Opinion
22-CV-4133 (PAE) (JLC) 22-CV-4135 (PAE) (JLC)
10-05-2023
THE PINKFONG COMPANY, INC. Plaintiff, v. 7DAY STORE, et al., Defendants. THE PINKFONG COMPANY, INC. Plaintiff, v. AISEVE, et al., Defendants.
To the Honorable Paul A. Engelmayer, United States District Judge:
REPORT & RECOMMENDATION
JAMES L. COTT, United States Magistrate Judge.
Plaintiff The Pinkfong Company, Inc. (“Pinkfong”) brought these two related actions against 107 total defendants alleging, inter alia, copyright infringement and related counterfeiting of its federally registered trademarks under the Lanham Act. The facts, causes of action, and requested relief in these two actions are virtually identical; the only significant difference between the two is the e-commerce platform on which the defendants marketed their allegedly counterfeit products. By Order dated December 19, 2022, the Court granted a default judgment against 100 of the defendants (the “Defaulting Defendants”) on these claims and these cases were referred to me to conduct an inquest on damages. For the reasons stated below, I recommend that Pinkfong be awarded statutory damages in the amount of $40,000 against 98 of the Defaulting Defendants and in the amount of $100,000 against defendants Baby Family Store and luckyhome66 Store. I further recommend that the Court issue a permanent injunction barring the Defaulting Defendants from manufacturing or marketing goods that infringe on Pinkfong's intellectual property.
Pinkfong initially commenced these actions against 53 defendants, in the case of Pinkfong v. 7Day Store et al. (“Pinkfong I”), and 54 defendants, in the case of Pinkfong v. Aiseve et al. (“Pinkfong II”), but has since filed notices of voluntary dismissal with respect to seven of them. See Pinkfong I, Dkt. Nos. 12, 23-25, 30-31; Pinkfong II, Dkt. Nos. 11, 24-25, 29, 32-33, 44-45.
I. BACKGROUND
A. Factual Background
The following facts, which are drawn from a review of Pinkfong's pleadings, motion papers, and submissions related to this inquest, are deemed established for the purpose of determining the damages to which Pinkfong is entitled. See, e.g., City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ‘ancient common law axiom' that a defendant who defaults thereby admits all ‘well-pleaded' factual allegations contained in the complaint.” (citation omitted)); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (“In light of [defendant's] default, a court is required to accept all of [plaintiff's] factual allegations as true and draw all reasonable inferences in its favor[.]” (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981))).
Pinkfong is a Korean company with a principal place of business in Seoul. Complaint (“Pinkfong I Compl.”) ¶5, Pinkfong I, Dkt. No. 12. It specializes in developing animated and gaming content. Id. ¶ 7.
Among other things, Pinkfong sells, advertises, and promotes Baby Shark products-toys and merchandise related to the viral children's music video- worldwide. Id. ¶¶ 9-11. Pinkfong has registered trademarks and obtained copyright registrations for its Baby Shark products. Id. ¶¶ 15-18. Pinkfong owns the exclusive rights to manufacture, import, export, advertise, and sell Baby Shark products. Id. ¶ 24.
The Defaulting Defendants are businesses based in China that have sold and shipped “counterfeit” Baby Shark products (the “Counterfeits”) throughout the United States via Alibaba and AliExpress, in the case of the Pinkfong I defendants, and via Amazon, in the case of the Pinkfong II defendants. Id. ¶¶ 28-29; Complaint (“Pinkfong II Compl.”) ¶¶ 31-32, Pinkfong II, Dkt. No. 11. The Defaulting Defendants do not conduct business with Pinkfong, nor are they authorized to market or sell Baby Shark products. Pinkfong I Compl. ¶ 34; Pinkfong II Compl. ¶ 37. Furthermore, the Counterfeits are “nearly indistinguishable” from genuine Baby Shark products. Pinkfong I Compl. ¶ 35; Pinkfong II Compl. ¶ 38. The Defaulting Defendants have continued to sell the Counterfeits despite Pinkfong's efforts to enforce its copyrights. Pinkfong I Compl. ¶ 24; Pinkfong II Compl. ¶ 24. Two of the Defaulting Defendants, Baby Family Store and luckyhome 66 Store, have continued to sell Counterfeits in violation of a temporary restraining order and preliminary injunction previously entered by the Court. Proposed Findings of Fact and Conclusions of Law (“Pinkfong I Pl. Mem.”) ¶¶ 13-14, 17 Pinkfong I, Dkt. No. 52; Pinkfong I Affidavit of Danielle S. Futterman dated February 10, 2023 (“Pinkfong I Futterman Aff.”), ¶ 17 & Exhibit C, Dkt. No. 53. Thus, Pinkfong requests $5,100,000 in statutory damages in total for both cases. Pinkfong I Pl. Mem. ¶ 72) (requesting $50,000 from each of the 48 Pinkfong I Defaulting Defendants and $100,000 from Baby Family Store and luckyhome 66 Store); Proposed Findings of Fact and Conclusions of Law (“Pinkfong II Pl. Mem.”) ¶ 70, Pinkfong II, Dkt. No. 52 (requesting $50,000 from each of the 50 Pinkfong II Defaulting Defendants). Pinkfong also seeks a permanent injunction barring the Defaulting Defendants from manufacturing, marketing, or selling the Counterfeits. Pinkfong I Pl. Mem. ¶ 72; Pinkfong II Pl. Mem. ¶ 70.
B. Procedural Background
Pinkfong brought both of these actions on May 13, 2022, alleging trademark infringement in violation of § 32 of the Federal Trademark (Lanham) Act, 15 U.S.C. § 1051 et seq.; counterfeiting of Pinkfong's federally registered trademarks in violation of 15 U.S.C. §§ 1114(1)(a)-(b), 1116(d) and 1117(b)-(c); trademark infringement of Pinkfong's unregistered trademarks in violation of 15 U.S.C. § 1125; false designation of origin, passing off and unfair competition in violation of Section 43(a) of the Trademark Act of 1946, (as amended 15 U.S.C. §1125(a)); copyright infringement of Pinkfong's federally registered copyrights in violation of the Copyright Act of 1976, 17 U.S.C. § 101 et seq., and related state and common law claims. Pinkfong I Compl. ¶ 1; Pinkfong II Compl. ¶ 1. On May 20, 2022, the Court granted Pinkfong's requests for temporary restraining orders against the Defaulting Defendants in both cases and issued an order requiring them to appear at a show cause hearing on June 17, 2022. Pinkfong I Dkt. No. 20; Pinkfong II Dkt. No. 21.
Although the Defaulting Defendants were timely served, Pinkfong I Dkt. No. 26; Pinkfong II Dkt. No. 26, they did not appear at the hearing. Pinkfong I Dkt. No. 8; Pinkfong II Dkt. No 8. The Court therefore issued preliminary injunctions against the Defaulting Defendants barring further sale of the Counterfeits. Pinkfong I Dkt. No. 8; Pinkfong II Dkt. No. 8. Thereafter, Pinkfong moved for default judgments. Pinkfong I Dkt. No. 35; Pinkfong II Dkt. No. 37.
On December 20, 2022, the Court granted default judgments in both cases and referred them to me to conduct an inquest into damages. Pinkfong I Dkt. Nos. 44-45; Pinkfong II Dkt. Nos. 48-49. On February 10, 2023, pursuant to court order, Pinkfong I Dkt. No. 45, Pinkfong II Dkt. No. 49, Pinkfong submitted Proposed Findings of Fact and Conclusions of Law and affidavits from their attorney, Danielle S. Futterman. Pinkfong I Dkt. Nos. 52-53, Pinkfong II Dkt. Nos. 52-53.
Pinkfong is not seeking attorneys' fees in these cases. Pinkfong I Futterman Aff. ¶ 20; Pinkfong II Affidavit of Danielle S. Futterman dated February 10, 2023, ¶ 16, Dkt. No. 53.
II. DISCUSSION
A. Personal Jurisdiction
As a threshold matter, there does not appear to be any question that the Court has personal jurisdiction over the Defaulting Defendants. See, e.g., Hood v. Ascent Med. Corp., No. 13-CV-628 (RWS) (DF), 2016 WL 1366920, at *6 (S.D.N.Y. Mar. 3, 2016) (“Where a plaintiff's filings raise questions as to whether a district court may permissibly exercise personal jurisdiction over a non-appearing defendant, the court may consider sua sponte whether the plaintiff has set forth facts justifying the assertion of personal jurisdiction.”), adopted by 2016 WL 3453656 (June 20, 2016), aff'd, 691 Fed.Appx. 8 (2d Cir. 2017). In an action like this one where the statutes that provide the basis for the Court's jurisdiction do not include nationwide service, the personal jurisdiction rules of the forum state apply. See, e.g., Schentag v. Nebgen, No. 17-CV-8734 (GHW), 2018 WL 3104092, at *15 (S.D.N.Y. June 21, 2018) (citing PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir. 1997)). Accordingly, New York law applies.
New York's long-arm statute provides that a court may exercise personal jurisdiction over any non-domiciliary who “transacts any business within the state or contracts anywhere to supply goods or services in the state” or “commits a tortious act without the state causing injury to person or property within the state ... if he (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.” N.Y. C.P.L.R. §§ 302(a)(1), (3). Here, New York customers are able to order goods for delivery to New York from the Defaulting Defendants through the online marketplace and e-commerce platforms Alibaba.com, AliExpress.com, and Amazon.com. Pinkfong I Compl. ¶ 3; Pinkfong II Compl. ¶ 3. Accordingly, Pinkfong has established that the Court has personal jurisdiction over the Defaulting Defendants. See, e.g., Chloe v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 170 (2d Cir. 2010) (personal jurisdiction existed where defendant “operated a highly interactive website offering such bags for sale to New York consumers”); Alibaba Grp. Holding Ltd. v. Alibabacoin Found., No. 18-CV-2897 (JPO), 2018 WL 5118638, at *3-4 (S.D.N.Y. Oct. 22, 2018) (proper exercise of personal jurisdiction over defendants based on online purchases by New York residents).
B. Default Judgment and Liability
“A default judgment entered on well-pleaded allegations in a complaint establishes a defendant's liability.” Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 854 (2d Cir. 1995) (brackets omitted) (quoting Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 69 (2d Cir. 1971), rev'd on other grounds, 409 U.S. 363 (1973)). “While a party's default is considered a concession of all well-pleaded allegations of liability, it is not considered an admission of damages.” Rovio Ent., Ltd. v. Allstar Vending, Inc., 97 F.Supp.3d 536, 545 (S.D.N.Y. 2015) (citing Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors, Inc., 699 F.3d 230, 234 (2d Cir. 2012)). “The district court must instead conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Am. Jewish Comm. v. Berman, No. 15-CV-5983 (LAK) (JLC), 2016 WL 3365313, at *3 (S.D.N.Y. June 15, 2016) (quoting Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)), adopted by 2016 WL 4532201 (Aug. 29, 2016).
A plaintiff “bears the burden of establishing [its] entitlement to recovery and thus must substantiate [its] claim with evidence to prove the extent of damages.” Dunn v. Advanced Credit Recovery Inc., No. 11-CV-4023 (PAE) (JLC), 2012 WL 676350, at *2 (S.D.N.Y. Mar. 1, 2012), adopted by 2012 WL 1114335 (Apr. 3, 2012). “To establish damages upon default, a plaintiff must demonstrate that the ‘compensation sought relate[s] to the damages that naturally flow from the injuries pleaded.'” Am. Jewish Comm., 2016 WL 3365313, at *3 (quoting Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 159 (2d Cir. 1992)). “In determining damages not susceptible to simple mathematical calculation, Federal Rule of Civil Procedure 55(b)(2) gives courts discretion to determine whether an evidentiary hearing is necessary or whether to rely on detailed affidavits or documentary evidence.” Id. at *4 (citation omitted). An evidentiary hearing is not necessary when the documents submitted provide a “sufficient basis from which to evaluate the fairness of” the damages requested. Fustok v. ContiCommodity Servs. Inc., 873 F.2d 38, 40 (2d Cir. 1989).
By virtue of their default, the Defaulting Defendants have conceded liability as to the allegations set forth in the complaints, which adequately pleaded valid causes of action under both copyright law and the Lanham Act. See, e.g., Taizhou Zhongneng Imp. & Exp. Co. v. Koutsobinas, 509 Fed.Appx. 54, 56 (2d Cir. 2013) (defaulting defendant's liability depends on whether “allegations are sufficient to state a cause of action”).
“To prevail on a claim of copyright infringement, a plaintiff must show both [1] ownership of a valid copyright and [2] copying” of a protected work without authorization. Knickerbocker Toy Co., Inc. v. Azrak-Hamway Int'l., Inc., 668 F.2d 699, 702 (2d Cir. 1982) (citations omitted); accord Davis v. Blige, 505 F.3d 90, 98 (2d Cir. 2007) (citing 17 U.S.C. § 501(b)). “[C]opying may be shown by indirect evidence[ ] ‘if the two works are so strikingly similar as to preclude the possibility of independent creation[.]'” Tangle, Inc. v. Individuals, Corps., Ltd. Liab. Cos., P'ships, And Unincorporated Ass'ns Identified On Schedule A Hereto, No. 21-CV-9352 (LGS) (RWL), 2022 WL 2442302, at *4 (S.D.N.Y. June 29, 2022) (quoting Lipton v. Nature Co., 71 F.3d 464, 471 (2d Cir. 1995) (cleaned up)), adopted in part by 2022 WL 3098306 (Aug. 4, 2022). “[S]imilarity, in turn, hinges on ‘whether an average lay observer would recognize the alleged copy as having been appropriated from the copyrighted work.'” Id. (quoting Hamil America, Inc. v. GFI, 193 F.3d 92, 100 (2d Cir. 1999)).
Here, Pinkfong meets both elements as it adequately alleged that (1) it owns valid copyrights, Pinkfong I, Dkt. No. 12, Ex. C; Pinkfong II, Dkt. No. 11, Ex. C (“Baby Shark Works”), and (2) the Counterfeits were “nearly indistinguishable” to genuine Pinkfong products and were sold without Pinkfong's authorization. Pinkfong I Compl. ¶¶ 34-35; Pinkfong II Compl. ¶¶ 37-38. Thus, Pinkfong has established liability for its copyright infringement claims as a matter of law.
Pinkfong also alleges that the Defaulting 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:
(a) [U]se[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; or
(b) Reproduce[s], counterfeit[s], cop[ies], or colorably imitate[s] a registered mark and appl[ies] such reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages, wrappers, receptacles or advertisements intended to be used in commerce upon or in connection with the sale, offering for sale, distribution, or advertising of 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)-(b). Thus, to establish a claim for either trademark counterfeiting or infringement, courts ask whether the allegedly infringed mark “is entitled to protection” and, if so, “whether use of the allegedly infringing mark is likely to cause consumer confusion as to the origin or sponsorship of the products to which it attached.” Cross Commerce Media, Inc. v. Collective, Inc., 841 F.3d 155, 168 (2d Cir. 2016) (citation and internal quotation marks omitted). As to the first element, “[a] certificate of registration with the [Patent and Trademark Office] is prima facie evidence that the mark is registered and valid (i.e., protectible).” Lane Capital Management, Inc. v. Lane Capital Management, Inc., 192 F.3d 337, 345 (2d Cir. 1999). As to the second element, the standard for consumer confusion is easily satisfied in the case of counterfeits “because 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) (internal quotation marks omitted).
Both elements are met in this case. Pinkfong owns certificates of trademark registration (“Baby Shark Marks”) for a number of goods related to Baby Shark. Pinkfong I, Dkt. No. 12, Ex. B.; Pinkfong II, Dkt. No. 11, Ex. B. Moreover, as mentioned above, the Defaulting Defendants' products are alleged to be “nearly indistinguishable” from genuine Pinkfong products. Pinkfong I Compl. ¶ 35; Pinkfong II Compl. ¶ 38. These allegations are sufficient to support the conclusion that the marks deployed by the Defaulting Defendants are counterfeits; the average purchaser would find the allegedly counterfeit mark to be substantially similar to the registered mark as it appears on the actual merchandising. See, e.g., Montres Rolex, S.A. v. Snyder, 718 F.2d 524, 531-32 (2d Cir. 1983) (rejecting “expert” evaluation test in favor of “average purchaser” test for identifying counterfeits); Horizon Trading, 908 F.Supp.2d at 434 (fine distinctions did not distinguish marks as not counterfeit). Accordingly, default judgment on Pinkfong's trademark counterfeiting and infringement claims is also warranted.
Furthermore, the Defaulting Defendants are deemed to have acted willfully “[b]y virtue of the[ir] default[.]” Tiffany (NJ), Inc. v. Luban, 282 F.Supp.2d 123, 124 (S.D.N.Y. 2003); see, e.g., Chloe v. Zarafshan, No. 06-CV-3140 (RJH), 2009 WL 2956827, at *7 (S.D.N.Y. Sept. 15, 2009) (“Willfulness may be established by a party's default because an innocent party would presumably have made an effort to defend itself.”). Even putting the fact of default aside, the Defaulting Defendants' willfulness is apparent from the similarity between the marks, their failure to take action after receiving notice of Pinkfong's lawsuit, and their leveraging of the Baby Shark Marks on their online storefronts to boast an affiliation with Pinkfong's popular intellectual property. See, e.g., Coach, Inc. v. Melendez, No. 10-CV-6178 (BSJ) (HBP), 2011 WL 4542971, at *5 (S.D.N.Y. Sept. 2, 2011) (“Because the marks used by defendants on their products are virtually identical to the [plaintiff's] Registered Trademarks, the conclusion is inescapable that defendants' infringement and counterfeiting is intentional.”), adopted by 2011 WL 4542717 (Sept. 30, 2011). Accordingly, Pinkfong has established the Defaulting Defendants' liability for willful counterfeiting and infringement of its registered trademarks.
Therefore, the only remaining issue is whether Pinkfong has provided adequate support for its request for damages. As discussed below, Pinkfong's submissions form a “sufficient basis from which to evaluate the fairness” of its request for damages, and thus, a hearing is unnecessary. Fustok, 873 F.2d at 40. C. Statutory Damages
1. Legal Standards
Under both Section 54 of the Copyright Act and Section 35 the Lanham Act, the trademark or copyright holder may elect to recover a reward of statutory damages, rather than actual damages, in cases of infringement. 17 U.S.C. § 504(a); 15 U.S.C. §§ 1117(c), (d). Under the Copyright Act, statutory damages range from $750 to $150,000 per work in a case of willful infringement. 17 U.S.C. §§ 504(c)(1)-(2). For willful infringement under the Lanham Act, statutory damages range from $1,000 to $2,000,000 per infringement. 15 U.S.C. § 1117(c).
Because many courts in this District have used the statutory damages provision of the Copyright Act for guidance, 17 U.S.C. § 504(c), when determining appropriate damages under the Lanham Act, and because Pinkfong is requesting damages well below the statutory maximum of either the Copyright Act or the Lanham Act, the Court will perform a single analysis of appropriate statutory damages under the Copyright Act. See, e.g., Tangle, 2022 WL 2442302, at *7 (performing single damages analysis where defendants violated both Copyright Act and Lanham Act). To determine the amount of statutory damages for copyright infringement, courts in this Circuit consider the following factors: (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.” Philip Morris USA Inc. v. A & V Minimarket, Inc., 592 F.Supp.2d 669, 673 (S.D.N.Y. 2009) (quoting Malletier v. WhenU.Com, Inc., 2007 WL 257717, at *4 (S.D.N.Y. Jan. 26, 2007) (quoting Fitzgerald Publ'g Co. v. Baylor Publ'g Co., 807 F.2d 1110, 1117 (2d Cir. 1986))); accord Sream, Inc. v. West Village Grocery Inc., No. 16-CV-2090 (CM) (OTW), 2018 WL 4735706, at *3 (S.D.N.Y. Sept. 14, 2018), adopted by Order dated Oct. 1, 2018, Dkt. 40; Cengage Learning, Inc. v. Bhargava, No. 14-CV-3174 (DAB) (RLE), 2017 WL 9802833, at *4 (S.D.N.Y. Aug. 22, 2017), adopted by 2018 WL 1989574 (April 25, 2018).
2. Plaintiffs Should Be Awarded Statutory Damages
Plaintiffs seek $50,000 in statutory damages against all Defaulting Defendants other than Baby Family Store and luckyhome66 Store, against whom they seek $100,000. Pinkfong I Pl. Mem. ¶ 72; Pinkfong II Pl. Mem. ¶ 70.
The first and second factors, i.e., the expenses saved and the profits reaped by the Defaulting Defendants as a result of their infringement and the revenues lost by Pinkfong, are unknown and cannot be determined as a result of the default. However, the Court resolves any uncertainty in favor of Pinkfong because it should not be deprived of its right to recover statutory damages simply because it is impossible to discern the expenses saved and profits reaped by the Defaulting Defendants. See, e.g., Philip Morris, 592 F.Supp.2d at 669 (in trademark infringement suit, where defendants fail to respond to complaint or to papers seeking default judgment and provide no information relating to their circumstances, “the Court draws every reasonable inference on these points against the defendants”); Sara Lee Corp. v. Bags of New York, 36 F.Supp.2d 161, 169 (S.D.N.Y. 1999) (“The Second Circuit instructs that in determining infringement damages, courts are to resolve against the defendants any factual uncertainties, such as whether any portion of the defendants' revenue may be deducted from damages, when the defendants left the uncertainty by not responding to the evidence of counterfeit sales with evidence of their own.”); Polo Ralph Lauren, L.P. v. 3M Trading Co. Inc., No. 97-CV-4824 (JSM), 1999 WL 33740332, at *6 (S.D.N.Y. April 19, 1999) (“[D]efendants have declined to participate in this lawsuit, and have thus deprived [plaintiff] of the opportunity to make a meaningful assessment of the extent of their business, including volume of sales and profits earned.”).
As to the third factor, the record does not provide the exact monetary value of Pinkfong's copyrights or the Baby Shark Marks. However, it does provide that the Baby Shark brand has “achieved worldwide recognition and success as a result of Plaintiff's efforts in building up and developing consumer recognition, awareness and goodwill in its Baby Shark Products.” Pinkfong I Pl. Mem. ¶ 50; Pinkfong II Pl. Mem. ¶ 48. For example, the Baby Shark music video has amassed more than 10 billion views on Youtube and the song debuted at No. 32 on the Billboard Hot 100 Chart. Pinkfong I Compl. ¶ 9. The Court can therefore “infer from the well-known reputations of most or all of the trademarks and the sea of advertising that presses them on the consciousness of the buying public that they are indeed valuable.” Lane Crawford LLC v. Kelex Trading (CA) Inc., No. 12-CV-9190 (GBD) (AJP), 2013 WL 6481354, at *4 (S.D.N.Y. Dec. 3, 2013), adopted by 2014 WL 1338065 (April 3, 2014). Moreover, “the persistence of the counterfeiting of . . . marks regardless of legal obstacles is itself a testimonial to their value.” Polo Ralph Lauren, 1999 WL 33740332, at *6. That 100 defendants have committed hundreds of infringing uses of Pinkfong's Baby Shark Marks and created scores of counterfeit Baby Shark products is evidence of the intellectual property's value that weighs in favor of Pinkfong's request for damages.
Factors four and seven, which relate to deterring the conduct of the Defaulting Defendants and others, also weigh in Pinkfong's favor. “The need to deter other counterfeiters is particularly compelling given the apparent extent of counterfeit activity,” including the claims brought against the 100 defaulting defendants in this suit. Bumble & Bumble, LLC v. Pro's Choice Beauty Care, Inc., No. 14-CV-6911 (VEC) (JLC), 2016 WL 658310, at *5 (S.D.N.Y. Feb. 17, 2016), adopted by 2016 WL 1717215 (April 27, 2016). A substantial award is necessary to discourage the Defaulting Defendants from continuing to engage in their illicit conduct. In addition, the Defaulting Defendants' willful misconduct and failure to appear in this litigation merit the conclusion that “a slight damage award is unlikely to deter them from continuing their illegal business.” Louis Vuitton Malletier, S.A. v. LY USA, No. 06-CV-13463 (AKH), 2008 WL 5637161, at *2 (S.D.N.Y. Oct. 3, 2008) (citations omitted); see, e.g., Coach, Inc. v. O'Brien, No. 10-CV-6071 (JPO), 2012 WL 1255276, at *14 (S.D.N.Y. April 13, 2012) (“Although nothing in the record demonstrates whether [plaintiff] lost any revenue from [defendant's] infringement, the goal of deterring similar conduct generally requires a significant award.”); Malletier v. Carducci Leather Fashions, Inc., 648 F.Supp.2d 501, 504 (S.D.N.Y. 2009) (“[W]here . . . a defendant is shown to have acted willfully, a statutory award should incorporate not only a compensatory, but also a punitive component to discourage further wrongdoing by the defendants and others[.]”).
The remaining factors also weigh in favor of Pinkfong. With respect to the fifth factor, as discussed above, in this District a defaulting defendant is considered a per se willful infringer. See, e.g., Malletier, 648 F.Supp.2d at 504 (willfulness presumed “by virtue of . . . default”). Regarding the sixth factor, the Defaulting Defendants have failed to participate in this litigation, and thus have deprived plaintiffs of any records from which to assess the value of the infringing materials.
Pinkfong's request for $50,000 in statutory damages against the vast majority of the Defaulting Defendants is within the range of statutory damages other courts in this District have awarded in similar cases. See, e.g., Tangle, 2022 WL 2442302, at *8 ($50,000 awarded per defaulting defendant when defendants sold counterfeit toys on websites that included Amazon and Wish) (collecting cases). Notably, courts typically grant a plaintiff's request for statutory damages in full when a defendant continues its conduct despite receiving notices to end its infringing activity. See, e.g., Lucerne Textiles, Inc., 2013 WL 174226, at *3-4 ($30,000 requested and awarded in statutory damages in copyright case where defendant defaulted and plaintiff sent cease and desist letters prior to lawsuit); Hounddog Prods., L.L.C. v. Empire Film Grp., Inc., 826 F.Supp.2d 619, 631-32 (S.D.N.Y. 2011) ($150,000 requested and awarded in statutory damages in copyright case where defendant received notice it no longer had authorization to use copyright prior to lawsuit).
Here, Pinkfong does not provide evidence of taking enforcement efforts against the Defaulting Defendants prior to filing suit; rather, it offers only a general statement that “Pinkfong has gone to great lengths to protect its interests in and to the Baby Shark Products, Baby Shark Marks and Baby Shark Works.” Pinkfong I Compl. ¶24; Pinkfong II Compl. ¶24. Accordingly, I recommend an award of $40,000 (instead of the requested $50,000) per Defaulting Defendant other than Baby Family Store and luckyhome66 Store in statutory damages for copyright infringement. See, e.g., Whitehead v. Mix Unit, LLC, No. 17-CV-9476 (VSB) (JLC), 2019 WL 384446, at *4 (S.D.N.Y. Jan. 31, 2019) (requested statutory damages for copyright infringement reduced from $30,000 to $25,000 where defendant defaulted and distinguished from other cases where higher statutory damages were awarded because defendant continued infringement despite receiving notices to end its infringing activity), adopted by 2019 WL 1746007 (Apr. 18, 2019); Hollander Glass Texas, Inc. v. Rosen-Paramount Glass Co., Inc., 291 F.Supp.3d 554, 560 (S.D.N.Y. 2018) (same) (collecting cases), adopted by No. 17-CV-2105 (VSB) (GWG), 2019 WL 416327 (Feb. 1, 2019).
Pinkfong requests damages of $100,000 against Baby Family Store and luckyhome66 Store, providing evidence that they continue to sell Counterfeits subsequent to the entry of a temporary restraining order and preliminary injunction against them. Pinkfong I, Dkt. No. 53, Ex. C. Such disregard for a court order increases the salience of factors four and seven, discussed above. Therefore, I recommend an award of $100,000 against Baby Family Store and luckyhome66 Store.
Pursuant to 28 U.S.C. § 1961, “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court . . . [and] shall 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). Pinkfong is consequently entitled to and should be awarded post-judgment interest on the money judgments entered in this action. See, e.g., WowWee Group Limited v. Haoqin, No. 17-CV-9893 (WHP), 2019 WL 1316106, at *4 (S.D.N.Y. Mar. 22, 2019) (granting post-judgment interest following default by defendants who counterfeited plaintiff's marks and products); Bumble & Bumble, 2016 WL 658310, at *12 (granting post-judgment interest after plaintiff's success on merits of trademark infringement claim).
3. The Defaulting Defendants Should Be Permanently Enjoined from Infringing Upon Pinkfong's Intellectual Property
Both the Copyright Act and the Lanham Act provide for injunctive relief to protect a copyright or trademark. 17 U.S.C. § 502(a); 15 U.S.C. § 1116; see, e.g., McGraw-Hill Glob. Educ. Holdings, LLC v. Khan, 323 F.Supp.3d 488, 499 (S.D.N.Y. 2018) (as part of default judgment, permanent injunctive relief was appropriate under the Copyright Act, “enjoining Defendants from infringing any copyrighted work . . . owned or controlled by plaintiffs”); Harris v. Fairweather, No. 11-CV-2152 (PKC) (AJP), 2012 WL 3956801, at *10-11 (S.D.N.Y. Sep. 10, 2012) (same, with respect to the Lanham Act).
Courts may grant a permanent injunction when a plaintiff demonstrates that it has succeeded on the merits and: “(1) that 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 Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
Pinkfong meets all four requirements. The Lanham Act codifies a rebuttable presumption of irreparable harm upon a finding that a violation occurred. 15 U.S.C. § 1116(a). Beyond the presumption, Pinkfong plausibly alleges that it has suffered both financial and reputational irreparable harm due to the Counterfeits, which is a sufficient basis to grant a permanent injunction. Pinkfong I Pl. Mem. ¶ 68; Pinkfong II Pl. Mem. ¶ 66. See, e.g., United States Polo Ass'n v. PRL USA Holdings, Inc., 800 F.Supp.2d 515 (S.D.N.Y. 2011) (reputational harm caused by likelihood of confusion warrants permanent injunction); see also Really Good Stuff, LLC v. BAP Inv'rs, L.C., 813 Fed. App'x 39, 44 (2d Cir. 2020) (“The loss of reputation and goodwill constitutes irreparable harm.”).
Moreover, purely monetary relief would not compensate for Pinkfong's injury. When a default judgment is entered, “[a] court may infer from a defendant's default that it is willing to or may continue its infringement.” Pearson Educ., Inc. v. Vegara, No. 09-CV-6832 (JGK) (KNF), 2010 WL 3744033, at *4 (S.D.N.Y. Sept. 27, 2010) (internal citations omitted), adopted by Order dated May 11, 2011, Dkt. No. 21.
The balance of hardships also favors Pinkfong. Pinkfong will suffer irreparable harm from the Defaulting Defendants' continued infringement on its intellectual property, while the Defaulting Defendants will not suffer any legally cognizable hardship from an injunction barring them from producing and marketing counterfeit products. Lastly, the public interest is served by a permanent injunction, as “the public has an interest in not being deceived-in being assured that the mark it associates with a product is not attached to goods of unknown origin and quality.” N.Y.C. Triathlon, LLC v. NYC Triathlon Club, Inc., 704 F.Supp.2d 305, 344 (S.D.N.Y. 2010) (granting motion to enjoin defendant from further trademark violations).
Therefore, Pinkfong should be granted a permanent injunction, as sought in its complaint and as granted in a preliminary fashion by the Court, barring the Defaulting Defendants from:
i. Manufacturing, importing, exporting, advertising, marketing, promoting, distributing, displaying, offering for sale, selling, and/or otherwise dealing in the Counterfeits or any other products bearing the Baby Shark Marks and/or Baby Shark Works and/or marks or works that are confusingly or substantially similar to, identical to, and constitute a counterfeiting and/or infringement of the Baby Shark Marks and/or the Baby Shark Works;
ii. Directly or indirectly infringing in any manner on Pinkfong's Baby Shark Marks and/or Baby Shark Works;
iii. Using any reproduction, copy, counterfeit, or colorable imitation of Pinkfong's Baby Shark Marks and/or Baby Shark Works to identify any goods or services not authorized by Pinkfong;
iv. Using Pinkfong's Baby Shark Marks and/or Baby Shark Works or any other marks and/or artwork that are confusingly or substantially similar to the
Baby Shark Marks and/or Baby Shark Works, on or in connection with Defaulting Defendants' manufacturing, importing, exporting, advertising, promoting, marketing, distributing, displaying, offering for sale, selling, and/or otherwise dealing in the Counterfeits;
v. Using any false designation of origin or false description, or engaging in any action which is likely to cause confusion, cause mistake, and/or to deceive members of the trade and/or the public as to the affiliation, connection, or association of any product manufactured, imported, exported, advertised, marketed, promoted, distributed, displayed, offered for sale, or sold by Defaulting Defendants with Pinkfong, and/or as to the origin, sponsorship, or approval of any product manufactured, imported, exported, advertised, marketed, promoted, distributed, displayed, offered for sale, or sold by Defaulting Defendants and Defaulting Defendants' commercial activities by Pinkfong;
vi. Secreting, concealing, destroying, altering, selling off, transferring or otherwise disposing of and/or dealing with: (i) Counterfeits and/or (ii) any computer files, data, business records, documents or any other records or evidence relating to their User Accounts, Merchant Storefronts or the Defaulting Defendants' Assets and the manufacture, importation, exportation, advertising, marketing, promotion, distribution, display, offering for sale and/or sale of Counterfeits;
vii. Effecting assignments or transfers, forming new entities or associations, or creating and/or utilizing any other platform, User Account, Merchant Storefront or any other means of importation, exportation, advertising, marketing, promotion, distribution, display, offering for sale and/or sale of Counterfeits for the purposes of circumventing or otherwise avoiding the prohibitions set forth in this Order; and viii. Knowingly instructing, aiding or abetting any other person or business entity in engaging in any of the activities referred to in subparagraphs (i) through (vii) above.Pinkfong I Compl. at 23-24; Pinkfong II Compl. at 24-25; Preliminary Injunction Order, Pinkfong I, Dkt No. 8; Preliminary Injunction Order, Pinkfong II, Dkt. No. 8.
III. CONCLUSION
For the foregoing reasons, Pinkfong should be awarded $4,120,000 ($40,000 each from 98 of the Defaulting Defendants and $100,000 each from Baby Family Store and luckyhome66 Store), along with post-judgment interest. The Court should also issue an order permanently enjoining the Defaulting Defendants from further infringing on Pinkfong's intellectual property as outlined above.
PROCEDURE FOR FILING OBJECTIONS
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, and any responses to such objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Paul A. Engelmayer, United States Courthouse, 40 Foley Square, New York, NY 10007. Any requests for an extension of time for filing objections must be directed to Judge Engelmayer.
FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).