provide the Court with guidance as to how to determine a reasonable amount of damages within the statutory range. Philip Morris USA Inc. v. Lee, 547 F.Supp.2d 685, 695 (W.D. Tex. 2008). To determine the range of the award for both copyright and trademark infringement, courts have considered factors such as: “the willfulness of the defendant's conduct, the deterrent effect of an award on both the defendant and on others, the value of the copyright, whether the defendant has cooperated in providing necessary records to assess the value of the infringing material, and the losses sustained by the plaintiff.” Future World Elecs., LLC v. Over Drive Mktg., LLC, No. 3:12-CV-2124-B, 2013 WL 5925089, at *4 (N.D. Tex. Nov. 5, 2013) (quoting Commercial Law League of Am., Inc. v. George, Kennedy & Sullivan, LLC, No. CIV.A. H-07-0315, 2007 WL 2710479, at *3 (S.D. Tex. Sept. 14, 2007)). A court may also consider “the expenses saved and profits reaped by the infringer.” Future World Elecs., LLC, 2013 WL 5925089, at *4 (quoting Playboy Enter., Inc. v. Webbworld, Inc., 968 F.Supp. 1171, 1176 (N.D. Tex. 1997)).
To determine whether the Defendants' conduct was willful, the undersigned may look to the willfulness in the copyright context. Courts have noted that “the factors relevant to the size of statutory damages under section 504(c) of the Copyright Act are also appropriate to measuring damages under section 1117(c) of the Lanham Act.” Microsoft Corp. v. Software Wholesale Club, Inc., 129 F.Supp.2d 995, 1008 (S.D. Tex. 2000) (citing Sara Lee Corp. v. Bags of New York, Inc., 36 F.Supp.2d 161, 166 (S.D.N.Y. 1999)); see also Commercial Law League, 2007 WL 2710479, at *3 (noting that courts have found guidance in analogous provision for statutory damages in 17 U.S.C. § 504(c)). In the copyright context, the Fifth Circuit has held that a “defendant acts ‘willfully' within the meaning of [the statutory damages provision of the Copyright Act] … if he knows his actions constitute an infringement; the actions need not have been malicious.” Broadcast Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 236 (5th Cir. 1988).
Here, Defendants facilitated sales by using the BROCHETTE EXPRESS marks on their website store listings, often utilizing BVE's copyrighted photographs. Dkts. 1; 1-4; 43-2, at 10-14. On June 6, 2023, BVE appeared before the undersigned for an evidentiary hearing regarding its damages request. See Dkts. 44; 45. BVE's founder testified that he'd made efforts to notify the defaulting Defendants of their infringing use of the mark and has issued infringement reports requesting the removal of the infringing products. Dkt. 45. BVE's founder also testified that the Defendants' use of the registered trademark took opportunities away from BVE and devalued the brand. Id. Further, he has been forced to untenably lower the price of his product on Amazon.com to compete with counterfeiters. Id. BVE's founder reported that BVE's sales of the BROCHETTE EXPRESS product were in the tens of thousands and that he has invested approximately $45,000 in the company. Id. Defendants' continued use of BVE's BROCHETTE EXPRESS mark and corresponding photographs after being notified of their infringing conduct demonstrates that Defendants knew their activities infringed on BVE's rights with respect to its BROCHETTE EXPRESS mark. The undersigned finds the Defendants' conduct was willful.
BVE's Motion for Default Judgment identifies twelve defaulting defendants, and BVE seeks an award of statutory damages for trademark infringement in the amount of $100,000.00 per defaulting Defendant, for a total of $1,200,000. Dkt. 1, at 14. BVE argues this damages award adequately compensates BVE for its injury and deters further use of counterfeit marks and infringement. Id. However, the undersigned finds BVE's requested damages to be excessive. While BVE is entitled “to damages that will serve as a deterrent, it is not entitled to windfall.” Yelp Inc. v. Catron, 70 F.Supp.3d 1082, 1089 (N.D. Cal. 2014). Instead, the undersigned finds that an award of $20,000 per Defendant is reasonable, for a total of $240,000. See Rovio Ent., Ltd. v. GW Trading LLC, No. 5:13-CV-1079-XR, 2016 WL 4126657, at *6 (W.D. Tex. Aug. 2, 2016) (finding an award of $25,000 per violation, for a total of $1,100,000 is “just and appropriate” for willful trademark infringement of the “Angry Birds” mark by defaulting defendant sellers of products bearing the counterfeit mark); BVE Brands v. Does 1-82, No. 1:20-CV-505-RP (W.D. Tex. Jan 14, 2021) (finding the requested statutory damages of $2,000,000.00 to be excessive, finding willfulness and awarding $100,000.00 in statutory damages per mark). This dollar amount is based on Defendants' willful conduct and failure to cooperate in providing necessary records limiting the undersigned's ability to evaluate the losses sustained by BVE, the profits reaped by Defendants, or the value of the trademark. Dkt 43, at 6. It is also based on BVE's evidence with respect to its sales, capital investments, and the effect of counterfeiting on its business model. Such an amount is sufficient to penalize Defendants' willful conduct and deter Defendants and other sellers from infringing trademarked materials in the future. See Coach, Inc. v. Brightside Boutique, No. 1:11-CA-20 LY, 2012 WL 32941, at *6 (W.D. Tex. Jan. 6, 2012), report and recommendation adopted, No. A-11-CA-020-LY, 2012 WL 13149026 (W.D. Tex. Mar. 16, 2012).
Trademark infringing Defendants are numbered 1, 3, 7, 14, 27, 31, 45, 50, 53, 55, 71, and 72. Dkt. 43-8.
2. Copyright Damages
The Copyright Act allows a plaintiff alleging copyright infringement to recover statutory damages in an amount between $750 and $30,000 per infringement with respect to any one work as the court deems just, in lieu of actual damages and profits at any time before final judgment. 17 U.S.C. § 504(c)(1). If the infringement was willful, “the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000.” 17 U.S.C. § 504(c)(2). The Court has “virtually unfettered” discretion to set an amount it considers just within the statutory range. Cullum v. Diamond A Hunting, Inc., 484 Fed.Appx. 1000, 1002 (5th Cir. 2012). In copyright infringement cases, statutory damages should be awarded in an amount sufficient to deter future copyright infringement by making compliance less costly than violation. EMI Apr. Music Inc. v. Jet Rumeurs, Inc., 632 F.Supp.2d 619, 625 (N.D. Tex. 2008); Future World Elecs., LLC v. Over Drive Mktg., LLC, No. 3:12-CV-2124-B, 2013 WL 5925089, at *4 (N.D. Tex. Nov. 5, 2013) (“Ultimately, statutory damages are intended not merely for the restitution of profits or reparation of injury, but to deter wrongful conduct.”). In its motion for default judgment, BVE alleges that the Defendants acted willfully and seeks statutory damages under the Copyright Act of $150,000, the statutory maximum, against each Defaulting Defendant for each copyrighted photo or video infringed. Dkt. 43, at 13-14.
While the Copyright Act does not define the term “willful,” according to the Fifth Circuit, a defendant acts “willfully” within the meaning of the Act when the infringer “knows his actions constitute an infringement,” even if the actions were not malicious. See Broad. Music, 855 F.2d at 236. BVE argues that Defendants “intentionally infringed BVE's copyrighted Works” and they used the works for “the purpose of advertising, marketing, and selling their counterfeit products.” Dkt. 43, at 13-14. As stated above, the undersigned agrees with BVE that Defendants' actions were willful.
In its motion for default judgment, BVE seeks statutory damages in the amount of $150,000, the statutory maximum, against each Defaulting Defendant for each copyrighted photograph or video infringed for a total of $16,950,000. Dkts. 43, at 13-14, 25; 43-8, at 2. BVE identifies fifty-five Defaulting Defendants that each infringed between one and seven copyrighted photographs or videos, for a total of 113 discrete violations. Dkt. 43-8, at 1-2. BVE argues that the statutory maximum per violation will compensate BVE for its injury and deters Defendants from further infringement in the future. Dkt. 43, at 15.
While the undersigned agrees that BVE is entitled to statutory damages and indeed, is obliged to award damages for each infringed work, BVE's requested damages of $150,000 for each infringed photo and video per Defendant is excessive. R A Guthrie Co., Inc. v. Boparai, No. 4:18-CV-080-ALM-KPJ, 2021 WL 1148957, at *14 (E.D. Tex. Mar. 1, 2021), report and recommendation adopted, No. 4:18-CV-080-ALM-KPJ, 2021 WL 1141667 (E.D. Tex. Mar. 25, 2021) (stating that in most cases in the Fifth Circuit “rarely [do statutory damages awards] reach the statutory maximum of $150,000 per infringed work” and “[t]o the Court's best knowledge, there has only been one case in which a district court in the Fifth Circuit awarded the maximum award of $150,000 per infringement.).
Under § 504(c), a trial court is “bound by the rule that it must award damages according to the number of ‘separate and independent' works infringed ....” Broad. Music, 855 F.2d at 237; see also Walt Disney Co. v. Powell, 897 F.2d 565, 569 (D.C. Cir. 1990) (“Both the text of the Copyright Act and its legislative history make clear that statutory damages are to be calculated according to the number of works infringed, not the number of infringements.”). In Mason v. Montgomery Data, Inc., 967 F.2d 135, 143-44 (5th Cir.1992), the Fifth Circuit explained: “the total number of ‘awards' of statutory damages ... that a plaintiff may recover in any given action depends on the number of works that are infringed and the number of individually liable infringers, regardless of the number of infringements of those works. So if a plaintiff proves that one defendant committed five separate infringements of one copyrighted work, that plaintiff is entitled to only one award of statutory damages.... And if a plaintiff proves that two different defendants each committed five separate infringements of five different works, the plaintiff is entitled to ten awards, not fifty.”
Instead, the undersigned finds that granting BVE $1,000.00 for each copyrighted work or video infringed per Defaulting Defendant for a total of $113,000.00 is reasonable. In light of the testimony regarding BVE's business model, revenues, and the investments its owner has made in the company, the undersigned concludes that this amount is sufficient to compensate BVE for the infringement, to penalize Defendants for their willful conduct, and deter Defendants and similar sellers from engaging in this type of infringement.
Copyright infringing Defendants are numbered 2, 4-6, 9-17, 21, 22, 24-26, 28, 29, 32-43, 45, 4648-50, 52, 53, 55-59, 61-65, 67-69, and 71-73. Dkt. 43-8.
3. Attorney's Fees
BVE also seeks to recover its reasonable and necessary attorney's fees and costs pursuant to section 1117(a) of the Lanham Act and section 505 of the Copyright Act. Dkt. 43, at 15-17. A court may award reasonable attorney's fees and costs to the prevailing party for a copyright violation. See 17 U.S.C. § 505. Courts have discretion to award attorney's fees. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994). Courts consider the Fogerty factors when deciding to award attorney's fees, including the “frivolousness, motivation, objective unreasonableness (both in factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” Id. at 535. Fee awards in copyright infringement cases are the rule rather than the exception and should be awarded routinely. See Positive Black Talk, Inc. v. Cash Money Records, Inc., 394 F.3d 357, 381 (5th Cir. 2004); Canopy Music Inc. v. Harbor Cities Broad., Inc., 950 F.Supp. 913, 917-918 (E.D. Wis. 1997) (awarding attorney's fees award on a motion for default judgment).
As the prevailing party on each of its claims, BVE is entitled to reasonable attorney's fees and its costs and expenses incurred in bringing this lawsuit pursuant to 15 U.S.C. § 1117(a) and 17 U.S.C. § 505. BVE has established it has reasonably incurred $16,403.75 in attorneys' fees and $1,660.14 in litigation costs and expenses for a total of $18,063.89 Dkts. 43, 43-5, at 15-17.
4. BVE's Request for Permanent Injunction
BVE also seeks to convert the preliminary injunction that the Court entered on October 7, 2022, Dkt. 43, at 2, into a permanent injunction with the same terms. Id. at 18. A plaintiff seeking a permanent injunction must generally satisfy a four-factor test: (1) the plaintiff has suffered an irreparable injury; (2) remedies available at law, such as monetary damages, are inadequate compensation; (3) considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) a permanent injunction would not disserve the public interest. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). All four factors weigh in favor of granting a permanent injunction against Defendants.
BVE has demonstrated that it has suffered an irreparable injury by demonstrating that Defendants have used BVE's mark and corresponding copyrighted photographs to advertise and sell counterfeit products. Dkt. 1, at 10-14. Further, monetary damages are insufficient as the possibility of harm to BVE's reputation constitutes irreparable harm sufficient for a permanent injunction. See Valley v. Rapides Parish Sch. Bd., 118 F.3d 1047, 1056 (5th Cir. 1997) (finding irreparable harm based upon potential damage to reputation). The balance of hardships weighs in BVE's favor because Defendants have not appeared in this lawsuit but continue to use the “BROCHETTE EXPRESS” mark and corresponding copyrighted photographs. Dkt. 43, at 2. The public interest factor also weighs in favor of an injunction because the public interest and the Lanham Act would be undermined if the Defendants' improper conduct is allowed to continue. Accordingly, a permanent injunction is warranted.
The undersigned recommends that the District Court grant BVE's motion for a permanent injunction against Defendants, preventing them from using BVE's “BROCHETTE EXPRESS” mark, its copyrighted photographs, branding, or any colorable imitation thereof; engaging in any further action that is likely to confuse, mislead, or deceive others into believing that the Defendants, or their products and services, are connected with, sponsored by, or approved by BVE; and engaging in any other activity constituting unfair competition with BVE or infringing on BVE's intellectual property rights.
IV. RECOMMENDATION
In accordance with the foregoing discussion, the undersigned RECOMMENDS that the District Court GRANT IN PART and DENY IN PART BVE's Motion for Default Final Judgment against Defendants, Dkt. 43. Specifically, the District Court should GRANT default judgment as to BVE's federal and common law trademark infringement, unfair competition, and copyright infringement claims and DENY default judgment as to BVE's false designation of origin claim. BVE should be awarded statutory damages in the amount of $20,000.00 per defendant for trademark infringement for a total of $240,000.00; $1,000.00 per defendant per for copyrighted work infringed for a total of $113,000.00; attorneys' fees in the amount of $18,063.89, and court costs. Further, Defendants should be permanently enjoined from using BVE's “BROCHETTE EXPRESS” mark, its copyrighted photographs, branding, or any colorable imitation thereof. The referral of this case should now be CANCELED.
Trademark infringing Defendants are numbered 1, 3, 7, 14, 27, 31, 45, 50, 53, 55, 71, and 72. Dkt. 43-8. Copyright infringing Defendants are numbered 2, 4-6, 9-17, 21, 22, 24-26, 28, 29, 32-43, 45, 4648-50, 52, 53, 55-59, 61-65, 67-69, and 71-73. Id.
V. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).