Opinion
21-CV-3486 (RA) (SN)
02-13-2024
PEARSON EDUCATION, INC., ELSEVIER INC., BEDFORD, FREEMAN & WORTH PUBLISHING GROUP, LLC d/b/a MACMILLIAN LEARNING, CENGAGE LEARNING, INC., and MCGRAW HILL LLC, Plaintiffs, v. MUSTAPHA NAJJI, ZAHRAT AL TAIF d/b/a GOODS WHOLESALERS LL, ABDERRAHMANE LASRI, AHMED ALI, ALI SAMY, ID TNAINE ABDELLAH, SAID OUKRIM, SYED ATIF RAZA, SYED HUSSAIN, ABIDA IMRAN, MUHAMMAD SHEHZAD QAMMAR, YI SHI, MANH CUONG CAN, THU DUC NGUYEN, HOA MY HOANG, HOANG ANH THI LAN, NGUYEN KIEN VIET, PHUC DUONG NGUYEN, THOM THI BUI, TRANG THI TRAN, TUAN DUONG ANH, FAISAL MAJID, KHALID IBRAHIM, ABD RAHIM BIN KARIM, AHMA SYAHIR, ALEJANDRO VERA, MOHAMMAD SAMEED UBAIR KHAN ABBASI, FARAH MAQSOOD, MUHAMMAD HAMZA AFZAL, NOUMAN MALIK, SYED HASNAIN RAZA, ANJUM AKHTER, DUNG VUONG, HAROON MANSHA, GUYEN HAI ONG, NHAT DUONG DUC, SHERRY SANDERS, KIEN QUYET TRAN, FAROUQ JABRI, RAMYA MANI, HENRY JOHNSON, PAVEL GALKIN, IRINA DZHAVAKYANTS, HUONG THI THU NGUYEN, MIKE WALLAVE, AN NGUYEN HOANG THIEN, JONGHU KU, HAMMAD YOUSAF, DOE 24 d/b/a TEACHINGRESOURCESSTORE.COM, and DOE 31 d/b/a TESTBANKSOLUTIONMANUAL01.COM, Defendants.
REPORT AND RECOMENDATION
SARAH NETBURN, UNITED STATES MAGISTRATE JUDGE.
TO THE HONORABLE RONNIE ABRAMS:
This case concerns the unauthorized use of trademarked and copyrighted higher-education textbooks and tailored learning solutions, including test banks, instructor solutions manuals (“ISMs”), and textbooks, produced by Plaintiffs Pearson Education (“Pearson”), Elsevier Inc. (“Elsevier”), Bedford, Freeman & Worth Publishing Group, LLC d/b/a Macmillan Learning (“Macmillan Learning”), Cengage Learning, Inc. (“Cengage”), and McGraw Hill LLC (“McGraw Hill”) (collectively, “Plaintiffs”). Without the Plaintiffs' authorization, Defendants offered for sale and sold counterfeit products on their websites. Plaintiff filed this action against Defendants for copyright infringement under 17 U.S.C. § 501(a), and trademark infringement and counterfeiting under 15 U.S.C. § 1114.
Given the large number of Defendants, the Defendants are grouped as follows: Mustapha Najji and Zahrat Al Taif d/b/a Goods Wholesalers LL (“Group 1”); Abderrahmane Lasri, Ahmed Ali, Ali Samy, Id. Tnaine Abdellah, Said Ouakrim, Syed Atif Raza, and Syed Hussain (“Group 2”); Abida Imran, Muhammad Shehzad Qammar, and Yi Shi (“Group 3”); Manh Cuong Can and Thu Duc Nguyen (“Group 4”); Hoa My Hoang, Hoang Anh Thi Lan, Nguyen Kien Viet, Phuc Duong Nguyen, Thom Thi Bui, Trang Thi Tran, and Tuan Duong Anh (“Group 5”); Faisal Majid and Khalid Ibrahim (“Group 6”); Abd Rahim Bin Karim and Ahma Syahir (“Group 7”); Alejandro Vera and Mohammad Sameed Ubair Khan Abbasi (“Group 8”); Farah Maqsood, Muhammad Hamza Afzal, Nouman Malik, and Syed Hasnain Raza (“Group 9”); and Anjum Akhter, Dung Vuong, Haroon Mansha, Nguyen Hai Long, Nhat Duong Duc, and Sherry Sanders (“Group 10”). The following Defendants are addressed individually: Kien Quyet Tran, Farouq Jabri, Ramya Mani, Henry Johnson, Pavel Galkin, Irina Dzhavakyants, Huong Thi Thu Nguyen, Mike Wallace, An Nguyen Hoang Thien, Jongho Ku, Hammad Yousaf, Doe 24 d/b/a teachingresourcesstore.com, and Doe 31 d/b/a testbanksolutionmanual01.com.
After Defendants failed to appear, the Honorable Ronnie Abrams entered an order granting default and a permanent injunction in favor of the Plaintiffs. ECF No. 98. Judge Abrams then referred this matter to my docket to conduct an inquest on damages. I recommend the Plaintiffs be awarded a total of $23,150,000 in statutory damages under the Lanham Act and the Copyright Act plus applicable post-judgment interest.
PROCEDURAL BACKGROUND
Plaintiffs are five of the leading educational publishers in the United States and are providers of higher education textbooks and learning solutions within the international, academic marketplace.
Plaintiffs annually publish thousands of educational works, including textbooks, corresponding test banks, and instructor solutions manuals (“ISMs”). Plaintiffs were granted the exclusive licenses of the copyrights in the Authentic Works described in Exhibit B to the Amended Complaint (the “Authentic Works”). Am. Comp., ECF No. 59-2. Plaintiffs Cengage and McGraw Hill own their respective trademarks described in Exhibit C to the Amended Complaint (“Marks”) on the Principal Register of the U.S. Patent and Trademark Office. Am. Comp., ECF No. 59-3.
Defendants are believed to be located overseas and “own, control, and/or operate wholly illegal websites that are devoted to the infringement of others' intellectual property rights.” Proposed Findings of Fact and Conclusions of Law, ECF No. 99, ¶ 3 (“FFCL”). The Defendants reproduce, distribute, and sell copies of the Plaintiffs' Authentic Works without authorization. In their investigation, Plaintiffs purchased and obtained samples directly from many of the Defendants' infringing sites, which they confirmed to be digital copies of the Plaintiffs' copyrighted and trademarked Authentic Works.
Plaintiffs sued the Defendants, identified as “Doe” defendants at the time, for copyright and trademark infringement. Simultaneously, the Plaintiffs moved for: (1) a temporary restraining order (“TRO”); (2) an order authorizing expediated discovery; (3) an order restraining Defendants' storefronts and assets; (4) an order authorizing alterative service; and (5) an order to show cause for a Preliminary Injunction. The Court granted the application in an Ex Parte Order. See ECF No. 28. After a hearing, the District Court entered a Preliminary Injunction against the Defendants. Pursuant to the Ex Parte Order, the Plaintiffs pursued expedited discovery and were able to obtain information from third-parties that identified the Defendants' names and many aliases. Subsequently, the Plaintiffs filed an Amended Complaint against the Defendants, identifying them by name. They successfully served the Amended Summons and Complaint on all Defendants. No Defendant responded to the Amended Complaint. Upon the Plaintiffs' request, the Clerk issued Certificates of Default as to all Defendants.
Plaintiffs filed a motion for default judgment against all defendants, and the Clerk issued two Certificates of Default. ECF Nos. 72, 77. After a show cause hearing, Judge Abrams determined that Plaintiffs established a basis for the Court to exercise personal jurisdiction over the Defendants and granted the Plaintiffs' Motion for Default. ECF No. 92. After Judge Abrams referred this matter to me for an inquest on damages, Plaintiffs filed their Proposed Findings of Fact and Conclusions of Law in support of damages. To date, Defendants have failed to respond.
DISCUSSION
I. Legal Standard
The Court of Appeals set forth the procedural rules applicable to the entry of a default judgment in City of New York v. Mickalis Pawn Shop, LLC:
“Federal Rule of Civil Procedure 55 is the basic procedure to be followed when there is a default in the course of litigation.” Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004). Rule 55 provides a “two-step process” for the entry of judgment against a party who fails to defend: first, the entry of a default, and second, the entry of a default judgment. New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005). The first step, entry of a default, formalizes a judicial recognition that a defendant has, through its failure to defend the action, admitted liability to the plaintiff.... The second step, entry of a default judgment, converts the defendant's admission of liability into a final judgment that terminates the litigation and awards the plaintiff any relief to which the court decides it is entitled, to the extent permitted by Rule 54(c).645 F.3d 114, 128 (2d Cir. 2011).
Where default has been entered against a defendant, courts accept as true all the well-pleaded facts alleged in the complaint, except those concerning the amount of damages. See In re Indus. Diamonds Antitrust Litig., 119 F.Supp.2d 418, 420 (S.D.N.Y. 2000).
In an inquest for damages where the plaintiff has sufficiently pleaded a claim on which relief can be granted, the only remaining issue is to determine the amount of damages owed. See Gucci Am., Inc. v. Tyrrell-Miller, 678 F.Supp.2d 117, 119 (S.D.N.Y. 2008) (citing Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). The plaintiff must provide adequate support for the requested relief. Id.; see also Malletier v. Carducci Leather Fashions, Inc., 648 F.Supp.2d. 501, 503 (S.D.N.Y. 2009) (“[A] plaintiff seeking to recover damages against a defaulting defendant must prove its claim th[r]ough the submission of evidence ....”). A court may determine the amount a plaintiff is entitled to recover without a hearing, so long as: (1) the court determines the proper rule for calculating damages, and (2) the evidence submitted by the plaintiff establishes “with reasonable certainty” the basis for the damages. Id.
II. Liability
Courts evaluating damages in a default context first look to the complaint to determine whether the plaintiff has established a prima facie case for recovery. See Lenard v. Design Studio, 889 F.Supp.2d 518, 528 (S.D.N.Y. 2012) (the court must first determine whether the allegations in the complaint were sufficiently pleaded to establish liability); Eurosteel Corp. v. M/V Koggegracht, No. 01-cv-7731 (DLC), 2003 WL 1872652, at *1 (S.D.N.Y. Apr. 11, 2003) (finding that plaintiff had established a prima facie case for recovery). In light of the Defendants' default, the Plaintiffs' properly-pleaded allegations are accepted as true, except those relating to damages. See Cotton v. Slone, 4 F.3d 176, 181 (2d. Cir. 1993).
Plaintiffs seek maximum statutory damages under the Copyright Act of $150,000 per infringed Authentic Work, for a total of $12,150,000 in copyright damages. Additionally, Plaintiffs Cengage and McGraw Hill seek $1,000,000 in statutory damages under the Lanham Act, per infringed Mark for a total of $11,000,000 in trademark damages.
A. The Copyright Act
“To make out a prima facie case of copyright infringement, a party must show (1) ownership of a valid copyright in the item and (2) unauthorized copying.” Int'l Swaps & Derivatives Ass'n, Inc. v. Socratek, LLC, 712 F.Supp.2d 96, 102 (S.D.N.Y. 2010) (citing Tufenkian Import/Export Ventures, Inc. v. Einstein Moomjy, Inc., 338 F.3d 127, 131 (2d Cir. 2003)). Both requirements are satisfied. The allegations of the Amended Complaint, accepted as true, demonstrate that the Plaintiffs owned and registered valid copyrights for a series of Authentic Works, listed in Exhibit B to the Amended Complaint, and that the Defendants sold unauthorized copies of the Authentic Works through a variety of websites. See Am. Comp., ECF No. 59-2. The Court therefore finds that Defendants are liable for copyright infringement.
B. The Lanham Act
Plaintiffs Cengage and McGraw Hill allege that the Defendants engaged in trademark counterfeiting and infringement in violation of the Lanham Act. See 15 U.S.C. §§ 1114(1)(a)-(b). “The Lanham Act imposes liability on any person who in connection with the sale, offering for sale, or distribution of a good either uses a counterfeit of a registered mark or counterfeits such mark in advertising or packaging materials when such use or counterfeiting is likely to cause confusion.” Off-White LLC v. 5HK5584 , No. 19-cv-672 (RA) (JLC), 2020 WL 1646692, at *5 (Apr. 3, 2020), report and recommendation adopted by 2020 WL 3050552 (S.D.N.Y. June 8, 2020). To establish a claim for either trademark counterfeiting or infringement, a plaintiff must demonstrate that the allegedly infringed mark is entitled to protection and the use of the allegedly infringed mark “is likely to cause consumer confusion as to the origin or sponsorship of the products to which it is attached.” Cross Commerce Media, Inc. v. Collective, Inc., 841 F.3d 155, 168 (2d Cir. 2016) (quoting Virgin Enters. Ltd. v. Nawab, 335 F.3d 141, 146 (2d Cir. 2003)).
“A certificate of registration with the [Patent and Trademark Office] is prima facie evidence that the mark is registered and valid (i.e., protectible), that the registrant owns the mark, and that the registrant has the exclusive right to use the mark in commerce.” Lane Cap. Mgmt., Inc. v. Lane Cap. Mgmt., Inc., 192 F.3d 337, 345 (2d Cir. 1999). There is no dispute that Plaintiffs are the owner of the trademarks described in Exhibit C to the Amended Complaint. See Am. Comp., ECF No. 59-3. Because the Marks are lawfully registered with the U.S. Patent and Trademark Office, they are entitled to protection. As to the likelihood of confusion, courts in this circuit have recognized that “counterfeits, by their very nature, cause confusion.” Coach, Inc. v. Horizon Trading USA Inc., 908 F.Supp.2d 426, 433 (S.D.N.Y. 2012) (quoting Gucci Am., Inc. v. Duty Free Apparel, Ltd., 286 F.Supp.2d 284, 287 (S.D.N.Y. 2003)). Under the Lanham Act, a “counterfeit” is “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127.
Taking the allegations in the Amended Complaint as true, “the spurious, counterfeit marks on the test banks, ISMs, and/or textbooks that Defendants have distributed, or that appear on Product Pages or other advertisements through which Defendants have offered to sell unauthorized copies of Plaintiffs' Authentic Works, are identical to and/or substantially indistinguishable from Plaintiffs' Marks.” Am. Comp. ¶ 87. Because “the average purchaser would find the allegedly counterfeit mark to be substantially similar to the registered mark as it appears on the actual merchandising,” these allegations are sufficient to support a finding that Defendants' products are counterfeit. Off-White LLC, 2020 WL 1646692, at *5. The Court therefore finds that Defendants are liable for trademark infringement.
III. Damages
Once liability is established, the sole remaining issue before the court is whether the plaintiff has provided adequate support for the relief it seeks. Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997); 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 an inquest for damages, the plaintiff bears the burden of proof and must introduce sufficient evidence to establish the amount of damages with “reasonable certainty.” Transatlantic Marine, 109 F.3d at 111; see also Lenard v. Design Studio, 889 F.Supp.2d 518, 538 (S.D.N.Y. 2012) (awarding no damages because plaintiff failed to demonstrate the amount of fines incurred that were attributable to defendant). A court may determine the appropriate damages on the basis of affidavits and other documentary evidence “as long as [the court has] ensured that there [is] a basis for the damages specified in the default judgment.” Transatlantic Marine, 109 F.3d at 111 (quoting Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d. Cir. 1989)); see also Action S.A. v. Marc Rich & Co., 951 F.2d 504, 508 (2d Cir. 1991) (leaving the decision of whether a hearing is necessary for determining damages to the discretion of the district court); Fed.R.Civ.P. 55(b)(2).
A. Duplicative Damages
As a general matter, “[a] plaintiff seeking compensation for the same injury under different legal theories is of course only entitled to one recovery.” Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 497 (2d Cir. 1995). When evaluating whether plaintiffs can recover duplicative statutory damages under the Lanham Act and Copyright Act, courts in this Circuit have followed “the recent trend . . . to preclude double recovery in cases involving the sale of pirated, copyrighted material.” Cengage Learning, Inc. v. Globonline SDN, No. 14-cv-3174 (DAB), 2018 WL 1989574, at *2 (S.D.N.Y. Apr. 25, 2018) (collecting cases). Although Plaintiffs Cengage and McGraw Hill ask for statutory damages under both the Copyright Act and the Lanham Act for certain Defendants, they do not seek awards for both copyright and trademark damages for any single act of infringement. Plaintiffs Cengage and McGraw Hill do not attempt to recover copyright damages for the Authentic Works for which they seek trademark damages, and the remaining Plaintiffs do not seek trademark damages. Therefore, there are no duplicative damages sought.
B. Statutory Damages
Plaintiffs do not seek actual damages sunder the Copyright Act and the Lanham Act; rather, Plaintiffs seek statutory damages for willful infringement. Statutory damages are particularly appropriate where actual damages are difficult to calculate. See Bus. Trends Analysts, Inc. v. Freedonia Grp., Inc., 887 F.2d 399, 406 (2d Cir. 1989); Chanel, Inc. v. Gardner, No. 07-cv-6679 (GBD)(MHD), 2011 WL 204911, at *1 (S.D.N.Y. Jan. 21, 2011) (stating that statutory damages are appropriate under the Lanham Act “when actual damages are difficult to calculate”). Indeed, the rationale underlying the Lanham Act's statutory damages framework “is the practical inability to determine profits or sales made by counterfeiters.” All-Star Mktg. Grp., LLC v. Media Brands Co., Ltd., 775 F.Supp.2d 613, 620 (S.D.N.Y. 2011) (citing Bus. Trends Analysts, Inc., 887 F.2d at 406); see also Sara Lee Corp. v. Bags of New York, Inc., 36 F.Supp.2d 161, 165 (S.D.N.Y. 1999) (“Statutory damages are most appropriate when infringer nondisclosure during fact finding leaves damages uncertain. This problem motivated the enactment of § 1117(c)....”).
1. Copyright Damages
Under the Copyright Act, a copyright infringer is liable for either actual damages or statutory damages. 17 U.S.C. § 504(a). A copyright owner may recover a statutory damages award not less than $750 or more than $30,000 for each copyrighted work, as the Court deems just. 17 U.S.C. § 504(c)(1).
2. Trademark Damages
A court may award statutory trademark damages in the amount of not less than $1,000 or more than $200,000 per counterfeit mark, as the court considers just. 15 U.S.C. § 1117(c). “District courts have wide discretion in awarding statutory damages.” Malletier v. Artex Creative Int'l Corp., 687 F.Supp.2d 347, 355 (S.D.N.Y. 2010).
3. Finding of Willfulness
Both the Copyright Act and the Lanham Act provide for increased maximum statutory damages when the defendants are deemed to have infringed willfully.
Under the Copyright Act, courts may award the maximum statutory damages up to $150,000 if the infringement was willful. 17 U.S.C. § 504(c)(2). An infringement is willful if “the defendant had knowledge that its conduct represented infringement or perhaps recklessly disregarded that possibility.” Hounddog Prods., L.L.C. v. Empire Film Grp., Inc., 826 F.Supp.2d 619, 631 (S.D.N.Y. 2011) (quoting Hamil Am., Inc. v. GFI, 193 F.3d 92, 97 (2d Cir. 1999)). “Where a defendant has defaulted, a complaint's allegations of willfulness may be taken as true.” Elsevier Inc. v. Siew Yee Chew, No. 17-cv-6225 (JGK) (GWG), 2019 WL 74606, at *6 (S.D.N.Y. Jan. 2, 2019). Plaintiffs seek the maximum amount of $150,000 in statutory damages for every Authentic Work the Defendants willfully infringed.
Similar to the Copyright Act, the Lanham Act provides for enhanced statutory damages when the use of the counterfeit mark was willful. The standard for willfulness is analogous, and considers “‘whether the defendant had knowledge that [his] conduct represented infringement or perhaps recklessly disregarded the possibility.'” Kepner-Tregoe, Inc. v. Vroom, 186 F.3d 283, 288 (2d Cir. 1999) (quoting Twin Peaks Prods., Inc. v. Publications Int'l, Ltd., 996 F.2d 1366, 1382 (2d Cir. 1993)); see also Yurman Studio, Inc. v. Castaneda, 591 F.Supp.2d 471, 503 (S.D.N.Y. 2008) (quoting NFL v. PrimeTime 24 Joint Venture, 131 F.Supp.2d 458, 475 (S.D.N.Y. 2001)) (stating that willfulness can be measured by a defendant's “‘reckless disregard of the high probability' that it was infringing”). Plaintiffs Cengage and McGraw Hill seek $1,000,000 in statutory damages per infringed Mark under 15 U.S.C. § 1117(c) of the Lanham Act for the Defendants' willful counterfeiting and infringement.
First, by virtue of their default and subsequent failure to participate in this inquest, the Defendants are deemed to have acted willfully. Stokes v. MilkChocolateNYC LLC, No. 22-cv-6786 (PAE) (RWL), 2023 WL 447073 at *6 (S.D.N.Y. July 11, 2023) (collecting cases); See Malletier, 648 F.Supp.2d. at 504 (citing Cotton, 4 F.3d at 181) (“Here, by virtue of its default, [the defendant] has admitted [the plaintiff's] allegation that it acted knowingly and intentionally or with reckless disregard or willful blindness to [the plaintiff's] rights.”); All-Star Mktg. Grp., 775 F.Supp.2d at 621-22 (citing various cases) (“Defendants have defaulted . . . and by virtue of their default are deemed to be willful infringers.”). Defendants operated websites devoted to selling publications that Defendants know they have no rights to sell, at the expense of Plaintiffs and the educational system. FFCL ¶ 97. Defendants also had reason to know that their activities infringed on Plaintiffs' copyrights and trademarks because they were under permanent injunction to cease infringing use of Authentic Works and Marks for which the Plaintiffs hold ownership.
A finding of willful trademark infringement is bolstered by the Defendants use of near identical or substantially indistinguishable copies of the Marks on the Infringing Authentic Works sold and/or advertised by the Defendants. See Am. Comp ¶¶ 87, 167; see also Coach, Inc. v. Melendez, No. 10-cv-6178 (BSJ) (HBP), 2011 WL 4542971, at *5 (Sept. 2, 2011), report and recommendation adopted by 2011 WL 4542717 (S.D.N.Y. Sept. 30, 2011) (“Because the marks used by defendants on their products are virtually identical to the Coach Registered Trademarks, the conclusion is inescapable that defendants' infringement and counterfeiting is intentional.”). This is precisely the sort of willful conduct that Congress sought to deter when it enacted the statutory damages provision of the Lanham Act. That is, “Congress took into account that oftentimes, counterfeiters' records are nonexistent, inadequate or deceptively kept in order to willfully deflate the level of counterfeiting activity actually engaged in, making proving actual damages in these cases extremely difficult if not impossible.” Kenneth Jay Lane, Inc., No. 03-cv-2132 (GBD) (KNF), 2006 WL 728407 at *6 (S.D.N.Y. March 21, 2006) (quoting Polo Ralph Lauren, L.P. v. 3M Trading Co., Inc., No. 97-cv-4824 (JSM)(MHD), 1999 WL 33740332 at *4 (S.D.N.Y. April 19, 1999)). Thus, the Defendants' failure to defend this lawsuit combined with their use of near identical marks demonstrates a willfulness to infringe upon Plaintiffs' trademarks. Accordingly, the Court finds that enhancement for willful infringement under the Copyright Act and the Lanham Act is properly applied.
4. Analysis of Awards
Section 1117(c)(2) of the Lanham Act instructs courts to award a “just” amount and establishes a cap on the award; it provides no further guidance on determining damages. See AllStar Mktg. Grp., 775 F.Supp.2d at 621-22 (citing Malletier, 648 F.Supp.2d. at 504). Courts in this district have sought guidance from the analogous statutory damages provision in the Copyright Act, 17 U.S.C. § 504(c), which contemplates that a finding of willfulness should result in damages that are both compensatory and, as a deterrent, punitive. See Id. at 622, n.5 (citing various cases); Sara Lee Corp., 36 F.Supp.2d at 167 (“The Copyright Act is not only similar in principle to the Trademark Act but identical in much of its statutory damages language.... [I]n interpreting Copyright Act language parallel to that in . . . 15 U.S.C. § 1117(c), the Second Circuit has held that uncapped statutory damages . . . may be punitive as necessary to deter the defendants, to deter others, and to redress wrongful litigation conduct.”). “Although the Lanham Act does not provide guidelines for courts to consider in awarding statutory damages, courts look to the analogous provision of the Copyright Act, which gives the court wide discretion to determine what amount of damages should be awarded within the minimum and maximum bounds proscribed under the Lanham Act.” Coach, Inc. v. Allen, No. 11-cv-3590 (CM), 2012 WL 2952890, at *9 (S.D.N.Y. July 19, 2012) (citing Union of Orthodox Jewish Congregations of America v. Royal Food Distribs. LLC., 665 F.Supp.2d 434, 436-37 (S.D.N.Y. 2009); Fitzgerald Publ'g. Co., Inc. v. Baylor Publ'g. Co., Inc., 807 F.2d 1110, 1116 (2d Cir. 1986)).
When determining damages under the Copyright Act and the Lanham Act, courts consider: (1) “the expenses saved and the profits reaped”; (2) “the revenues lost by the plaintiff”; (3) “the value of the copyright”; (4) “the deterrent effect on others besides the defendant”; (5) “whether the defendant's conduct was innocent or willful”; (6) “whether a 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.” (the “Fitzgerald factors”). Union of Orthodox Jewish Congregations of Am. v. Royal Food Distributors Liab. Co., 665 F.Supp.2d 434, 436 (S.D.N.Y. 2009) (quoting Fitzgerald Pub., 807 F.2d at 1117).
All of the Fitzgerald factors favor a heightened award. “[D]efaulting Defendant's failure to appear in this action prevents the Court from ascertaining their profits or the full extent of Plaintiff's losses, although as a general matter ‘[c]ourts have supported an inference of a broad scope of operations in cases dealing specifically with websites that ship and sell to a wide geographic range.'” Mattel, Inc. v. 1622758984, No. 18-cv-8821 (AJN), 2020 WL 2832812, at *7 (S.D.N.Y. May 31, 2020) (citing Spin Master Ltd. v. Alan Yuan's Store, 325 F.Supp.3d 413, 426 (S.D.N.Y. 2018)). Due to the nature of the digital files at issue, there is no limit to the number of times they can be copied or sold. Based on data obtained from PayPal and Stripe, payment processors used by certain Defendants, the Defendants earned at least $5,474,053 in revenues from their Sites that used PayPal and Stripe. Inquest Atty. Decl. ¶¶ 9, 11. Plaintiffs identified over 30,000 listings for their Authentic Works that Defendants had available for sale, as set forth in the Attorney Declaration. Plaintiffs suffer both financial and reputation harm because Defendants have reproduced and sold an indeterminable number of infringing copies of Plaintiffs' Authentic Works.
Plaintiffs' copyrights and trademarks have high value because Plaintiffs are among the leading higher education publishers internationally. See Elsevier Inc. v. Siew Yee Chew, No. 17-cv-6225 (JGK) (GWG), 2019 WL 74606, at *7 (S.D.N.Y. Jan. 2, 2019) (“we can infer from the well-known reputations for high-quality education content of the plaintiffs that [their copyrights and trademarks] are indeed valuable”) (internal citations omitted) (alteration in original); Cengage Learning, Inc., v. Trung Kien Nguyen, No. 20-cv-0769 (JGK) (SDA), 2021 WL 228726, at *7 (S.D.N.Y. June 1, 2021) (finding that this factor weighed in Plaintiffs' favor because they are “among the leading higher education publishers in the world and have invested decades of effort in building a reputation of quality in the publishing industry, which consumers associate with Plaintiffs and their textbooks”).
Lastly, the maximum statutory award will serve as a deterrent for Defendants and counterfeiters generally, who have built businesses around illicit websites that enable the sale of infringing materials in virtual anonymity and with impunity.
The Defendants' willful copyright and trademark infringement favor a heightened award under the Lanham Act as well. Therefore, the Court recommends that Plaintiffs Cengage and McGraw Hill are awarded $1,000,000 in statutory damages per infringed Mark under the Lanham Act, and all Plaintiffs are awarded $150,000 for every Authentic Work the Defendants willfully infringed under the Copyright Act, as detailed in Exhibit 4 to the Inquest Attorney Declaration. See FFCL, Inquest Atty. Decl. Ex. 4.
IV. Post-Judgment Interest
Federal law 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.” 28 U.S.C. § 1961(a). Accordingly, Plaintiffs should be awarded post-judgment interest.
CONCLUSION
The Court recommends that the Plaintiffs be awarded a total of $23,150,000 in statutory damages under the Lanham Act and the Copyright Act plus applicable post-judgment interest. Specifically, the Court recommends that Plaintiffs Cengage and McGraw Hill are awarded $1,000,000 in statutory damages per relevant Defendant or Defendant Group and counterfeited Marks, and all Plaintiffs are awarded $150,000 in statutory damages per Defendant or Defendant Group and copyrights infringed, as detailed in Exhibit 4 to the Inquest Attorney Declaration. See FFCL, Inquest Atty. Decl. Ex. 4.
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have 14 days from the service of this Report and Recommendation to file written objections under 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See Fed.R.Civ.P. 6(a), 6(d). A party may respond to another party's objections within 14 days after being served with a copy. Fed.R.Civ.P. 72(b)(2); see Fed.R.Civ.P. 6(a), 6(d). These objections shall be filed with the Court and served on any opposing parties. See Fed.R.Civ.P. 72(b)(2). Courtesy copies shall be delivered to the Honorable Ronnie Abrams if required by that judge's Individual Rules and Practices. Any requests for an extension of time for filing objections must be addressed to Judge Abrams. See Fed.R.Civ.P. 6(b). The failure to file timely objections will waive those objections for purposes of appeal. See Thomas v. Arn, 474 U.S. 140 (1985); United States v. James, 712 F.3d 79, 105 (2d Cir. 2013).