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finding that a sole corporate officer and employee served as a "moving, active, conscious force" behind the corporation's conduct
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98 Civ. 5408 (THK).
November 16, 2001
MEMORANDUM OPINION AND ORDER
Plaintiff, Calvin Klein Jeanswear Co. ("CKJ"), has asserted several causes of action against Defendants, Tunnel Trading, Jack Lipper ("Lipper"), Apparel Web, Inc. ("Apparel Web"), and Barry Zimberg ("Zimberg"). Each of these claims relates to Defendants' alleged traffic in goods bearing certain Calvin Klein trademarks to which Plaintiff, under a licensing agreement with Calvin Klein, Inc., has exclusive rights. Plaintiff claims violations of Sections 32(1) and 43(a) of the Lanham Act, 15 U.S.C. § 1114(1) and 1125(a), for trademark infringement and false designation of origin, respectively. Plaintiff also asserts supplemental causes of action, arising under New York law, for trademark infringement and unfair competition. Plaintiff seeks injunctive relief, damages, and an accounting for profits, as well as costs and attorneys' fees.
Pursuant to 28 U.S.C. § 636(c), the parties have consented to have this Court conduct all proceedings in this matter. All pretrial discovery has been completed, and Defendants Barry Zimberg and Apparel Web ("Defendants") have moved for summary judgment on all claims. Plaintiff has opposed this motion and has cross-moved for partial summary judgment against all four Defendants solely on the issue of liability.
Plaintiff directs its Motion for Partial Summary Judgment against all four named Defendants. However, Defendants Tunnel Trading and Jack Lipper have not responded to the Motion. Indeed, though both were served with a copy of the Complaint, they have never filed an answer to the Complaint or otherwise formally appeared in this litigation. At some point soon after the deadline for filing responsive papers had passed, Plaintiff sought to apply for a default judgment against Tunnel Trading and Jack Lipper. However, counsel for these Defendants, Richard Siegal, appeared at a conference before this Court on December 3, 1998, and stated that he had mailed copies of his Answer to Plaintiff and that he intended to file the Answer with the Court immediately. Based on these representations, the Court directed the parties to proceed with the litigation on the merits. Although it appears that Lipper and Tunnel trading did serve an Answer on the other parties, Siegal never filed an Answer with the Court. Nor has the Court otherwise heard from him or his clients since the 1998 conference. (Lipper was, however, deposed by Plaintiff in February 1999.) Nevertheless, Plaintiff has not sought the entry of a default judgment against Lipper and Tunnel Trading, and has brought its Motion for Partial Summary Judgment against all of the Defendants.
Plaintiff has moved for partial summary judgment only on its two Lanham Act claims. In its cross-motion, Plaintiff does not refer to its claims of infringement and unfair competition under New York law. Although Defendants have moved for summary judgment on "all claims" (Memorandum of Law of Defendants in Support of Motion for Summary Judgment ("Defs. Mem.") at 17), nowhere in their two Memoranda of Law in support of their motion do they discuss or even refer to Plaintiff's state law claims. The Court therefore will not address the state law claims in ruling on the instant motion and cross-motion.
BACKGROUND
Except as specifically noted, there is no dispute as to the following facts: Plaintiff is a Delaware corporation with its principal place of business in New York. (Complaint ("Compl.") at 1; Defendants' Statement Pursuant to [Local Civil] Rule 56.1 ("Defs. R. 56.1 Statement") ¶ 1.) Plaintiff holds a license from Calvin Klein, Inc., to use various Calvin Klein trademarks in connection with the manufacture and sale of jeans and jeanswear-related apparel such as t-shirts, sweatshirts, and baseball caps. (Compl. at 2; Defs. R. 56.1 Statement ¶ 3.) Defendant Zimberg is the founder and sole employee of Apparel Web, a corporation that brokers the sale of clothing "by bringing interested buyers and sellers together for a commission." (Defs. Mem. at 4; Deposition of Barry Zimberg ("Zimberg Dep.") at 12-13, 25.)In 1997 and 1998, Defendants Tunnel Trading and Jack Lipper offered goods bearing the Calvin Klein trademarks to Defendants Zimberg and Apparel Web. (Deposition of Jacov Lipper ("Lipper Dep.") at 166-78; Plaintiff's Statement of Undisputed Facts and Issues of Law ("Pl. R. 56.1 Statement") ¶ 3.) Around June 1998, Defendants Zimberg and Apparel Web sent two pairs of jeans bearing the Calvin Klein trademarks to RI Trading of New York, Inc. ("RI"), in anticipation of the sale of such jeans. (Declaration of Ron Yeffet ("Yeffet Decl.") ¶ ¶ 2-3, attached as Ex. B to Defs. Mem.; Pl. R. 56.1 Statement ¶ 4.) Plaintiff asserts, and Defendants dispute, that these jeans had been obtained from Defendants Lipper and Tunnel Trading. (Pl. R. 56.1 Statement ¶ 4; Defendants' Response to Plaintiff's Statement Pursuant to Rule 56.1 ("Defs. R. 56.1 Resp.") ¶ 4.) Pursuant to a settlement agreement between RI and Plaintiff resolving prior trademark-infringement litigation, RI had the option of having Plaintiff authenticate any Calvin Klein Jeanswear goods that RI intended to buy or sell. (Yeffet Decl. ¶ 2; Declaration of Michael F. Colosi, Esq. ("Colosi Decl.") ¶ 3; Defs. Mem., Ex. C.) On or about July 16, 1998, RI delivered to Plaintiff the two sample pairs of jeans that Apparel Web had provided to RI. (Pl. R. 56.1 Statement ¶ 5; Colosi Decl. ¶ 4, Ex. C; Yeffet Decl. ¶ 4.) According to Plaintiff, these same two pairs of jeans were deemed counterfeit by CKJ on or about July 17, 1998. (Plaintiff's Memorandum of Law ("Pl. Mem.") at 17; Colosi Decl. ¶ 5.) Plaintiff further contends that on or about the following day, the jeans were delivered to the offices of Milton Springut, Plaintiff's counsel, who "had them placed in a marked file, under lock and key," where they have remained ever since. (Pl. Mem. at 17; Declaration of Milton Springut ("Springut Decl.") ¶ ¶ 3-5.) It is on the basis of these two pairs of jeans that Plaintiff contends that Defendants have been trafficking in counterfeit CKJ jeans.
Defendants do not contest that the jeans marked PX-201 and PX-202 for the purposes of this litigation are counterfeit. (Defs. R. 56.1 Resp. ¶ 6.) Defendants do dispute that these two pairs of jeans are the same ones that RI delivered to Plaintiff's office for authentication, on July 16, 1998. (Defs. Mem. at 16-17; Yeffet Decl. ¶ 6.) Defendants rely on the Declaration of Ron Yeffet, the president of RI, who states that when he delivered the two pairs of jeans to Plaintiff's office in 1998, "[t]he receptionist placed the two sample jeans on a pile of apparel behind her desk." (Yeffet Decl. ¶ 6.) Yeffet further states that "[t]he two sample jeans were not marked, tagged, bagged or segregated in any manner" and that the two jeans he was shown as marked exhibits at his deposition were not the two samples he had delivered to Plaintiff. (Id.) Defendants Zimberg and Apparel Web argue that the testimony of Marian Mazza also supports the conclusion that the jeans marked as exhibits in this case are not the same jeans initially delivered by RI to CKJ. (Defs. Mem. at 5.) Ms. Mazza, a CKJ employee deposed by Defendants Zimberg and Apparel Web on October 16, 2000, testified that the jeans marked PX-201 and PX-202 were counterfeit. (Deposition of Marian Mazza ("Mazza Dep.") at 90-103, attached as Ex. C to Declaration of Scott D. Locke ("Locke Decl.").) Ms. Mazza also testified that Plaintiff's counsel had first shown her these jeans several months earlier — that is, many months after RI first delivered to Plaintiff the jeans it had received from Defendants in July 1998. (Mazza Dep. at 80-84, attached as Exs. D and E to Defs. Mem.) From this lapse of time, as well as from Mr. Yeffet's declarations, Defendants argue that Plaintiff "ha[s] not and cannot establish the chain of custody for the jeans in its possession." (Defs. Mem. at 5.) Plaintiff contests this assertion, claiming that "the declarations of Michael Colosi . . . and Milton Springut . . . establish that there is a clear chain of custody of the counterfeit jeans in question." (Plaintiff's Response to Defendants' Statement Pursuant to Local Rule 56.1 ("Pl. R. 56.1 Resp.") ¶ 7.)
DISCUSSION
I. Summary Judqment
Summary judgment is appropriate only when the submissions of the parties, taken together, "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In deciding a motion for summary judgment, the Court must "view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor."Am. Cas. Co. of Reading, Pa. v. Nordic Leasing, Inc., 42 F.3d 725, 728 (2d Cir. 1994) (citation and quotation marks omitted). The moving party must "inform the district court of the basis for its motion" and identify the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986). If the moving party meets this burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). A party opposing a motion for summary judgment "may not rest on the pleadings, but must further set forth specific facts in the affidavits, depositions, answers to interrogatories, or admissions showing a genuine issue exists for trial." Cifarelli v. Village of Babylon, 93 F.3d 47, 51 (2d Cir. 1996); see also Fed.R.Civ.P. 56(c) and (e); Celotex, 477 U.S. at 324, 106 S.Ct. at 2553.
II. Standing
As a threshold matter, Defendants argue that Plaintiff lacks standing to pursue its claims under the Lanham Act. Defendants make two sets of arguments in this regard. The first is easily disposed of.
Defendants assert that Plaintiff's license from the Calvin Klein corporation does not grant any rights with respect to the marks Plaintiff is enforcing here. Defendants contend that Plaintiff's license only permits it to use the Calvin Klein mark "in the form of Calvin Klein Jeans and CK/Calvin Klein Jeans." (Letter of Kashif Molamusa, counsel for Defendants Zimberg and Apparel Web, Aug. 14, 2001 ("Molamusa Let.") at 2.) Defendants further argue that Plaintiff "cannot use the CK Mark independent of the additional language Jeans." (Defendants' Reply Memorandum/Memorandum in Opposition to Plaintiff's Cross-Motion ("Reply") at 2 (emphasis in original).) Because Plaintiff refers in the Complaint to Defendants' alleged infringement of "the Calvin Klein trademarks" (and not, more precisely, to Defendants' alleged infringement of the marks "Calvin Klein and CK/Calvin Klein "in the form of Calvin Klein Jeans and CK/Calvin Klein Jeans' as applied to jeans and jeans-related items" (Molamusa Let. at 2)), Defendants claim that Plaintiff is trying to "trick the Court" (Reply at 2) into enforcing a mark — the "Calvin Klein" mark, standing alone — to which Plaintiff has no rights. Plaintiff attempts this supposed sleight-of-hand, Defendants assert, because "Calvin Klein Jeans" is a far weaker mark than the "stronger, established mark Calvin Klein." (Reply at 3.)
In its response to Defendants' Motion for Summary Judgment, Plaintiff disputed Defendants' argument about the nature of its license from Calvin Klein, Inc., but submitted only a small portion of its license agreement. At the Court's direction, Plaintiff produced a copy of the license agreement to the Court and to Defendants, and both parties submitted supplemental letter briefs on the issue of standing.
Defendants are apparently correct that the licensing agreement between Plaintiff and the Calvin Klein corporation grants the former the right to use the Calvin Klein trademark only in forms containing the word "Jeans." However, Plaintiff does not take issue with this characterization of its license. In fact, the first paragraph of the Complaint flatly states that "CKJ is the exclusive licensee of Calvin Klein for use of the trademarks CALVIN KLEIN and CK/CALVIN KLEIN in the form of the logos `CALVIN KLEIN JEANS' and `CK/CALVIN KLEIN JEANS'" (emphasis added). In a parenthetical after the foregoing, Plaintiff designates those marks "the Calvin Klein Trademarks" for short, and subsequently uses this designation throughout the Complaint. It is this common use of shorthand that apparently constitutes the "trick" Defendants make so much of in their submissions. Needless to say, if this is Defendants' argument, it is frivolous at best. In any event, nothing in Plaintiff's submissions gives any indication that Plaintiff is attempting to enforce the "Calvin Klein" mark standing alone. Indeed, the two sample pairs of jeans at issue in this case bear the mark "CK Calvin Klein Jeans." (Colosi Decl., Ex B.) This Court therefore finds that Plaintiff does not lack standing to enforce the mark on this basis.
Defendants' second challenge to Plaintiff's standing is based on Plaintiff's status as a licensee, and not the owner, of the Calvin Klein trademarks in issue. Defendants contend that Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), grants standing to assert a claim for trademark infringement solely to the registrant of the mark and its legal representatives, predecessors, successors, and assignees. Defendants also claim that Plaintiff lacks standing to sue for false designation of origin under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), on the grounds that Plaintiff does not have an ownership interest in the mark. Plaintiff responds that as the exclusive licensee of the marks at issue, it is entitled to bring enforcement actions under both 15 U.S.C. § 1114(1) and 15 U.S.C. § 1125(a). Plaintiff has also submitted a declaration from a corporate officer at Calvin Klein, Inc., stating that Plaintiff is the exclusive U.S. licensee of the trademarks at issue and that the Calvin Klein corporation approves of Plaintiff's prosecution of the instant action. (Second Declaration of Dawn Buonocore-Atlas ("Second Buonocore-Atlas Decl.") at ¶ ¶ 3, 5.)
Section 32 of the Lanham Act grants standing to assert a claim of trademark infringement to the "registrant" of the mark. 15 U.S.C. § 1114(1). The Act further defines registrant as including the registrant and its "legal representatives, predecessors, successors and assigns." Id. § 1127. Despite this seemingly definite and circumscribed statutory language, a few courts have found that in certain circumstances an exclusive licensee has standing to sue under Section 32. See Quabaug Rubber Co. v. Fabiano Shoe Co., 567 F.2d 154, 159 (1st Cir. 1977) (dictum); Ultrapure Sys., Inc. v. HAM-LET Group, 921 F. Supp. 659, 665-66 (N.D. Cal. 1996); Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 753 F. Supp. 1240, 1245 (D.N.J.), aff'd, 935 F.2d 1281 (3d Cir. 1991); Etri, Inc. v. Nippon Miniature Bearing Corp., 85 Civ. 615, 1989 WL 99575, at *3 (N.D. Ill. Aug. 18, 1989). Those courts have stated that standing may exist where the "licensing" agreement grants to an exclusive licensee a property interest in the trademark, or rights that amount to those of an assignee. See Quabaug, 567 F.2d at 159 n. 2 (" 15 U.S.C. § 1127 provides that the term registrant embraces the assignee thereof, and an exclusive licensee is an assignee.");Ultrapure, 921 F. Supp. at 666 (holding that an exclusive licensee has standing under § 1114 where the licensee, by license agreement, effectively "qualifie[d] as an assignee or successor of the registrant"); Etri, 1989 WL 99575, at *3 (finding standing because the agreement between licensor and plaintiff licensee, "although entitled a `License Agreement,' operates as an assignment of [licensor's] interests in the trademark"); see also Finance Inv. Co. v. Geberit A.G., 165 F.3d 526, 531 (7th Cir. 1998) (quoting 3 Jerome Gilson, Trademark Protection Practice § 8.16(1)(b) (1997)) ("[A] truly exclusive licensee, one who has the right even to exclude his licensor from using the mark . . . is equated with an assign[ee] since no right to use [the mark] is reserved to the licensor, and the licensee's standing derives from his presumed status as an assignee.").
However, those cases finding standing for de facto assignees are the exceptions that prove the rule — namely, that only the registrant of a trademark or its legal representatives, predecessors, successors, and assigns have standing to sue for trademark infringement under § 1114. See Berni v. Int'l Gourmet Rests. of Am., Inc., 838 F.2d 642, 645-46 (2d Cir. 1988); DEP Corp. v. Interstate Cigar Co., 622 F.2d 621, 622-23 (2d Cir. 1980); Finance Inv. Co., 165 F.3d at 531; Nordco A.S. v. Ledes, 95 Civ. 7753 (RJW), 1997 WL 570546, at *2 (S.D.N.Y. Sept. 15, 1997); Gruen Marketing Corp. v. Benrus Watch Co., 955 F. Supp. 979, 982 (N.D. Ill. 1997); see also 5 Thomas J. McCarthy, McCarthy on Trademarks and Unfair Competition § 32:3 (4th ed. 2001). Where a licensing agreement does not grant the licensee a property interest in the mark or otherwise assign to the licensee the registrant-licensor's ownership rights, the licensee, even if exclusive, cannot enforce the mark under § 1114. See DEP, 622 F.2d at 621 (denying standing to exclusive distributor where agreement expressly stated distributor had no claim of right to mark); Finance Inv. Co., 165 F.3d at 532 (denying standing to exclusive licensee where licensing agreement set forth many duties and rights inconsistent with an assignment, such as geographic limitations on the licensee's territory); Gruen, 955 F. Supp. at 983 (holding that licensing agreement was not assignment where agreement reserved many rights to licensor and stated that licensor was "owner of all right, title and interest in and to [the mark]"); see also Silverstar Enters., Inc. v. Aday, 537 F. Supp. 236, 240 (S.D.N.Y. 1982) (noting that DEP probably controls situation where licensing agreement contains clause acknowledging "Licensor's exclusive right, title and interest in and to the [marks]"). Moreover, "the Lanham Act precludes the assignment of a registered trademark unless it is assigned with the good will of the business in which the mark is used, or with that part of the good will connected with the use of and symbolized by the mark." DEP, 622 F.2d at 622; see also Gruen, 955 F. Supp. at 982 (contrasting assignment of a mark, "an outright sale," with a license, "a limited permit . . . to use the mark") (citing 2 McCarthy on Trademarks § 18:1 (1996)).
Here, Plaintiff does not assert that its licensing agreement with Calvin Klein, Inc., effects an assignment to Plaintiff of Calvin Klein's interests in the mark. Nor could Plaintiff plausibly make such an assertion, as the licensing agreement makes clear. The agreement, titled "License Agreement," sets forth numerous rights and obligations consistent with a licensing agreement, and not with an assignment. For example, the agreement grants Plaintiff use of the mark only in certain geographical areas (License Agreement Between Calvin Klein, Inc., and Calvin Klein Jeanswear Co. ("Agmt.") at 6), see Finance Inv. Co., 165 F.3d at 532, and requires Plaintiff to maintain the quality of the licensed mark (Agmt. at 25-27), see Gruen, 955 F. Supp. at 983 (citing 2 McCarthy on Trademarks § 18:44). More importantly, the agreement contains numerous explicit representations that it is a license, such as "Licensor reserves all rights to the Licensed Marks except as specifically granted herein" (Agmt. at 10); "the Calvin Klein Trademark Trust . . . is the owner, and Licensor . . . is the beneficial owner, of all right, title and interest in and to the Licensed Marks" (id. at 41); "the Trust is also the owner of the goodwill [in the Licensed Marks]" (id.); and "Licensee's rights pursuant to this Agreement are solely those of a licensee." (Id. at 43.) It is thus beyond question that Plaintiff is not an assignee of the registrant-owner but a mere licensee; as such, Plaintiff falls outside the statutory definition of "registrant" and may not sue for trademark infringement under § 1114(1).
Unlike Section 32 of the Lanham Act, which grants a right of action solely to the registrant of a trademark, Section 43(a) permits "any person who believes that he or she is likely to be damaged" by the proscribed conduct to bring a civil action. 15 U.S.C. § 1125(a). Courts have consistently recognized that this broad language confers standing on trademark licensees. See, e.g., Quabaug Rubber Co., 567 F.2d at 161; Piccoli A/S v. Calvin Klein Jeanswear Co., 19 F. Supp.2d 157, 171 (S.D.N.Y. 1998); Mastercard Int'l, Inc. v. Sprint Communications, 94 Civ. 1051 (JSM), 1994 WL 97097, at *3 (S.D.N.Y. Mar. 23, 1994), aff'd, 23 F.3d 397 (2d Cir. 1994); Bus. Trends Analysts v. Freedonia Group, Inc., 650 F. Supp. 1452, 1457 (S.D.N.Y. 1987); Silverstar, 537 F. Supp. at 241. The plaintiff need only show "potential commercial or competitive injury" from a violation of § 1125(a). Piccoli, 19 F. Supp.2d at 172 (citing Berni, 838 F.2d at 645-48); accord Quabaug Rubber Co., 567 F.2d at 161 ("[O]ne who may suffer adverse consequences from a violation of section 1125(a) has standing to sue regardless of whether he is the registrant of the trademark.").
Obviously, the alleged sale of counterfeit jeans bearing the marks for which Plaintiff has an exclusive license would cause Plaintiff to "believe that [it] is likely to be damaged." 15 U.S.C. § 1125(a). Neither the statute nor the caselaw requires any further showing. Plaintiff therefore has standing to sue for false designation of origin under § 1125(a).
Accordingly, Defendants' Motion for Summary Judgment on the basis of Plaintiff's lack of standing is granted solely with respect to the claim under 15 U.S.C. § 1114, and is denied in all other respects. III. Zimberg's Individual Liability
The dismissal of Plaintiff's Section 32 claim is largely academic. The evidence needed to prove liability under Sections 32 and 43 of the Lanham Act is virtually the same, given that Plaintiff's claims for infringement and unfair competition are based upon the same conduct. See Ballet Makers, Inc. v. United States Shoe Corp., 633 F. Supp. 1328, 1331 (S.D.N.Y. 1986); see also Gucci Am., Inc. v. Action Activewear, Inc., 759 F. Supp. 1060, 1063 (S.D.N.Y. 1991) ("The elements required to succeed on these claims [trademark infringement under 15 U.S.C. § 1114 and unfair competition under 15 U.S.C. § 1125] are substantially the same."). Moreover, the remedies available for violations of each section are the same; injunctive and monetary relief, including profits and attorneys' fees, are expressly available (subject to the principles of equity) to a plaintiff prevailing under either section. See 15 U.S.C. § 1116 (injunction); 15 U.S.C. § 1117(a) (monetary relief); see also Gillette Co. v. Wilkinson Sword, Inc., No. 89 Civ. 3586 (KMW), 1992 WL 30938, at *3 (S.D.N.Y. Feb. 3, 1992) (noting that in 1988 Congress, codifying the decisional law of a majority of circuits, including the Second Circuit, amended § 1117(a) of Lanham Act to apply explicitly to § 1125(a) violations).
Defendant Zimberg asserts that he cannot be held personally liable for any of the alleged acts of infringement. He argues that even assuming Apparel Web violated the Lanham Act, Zimberg himself cannot be liable because he lacked the requisite intent for individual liability under the Act; that is, he "believed that he was marketing genuine CKJ apparel." (Defs. Mem. at 10.) Plaintiff counters that as "the sole purchaser, seller and employee of Apparel Web" (Pl. Mem. at 10; Zimberg Dep. at 13), Zimberg is subject to individual liability. The Court agrees with Plaintiff.
Under the Lanham Act, "personal liability for trademark infringement and unfair competition is established if the officer is a moving, active, conscious force behind the defendant corporation's infringement."Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899, 913 (E.D.N.Y. 1988) (citation and internal punctuation omitted). See generally 4 McCarthy on Trademarks § 25:24. A showing that the officer "authorized and approved the acts of unfair competition which are the basis of [the] . . . corporation's liability" is sufficient to subject the officer to personal liability. Bambu Sales, 683 F. Supp. at 913 (quoting Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir. 1978)). Further, "it is immaterial whether he knows that his acts will result in an infringement." Id. at 913-914 (citation and internal punctuation omitted); see also Carell v. Shubert Org., 104 F. Supp.2d 236, 271 (S.D.N.Y. 2000).
Under this standard, it is plain that Defendant Zimberg may be held liable for any acts of trademark infringement or unfair competition committed by Defendant Apparel Web. As its sole corporate officer and employee, Defendant Zimberg unarguably served as the "moving, active, conscious force," Bambu Sales, 683 F. Supp. at 913, behind Apparel Web's conduct. See McDonald's Corp. v. McBagel's, Inc., 649 F. Supp. 1268, 1281 (S.D.N.Y. 1986) (subjecting sole proprietor of infringing corporation to same injunction as corporate entity); Polo Fashions, Inc. v. Extra Special Prods., Inc., No. 77 Civ. 5023 (GLG), 1980 WL 30287, 208 U.S.P.Q. 421, 426 (S.D.N.Y. Mar. 5, 1980) (holding president and sole shareholder personally liable); see also 4 McCarthy on Trademarks § 25:24 ("The person who is a sole shareholder, officer, and director of the corporate infringer is personally liable."). Contrary to Defendants' assertion, the law does not require Plaintiff to show that Defendant Zimberg "consciously sought to commit a trademark violation." (Reply at 9.) Accordingly, Defendants' motion for summary judgment on the claims against Defendant Zimberg individually is denied.
IV. Liability/Likelihood of Confusion
To prevail on claim of false designation of origin under § 43(a) of the Lanham Act, a plaintiff must, as a threshold matter, show that the mark in question is entitled to protection. See Orb Factory, Ltd. v. Design Sci. Toys, Ltd., No. 96 Civ. 9649 (RWS), 1999 WL 191527, at *4 (S.D.N.Y. Apr. 7, 1999) (citing Genessee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 143 (2d Cir. 1997)); Rosco, Inc. v. Mirror Lite Co., 139 F. Supp.2d 287, 297 (E.D.N.Y. 2001) (citing Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 390 (2d Cir. 1995)).
Plaintiff has submitted copies of the official registrations for the trademarks "Calvin Klein," "CK/Calvin Klein," and "CK/Calvin Klein Jeans," as well as a copy of the licensing agreement permitting Plaintiff to use these marks in specified ways. (Declaration of Dawn Buonocore-Atlas ("Buonocore-Atlas Decl."), Ex. 1; Agmt.) Plaintiff has also submitted two declarations from an officer of Calvin Klein, Inc., stating that Plaintiff is the exclusive licensee of the above marks in the United States and that as such, Plaintiff has the exclusive right to use these marks in connection with jeans and jeans-related apparel. (Buonocore-Atlas Decl. ¶ 3; Second Buonocore-Atlas Decl. ¶ 3.) Defendants, in arguing the merits of their motion for summary judgment, reiterate their assertion that Plaintiff has no rights to the marks it is attempting to enforce in this action; for the reasons stated above, the Court finds no merit in this assertion. What Defendants do not contest is that these marks are entitled to trademark protection under the Lanham Act. Thus, the first prerequisite to Plaintiff's claim — that of establishing rights to a valid mark — is satisfied.
Once it is established that a mark is entitled to protection, the inquiry turns to whether "numerous ordinary prudent purchasers are likely to be misled or confused as to the source of the product in question."Arrow Fastener, 59 F.3d at 390-91; see also Estee Lauder, Inc. v. Gap, Inc., 108 F.3d 1503, 1510 (2d Cir. 1997); Cache, Inc. v. M.Z. Berger Co., No. 99 Civ. 12320 (JGK), 2001 WL 38283, at *5 (S.D.N.Y. Jan. 16, 2001). In this Circuit, courts deciding whether a plaintiff has established a likelihood of confusion must consider the eight factors set forth in the classic Polaroid opinion. See Arrow Fastener, 59 F.3d at 391 (citing Polaroid Corp. v. Polaroid Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961)). These factors are as follows:
(1) the strength of the mark; (2) the degree of similarity between the two marks; (3) the proximity of the products; (4) the likelihood that the prior owner will "bridge the gap" (5) actual confusion; (6) the defendant's good faith in adopting its mark; (7) the quality of the defendant's product; and (8) the sophistication of the buyers.Id. This list of factors is nonexclusive, and no one of the factors is dispositive. See Estee Lauder, 108 F.3d at 1510 (citations omitted).
Summary judgment is appropriate where, based on the Polaroid inquiry, "the undisputed evidence would lead to only one conclusion as to whether confusion is likely." Cadbury Beverages, Inc. v. Cott Corp., 73 F.3d 474, 478 (2d Cir. 1996) (citations omitted). Where both parties have moved for summary judgment, the court must "determine whether any reasonable trier of fact could conclude that confusion is likely, and, if so, whether no reasonable trier of fact could conclude that it is not." Id. However, as is discussed below, Plaintiff's Cross-Motion for Summary Judgment fails because of the factual dispute regarding the chain of custody of the sample jeans. Accordingly, whether or not the Polaroid factors would otherwise justify the grant of Plaintiff's cross-motion need not be considered here. As for Defendants' motion, an award of summary judgment would nonetheless be appropriate if this Court found that Plaintiff had failed, as a matter of law, to establish the likelihood of confusion between its products and those it claims Defendants are selling. The Court's task, then, is to analyze each of the Polaroid factors in turn to determine whether the record raises a genuine issue of material fact on the likelihood of confusion. See Cache, 2001 WL 38283, at *6 (citingSports Auth., Inc. v. Prime Hospitality Corp., 89 F.3d 955, 960 (2d Cir. 1996)).
In this case, Defendants do not dispute that the two sample pairs of jeans Plaintiff has submitted as evidence of Defendants' trafficking in counterfeiting jeans are in fact counterfeit. (Pl. R. 56.1 Statement ¶ 6; Defs. R. 56.1 Statement ¶ 6.) Therefore the likelihood of consumer confusion from the marketing of these jeans, if such marketing were established, would most likely not be seriously in dispute. Cf. Proctor Gamble Co. v. Quality King Distribs., Inc., 123 F. Supp.2d 108, 115 (E.D.N.Y. 2000) ("[I]t would be difficult to imagine a clearer case of consumer confusion than the instant case in which defendants . . . sold counterfeit products on which plaintiff's registered marks appear in their entirety.") (citation and quotation marks omitted); Rolex Watch U.S.A., Inc. v. Jones, No. 99 Civ. 2359 (DLC), 2000 WL 1528263, at **2-3 (S.D.N.Y. Oct. 13, 2000); Gucci Am., Inc. v. Accents, No. 96 Civ. 9575 (JSR), 1997 WL 691431, at **2-3 (S.D.N.Y. Nov. 5, 1997). In any event, even a cursory analysis of the Polaroid factors demonstrates that Plaintiff has come forth with more than enough evidence of likely confusion to preclude the grant of summary judgment to Defendants.
Strength of Plaintiff's Mark
Plaintiff has put forth ample evidence establishing the strength of the marks at issue. In considering the strength of a mark, a court's inquiry "focuses on the distinctiveness of the mark, or more precisely, its tendency to identify the goods as coming from a particular source."Swatch, S.A. v. Siu Wong Wholesale, No. 92 Civ. 3653 (PKL), 1992 WL 142745, at *4 (S.D.N Y June 8, 1992) (quoting Lang v. Ret. Living Pub. Co., 949 F.2d 576, 581 (2d Cir. 1991)). Registered marks, such as Plaintiff's, are "presumed to be distinctive and should be afforded the utmost protection." Swatch, 1992 WL 142745, at *4 (quoting Lois Sportswear, U.S.A., Inc. v. Levi Strauss Co., 799 F.2d 867, 871 (2d Cir. 1986)). Moreover, Plaintiff enhances the strength of its marks by,inter alia, maintaining various quality controls and spending extensive amounts on marketing. (Lawler Decl. ¶ ¶ 4-5, 7); see Rolex, 2000 WL 1528263, at *2. For their part, Defendants simply assert, without citing to any evidence in the record, that the Calvin Klein and Calvin Klein Jeans marks are weak; that these marks "have weakened considerably from their association with child pornography"; and that Plaintiff has been "selling inferior products outside its market." (Defs. Mem. at 12.) The Court will not give any weight to these bare, unsubstantiated allegations; under Rule 56, "a party may prevail in a summary judgment motion only upon the introduction of competent evidence, such as affidavits." Padilla v. Payco Gen. Am. Credits, Inc., 161 F. Supp.2d 264, 274 (S.D.N.Y. 2001); see Fed.R.Civ.P. 56. This factor thus weighs strongly in favor of Plaintiff.
Similarity of the Marks
It is undisputed that the marks on the counterfeit jeans and the registered Calvin Klein trademarks are the same. (Pl. R. 56.1 Statement ¶ ¶ 4-6.) This factor thus weighs heavily in Plaintiff's favor.See Swatch, 1992 WL 142745, at *4.
Proximity of the Products
This inquiry is concerned with "competitive proximity," that is, with "whether it is likely that customers mistakenly will assume either that the junior user's goods somehow are associated with the senior user or are made by the senior user." Swatch, 1992 WL 142745, at *4 (quotingCentaur Communications, Ltd. v. A/S/M Communications, Inc., 830 F.2d 1217, 1226 (2d Cir. 1987)). Because Plaintiff's and Defendants' goods — jeans — are substantially identical, their competitive proximity is "readily apparent." Id. This factor thus also weighs in Plaintiff's favor. See id; Consol. Cigar Corp. v. Monte Cristi de Tabacos, 58 F. Supp.2d 188, 198 (S.D.N.Y. 1999).
Bridging the Gap
This factor "looks to whether the senior user of the mark is likely to enter the market in which the junior user is operating, that is, bridge the gap." Swatch, 1992 WL 142745, at *4 (quoting Centaur Communications, 830 F.2d at 1227). Where, as here, the parties are selling identical products, there is no gap to bridge. Thus, this factor strongly favors Plaintiff. See id.
Evidence of Actual Confusion
Defendants correctly point out that Plaintiff has not submitted any evidence of actual consumer confusion, such as a consumer survey. However, "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." See Swatch, 1992 WL 142745, at *5 (quoting Lois Sportswear, 799 F.2d at 875. Plaintiff's failure to produce evidence of actual confusion is therefore of little avail to Defendants.
Defendants' Good Faith
This factor focuses on "whether the defendant adopted its mark with the intention of capitalizing on [the] plaintiff's reputation and goodwill and any confusion between his and the senior user's product." See Fila U.S.A., Inc. v. Run Run Trading Corp., No. 95 Civ. 7144 (PKL), 1996 WL 271992, at *3 (S.D.N.Y. May 21, 1996) (quoting Lang, 949 F.2d at 581). Defendant Zimberg claims he believed he was marketing genuine CKJ apparel. (Defs. Mem. at 10). Because this is a counterfeiting case, however, the relevance of Defendants' intent to the determination of confusion under the Polaroid test is "extremely limited." See Gucci v. Accents, 1997 WL 691431, at *2. Moreover, as is discussed below, in the section on damages, Plaintiff points to some, albeit rather limited, evidence of Defendants' bad faith.
Quality of Defendants' Products
This factor looks to whether the stature of Plaintiff's mark could be "tarnished" by the Defendants' inferior goods. See Fila, 1996 WL 271992, at *3 (quoting Cadbury, 73 F.3d at 483). Where the allegedly infringing product is inferior, the quality factor weighs in favor of Plaintiff. See Consol. Cigar, 58 F. Supp.2d at 199 (quoting Nikon v. Ikon Corp., 987 F.2d 91, 95 (2d Cir. 1993)). Here, the undisputed testimony of Marian Mazza, a CKJ vice president in charge of manufacturing jeans, establishes that the two pairs of sample jeans in question are of a quality inferior to that of authentic Calvin Klein jeans. (Mazza Dep. 90-103.) This factor thus favors Plaintiff.
Sophistication of the Buyers
Neither party has submitted evidence as to the sophistication of consumers of Calvin Klein Jeanswear.
In sum, however, the other Polaroid factors weigh heavily in Plaintiff's favor. As noted, this Court need not consider whether Plaintiff has submitted enough evidence to support the grant of summary judgment; suffice it to say that Defendants fall woefully short of demonstrating that no reasonable juror could conclude that there is a likelihood of confusion between Defendants' and Plaintiff's goods.
Defendants do, however, raise a genuine factual dispute as to whether or not the jeans in evidence in this case are the same jeans that RI initially delivered to Plaintiff for authentication. As noted, Defendants argue that Plaintiff cannot establish a chain of custody between the jeans delivered by RI to CKJ, and the two pairs of counterfeit jeans produced in discovery by Plaintiff. In support of this contention, Defendants have submitted a declaration from the president of RI, Ron Yeffet, that points to alleged carelessness on the part of CKJ in marking and storing the sample Jeans; Mr. Yeffet also testified at his deposition that the two jeans marked as exhibits, the concededly counterfeit jeans, were not the two samples he delivered to CKJ. (Yeffet Decl. ¶ 6.) Plaintiff denies these assertions, and has submitted declarations purporting to establish a clear chain of custody of the counterfeit jeans in question. (Colosi Decl.; Springut Decl.) The competing factual claims of Plaintiff's witnesses and of Defendants' cannot be resolved on a motion for summary judgment. Rather, they raise a genuine dispute with respect to an essential aspect of Plaintiff's claim — that the counterfeit jeans in evidence are the same jeans produced or sold by Defendants — and thus are appropriately resolved by a jury, not by this Court.
As also noted, Defendants dispute that the two pairs of jeans they delivered to RI were obtained from Lipper and Tunnel Trading. (Defs. R. 56.1 Resp. ¶ 4.)
Moreover, even assuming the two pairs of counterfeit jeans in question came from Defendants, Defendants correctly argue that this would not establish that all, or indeed any more than two, of Defendants' transactions involved counterfeit goods. (Defs. Mem. at 13-16.) In response, Plaintiff asserts that Defendants' canceled checks containing the notations "CKJ" and "CK Jeans" indicate a large volume of trade of counterfeit Calvin Klein jeanswear. (Pl. Mem. at 16.) However, the inferences, if any, to be drawn from these checks, and from the fact, if later established, that Defendants delivered two pairs of counterfeit jeans to RI, are more appropriately drawn by a jury than by this Court on a motion for summary judgment. Whether or not Defendants are in the business of buying and selling counterfeit goods — as opposed to simply offering two pairs of counterfeit jeans to RI on a single occasion — is a factual question material to the determination of Defendants' liability (and Plaintiff's damages) under the Lanham Act.
V. Damages
In addition to injunctive relief, the Complaint demands from Defendants an accounting for profits, as well as costs and attorneys' fees. Section 35 of the Lanham Act, 15 U.S.C. § 1117, permits prevailing plaintiffs to recover damages, including defendants' profits, under certain circumstances. See George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532, 1537 (2d Cir. 1992). There are "three categorically distinct rationales" for awarding profits under the Lanham Act: "(1) the defendant is unjustly enriched; (2) the plaintiff sustained damages from the infringement; or (3) the award of profits is necessary to deter a willful infringer from doing so again." Gidatex, S.r.L. v. Campaniello Imports, Ltd., 82 F. Supp.2d 136, 141 (S.D.N.Y. 2000) (citing George Basch, 968 F.2d at 1537). Under each of these rationales, "a plaintiff must prove that an infringer acted with willful deception." Id. (quoting George Basch, 968 F.2d at 1540).
Defendants, in their motion, argue that Plaintiff has submitted "no evidence" upon which a court could conclude that an award of profits was appropriate. (Defs. Mem. at 13.) For example, as noted above, even it were determined that the two pairs of jeans in issue are counterfeit, and that Defendants were the source of these jeans, such findings would not constitute evidence of actual sales for which profits could be sought. In response, Plaintiff points to evidence in the record, such as Defendants' canceled checks, that apparently reveals more than one million dollars of transactions in goods bearing the Calvin Klein trademarks. (Pl. Mem. at 16; Locke Decl., Ex. D) Plaintiff also cites to deposition testimony of Defendant Zimberg that suggests the Defendants' knowledge that they were trafficking in illegal goods (Pl. Mem. at 15.), as well as to Defendants' failure to maintain proper records, which Plaintiff claims is typical of counterfeiters (id. at 5).
In its Cross-Motion, Plaintiff seeks summary judgment solely on the issue of liability.
Whether or not Defendants acted willfully, and whether they can be held responsible for profits earned from the sale of counterfeit Calvin Klein jeans, turn upon the resolution of the chain-of-custody issue, as well as upon proof of sales of counterfeit goods other than the two samples. Accordingly, the Court denies summary judgment to Defendants on the issue of Plaintiff's entitlement to an accounting.
CONCLUSION
For the foregoing reasons, Defendants' Motion for Summary Judgment is granted only with respect to Plaintiff's claim of trademark infringement under 15 U.S.C. § 1114, and is denied in all other respects. Plaintiff's Cross-Motion for Partial Summary Judgment on the issue of liability is also denied.
The parties are to submit a Joint Pretrial Order by December 17, 2001.
SO ORDERED.