Opinion
23 CV 5808 (KAM)(LB)
11-25-2024
GEORG NEUMANN GMBH, Plaintiff, v. GOTOTOOLZ, LTD and ANTON VYNOHRADOV a/k/a IAN DAVIDSON, Defendants.
REPORT & RECOMMENDATION
LOIS BLOOM, UNITED STATES MAGISTRATE JUDGE
Georg Neumann GmbH (“plaintiff”) moves pursuant to Federal Rule of Civil Procedure 55(b) for a default judgment against GoToToolz, Ltd. and Anton Vynohradov a/k/a Ian Davidson (“defendants”). ECF Nos. 25, 26. The Honorable Kiyo A. Matsumoto referred plaintiff's motion to me under 28 U.S.C. § 636(b)(1)(B). For the following reasons, I respectfully recommend that plaintiff's motion for a default judgment seeking a permanent injunction and damages against defendants should be granted. I further recommend that plaintiff should be awarded post-judgment interest.
BACKGROUND
Plaintiff filed this trademark action against defendant GoToToolz, Ltd. and Ian Davidson on July 31, 2023. ECF No. 1. GoToToolz Ltd. was served on August 22, 2023 and its answer was due on September 12, 2023. ECF No. 9. Plaintiff moved to amend the complaint on October 11, 2023 “to include Anton Vynohradov a/k/a Ian Davidson as a defendant.” ECF No. 10. The request was granted and plaintiff filed its amended complaint on October 16, 2023. ECF No. 11. Plaintiff sought a certificate of default as to GoToToolz, Ltd. and the Clerk of Court noted entry of GoToToolz Ltd.'s default on November 3, 2023. ECF Nos. 13, 15.
Plaintiff moved for an extension of time to file proof of service and requested permission to serve Vynohradov by alternative service on December 8, 2023. ECF No. 16. Plaintiff also filed its first motion for default judgment against GoToToolz, Ltd. on December 11, 2023. ECF No. 17. The Court granted plaintiff permission to serve Vynohradov by email, ECF No. 18, and plaintiff served Vynohradov on December 21, 2023. ECF No. 19. Plaintiff requested a certificate of default as to Vynohradov on January 23, 2024, ECF No. 20, and the Clerk of Court noted entry of default on April 1, 2024. ECF No. 21. Plaintiff moved for a default judgment against GoToToolz, Ltd. and Vynohradov on April 25, 2024. ECF No. 22. The Court denied both motions for default judgment, ECF Nos. 17, 22, and granted leave to refile. ECF No. 23. Plaintiff timely refiled both motions on July 29, 2024. ECF Nos. 25, 26. Plaintiff also moved for leave to file certain documents under seal. ECF No. 27. The motion was granted. Plaintiff's motion for a default judgment was referred to me for a Report and Recommendation in accordance with 28 § 636(b)(1)(B).
LEGAL STANDARD
Rule 55 of the Federal Rules of Civil Procedure establishes the two-step process for a plaintiff to obtain a default judgment. First, “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). Plaintiff may then move for a default judgment against a defendant. Fed.R.Civ.P. 55(b)(2). If a defendant fails to appear or move to set aside the default under Rule 55(c), the Court may enter a default judgment on plaintiff's motion. Id.
In light of the Second Circuit's “oft-stated preference for resolving disputes on the merits,” default judgments are “generally disfavored.” Enron Oil Corp. v. Diakuhara et al., 10 F.3d 90, 9596 (2d Cir. 1993). “Accordingly, plaintiff is not entitled to a default judgment as a matter of right simply because a party is in default.” Finkel v. Universal Elec. Corp., 970 F.Supp.2d 108, 118 (E.D.N.Y. 2013) (citing Erwin DeMarino Trucking Co. v. Jackson, 838 F.Supp. 160, 162 (S.D.N.Y. 1993) (courts must “supervise default judgments with extreme care to avoid miscarriages of justice”)).
On a motion for a default judgment, “[i]t is an ‘ancient common law axiom' that a defendant who defaults thereby admits all ‘well-pleaded' factual allegations contained in the complaint.” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011); see also Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997). Even though the well-pleaded allegations are deemed admitted, the Court has a “responsibility to ensure that the factual allegations, accepted as true, provide a proper basis for liability and relief.” Rolls-Royce PLC et al. v. Rolls-Royce USA, Inc., 688 F.Supp.2d 150, 153 (E.D.N.Y. 2010). In other words, “[a]fter default ... it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law.” Id. (citation omitted). If the unchallenged facts establish defendant's liability, the Court then determines the amount of damages due. Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999) (citing Transatlantic Marine Claims Agency, Inc., 109 F.3d at 111).
DISCUSSION
Plaintiff's amended complaint, ECF No. 11, asserts ten claims against defendants including: (1) trademark infringement pursuant to 15 U.S.C. § 1114; (2) common law trademark infringement; (3) trademark counterfeiting pursuant to 15 U.S.C. § 1114(1)(b); (4) trade dress infringement pursuant to 15 U.S.C. § 1125(a); (5) trademark infringement pursuant to 15 U.S.C. § 1125(a); (6) false representation pursuant to 15 U.S.C. § 1125(a); (7) unfair competition pursuant to 15 U.S.C. § 1125(a); (8) common law unfair competition; (9) trademark dilution pursuant to 15 U.S.C. § 1125(c); and (10) trademark dilution pursuant to New York General Business Law § 3601. Id.
I. Defendants are Liable Pursuant to the Lanham Act.
Plaintiff's First, Third, Fourth, Fifth, Sixth and Seventh claims for relief are for violations of Sections 32 and 43 of the Lanham Act. ECF No. 11. “Courts employ substantially similar standards when analyzing claims for trademark infringement and false designation of origin (that is, unfair competition) under Sections 32 and 43 of the Lanham Act.” J.T. Kalmar GmbH v. KLS Lighting Co. Ltd., No. 17-cv-7505(BMC), 2019 WL 3780091, at *2 (E.D.N.Y. Aug. 12, 2019). The Court therefore considers plaintiff's Lanham Act claims together.
A person is liable for trademark infringement under Section 32 of the Lanham Act when that person “use[s] in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, or advertising of any goods or services on or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C. § 1114(1)(a); see RiseandShine Corporation v. PepsiCo, Inc., 41 F.4th 112, 118 (2d Cir. 2022) (“To prevail in a federal trademark infringement claim, a plaintiff ‘must demonstrate that ... the defendant's actions are likely to cause confusion with [that] mark.'”). “In order to prevail on a trademark infringement claim for registered trademarks, pursuant to 15 U.S.C. § 1114.a plaintiff must establish that (1) it has a valid mark that is entitled to protection under the Lanham Act; and (2) the defendant used the mark, (3) in commerce, (4) in connection with the sale.or advertising of goods or services, (5) without the plaintiff's consent.In addition, the plaintiff must show that defendant's use of that mark is likely to cause confusion.as to the affiliation, connection, or association of [defendant] with [plaintiff], or as to the origin, sponsorship, or approval of [defendant's] goods, services, or commercial activities by plaintiff.” 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 406-07 (2d Cir. 2005) (internal quotations and citations omitted).
A plaintiff that demonstrates it holds a certificate of registration of a mark satisfies the first prong that it has a valid mark entitled to protection under the Lanham Act. 15 U.S.C. § 1057(b) (“[a] certificate of registration of a mark .. shall be prima facie evidence of the validity of the registered mark.”); see also CJ Products LLC and Ontel Products Corporation v. Snuggly Plushez LLC et al., 809 F.Supp.2d 127, 142 (E.D.N.Y. 2011) (“certificates of registration.constitute prima facie evidence of copyright validity.”). Plaintiff demonstrates ownership of ten valid marks registered on the Principal Register of the U.S. Patent and Trademark Office by attaching a copy of each registration to the amended complaint. ECF No. 11, ¶¶ 21, 22, 28, 29, Exhibit C. Therefore, plaintiff satisfies the first element and establishes that it holds valid marks entitled to protection under the Lanham Act. Plaintiff also sufficiently alleges that defendants used these marks in commerce in connection with their sale of goods and without plaintiff's consent. ECF No. 11, ¶¶ 36, 38, and 40.
Traditionally, in evaluating the consumer confusion prong, courts in this Circuit have relied on Judge Friendly's multi-factor nonexclusive balancing test set out in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961); see Monbo v. Nathan, 623 F.Supp.3d 56, 119 (E.D.N.Y. 2022) (“a court should focus on the ultimate question of whether consumers are likely to be confused.”). As Judge Friendly explained, “[w]here the products are different, the prior owner's chance of success is a function of many variables: the strength of his mark, the degree of similarity between the two marks, the proximity of the products, the likelihood that the prior owner will bridge the gap, actual confusion, and the reciprocal of defendant's good faith in adopting its own mark, the quality of defendant's product, and the sophistication of the buyers.”
a. The Strength of the Mark
The strength of a mark “is a measure of its ‘tendency to identify the goods sold under the mark as emanating from a particular, although possibly anonymous, source.'” DJ Direct, Inc. v. Margaliot, 512 F.Supp.3d 396, 410 (E.D.N.Y. 2021) citing Patsy's Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 217 (2d Cir. 2003) rev'd on other grounds 4 Pillar Dynasty LLC v. New York & Company, Inc., 933 F.3d 202 (2d Cir. 2019). “The strength factor is analyzed based on two components: ‘(1) the degree to which [the mark] is inherently distinctive; and (2) the degree to which it is distinctive in the marketplace.'” Car-Freshner Corp. v. American Covers, LLC, 980 F.3d 314, 329 (2d Cir. 2020) citing W.W.W. Pharmaceutical Co. v. Gillette Co., 984 F.2d 567, 572 (2d Cir. 1993) (alterations in original). Additionally, marks “are presumed to be strong by virtue of being registered.” Century 21 Real Estate, LLC v. Bercosa Corp., 666 F.Supp.2d 274, 282 (E.D.N.Y. 2009) citing Arrow Fastener Co. Inc. v. Stanley Works, 59 F.3d 384, 393 n. 6 (2d Cir. 1995).
As discussed above, plaintiff has pled that its marks are duly registered with the United States Patent and Trade Office. ECF No. 11, ¶¶ 20-22. Plaintiff alleges that it has designed and sold microphones for more than seventy years, continuously using the NEUMANN® trademark, and that “the music and entertainment industry widely recognizes the fame and excellence of Plaintiff's NEUMANN® microphones...”. Id. at ¶¶ 10-12, 33. Additionally, plaintiff has assigned specific colors to each of its microphones such that the “plaque or badge color associations are known to purchasers and prospective purchasers of [plaintiff's microphones],” it applies the trademark directly on each microphone with a three dimensional plaque, and the specific shape of the microphone body with a “transverse wedge shape, a wide top, front and back panels tapered toward the top, and rounded edges together with a cylindrical base ring” has become distinctive trade dress. Id., ¶ 18, 19, 27, 28.
Plaintiff's amended complaint sets forth that artists such as the Beatles, Michael Jackson, Stevie Wonder, John Lennon, Beyonce, Amy Winehouse, Ray Charles, the Rolling Stones, Bruno Mars, and Marvin Gaye have all used its microphones for “iconic recordings” such as Bohemian Rhapsody, Imagine, Hey Jude, and What's Going On. Id. at ¶¶ 13-14. Plaintiff's products have obtained goodwill and fame and have been featured in magazines such as Forbes, Sound on Sound, Mix, and Microphone Geeks as well as used in television programs such as “The Tonight Show with Jay Leno” and “The Late Show with David Letterman.” Id. at ¶¶ 24-26. The Court finds that plaintiff's marks are inherently distinctive and distinctive in the marketplace therefore this factor weighs strongly in plaintiff's favor.
b. The Degree of Similarity
In considering the degree of similarity between the marks, the Second Circuit has counseled that a Court should “look to two key questions: 1) whether the similarity between the two marks is likely to cause confusion and 2) what effect the similarity has upon prospective purchasers.” The Sports Authority, Inc. v. Prime Hospitality Corp., 89 F.3d 955, 962 (2d Cir. 1996).
Plaintiffs allege that defendants produce, market and sell “counterfeit knock-off microphones that are identical (or nearly identical) to Plaintiff's Trade Dress.” ECF No. 11, ¶ 36. Plaintiff alleges that defendant Vynohradov was quoted in an interview in which he compared his products to plaintiff's and said “the size and color are the same” and “[i]t took years to make a mic body that looks identical.” Id., ¶ 40. In support of their allegations of similarity, plaintiff alleges that defendants have specific designations for their products that mimic plaintiff's own designation. Id., ¶ 37. Additionally, plaintiff alleges that defendants display photos of real NEUMANN® microphones on their website, Id. at ¶ 38, and defendants have mimicked a similar “diamond shaped three dimensional plaque or badge” that mimics plaintiff's own badge. Id. at ¶ 39.
The Court finds significant similarity between plaintiff's and defendants' marks, including the shape of the microphone, the similar diamond shaped plaque, and that defendants displayed photos of genuine microphones on its website to advertise its own products. This suggests a likelihood to cause confusion amongst prospective purchasers of microphones and therefore weighs in plaintiff's favor.
c. The Proximity of the Products
In evaluating the proximity of the products, “a court should consider whether the two products compete with each other” both in terms of “the subject matter of the commerce in which the two parties engage and the geographic areas in which they operate.” DJ Direct, Inc., 512 F.Supp.3d at 411. The important inquiry is “the likelihood that customers may be confused as to the source of the products, rather than as to the products themselves” and turns on “all aspects of the products, including price, style, intended uses, target clientele, typical distribution channels, and others. Id. (citation omitted). Plaintiff alleges that defendants' products are sold through an online website just like plaintiff's products and “to the same exact demographic of consumers.” ECF No. 25-1, ECF No. 11, ¶¶ 56, 65. Defendants also use photographs of plaintiff's products on its website. These facts demonstrate the risk of consumer confusion and weigh in plaintiff's favor.
d. The Likelihood that the Prior Owner Will Bridge the Gap
To evaluate the likelihood that these products will bridge the gap a Court “looks to either the likelihood that [plaintiff] will enter [defendant's] business or the average customer's perception of the likelihood that the plaintiff would enter the defendant's market.” The Sports Authority, Inc. v. Prime Hospitality Corp., 89 F.3d 955, 963 (2d Cir. 1996). When parties “are already in competitive proximity, there is really no gap to bridge, and this factor is irrelevant.” Star Indus., Inc. v. Bacardi & Co., 412 F.3d 373, 387 (2d Cir. 2005). Having found the prior factor of competitive proximity in plaintiff's favor, this factor is irrelevant.
e. Actual Confusion
Actual confusion under the Lanham Act is “consumer confusion that enables a seller to pass off his goods as the goods of another.” The Sports Authority, Inc., 89 F.3d at 963. “It is ‘black letter law that actual confusion need not be shown to prevail under the Lanham Act, since actual confusion is very difficult to prove and the Act requires only a likelihood of confusion as to source.'” Guthrie Healthcare Sys. V. ContextMedia, Inc., 826 F.3d 27, 45 (2d Cir. 2016).
Plaintiff alleges that defendant's default has prevented it from obtaining evidence in discovery regarding actual confusion. ECF No. 25-1 at 16. “Actual confusion is highly probative of the likelihood of confusion, and proof of actual confusion is generally shown through consumer surveys or anecdotal evidence of confusion, or empirical studies or expert testimony.” Classic Liquor Importers, Ltd. v. Spirits International, B.V., 201 F.Supp.3d 428, 448 (S.D.N.Y. 2016). Although there is no direct evidence of actual confusion here, the Court credits plaintiff's position that defendants' default prevented collection of such evidence. Therefore, this factor is irrelevant for this motion.
f. Defendants' Bad Faith
“In analyzing whether a defendant has acted in bad faith, the question is whether the defendant attempted ‘to exploit the good will and reputation of a senior user by adopting the mark with the intent to sow confusion between the two companies' products.'” Tiffany and Co. v. Costco Wholesale Corp., 971 F.3d 74, 88 (2d Cir. 2020) citing Star Indus., Inc. v. Bacardi & Co. Ltd., 412 F.3d 373, 388 (2d Cir. 2005). The Second Circuit has “consistently recognized that intent to copy a product's useful, nonprotected attributes should not be equated automatically with an intent to deceive.” Tiffany and Co., 971 F.3d at 90. But, where use of an allegedly infringing mark is used subsequent to the trademark registration, “the defendant must carry the burden of explanation and persuasion.” Id. citing Kiki Undies Corp., v. Promenade Hosiery Mills, Inc., 411 F.2d 1097, 1101 (2d Cir. 1969).
Plaintiff alleges that defendant has used identical, or nearly identical, marks on its microphones and this should be treated as evidence of defendants' bad faith. Additionally, plaintiff quotes defendant Vynohradov as saying he “intended to copy ‘the size and color' of the genuine NEUMANN® microphones” and that “[i]t took years to make a mic body that looks identical” (alteration in original). ECF No. 11, ¶ 40; ECF No. 25-1 at 16. The Court notes that although defendants' microphones use a three-dimensional seal, it says “GTZ” and not “NEUMANN®”; therefore, it is not identical. ECF No. 11, ¶¶ 38, 39. However, defendants' microphones do not just use this three-dimensional seal, they also are the same shape as plaintiff's microphones. Id., ¶ 28. Additionally, as discussed above, defendants used photographs of plaintiff's products on its website to market its microphones. Therefore, this factor weighs in plaintiff's favor.
g. Quality of Defendant's Product
“This factor is primarily concerned with whether the senior user's reputation could be jeopardized by virtue of the fact that the junior user's product is of inferior quality.” Arrow Fastener Co. Inc. v. The Stanley Works, 59 F.3d 384, 398 (2d Cir. 1995). This factor is significant “when there is an allegation that a low quality product is taking unfair advantage of the public good will earned by a well-established high quality product.” DJ Direct, Inc. v. Margaliot, 512 F.Supp.3d 396, 413 (E.D.N.Y. 2021) citing Gruner + Jahr USA Publ'g v. Meredith Corp., 991 F.2d 1072, 1079 (2d Cir. 1993).
While plaintiff alleges the high quality reputation of its microphones, there is no record evidence regarding the quality of defendants' microphones so the Court does not consider this factor.
h. Sophistication of the Buyers
Regarding this final factor, “[t]he general impression of the ordinary purchaser, buying under the normally prevalent conditions of the market and giving the attention such purchasers usually give in buying that class of goods, is the touchstone.” DJ Direct, Inc., 512 F.Supp.3d at 413, citing McGregor-Doniger Inc. v. Drizzle, 599 F.2d 1126, 1137 (2d Cir. 1979) superseded on other grounds by Fed.R.Civ.P. 52(a). “[I]n some cases, a court is entitled to reach a conclusion about consumer sophistication solely on the nature of the product or its price.” Star Industries, Inc. v. Bacardi & Co. Ltd., 412 F.3d 373, 390 (2d Cir. 2005). Essentially, “[t]he more sophisticated the consumers, the less likely they are to be misled by similarity in marks.” TCPIP Holding Co., Inc. v. Haar Communications, Inc., 244 F.3d 88, 102 (2d Cir. 2001).
Plaintiff's memorandum of law in support of its motion cites paragraphs 13-16 of its amended complaint. ECF No. 25-1. Although plaintiff's memorandum asserts that the microphones have been used “by countless amateurs,” the operative pleading does not mention “amateurs” in any part of the complaint. Instead, the cited paragraphs 13-16 of the complaint, refer to “artists, producers, and sound engineers.. .music vocalists, instrumentalists, producers, sound engineers and musicians alike.” ECF No. 11 ¶¶ 13, 16. The Court finds that the operative pleading mainly cites famous users such as “the Beatles, Michael Jackson, Stevie Wonder, John Lennon, Beyonce, Amy Winehouse, Ray Charles, the Rolling Stones, Bruno Mars and Marvin Gaye.” This leads the Court to believe that the ordinary purchaser buying a microphone under normally prevalent conditions is a sophisticated consumer who would take time and effort to scrutinize the microphone they would purchase. This is enough to weigh this factor in defendants' favor. Gibson v. SCE Group, Inc., 391 F.Supp.3d 228, 249 (S.D.N.Y. 2019) (holding that where consumers are sophisticated, this Polaroid factor weighs in favor of defendants).
i. Application of the Polaroid Factors
Having reviewed the Polaroid factors, I find that the strength of plaintiff's marks, the degree of similarity, the proximity of the products, and defendant's bad faith all weigh in favor of plaintiff. The likelihood of bridging the gap and the quality of the defendant's product are not relevant in this specific case and the actual confusion and sophistication of the buyers cannot be determined on the instant record.
The ultimate question of the Polaroid factors is not a mechanical tallying of which side has more factors in its favor, but instead whether consumers are likely to be confused. See Monbo v. Nathan, 623 F.Supp.3d 56, 119 (E.D.N.Y. 2022). The Second Circuit has described “strength, similarity, and proximity ... as the most important Polaroid factors in most cases.” Akiro LLC v. House of Cheatham, Inc., 946 F.Supp.2d 324, 342 (S.D.N.Y. May 17, 2013) (citing Mobil Oil Corp. v. Pegasus Petroleum Corp., 818 F.2d 254, 258 (2d Cir. 1987)). In light of all three of these factors weighing in plaintiff's favor and the specific facts set forth by plaintiff, the Court finds that consumers are likely to be confused by defendants' products and plaintiff establishes the necessary elements to hold defendants liable under its Lanham Act claims for trademark infringement.
II. New York Common Law Claims
Plaintiff's Second and Eighth causes of action are for common law trademark infringement and common law unfair competition under New York state law. ECF No. 11. “Courts employ substantially similar standards when analyzing claims for trademark infringement under the Lanham Act, 15 U.S.C. § 1114(1)(a); false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a); trademark infringement under New York common law; and unfair competition under New York common law.” Van Praagh v. Gratton, 993 F.Supp.2d 293, 301 (E.D.N.Y. 2014).
Plaintiffs that establish a federal trademark infringement claim, “also necessarily establish[] the defendants' liability on the parallel infringement claim under New York common law.” Mitchell Grp. USA LLC v. Udeh, No. 14-cv-5745(DLI)(JO), 2017 WL 9487193, at *4 (E.D.N.Y. Mar. 8, 2017), R&R adopted, 2017 WL 3208532 (July 28, 2017).
“Under New York law, ‘[t]he standards for unfair competition claims under federal and New York law are the same as those governing trademark infringement claims under the Lanham Act, except the common law unfair competition claim requires a showing of bad faith or intent.'” Holiday Park Drive, LLC v. Newist Corp., No. 23-cv-2623(AMD)(JMW), 2024 WL 4040351, at *11 (E.D.N.Y. Feb. 15, 2024) citing Turn On Prods., Inc. v. Almost Famous Apparel, LLC, No. 18-cv-625(ILG)(RER), 2019 WL 2436297, at *3 (E.D.N.Y. Apr. 12, 2019).
As discussed above, plaintiff has properly alleged defendants' bad faith by quoting from an interview that defendant Vynohradov published on GoToToolz's website describing his intent to create a microphone that was identical to plaintiff's products. ECF No. 11, ¶¶ 40, 41. Having properly pled this element, plaintiff has established the necessary elements for liability pursuant to New York common law for both trademark infringement and unfair competition.
III. Trademark Dilution Claims
Plaintiff's last two causes of action, Nine and Ten, are trademark dilution claims pursuant to 15 U.S.C. § 1125(c) and New York General Business Law § 360-1. ECF No. 11.
a. Federal Trademark Dilution
Under 15 U.S.C. § 1125(c), federal dilution claims are cognizable under two theories: a dilution by “blurring” and a dilution by “tarnishment.” 15 U.S.C. § 1125(c). Plaintiff alleges in this case that defendants are liable for dilution by blurring. ECF No. 11, ¶ 87. Blurring arises “‘from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark,' 15 U.S.C. § 1125(c)(2)(B), and may be found ‘regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury,' 15 U.S.C. § 1125(c)(1)[.]” Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97, 105 (2d Cir. 2009).
The Lanham Act lays out six non-exhaustive factors for the Court to use in its determination of dilution by blurring: “(i) The degree of similarity between the mark or trade name and the famous mark. (ii) The degree of inherent or acquired distinctiveness of the famous mark. (iii) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark. (iv) The degree of recognition of the famous mark. (v) Whether the user of the mark or trade name intended to create an association with the famous mark. (vi) Any actual association between the mark or trade name and the famous mark.” 15 U.S.C. 1125(c)(2)(B)(i)-(vi).
In this case, the degree of similarity is high: plaintiff has pled the microphone bodies are of identical, or nearly identical shape, defendants' three-dimensional seal is oriented in the same way as the orientation of plaintiff's seal, and defendants use plaintiff's numbering system to highlight its different types of microphones. ECF No. 11, ¶¶ 17, 31, 37; Ex. A; Ex. B. Plaintiff has sufficiently pled that its mark is famous and has acquired significant distinctiveness in the recording industry. Id., ¶¶ 13, 14. These allegations demonstrate that there is a high degree of recognition of plaintiff's famous mark. Defendants use photographs of plaintiff's microphones on its website, use plaintiff's numbering system, and defendant Vynohradov's interview statements demonstrate defendants' intention to create an association with the famous mark. Plaintiff's pleading does not specifically speak to the exclusive use of the mark separate from owning its marks and the record does not demonstrate actual associations in this case, but the statutory considerations weigh in plaintiff's favor. Plaintiff has established its trademark dilution claim against defendants under the Lanham Act.
a. New York Trademark Dilution
Trademark dilution under New York common law is similar to dilution under the Lanham Act and also involves blurring or tarnishment. New York Stock Exchange, Inc. v. New York, New York Hotel LLC, 293 F.3d 550, 558 (2d Cir. 2002). In determining whether blurring has occurred New York courts look at six factors: “(i) the similarity of the marks; (ii) the similarity of the products covered; (iii) the sophistication of the consumers; (iv) the existence of predatory intent; (v) the renown of the senior mark; and (vi) the renown of the junior mark.” Id.; citing Sports Auth., Inc. v. Prime Hospitality Corp., 89 F.2d 955, 966 (2d Cir. 1996). As the Second Circuit determined in New York Stock Exchange, Inc., although “infringement and blurring differ in important respects.. .on the facts presented here, [the] discussion of infringement also disposes of the blurring claim.” The prior discussion on the similarity of the marks and products, the sophistication of the consumers, and the renown of the marks sufficiently establish plaintiff's New York state law trademark dilution claim against defendants.
IV. Remedies
a. Injunctive Relief
A plaintiff is entitled to injunctive relief under the Lanham Act “to prevent the violation of the registrant of a mark.. .or to prevent a violation under subsection (a), (c), or (d) of section 1125 of this title.” 15 U.S.C. § 1116(a). The Court is vested with discretion to issue a permanent injunction, “according to the principles of equity and upon such terms as the court may deem reasonable.” Id.; See eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 392-93 (2006) (“[T]he Patent Act expressly provides that injunctions ‘may' issue ‘in accordance with the principles of equity.'”). Upon a finding of liability, the Court applies a four-factor test to determine whether the plaintiff has shown:
(1) [t]hat it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.eBay, 547 U.S. at 391; see also Hermes International v. Rothschild, 678 F.Supp.3d 475, 489 (S.D.N.Y. 2023) (applying the eBay four-factor test and granting plaintiff a permanent injunction in a trademark infringement case brought pursuant to 15 U.S.C. § 1116(a)).
“Injunctive relief is warranted where a copyright owner establishes liability and a threat of continuing violations.” Warner Bros. Entertainment Inc. v. Carsagno, No. 06-cv-2676(NG)(RLM), 2007 WL 1655666, at *5 (E.D.N.Y. Jun. 4, 2007). It is undisputed that “a Court may [enter a permanent injunction] on a motion for a default judgment.” TRU Kids Inc. v. Zaza R Us, No. 23-cv-2260(OEM)(LB), 2023 WL 9232949, at *9 (E.D.N.Y. Dec. 11, 2023). Furthermore, “[a] Court may infer that a defaulting defendant is willing to continue its unlawful conduct.” Id. Here, the Court infers that defendants will continue to manufacture and sell microphones that infringe plaintiff's marks.
Plaintiff has sufficiently established that defendants' conduct will cause it irreparable injury by damaging its brand as a leading producer of microphones. Montblanc Simplo GmbH v. Colibri Corp., 692 F.Supp.2d 245, 259 (E.D.N.Y. 2010) (irreparable injury is “automatically satisfied” on defendant's default as plaintiff has shown “a likelihood of confusion from which irreparable injury is presumed.”). In its memorandum in support of the motion for a default judgment, plaintiff alleges that defendants continue to offer infringing products on its website at https://gototoolz.com. The Court's review of the website link confirms that defendants are continuing to advertise the products discussed in plaintiff's motion. See Wright v. Edwards, No. 21-cv-6063(PKC)(RLM), 2022 WL 17820247, at *10 (E.D.N.Y. July 18, 2022) (declining to issue an injunction because the Court's review of defendant's Etsy website showed defendants had ceased to advertise or continue selling its products). The threat of defendants continuing to violate plaintiff's trademark makes monetary damages inadequate to compensate plaintiff for its injuries.
The balance of hardships favors plaintiff in this case because defendant has defaulted in this action and because plaintiff has demonstrated the threat of both dilution to its brand and threat of continued violations. Finally, the public interest would not be disserved by a permanent injunction in this case. Having established these four elements, I recommend that plaintiff should be awarded a permanent injunction against defendants.
b. Damages
It is well established that a default constitutes an admission of well-pleaded factual allegations in the complaint, except those relating to damages. Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999); see also Greyhound Exhibitgroup, Inc. v. E.L.U.L Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) (“While a party's default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages.”). On a motion for a default judgment, plaintiff has the burden to prove the amount of damages with a “reasonable probability.” Innovation Ventures, LLC, 176 F.Supp.3d at 162. An evidentiary hearing is not required; rather, in determining damages, the Court may rely on detailed affidavits and other documentary evidence. Action S.A. v. Marc Rich & Co., 951 F.2d 504, 508 (2d Cir. 1991); see also Sream Inc. v. Khan Gift Shop, Inc., No. 15-CV-2091(KMW)(DCF), 2016 WL 1130610, at *5 (S.D.N.Y. Feb. 23, 2016) (recommending a default judgment and damages without holding an evidentiary hearing and instead determining damages based solely on plaintiff's written submissions), Report and Recommendation adopted, No. 15-CV-2091(KMW)(DCF), 2016 WL 1169517, at *1 (S.D.N.Y. Mar. 22, 2016).
Prevailing plaintiffs in a Lanham Act case are authorized to recover statutory damages, instead of actual damages, for the use of a trademark in the amount of: “(1) not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.” 15 U.S.C. § 1117(c)(2). “Congress enacted the statutory damages remedy in trademark counterfeiting cases because evidence of a counterfeiter's profits is almost impossible to ascertain since ‘records are frequently nonexistent, inadequate, or deceptively kept.'” Spin Master Ltd. v. 158, 463 F.Supp.3d 348, 371 (S.D.N.Y. 2020) citing Gucci Am. Inc. v. Duty Free Apparel, Ltd., 315 F.Supp.2d 511, 520 (S.D.N.Y. 2004).
In making a determination of appropriate statutory damages awards, courts typically consider the following factors: “(1) the expenses saved and the profits reaped by defendant; (2) the revenues lost by plaintiff; (3) the value of the mark; (4) the scale of defendant's infringement; (5) whether defendant's conduct was innocent or willful; (6) whether defendant has cooperated in providing particular records from which to assess the value of the infringing material produced; and (7) the potential for discouraging the defendant and others.” Spin Master Ltd., 463 F.Supp.3d at 371 citing Streamlight, Inc. v. Gindi, 2019 WL 6733022, at *11-12 (E.D.N.Y. Oct. 1, 2019), Report and Recommendation adopted, 2019 WL 6726152 (E.D.N.Y. Dec. 11, 2019) (citing Fitzgerald Publ'g Co., Inc. v. Baylor Publ'g Co., 807 F.2d 1110, 1117 (2d Cir. 1986)).
A thorough review of the first and fourth factors is difficult in light of defendants' default. The Court is constrained to “draw every reasonable inference on these points against the defendants.” Stark Carpet Corp. v. Stark Carpet & Flooring Installations, Corp. et al., 954 F.Supp.2d 145, 155 (E.D.N.Y. 2013). However, despite the default, plaintiff has provided no evidence or allegations of specific lost revenue making the second factor neutral. Plaintiff has sufficiently pled the third factor which the Court discussed above; the Court finds plaintiff's marks highly valuable. See Spin Master Ltd., 463 F.Supp.3d at 373 (“On a motion for a default judgment, this Court is required to accept these factual allegations as true.. .The Court thus finds the marks and copyrights to be highly valuable.”). Regarding the fifth factor, the Court finds that defendant's conduct was willful, also discussed supra, and defendant has not cooperated in providing records from which to assess the value of the infringing material produced. See Juul Labs, Inc. v. EZ Deli Grocery Corp. I, No. 21-cv-2615(MKB)(VMS), 2022 WL 1085406, at *8 (E.D.N.Y. Feb. 10, 2022) (“Here, Defendant's trademark infringement is deemed willful by virtue of Defendant's default, thus allowing for a maximum award against Defendant.”). Finally, the willfulness and deterrence factors support a finding of statutory damages. See Shenzhen Smoore Tech. Ltd. v. Anuonuo Intl. Trade Co., No. 19-cv-9896(LGS)(RWL), 2020 WL 7390518, at *9 (S.D.N.Y. Oct. 23, 2020) (“The remaining factors - willfulness and deterrence - further support significant statutory damages awards against Defaulting Defendants.. .[whose] conduct was unequivocally willful.”).
Plaintiff seeks a total award of $500,000 in statutory damages, requesting an award of $50,000 on each of plaintiff's ten marks defendants infringed. In support of this request, plaintiff cites two cases collecting trademark infringement awards of up to $50,000 in statutory damages per mark. Juul Labs, Inc. v. EZ Deli Grocery Corp. I, No. 21-cv-2615(MKB)(VMS), 2022 WL 1085406, at *8 (E.D.N.Y. Feb. 10, 2022); Stark Carpet Corp. v. Stark Carpet & Flooring Installations, Corp. et al., 954 F.Supp.2d 145 (E.D.N.Y. 2013). The Court notes that while Juul Labs, Inc. was a $50,000 award, there was only one violation, so the total award was $50,000. Furthermore, although plaintiff is correct that the Court in Stark Carpet Corp. found defendants' conduct willful and the need to deter future violations, it ultimately held that a $10,000 award was reasonable “given the very minimal harm that Plaintiff alleges and the minimal amount of evidence of actual harm.” Stark Carpet Corp., 954 F.Supp.2d at 156. Indeed the Juul Labs, Inc. Court specifically noted that most judges in this district “have issued awards far below the statutory maximum.where the defendant willfully infringes on the plaintiff's mark.but where there is no concrete information about the defendant's actual sales figures and profits and the estimate of plaintiff's lost revenue.” Juul Labs, Inc, 2022 WL 1085406, at *9 citing All-Star Mktg. Grp., LLC v. Media Brands Co., Ltd., 775 F. Supp, 2c 613, 624 (S.D.N.Y. 2011).
After considering the factors and the cases cited in both Juul Labs, Inc. and Stark Carpet Corp., the Court finds that a $25,000 statutory award to plaintiff for each mark infringed, for a total of $250,000 is sufficient to deter future violations. This award represents a twenty-five times multiplier to the minimum possible statutory damage award and satisfies the statutory purpose of the Lanham Act. Plaintiff should not be awarded a lottery level windfall. See Mattel Inc. v. www.power-wheels-outlet.com, et al., No. 21-cv-8108(PAE)(GWG), 2022 WL 2900763, at * (S.D.N.Y. July 22, 2022) (collecting cases) (noting that “courts in this circuit ‘have frequently awarded statutory damages in the range of $20,000-$50,000 per willfully infringed mark in cases where defendants fail to appear and the Court has limited information as to the scope or circumstances of defendants' infringement.'” citing Ontel Prods. Corp. v. Airbrushpainting Makeup Store, No. 17-cv-871(KBF) (Docket # 40), at 3 (S.D.N.Y. June 29, 2017)).
Plaintiff fails to demonstrate defendants caused it financial harm related to lost or diverted profits and sales.
a. Post Judgment Interest
“The Lanham Act permits a plaintiff to receive post-judgment interest ‘on any money judgment in a civil case recovered in a district court... [to] be calculated from the date of the entry of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding[] the date of the judgment.'” Shenzhen Smoore Tech. Ltd., 2020 WL 7390518, at *10 citing 28 U.S.C. § 1961(a). If this Report is adopted, the Court recommends that plaintiff should be awarded post-judgment interest at the one-year Treasury yield rate until the judgment is satisfied.
CONCLUSION
Accordingly, I respectfully recommend that plaintiff's default judgment motion under Fed.R.Civ.P. 55(b) should be granted. The Court should enter a permanent injunction against defendants. Plaintiff should be awarded statutory damages against the defendants in the total amount of $250,000 as well as post-judgment interest. Plaintiff is hereby ordered to serve a copy of this Report on defendants at their last known addresses and to file proof of service with the Court forthwith.
FILING OF OBJECTIONS TO 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 fourteen (14) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections shall be filed with the Clerk of the Court. Any request for an extension of time to file objections must be made within the fourteen-day period. Failure to file a timely objection to this Report generally waives any further judicial review. Marcella v. Capital Dist. Physician's Health Plan, Inc., 293 F.3d 42, 46 (2d Cir. 2002); Small v. Sec'y of Health & Human Servs., 892 F.2d 15 (2d Cir. 1989); see Thomas v. Arn, 474 U.S. 140 (1985).
SO ORDERED.