Opinion
06 Civ. 3776 (RJH) (KNF).
August 20, 2007
REPORT RECOMMENDATION
I. INTRODUCTION
Plaintiff Global Van Lines, Inc. ("Global"), brought this action against Global Moving Express, Inc. d/b/a Global Moving d/b/a Global Moving Express ("GME"), under the Lanham Act of 1946, as amended, 15 U.S.C. § 1051, et seq., to recover damages for: (i) trademark infringement; (ii) false designation of origin; and (iii) unauthorized use of Global's trademark and trade name, causing dilution of the quality of these marks and jeopardizing the goodwill built by Global, through these marks, over many years. Global also brought the following state-law claims: (i) common law unfair competition; (ii) statutory unfair competition and deceptive use of trade name, see New York General Business Law ("GBL") § 133; and (iii) statutory deceptive trade practice(s), see GBL § 349. Upon GME's failure to file an answer or otherwise respond to the complaint, your Honor ordered that a default judgment be entered against it. Additionally, your Honor granted Global's motion for an order imposing a permanent injunction. Thereafter, your Honor referred the matter to the undersigned to conduct an inquest and to report and recommend the amount of damages to be awarded to the plaintiff against the defendant.
The Court directed Global to serve and file its proposed findings of fact and conclusions of law, and an inquest memorandum setting forth its proof of damages, costs of this action and its attorney's fees. The Court also directed the defendant to serve and file any opposing memoranda, affidavits and exhibits, as well as any alternative findings of fact and conclusions of law it deemed appropriate. The defendant did not file anything in opposition to Global's submissions.
The plaintiff's inquest submissions aver that it is entitled to recover from the defendant $100,000, pursuant to 15 U.S.C. § 1117(c), for violating 15 U.S.C. § 1114, and $100,000, pursuant to 15 U.S.C. § 1117(d), for violating 15 U.S.C. § 1125(d). The plaintiff also requests that its damages award be trebled pursuant to 15 U.S.C. § 1117(b). Additionally, the plaintiff requests prejudgment interest, attorney's fees and the costs it incurred in prosecuting this action.
In the plaintiff's inquest submissions, it requests relief for alleged cyberpiracy pursuant to 15 U.S.C. § 1125(d). However, the plaintiff's complaint fails to allege any facts to support a claim pursuant to 15 U.S.C. § 1125(d). As a result, the Court declines to make a determination on damages for this claim.
II. BACKGROUND
When a defendant defaults in an action, by failing to plead or otherwise defend against a complaint, the defendant is deemed to have admitted every well-pleaded allegation of the complaint except those relating to damages. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). In addition, the plaintiff is entitled to all reasonable inferences from the evidence presented. See Au Bon Pain Corp. v. Artect, Inc. 653 F.2d 61, 65 (2d Cir. 1981). Based upon the submissions made by the plaintiff, the complaint filed in the instant action, and the Court's review of the entire court file in this action, the following findings of fact are made:
Global is a moving company certified by the Federal Highway Administration to transport goods interstate. Its services include: relocating domestic and corporate customers; packing, transporting and storing household goods; providing transportation insurance; and monitoring services. Since 1966, Global has used the trade name "Global," a service mark with its trade name and an image of a globe. Global is the owner of United States trademark registration Nos. 897, 127 and 1, 167, 207 for the service mark "GLOBAL and Design" for services involving the transportation of goods. See Compl. Ex. 1. In addition, Global owns trademark registration Nos. 903, 656 and 1, 119, 228 for the mark "GLOBAL" in connection with packing, storing and transporting goods for others and in connection with cartons, containers and packing materials for use in transporting goods and household articles, respectively. See id. Global uses these marks to advertise its services on television, on the internet, in print advertisements, and on equipment and vehicles it uses to facilitate its business. Global has become famous for the services it provides. Global has licensed various companies to act as its agents and permits these agents to use Global's registered marks on their vehicles and other products.
GME is a New York corporation operating as "Global Moving" and "Global Moving Express." GME purports to be a moving and storage company offering services nearly identical to those offered by Global.
According to Global, as of March 7, 2006, GME operated a website with the following internet address: http://www.globalmovingexpress.com. The name "Global Moving" was at the top of the website's homepage next to an image of a globe. Since the defendant's name and identifying marks are so similar to the plaintiff's registered tradenames and trademarks, the general public is unable to distinguish between the plaintiff's company and the defendant's company. For example, one of Global's customer service agents received a complaint from a GME customer regarding poor service she attributed, mistakenly, to Global. Global's name has been damaged because of its mistaken affiliation with GME.
III. CONCLUSIONS OF LAW
A default judgment in an action establishes liability, but is not a concession of damages. See Cappetta v. Lippman, 913 F. Supp. 302, 304 (S.D.N.Y. 1996) (citing Flaks v. Koegel, 504 F.2d 702, 707 [2d Cir. 1974]). Damages must be established by the plaintiff in a post-default inquest. Id. In conducting an inquest, a court need not hold a hearing "as long as it [has] ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine Claims Agency, Inc v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 [2d Cir. 1989]). The court may rely on affidavits or documentary evidence in evaluating the fairness of the sum requested. See Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 54 (2d Cir. 1993).
Statutory Damages
Global seeks damages for trademark infringement under Section 32 of the Lanham Act. In its most pertinent part, the statute provides that:
Any person who shall, without the consent of the registrant — (a) use in commerce any reproduction, counterfeit . . . 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 . . . shall be liable in a civil action by the registrant for the remedies hereinafter provided.15 U.S.C. § 1114(1)(a).
Under the Lanham Act, a prevailing plaintiff in an action, such as the one at bar, is typically entitled to recover: "(1) the defendant's profits; (2) any damages sustained by the plaintiff; and (3) the costs of the action." See 15 U.S.C. § 1117(a).
15 U.S.C. § 1117(c) allows a plaintiff to elect to recover statutory damages for infringing conduct when an infringer's profits and actual damages are uncertain. Section 1117(c) provides, in pertinent part, the following:
In a case involving the use of a counterfeit mark . . . the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection (a) of this section, an award of statutory damages . . . in the amount of (1) not less than $500 or more than $100,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just; or (2) if the court finds that the use of the counterfeit mark was willful, not more than $1,000,000 per counterfeit mark. . . .15 U.S.C. § 1117(c).
In crafting the statutory damages provision of the Lanham Act, 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." Polo Ralph Lauren, L.P. v. 3M Trading Co., Inc, No. 97 Civ. 4824, 1999 WL 33740332, at *4 (S.D.N.Y. April 19, 1999) (citation omitted); 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.").
15 U.S.C. § 1117(c) "does not provide guidelines for courts to use in determining an appropriate award, as it is only limited by what the court considers just." Gucci Am., Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d 511, 520 (S.D.N.Y. 2004) (internal quotation marks and citation omitted). Therefore, the court has broad discretion in fixing the amount of statutory damages. In cases where plaintiffs have requested statutory damages under 15 U.S.C. § 1117(c), courts have looked to an analogous provision of the Copyright Act, 17 U.S.C. § 504(c), in determining what factors should inform an award of statutory damages. Under the Copyright Act, courts look to factors such as:
(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.See Gucci, 315 F. Supp. 2d at 520 (citing Fitzgerald Pub. Co., Inc. v. Baylor Pub. Co., 807 F.2d 1110, 1117 [2d Cir. 1986]).
In the instant case, the plaintiff has demonstrated its tradename and trademarks are very valuable, given their longstanding use and the plaintiff's continual registration and renewal of its name and marks. The defendant's failure to appear in this action has prevented the plaintiff from determining the actual damages resulting from the defendant's misconduct. Global is not requesting damages based on willfulness, however, GME's willfulness, in violating the trademark law by using a counterfeit mark, is established by virtue of its default in this action. See Tiffany (NJ) Inc. v. Luban, 282 F. Supp. 2d 123, 124 (S.D.N.Y. 2003).
Based on the record before it, the Court finds that an award of $100,000, in statutory damages, for the defendant's infringement of the plaintiff's trademarks will compensate Global for its loss and impress upon GME that there are consequences for its infringing conduct. In addition, statutory damages of this amount will serve as a specific deterrent to GME and as a general deterrent to others who might contemplate engaging in similar infringing behavior in the future.
Treble Damages
Global requests that the court award treble damages, under 15 U.S.C. § 1117(b). However, the plaintiff is not entitled to treble damages because it has requested statutory damages, pursuant to 15 U.S.C. § 1117(c), which does not expressly authorize treble damages. See 15 U.S.C. § 1117(c). Statutory damages are seen as an alternative to recovering actual and treble damages. See Sly Magazine, LLC v. Weider Publications, L.L.C., No. 05 Civ. 3940, 2007 WL 1061906, at *4 (S.D.N.Y. Apr. 9, 2003) ("infringement of a registered trademark exposes the infringing party to treble damages . . . or to substantial statutory damages upon plaintiff's election. . . .") (emphasis added); Gucci, 315 F. Supp. 2d at 522 (determining that statutory damages "are available 'instead of actual damages'"). As explained in Sara Lee,
"[Section] § 1117(a) provides strictly compensatory relief; § 1117(b) provides strictly capped punitive relief; and § 1117(c) provides both compensatory and punitive relief without the strict limits of § 1117(a), (b). While § 1117(c) looks to compensatory considerations (e.g., actual losses and trademark value), it also looks to punitive considerations (e.g., deterrence of other infringers and redress of wrongful defense conduct)."36 F. Supp. 2d at 165.
Accordingly, while a plaintiff who demonstrates a defendant acted willfully is oftentimes automatically awarded treble damages pursuant to 15 U.S.C. § 1117(b), if it elects to recover actual damages under 15 U.S.C. § 1117(a), "it is an 'unadventurous corollary' to also treble any determinable damages when awarding statutory damages [pursuant to 15 U.S.C. § 1117(c)] because 'statutory damages give even greater weight to the need to deter and punish.'" Gucci, 315 F. Supp. 2d at 522 (quotingSara Lee Corp., 36 F. Supp. 2d at 170).
While the Court understands the plaintiff's desire for treble damages to deter and punish the defendant, the Court finds that, in a circumstance such as this, where the plaintiff has elected to receive statutory damages, treble damages are not available. The Court finds further that an award of $100,000, pursuant to 15 U.S.C. § 1117(c), is sufficient to deter the defendant from future infringing conduct.
Attorney's Fees and Costs
The plaintiff has requested that the court award it the attorney's fees and costs it incurred in prosecuting this infringement action. The Court acknowledges that, on November 11, 2006, your Honor granted Global's request for attorney's fees and costs, by adopting, with modification, the plaintiff's proposed order for judgment by default. However, while 15 U.S.C. § 1117(a) expressly permits a court to award attorney's fees and costs, 15 U.S.C. § 1117(c) makes no mention of attorney's fees and costs. "The presumption of attorney's fees [applicable under § 1117(a) awards] does not apply here (except to the extent that actual damages are a persuasive measure towards determining statutory damages), and any such application is simply another factor in the mix of the Court's broad discretion to award statutory damages." Gucci, 315 F. Supp. 2d at 522. Therefore, an award of attorney's fees and costs does not appear to be warranted.
The plaintiff has requested that the court award it prejudgment interest at the rate of 9% per annum. See New York Civil Practice Laws and Rules ("CPLR") §§ 5001 and 5004. However, the plaintiff has not supported its request for prejudgment interest by making citation to any caselaw and the Court has not been able to find any Second Circuit caselaw, that supports a court granting prejudgment interest to a party seeking statutory damages pursuant to 15 U.S.C. § 1117(c). Moreover, a "major exception to prejudgment interest under CPLR § 5001 . . . [is a] punitive damages [claim]." CSC Holdings, Inc. v. Khrisat, No. 04 Civ. 8592, 2005 WL 3030838, at *6 (S.D.N.Y. Nov. 8, 2005), adopted by Jan. 18, 2006 order (Docket Entry No. 7). Statutory damages awarded under the Lanham Act serve as a punishment and as a deterrent to future trademark infringement. See Gucci, 315 F. Supp. 2d at 522. As such, they are akin to punitive damages. See generally, CSC Holdings, 2005 WL 3030838, at *6 (holding statutory damages provided under the Communications Act are "analogous to punitive damages" because they serve as a deterrent.). Therefore, an award of prejudgment interest, in the circumstance of the instant case, would be inappropriate.
IV. RECOMMENDATION
For the reasons set forth above, the Court recommends that Global be awarded $100,000 in statutory damages pursuant to 15 U.S.C. § 1117(c). The Court recommends further that the plaintiff's request for attorney's fees, costs and prejudgment interest be denied.
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The plaintiff shall serve the defendant with a copy of this Report and Recommendation and submit proof of service to the court.
V. FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have ten (10) days from service of the Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Richard J. Holwell, United States District Judge, 500 Pearl St., Room 1950, New York, New York 10007, and to the chambers of the undersigned, 40 Centre St., Room 540, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Holwell. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).