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finding that "by virtue of their default, [defendants] have admitted that they acted knowingly and intentionally, or at least with a reckless disregard for, or willful blindness to, [plaintiff's] rights"
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11 Civ. 2183 (GBD) (FM)
08-09-2013
TIFFANY (NJ) LLC, et ano, Plaintiffs, v. ALICE DONG d/b/a TIFFANYINTHEBOX. COM, 925JEWELRYBOX.COM, TIFFANY 4GIRLS.COM, 925JEWELRYSALE.COM, PANDORAOUTLETS.COM, 925JEWELRY STORE.COM, 925STORE.ORG, JEWELRY SETSALE.COM, SILVERCHARM SALES.COM, XINGREN CO. LTD, GZ CHANG MIN NET S&T CO. BANGRUI INFORMATION AND TECHNOLOGY CO. LTD, SHANGHAI RONGJIAO ELECTRONIC BUSINESS CO., et al., Defendants.
REPORT AND RECOMMENDATION TO THE HONORABLE GEORGE B. DANIELS FRANK MAAS, United States Magistrate Judge.
This Report and Recommendation was prepared with the assistance of Sara Arrow, a second-year student at University of Pennsylvania Law School who served as a summer intern in my Chambers.
I. Introduction
This trademark infringement action has been referred to me to conduct an inquest. (ECF No. 27). Plaintiffs Tiffany (NJ) LLC and Tiffany and Company (together, "Tiffany") allege that eleven individual defendants ("Seller Defendants"), doing business through a series of companies and websites, unlawfully manufactured, marketed, and sold counterfeit versions of trademarked Tiffany products over the internet, in violation of the Lanham Act, 15 U.S.C. § 1051, et seq. (See ECF No. 19 ("Amended Complaint" or "Am. Compl.")). Tiffany further alleges that three other defendants, doing business as 95epay (collectively, "95epay"), are liable for contributory trademark infringement under the Lanham Act because they knowingly helped the Seller Defendants engage in transactions involving counterfeit Tiffany goods by processing purchasers' credit card payments. (Id. ¶¶ 114-24). The Seller Defendants and 95epay are hereinafter referred to collectively as the "Defendants."
Tiffany also asserts claims of false designation of origin, trademark dilution, unfair competition, and deceptive acts and practices against the Seller Defendants under New York law. (Id. ¶¶ 101-08).
Tiffany seeks statutory damages under the Lanham Act and a permanent injunction which would, among other things, prohibit the Defendants from further infringing Tiffany's trademarks, require the Seller Defendants to transfer registration of their infringing domain names to Tiffany, and direct third-party financial institutions, including the Industrial and Commercial Bank of China ("ICBC") and China Merchant Bank ("CMB") (together, the "Banks"), to liquidate the Defendants' assets and turn them over to Tiffany. (ECF No. 23 ("Pls.' Mem.") at 2, 23). The only contested portion of the relief requested relates to the turnover order, which the Banks oppose on several grounds, including China's bank secrecy laws. Previously, the Court had entered a preliminary injunction restraining the Defendants' assets, a copy of which was served on the Banks.
For the reasons set forth below, I recommend that Tiffany be awarded statutory Lanham Act damages against the Defendants in the amount of $9 million, plus prejudgment interest at the rate set forth in 28 U.S.C. § 1961. I further recommend that Tiffany be granted an injunction permanently enjoining the Defendants from further infringements of the Tiffany trademarks, and directing the Seller Defendants to transfer to Tiffany the domain names of their infringing websites. Finally, I recommend that the Court decline to act on the request for a turnover order until the United States Court of Appeals for the Second Circuit has ruled in another case in which Tiffany seeks similar relief, but that the Court's prior asset freeze order remain in effect in the interim.
II. Facts
Tiffany's Amended Complaint and uncontested inquest papers establish the following:
A. Tiffany
Tiffany is a famous purveyor of luxury items, including jewelry, watches, sterling silver goods, personal accessories, fragrances, stationery, and home items. (Am. Compl. ¶ 28). Tiffany (NJ) LLC is the owner of several federally-registered trademarks, including eight marks at issue in this action: "T & CO," "TIFFANY & CO," "TIFFANY & CO.," "TIFFANY BLUE," the "TIFFANY BLUE BOX," the "TIFFANY BLUE SHOPPING BAG," and two "TIFFANY" marks (collectively, the "Tiffany Marks"). (Id. ¶¶ 7, 29). Tiffany and Company, d/b/a "Tiffany & Co.," is the exclusive licensee of the Tiffany Marks. (Id. ¶ 8).
The two "TIFFANY" marks have different typefaces. (Am. Compl. ¶ 29).
Tiffany has devoted significant resources to advertise and promote its brand, Tiffany products, and the Tiffany Marks throughout the world. (Id. ¶ 32). Indeed, over the past decade, Tiffany has expended more than $750 million on such activities in the United States alone. During this same period, sales of goods bearing or marketed under the Tiffany Marks in the United States have exceeded $12.6 billion. (Id.). Consumers purchase these Tiffany products because of the quality and "goodwill" associated with the Tiffany Marks. (Id. ¶ 35).
B. Seller Defendants
All but one of the Seller Defendants has a home or business address in China. (Id. ¶¶ 9-20; ECF No. 11 (Decl. of Joseph Pepe, President of Hawthorne Investigations & Security, dated Mar. 24, 2011 ("Pepe Decl.")), ¶¶ 117-39). Through its ongoing investigations, Tiffany learned that the Seller Defendants were offering counterfeit Tiffany products for sale by means of at least seven websites without authorization, permission, or licenses from Tiffany. (Am. Compl. ¶¶ 2-3, 23, 38, 41, 45, 48; see ECF No. 10 (Decl. of Richard Perrone, Group Director of Quality Assurance for Tiffany, dated Mar. 23, 2011 ("Perrone Decl.")), ¶¶ 17, 19; Pepe Decl. ¶¶ 2-3). One of the Seller Defendants also has registered two additional, strikingly similar websites. (Am. Compl. ¶ 58). Although these sites had yet to be used for actual sales by the date this action was filed, counterfeiters frequently develop such sites to ensure that they have an alternative platform for sales if one of their websites is shut down. (Id.; Pepe Decl. ¶¶ 126-28). Indeed, the Seller Defendants previously shifted the business of TiffanyintheBox.com to 925JewelryStore.com for this reason. (Am. Compl. ¶ 58).
The sole possible exception is defendant Fiona Jones, for whom no address is set forth in the Amended Complaint. (See Am. Compl. ¶ 11).
Collectively, the Seller Defendants' websites offer more than 10,200 products that replicate the ornamentation, design, and labeling of authentic Tiffany products, and most of them bear exact copies of one or two of the Tiffany Marks. (Id. ¶¶ 43, 51; see also Pepe Decl. ¶¶ 10-63 & Ex. 1 (screenshots of each of the websites advertising counterfeit Tiffany products)). These items are replicas of nine separate types of Tiffany products (bracelets, necklaces, earrings, rings, watches, jewelry sets, key rings, money clips, and cuff links). (Am. Compl. ¶¶ 43, 52; Pepe Decl. ¶ 9). For example, Tiffany sells a "Tiffany 1837" cuff bracelet in sterling silver that bears Tiffany's "T & CO" trademark. (Am. Compl. ¶ 40). Using a photograph copied from the official Tiffany website, the 925JewelryStore.com website offers a "Tiffany 1837 Cuff" in "sterling silver" that is virtually identical to the Tiffany product, including the "T & CO" trademark. (See id.). Similarly, the PandoraOutlets.com website sells a "Heart Tag Toggle Bracelet" in "[s]terling silver" that replicates the original sterling silver "Tiffany heart tag toggle bracelet," including the "TIFFANY & CO" trademark. (Id. ¶ 41). The Tiffany4Girls.com website also sells a "Tiffany 1837 Lock Charm and Necklace" that appears to be identical to a sterling silver "Tiffany 1837 Lock Pendant" with a "T & CO" trademark manufactured by Tiffany. (Id. ¶ 42). Through their websites, the Seller Defendants have shipped at least some counterfeit "Tiffany" products to customers in this District. (Am Compl. ¶ 38).
In addition to selling counterfeit Tiffany products, the Seller Defendants also imitate the packaging used by Tiffany for its products, including the "Tiffany Blue" box and shopping bag, and use the Tiffany Marks in the domain names of their websites and in connection with the sale of counterfeit products. (See Am. Compl. ¶¶ 3, 29, 38, 47, 53).
Between December 2010 and February 2011, investigators acting on behalf of Tiffany made numerous purchases from the Seller Defendants' websites. (Pepe Decl. ¶ 64). Included among these purchases were four "Tiffany" items that the investigators acquired from the TiffanyintheBox.com and PandoraOutlets.com sites. (Am. Compl. ¶¶ 49, 66; see Pepe Decl. ¶¶ 64-116). These items were described on the websites as a "Tiffany Round Tag Charm Bracelet," a "Tiffany Replica Key Ring," a "Tiffany 1837 Ring," and a bean-shaped necklace "from Tiffany & Co.'s Elsa Peretti collection." (Am. Compl. ¶ 49). Each of the products delivered pursuant to the Tiffany investigators' orders was inferior to its authentic Tiffany counterpart in quality and composition. (Id. ¶¶ 49-50; see Perrone Decl. ¶¶ 24-29 & Exs. 7, 8, 9, 10). Indeed, a laboratory analysis revealed that the replicas were composed of a white metal containing at most 4.75% silver, compared to Tiffany's authentic "sterling silver" products, which contain 92.5% silver. (Am. Compl. ¶ 49). The inferior quality of the Seller Defendants' counterfeit products thus is likely to damage Tiffany's reputation, goodwill, and sales. (Id. ¶ 79).
C. 95epay
95epay provides credit card processing services for online merchants engaged in "high risk industries," including those selling counterfeit "replica" merchandise. (Id. ¶¶ 4, 20, 63-64, 72, 73). The TiffanyintheBox.com and PandoraOutlets.com websites both used 95epay's services to accept credit cards as a form of payment for goods that they sold. (Id. ¶¶ 4, 56, 65). In fact, 95epay processed the credit card payments for three of the four purchases made by Tiffany's investigators from TiffanyintheBox.com and PandoraOutlets.com. (Id. ¶ 66; Pepe Decl. ¶¶ 66, 72, 111 & Exs. 2, 5, 30).
As the 95epay website indicates, in the course of its business, 95epay verifies and assesses the risk of both the merchant and the online shopper associated with each transaction and seeks to identify suspicious transactions. (Am. Compl. ¶¶ 4, 63). This process includes a review of the merchant's website. (Id. ¶ 67). 95epay then processes the transactions it approves. (Id.). Although 95epay has been served with copies of both the temporary restraining order and the preliminary injunction previously issued by this Court, it has continued to provide payment processing for several of the Seller Defendants' websites. (Id. ¶¶ 70-71). 95epay therefore has either knowingly facilitated the sale of counterfeit Tiffany products or been willfully blind to the illegality of the transactions it processes. (Id. ¶ 69).
III. Discussion
A. Standard of Review
In light of the Defendants' default, Tiffany's well-pleaded allegations concerning issues other than damages must be accepted as true. 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); Time Warner Cable of N.Y. City v. Barnes, 13 F. Supp. 2d 543, 547 (S.D.N.Y. 1998).
Additionally, although a plaintiff seeking to recover damages against a defaulting defendant must prove its claim through the submission of evidence, the Court need not hold a hearing as long as it has (1) determined the proper rule for calculating damages on the claim, see Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999), and (2) the plaintiff's evidence establishes, with reasonable certainty, the basis for the damages specified in the default judgment, see Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997). Both requirements having been met in this case, a hearing is unnecessary.
B. Jurisdiction and Venue
Because the Amended Complaint alleges violations of the Lanham Act, 15 U.S.C. §§ 1051, et seq., the Court has subject matter jurisdiction over Tiffany's claims under 15 U.S.C. § 1121(a) and 28 U.S.C. §§ 1331 and 1338(b).
The Court also has personal jurisdiction over the Seller Defendants based on their shipments of goods to Tiffany's New York-based investigator and other customers in New York State. (Am. Compl. ¶ 26; see, e.g., Pepe Decl. ¶¶ 2, 5, 30); see Malletier v. Artex Creative Int'l Corp., 687 F. Supp. 2d 347, 353 (S.D.N.Y. 2010). Similarly, the Court has personal jurisdiction over 95epay based on its processing of counterfeit Tiffany products transactions involving customers in New York. (Am. Compl. ¶ 26; Pepe Decl. Exs. 5, 30).
Venue in this District is proper because a substantial part of the events giving rise to this suit occurred here. 28 U.S.C. § 1391(b)(2).
C. Damages
1. Damages for Infringement
Under the Lanham Act, a trademark owner may choose to recover either statutory or actual damages. See 15 U.S.C. § 1117(a), (c). In this case, because it lacks any information from the Defendants concerning their actual sales, Tiffany has elected to recover statutory damages for the Defendants' sales of counterfeit jewelry. (Pls.' Mem. at 2, 16, 18-19).
Tiffany alleges that it is further entitled to recover statutory damages for the Seller Defendants' bad faith use of the domain names TiffanyintheBox.com and Tiffany4Girls.com, as well as the reasonable attorneys' fees and costs that it incurred in prosecuting this action. (Id. at 19) (citing 15 U.S.C. §§ 1117(b), (d)). Rather than pursuing this additional relief, however, Tiffany merely requests that the Court take this into account in the course of determining its statutory damages under the Lanham Act arising out of the Defendants' sales. (Id.).
The Lanham Act provides that statutory damages for trademark infringement may be awarded in the amount of
(1) not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just; or15 U.S.C. § 1117(c).
(2) if the court finds that the use of the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just.
In the absence of any guidelines in Section 1117(c) for determining the appropriate statutory damages to award in a trademark case, courts often have looked for guidance to the better developed case law under the analogous provision of the Copyright Act, 17 U.S.C. § 504(c). See, e.g., Coach, Inc. v. O'Brien, No. 10 Civ. 6071 (JPO) (JLC), 2012 WL 1255276, at *2 (S.D.N.Y. Apr. 13, 2012); All-Star Mktg Grp., LLC v. Media Brands Co., Ltd, 775 F. Supp. 2d 613, 622 (S.D.N.Y. 2011); Malletier v. Carducci Leather Fashions, Inc., 648 F. Supp. 2d 501, 504 (S.D.N.Y. 2009). Under the Copyright Act, the following factors have been considered in setting statutory damage awards: (1) the expenses saved and profits reaped by the defendant; (2) the revenues lost by the plaintiff; (3) the value of the copyright; (4) the deterrent effect on infringers other than the defendant; (5) whether the defendant's conduct was innocent or willful; (6) whether the defendant has cooperated in providing particular records from which to assess the value of the infringing material produced; and (7) the potential for deterring the defendant. Louis Vuitton Malletier, S.A. v. LY USA, No. 06 Civ. 13463 (AKH), 2008 WL 5637161, at *1-2 (S.D.N.Y. Oct. 3, 2008). Additionally, copyright case law suggests that when 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 defendant and others. See, e.g., N.A.S. Import, Corp. v. Chenson Enters., 968 F.2d 250, 252 (2d Cir. 1992); Fitzgerald Publ'g Co. v. Baylor Publ'g Co., 807 F.2d 1110, 1117 (2d Cir. 1986).
Here, by virtue of their default, the Defendants have admitted that they acted knowingly and intentionally, or at least with a reckless disregard for, or willful blindness to, Tiffany's rights. Cotton, 4 F.3d at 181; (see, e.g., Am. Compl. ¶¶ 38, 45, 63, 69, 85, 100). In the course of their activities, the Seller Defendants sold nine types of products and directly infringed eight Tiffany Marks. Accordingly, Tiffany potentially could recover statutory damages of as much as $2 million per counterfeit mark per type of goods sold, offered for sale, or distributed on the Defendants' websites, i.e., as much as $144 million, for those sales. 15 U.S.C. § 1117(c)(2).
Tiffany instead urges that it be awarded $200,000 for each of the eight Tiffany Marks the Seller Defendants infringed, multiplied by the nine types of goods that they sold, for a total award of $14.4 million. (Pls.' Mem. at 18-19). This request is based on the formula applied in Gucci Am., Inc. v. MyReplicaHandbag.com, No. 07 Civ. 2438 (JGK) (DFE), 2008 WL 512789 (S.D.N.Y. Feb. 26, 2008). In that case, Judge Koeltl adopted Magistrate Judge Eaton's recommendation that the plaintiffs be awarded $100,000 per mark per type of goods sold. Id. at *1, 5. Because the maximum statutory damages available under the Lanham Act have doubled since then, Tiffany reasons that it should now be awarded $200,000 per mark per type of goods sold.
This assumes that each of the Tiffany Marks was infringed in connection with each type of goods sold.
In several cases involving willful trademark infringement, judges in this District have awarded $50,000 or less per infringing mark or group of marks. These cases, however, generally involve small-scale counterfeiting operations. See, e.g., All-Star Mktg. Group, LLC v. Media Brands Co., 775 F. Supp. 2d 613, 623 (S.D.N.Y. 2011) (awarding $50,000 for each mark infringed after plaintiff gave notice of its trademark claim and $25,000 for each prior infringement); Malletier v. Artex Creative Int'l Corp., 687 F. Supp. 2d 347, 358 (S.D.N.Y. 2010) (awarding $18,000 per mark given such factors as "the small scale of defendants' operation" and "its limited resources"); Cartier Int'l B.V. v. Ben-Menachem, No. 06 Civ. 3917 (RWS), 2008 WL 64005, at *14-15 (S.D.N.Y. Jan. 3, 2008) (awarding $50,000 per mark infringed against operators of fifteen websites who were doing business from a home in Brooklyn); Polo Ralph Lauren, L.P. v. 3M Trading Co., Inc., No. 97 Civ. 4824 (JSM) (MH), 1999 WL 33740332, at *7 (S.D.N.Y. Apr. 19, 1999) (awarding $25,000 per trademark violation against a small retail store in Little Italy); Gucci Am., Inc. v. Gold Ctr. Jewelry, 997 F. Supp. 399, 401, 406 (S.D.N.Y. 1998) (awarding $25,000 per defendant against retail jewelry stores in the Bronx).
At the other extreme, some judges in this District have awarded as much as $1 million for each trademark willfully infringed. (See Pls.' Mem. at 21 (citing, e.g., Gucci Am., Inc. v. Curveal Fashion, No. 09 Civ. 8458 (RJS), 2010 WL 308303, at *5 (S.D.N.Y. Jan. 20, 2010); Nike, Inc. v. Top Brand Co., No. 00 Civ. 8179 (KMW) (RLE), 2006 WL 2946472, at *3 (S.D.N.Y. Feb. 27, 2006); Gucci Am., Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d 511, 521-22 (S.D.N.Y.2004))). In each of these cases, there was reason to believe that the defendant's sales were substantial. For example, in Nike there was evidence that the defendant's operations "led to the production of millions of infringing goods." Nike, 2006 WL 2946472, at *2.
Finally, certain district judges have awarded the statutory maximum, but without multiplying that amount by the number of trademarks infringed. See MyReplicaHandbag.com, 2008 WL 512789, at *5 (citing Rolex Watch U.S.A., Inc. v. Brown, No. 01 Civ. 9155 (JGK) (AJP), 2002 WL 1226863, at *2 (S.D.N.Y. June 5, 2002); Louis Vuitton Malletier and Oakley, Inc. v. Veit, 211 F. Supp. 2d 567, 584-85 (E.D. Pa. 2002)).
In this case, the Seller Defendants' failure to appear or respond to Tiffany's papers seeking a default judgment has left the Court with relatively little information on which to base a damages award. Among other things, it is impossible to determine the precise scope of the Seller Defendants' counterfeiting operations, or the amount of the expenses they saved and profit that they reaped by infringing the Tiffany Marks. Nonetheless, the Seller Defendants have actively operated numerous websites and registered at least two additional websites. They further have offered more than 10,000 counterfeit Tiffany items for sale. These facts alone suggest that the Seller Defendants are operating a large-scale counterfeiting enterprise. See LY USA, 2008 WL 5637161, at *3. Because the Seller Defendants market their wares online, they also obviously have the ability to reach a virtually limitless number of potential customers worldwide. See Veit, 211 F. Supp. 2d at 584 ("[w]hile the record contains no evidence of the actual scope of the defendants' sales, . . . given the scope of the internet supermarket, such sales offerings are presumptively quite high"); Rolex Watch U.S.A, Inc. v. Jones, No. 99 Civ. 2359 (DLC) (FM), 2002 WL 596354, at *5 (S.D.N.Y. Apr. 17, 2002) (an award of $25,000 per mark, while sufficient for willful trademark infringement in storefronts, may be inadequate given "the virtually limitless number of customers available to [defendant] through his Web sites"). Finally, the Tiffany Marks that the Seller Defendants have chosen to infringe obviously are valuable as evidenced by the considerable sums that Tiffany spends to ensure their continued cachet.
In these circumstances, Tiffany is entitled to a substantial damages award, both to compensate Tiffany for the damage to the Tiffany Marks and to further the goals of specific and general deterrence. In the absence of proof that each of the Seller Defendants infringed each of the Tiffany Marks with respect to each type of goods sold, I conclude that the Court should award damages based on the sale of the nine types of goods on which the Tiffany Marks were improperly placed. Specifically, I recommend that Tiffany be awarded statutory damages in the amount of $1 million per type of goods sold, i.e., a total of $9 million, against each of the Seller Defendants.
Although 95epay did not directly infringe on Tiffany's trademarks, liability for trademark damages can extend "beyond those who actually mislabel goods with the mark of another." Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 853 (1982). Thus, a defendant that provides a service may become contributorily liable if it "intentionally induces another to infringe a trademark" or "continues to supply its [service] to one whom it knows or has reason to know is engaging in trademark infringement." Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 106 (2d Cir. 2010) (citing Inwood, 456 U.S. at 854). In that connection, Tiffany has alleged - and 95epay has not denied - that 95epay not only supplies the marketplace for the Seller Defendants' unlawful transactions, but "is a full partner in [their] counterfeiting activities" and profits thereby. (See Am. Compl. ¶ 63). This is sufficient to establish contributory infringement. See Gucci Am., Inc. v. Frontline Processing Corp., 721 F. Supp. 2d 228, 248-49 (S.D.N.Y. 2010). Tiffany also has made factual allegations from which the Court may infer that 95epay had knowledge that the Seller Defendants traded in counterfeit products, or was willfully blind to that fact. Finally, to the extent that a showing of control over infringing activity is necessary, Tiffany has complied by alleging that 95epay's credit card processing services are a necessary element for the transaction of counterfeit goods online. See id. at 250-51. 95epay therefore should also be required to pay statutory damages in the amount of $9 million.
2. Prejudgment Interest
The Lanham Act authorizes a court to award a trademark owner prejudgment interest from the date its complaint is filed at the "annual interest rate established under section 6621(a)(2) of Title 26." 15 U.S.C. § 1117(b). That rate, in turn, is the sum of the "Federal short-term rate" determined by the Secretary of the Treasury, plus three percentage points. 26 U.S.C. § 6621(a)(2), (b). Accordingly, Tiffany is entitled to prejudgment interest on the $9 million award at that rate from March 30, 2011, when its original complaint was filed, through the date judgment is entered.
D. Injunctive Relief
A court may issue an injunction when a moving party establishes, first, that there is a statutory basis for relief, and, second, that it "meets the prerequisites for the issuance of an injunction." Pitbull Prods., Inc. v. Universal Netmedia, Inc., No. 07 Civ. 1784 (RMB) (GWG), 2007 WL 3287368, at *5 (S.D.N.Y. Nov. 7, 2007) (quoting Kingvision Pay-Per-View Ltd. v. Lalaleo, 429 F. Supp. 2d 506, 516 (E.D.N.Y. 2006)). The second element requires that the party seeking an injunction "demonstrate irreparable harm and the absence of an adequate remedy at law." Id. Irreparable harm is established in a trademark case if there is "any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question." Id. at *6 (quoting Lobo Enters., Inc. v. Tunnel, Inc., 822 F.2d 331, 333 (2d Cir. 1987)); see also Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 537 (2d Cir.2005) ("In trademark disputes, a showing of likelihood of confusion establishes . . . irreparable harm.") (internal citation and quotation marks omitted). Permanent injunctive relief thus generally is awarded when there is "a threat of continuing violations." See Warner Bros. Entm't, Inc. v. Carsagno, No. 06 CV 2676 (NG) (RLM), 2007 WL 1655666, at *5 (E.D.N.Y. June 4, 2007).
1. Injunctive Relief against the Defendants
In its Amended Complaint and inquest papers, Tiffany seeks an injunction permanently enjoining the Defendants from engaging in any future infringements of its trademarks. In particular, Tiffany seeks language enjoining (a) the Seller Defendants from manufacturing, selling, and marketing counterfeit Tiffany products, and (b) 95epay from providing payment processing services to merchants selling counterfeit Tiffany products. (See Am. Compl. ¶ 125; ECF No. 24, Ex. 8 ("Proposed Judgment") ¶¶ 1-4, 7; Pls.' Mem. at 22-23). Tiffany further asks that the Seller Defendants be compelled to transfer the registrations of the domain names of the infringing websites to Tiffany. (Am Compl. ¶ 125 (14); Proposed Judgment ¶ 6).
Turning to the first requirement for an injunction, there is no question that there is a statutory basis for the Court to grant relief. Indeed, the Lanham Act expressly provides that federal courts have the power to "grant injunctions, according to the principles of equity" in trademark infringement cases. 15 U.S.C. § 1116(a). Under 15 U.S.C. § 1125(d)(1)(A)(ii), a court also may grant injunctive relief when a defendant "registers, traffics in, or uses a domain name" that infringes on a plaintiff's trademark.
The New York General Business Law similarly authorizes injunctive relief in cases in which a defendant has infringed or diluted a plaintiff's trademark rights. N.Y. Gen. Bus. Law § 360-m (McKinney 2012).
The second requirement for injunctive relief also is satisfied. By virtue of their defaults, the Defendants have admitted that they willfully infringed Tiffany's trademarks. See Dunkin' Donuts, Inc. v. Peter Romanofsky, Inc., No. CV-05-3200 (SJ) (JMA), 2006 WL 2433127, at *6 (E.D.N.Y. Aug. 8, 2006). The Defendants also have admitted that there is a likelihood of confusion on the part of a large number of consumers and, thus, irreparable injury to Tiffany. (See Am. Compl. ¶¶ 2, 5, 6, 44, 46, 50, 76). Furthermore, the Defendants have evidenced an intent to continue infringing Tiffany's trademarks. For example, Tiffany alleges that the Seller Defendants have registered additional domain names and transferred traffic from at least one of their previous sites to a new site. (Id. ¶ 58). 95epay also has continued to provide payment processing services to sellers of counterfeit merchandise, despite having been served with copies of the Court's temporary restraining order and preliminary injunction. (Id. ¶¶ 70-71).
For these reasons, Tiffany is entitled to an injunction enjoining the Seller Defendants from manufacturing, selling, and marketing counterfeit Tiffany products, and 95epay from providing payment processing services to merchants selling counterfeit Tiffany products.
Tiffany further seeks injunctive language compelling the Seller Defendants to transfer to Tiffany the registrations of the infringing websites' domain names. Judges in this District have required online infringers to transfer their domain names to the aggrieved parties in similar circumstances. See Pitbull, 2007 WL 3287368; see also Philip Morris USA, Inc. v. Otamedia Ltd., 331 F. Supp. 2d 228, 234, 247 (S.D.N.Y. 2004) (modifying injunction to require that defendant transfer two domain names to plaintiff after defendant "persistently and overtly flouted" terms of default judgment). Accordingly, the permanent injunction in this case should incorporate such a requirement.
2. Injunctive Relief Against the Banks
The preliminary injunction previously entered restrained any financial institutions receiving notice thereof from transferring, secreting, or disposing of any assets of the Defendants, whether located in the United States or abroad. (See ECF No. 6 at 7). Although no specific institutions were named in the preliminary injunction, copies of it were served on the Banks. The Proposed Judgment that Tiffany subsequently filed with the Court seeks a directive that any financial institutions holding assets associated or used in connection with the Seller Defendants' websites be required to liquidate them, whether held in the United States or abroad, and pay the proceeds to Tiffany in satisfaction of its damages award. (See Proposed Judgment ¶¶ 9-10). The Proposed Judgment further specifies the last four digits of two bank accounts - one at CMB and another at ICBC - which were identified either on the 95epay website or in documents provided to Tiffany by PayPal. (Id. ¶ 9).
In marked contrast to the Defendants' deafening silence concerning this action, the Banks have actively opposed Tiffany's efforts to seek relief against them. This, in turn, has led to considerable letter briefing. In their letters to the Court, the Banks take issue with the turnover provisions of the Proposed Judgment, alleging that Tiffany has neither followed the procedures necessary to secure a turnover order, nor demonstrated its entitlement to such relief. The Banks request that the Court therefore either strike those provisions from the Proposed Judgment or allow them to file formal papers in opposition to the Proposed Judgment. (See ICBC Feb. 16 Letter at 1; CMB Feb. 16 Letter at 1; ICBC Mar. 6 Letter at 1). For the reasons set forth below, this application should be granted in part, and the Banks should be permitted to make a further submission before the Court compels them to liquidate the Defendants' assets in China and remit them to Tiffany.
(See Ltr. to the Court from Andrew Rhys Davies, Esq., dated Feb. 16, 2012 ("ICBC Feb. 16 Ltr."), at 1; Ltr. to the Court from Dwight A. Healy, Esq., dated Feb. 16, 2012 ("CMB Feb. 16 Ltr."); Ltr. to the Court from Robert L. Weigel, Esq., dated Feb. 24, 2012 ("Tiffany Feb. 24 Ltr."); Ltr. to the Court from Mr. Davies, dated Mar. 6, 2012 ("ICBC Mar. 6 Ltr."); Ltr. to the Court from Mr. Weigel, dated Mar. 16, 2012) ("Tiffany Mar. 16 Ltr.")).
In their submissions, the Banks advance three principal objections to the proposed turnover order. First, they argue that Tiffany failed to follow the applicable procedures, which allegedly require a judgment creditor to commence a special proceeding in order to obtain a turnover order. (ICBC Feb. 24 Letter at 1-2). Second, they maintain that any direction that they remit the Defendants' overseas assets would violate the "separate entity" rule. (Id. at 4). Finally, they contend that the Banks cannot be required to turn over any of the Defendants' assets in China because such an order would subject the Banks and their employees to sanctions for violating China's bank secrecy laws. (Id.).
Tiffany counters that the Banks' attempt to require that Tiffany commence a post-judgment special proceeding would eviscerate the progress it has achieved thus far because the preliminary injunction would dissolve once judgment is entered, and the Defendants' assets therefore would no longer be restrained. (Tiffany Feb. 24 Ltr. at 2). Tiffany also argues that the separate entity rule applies to orders of attachment, not to an order directing the turnover of funds by an entity over which a court has personal jurisdiction. (Id. at 2-3). Last, because the Banks allegedly sat on their haunches after being served with the preliminary injunction, Tiffany urges the Court to give short shrift to their arguments under Chinese law. (Id. at 3; Tiffany Mar. 16 Ltr.).
a. Applicable Law
Rule 69(a) of the Federal Rules of Civil Procedure requires that post-judgment efforts to execute on a money judgment comply with the procedural law of the forum state - unless a federal statute dictates to the contrary. The Lanham Act contains no such instruction. Accordingly, the applicable statute is Section 5225 of the New York Civil Practice Law and Rules ("CPLR"). That statute authorizes a court to compel a nonparty to surrender a judgment debtor's property
[u]pon a special proceeding commenced by the judgment creditor, against a person in possession or custody of money or other personal property in which the judgment debtor has an interest, or against a person who is a transferee of money or other personal property from the judgment debtor, where it is shown that the judgment debtor is entitled to the possession of such property or that the judgment creditor's rights to the property are superior to those of the transferee . . . .CPLR 5225 (emphasis added).
The Federal Rules of Civil Procedure make no mention of special proceedings. As the Banks concede, federal courts in New York therefore have deemed the CPLR special proceeding requirement satisfied when a plaintiff proceeds by complaint or motion against the third party holding a judgment debtor's assets. (See ICBC Mar 6 Ltr. at 2 n.2 (citing N. Mariana Islands v. Millard, No. 11 Misc. 99, 2012 WL 607256, at *2 (S.D.N.Y. Feb. 27, 2012) (Rakoff, J.) ("Nearly every court in this Circuit to consider the issue has held that parties can bring a motion under [Rule] 69(a), rather than instituting a special proceeding under the New York State law."); CSX Transp., Inc. v. Filco Carting Corp., No. 10-CV-1055 (NGG) (JMA), 2011 WL 2713487, at *2 (E.D.N.Y. July 11, 2011); S.E.C. v. Colonial Inv. Mgmt. LLC, No. 07 Civ. 8849 (PKC), 2010 WL 4159276, at *2 (S.D.N.Y. Oct. 6, 2010))); see also Mitchell v. Lyons Prof'l Servs., Inc., 727 F. Supp. 2d 120, 125 (E.D.N.Y. 2010) ("Here, other than the generation of an additional filing fee for the commencement of a separate proceeding in this Court, there seems to be no reason to compel plaintiffs to start over when there is a vehicle for relief presently pending.").
Although no formal motion has been filed in this case, the Banks indisputably have had notice of Tiffany's request for a turnover order. The special proceeding requirement of CPLR 5225 consequently does not pose any impediment to this Court acting on Tiffany's request, assuming such relief is otherwise warranted.
b. Separate Entity Rule
The Banks also seek to avoid an order compelling the turnover of the Defendants' assets based on the separate entity rule. Under that rule, each branch of a bank is "treated as a separate entity for attachment purposes." Allied Maritime, Inc. v. Descatrade, SA, 620 F.3d 70, 74 (2d Cir. 2010); Cronan v. Schilling, 100 N.Y.S.2d 474, 476 (Sup. Ct. N.Y. County 1950). The rule dates back to an age when electronic data bases were in their infancy, and it was intended to prevent the chaos that might result if an attachment order were served on one branch of a bank unbeknownst to another branch which then allowed the judgment debtor to transfer funds. As the court observed in Cronan, but for the rule, each branch of a bank seeking to prevent such an inadvertent violation of an attachment order would have to check with every other branch before cashing any check, which "would place an intolerable burden upon banking and commerce, particularly where the branches are numerous, as is often the case." 100 N.Y.S.2d at 476. To the extent that the rule is applied to out-of-state or foreign banks, it also means, as a practical matter, that assets outside the jurisdiction may not be restrained simply by serving a domestic bank branch. See John Wiley & Sons, Inc. v. Kirtsaeng, No. 08 Civ. 7834 (GEL) (DCP), 2009 WL 3003242, at *3 (S.D.N.Y. Sept. 15, 2009).
In this case, the turnover order that Tiffany seeks is intended to help it enforce a judgment against defendants over whom this Court has jurisdiction, not to attach property to ensure its continued availability or to acquire quasi in rem jurisdiction. Citing Koehler v. Bank of Bermuda, Ltd., 12 N.Y.3d 533 (2009), Tiffany maintains that the separate entity rule is therefore inapplicable. (Tiffany Mar. 16 Ltr. at 1).
In Koehler, the New York Court of Appeals addressed a question certified by the Second Circuit, which asked "whether a court sitting in New York has the authority under CPLR 5225(b) to order a defendant, other than a judgment debtor, . . . to deliver assets into New York, when the court has personal jurisdiction over the [garnishee] defendant but the assets are not located in New York." Id. at 537. Answering that question in the affirmative, the court drew a distinction between prejudgment attachment proceedings under CPLR article 62 and proceedings to enforce money judgments under CPLR article 52. As the court explained, an attachment order enables a creditor to obtain the prejudgment seizure of property to ensure that it is not dissipated. Id. at 538. Additionally, when the court cannot obtain personal jurisdiction over the debtor, an attachment allows the court to exercise quasi in rem jurisdiction. Id. In either circumstance, "[i]t is a fundamental rule that . . . the res must be within the jurisdiction of the court issuing the process." Id. at 538-39.
Under CPLR article 52, by comparison, a court may "issue a judgment ordering a [garnishee] to deliver the property in which the judgment debtor has an interest, or to convert it to money for payment of the debt." Id. at 537 (citing CPLR 5225(b)). CPLR article 52, however, "contains no express territorial limitation barring the entry of a turnover order that requires a garnishee to transfer money or property into New York from another state or country." Id. at 539. Indeed, in 2006, the New York legislature amended CPLR 5224 to allow a judgment creditor to serve a subpoena in New York State seeking information about assets of the judgment debtor held out of state. Id. Given these structural differences between CPLR articles 52 and 62, the Koehler court held that a "court sitting in New York that has personal jurisdiction over a garnishee bank can order the bank to produce [a judgment debtor's property] located outside New York, pursuant to CPLR 5225(b)." Id. at 541; see also United States v. First Nat. City Bank, 379 U.S. 378, 384 (1965) ("Once personal jurisdiction of a party is obtained, the District Court has the authority to order it to freeze property under its control, whether the property be within or without the United States.") (internal quotation marks omitted).
There is a split of authority as to whether Koehler abrogates the separate entity rule when a judgment creditor seeks to compel a garnishee in New York to turn over assets of the judgment debtor outside New York's territorial boundaries. Thus, in Parbulk II Asv. Heritage Maritime SA, 935 N.Y.S.2d 829, 832 (Sup. Ct. N.Y. County 2011), Justice Sherwood of the Commercial Division concluded that Koehler did not abrogate - indeed, did not even address - the separate entity rule, which the Justice described as a "court-made rule" that "does not involve any interpretation of CPLR article 52 or CPLR article 62." Id. Justice Stallman similarly has held that Koehler did not abrogate the separate entity rule, at least insofar as an attorney - not a court - simply causes an information subpoena and restraining notice to be served by certified mail, return receipt requested, on the domestic branch of a foreign bank. Global Tech, Inc. v. Royal Bank of Canada, No. 150151/2011, 2012 WL 89823, at *13 (Sup. Ct. N.Y. County Jan. 11, 2012).
Several federal judges disagree with these decisions. For example, Judge Castel held in JW Oilfield Equip., LLC v. Commerzbank AG, 764 F. Supp. 2d 587 (S.D.N.Y. 2011), that the court could issue a turnover order under CPLR 5225(b) because the foreign bank admitted that "it does business in New York systematically and continuously through its New York branch, which is not incorporated and is not an entity separate from the German bank." Id. at 593. Thereafter, in Eitzen Bulk A/S v. Bank of India, 827 F. Supp. 2d 234 (S.D.N.Y. 2011), Judge Hellerstein determined that an information subpoena under CPLR 5224 which is served on a corporation that is doing, or licensed to do, business in New York could compel that corporation to disclose "all responsive materials within the corporation's control, even if those materials are located outside New York." Id. at 238 (emphasis added). Although Judge Hellerstein relied on the language of CPLR 5224, which expressly so provided, in reaching his conclusion, he also observed that the "result in Koehler" was a further basis for requiring the domestic company to reveal information about assets outside New York. Id. at 239.
By comparison, in Commonwealth of the N. Marianas v. Canadian Imperial Bank of Commerce, 717 F.3d 266, 268 (2d Cir. 2013), the Second Circuit, after receiving a response to questions certified to the New York Court of Appeals, held that a bank that is directed to turn over a judgment debtor's assets must have actual, not merely constructive, possession or custody of the assets. In doing so, the court noted that the New York Court of Appeals, much like the district court, had relied on the express language of CPLR 5225(b), which refers to assets in the "possession or custody" of a garnishee and, thus, does not authorize the entry of a turnover order where the garnishee merely has "control" over the entity that held the judgment debtor's assets.
To date, the parties have addressed this split of authority only cursorily in their letters to this Court. (See Tiffany Feb. 24 Ltr. at 3-4; ICBC Mar. 6 Ltr. at 4). Nevertheless, given the importance of the issue, the Banks - and therefore Tiffany - should be permitted to make more detailed submissions before this Court rules as to the continued viability of the separate entity rule under the circumstances of this case.
c. Chinese Bank Secrecy Laws
Although the Banks perhaps may have confirmed that they hold none of the Defendants' assets at their New York branches, see Tiffany (NJ) LLC v. Forbse, No. 11 Civ. 4976 (NRB), 2012 WL 1918866, at *2 (S.D.N.Y. May 23, 2012), they have yet to declare whether such assets exist in China, much less confirm that those assets have been restrained. They argue that they should not be required to make such disclosures, or turn over any assets that the Defendants may have in China, because doing so would subject them to sanctions in China under that nation's bank secrecy laws. (See ICBC Mar. 6 Ltr. at 4-5).
There have been several instances over the past few years in which judges in this District have required Chinese banks to provide information concerning their account holders, or to turn over their assets to satisfy a judgment against one or more Chinese debtors, or both. See, e.g., Wultz v. Bank of China, Ltd., 910 F. Supp. 2d 548 (S.D.N.Y. Oct. 29, 2012) (ordering Bank of China to produce, inter alia, documents concerning account holder's bank accounts); Gucci Am., Inc. v. Li, 2010 Civ. 4974 (RJS), 2011 WL 6156936 (S.D.N.Y. Aug. 23, 2011) (ordering Bank of China to produce account information and freezing assets of defendants); Tiffany (NJ) LLC v. Forbse, 11 Civ. 4976 (NRB), ECF No. 10 (preliminary injunction restraining assets and directing the production of records concerning the defendants' assets in Chinese bank accounts); Gucci Am., Inc. v. Bagsmerchant, LLC, 2010 Civ. 2911 (DAB), ECF No. 19 (default judgment requiring liquidation of defendants' previously-frozen assets, no matter where located, including accounts at the Bank of China). Typically, because the defendants had defaulted, the decretal language requiring asset disclosure and turnover was not disclosed to the garnishee banks before being entered. (See Li, 2010 Civ. 4974 (RJS), ECF No. 12; Forbse, 11 Civ. 4976 (NRB), ECF No. 10; Bagsmerchant, 2010 Civ. 2911 (DAB), ECF No. 19).
In Li, Forbse, and Bagsmerchant, however, the Chinese banks subject to the Court's directives subsequently sought modifications thereof.
More recently, both the People's Bank of China ("PBOC") and the China Banking Regulatory Commission ("CBRC") have raised a concern that orders requiring the disclosure or turnover of assets in China are contrary to China's Banking Law and may subject the banks and their employees to sanctions. Specifically, by letter dated November 3, 2011, the PBOC and CBRC advised four judges of this Court that it would be a violation of Chinese law for a Chinese bank to disclose its customers' account information without the customers' authorizations, unless the request is made by a Chinese judicial department or government agency acting pursuant to express statutory or regulatory authority. (See Ltr. dated Nov. 3, 2011, from Zhou Xuedong (PBOC) and Liu Xiaoyong (CBRC) to Judges Pauley, Sullivan, Batts, and Pitman, at 2). As the letter observed, because a "foreign court (including a U.S. court)" is not a body that can authorize disclosure, "China's commercial banks . . . may not disclose outside China their clients' account information or freeze or deduct funds from such accounts pursuant to a U.S. court's order." (Id.). The letter urged deference to this blocking statute on the ground that China's nascent financial sector needed "to strictly ensure the security of information of bank clients" to engender confidence in the banking system and thereby promote its further development. (Id.).
The PBOC is China's central bank and has the "power to control monetary policy and regulate financial institutions." Southgate Master Fund, LLC ex rel. Montgomery Capital Advisors, LLC v. United States, 651 F. Supp. 2d 596, 601 (N.D. Tex. 2009).
The letter noted further that China is a signatory to the Hague Convention on the Taking of Evidence in Civil and Commercial Matters, suggesting that this treaty should be the mechanism that a United States court uses to secure information from Chinese banks in a manner that "avoid[s] unnecessary conflicts of law between the two countries." (Id.). That mechanism, however, does not address circumstances in which plaintiffs in this country have already secured judgments that they seek to enforce against defendants in China or who have assets in China. Indeed, as the letter conceded, although the United States and China engage in an annual Strategic and Economic Dialogue in an effort to foster cross-border legal enforcement, the only other potentially relevant treaty between the two countries is an Agreement on Mutual Judicial Assistance in Criminal Matters, which is no use to Tiffany in this civil lawsuit. (Id. at 3). There thus is no treaty mechanism for the United States courts to employ in an effort to make a judgment creditor whole.
Finally, the letter noted that the PBOC and CBRC had learned that certain account information regarding the Bank of China's customers in China had been produced to the plaintiffs in Gucci Am., Inc. v. Li, 2011 WL 6156936. (Id.). The letter indicated that the PBOC and CBRC had issued a "severe warning" to the Bank of China and were investigating further to "evaluate the severity of the infraction and determine the appropriate sanctions." (Id.).
By asking this Court to "take full consideration" of China's concerns regarding the needs of its bank clients and the development of its banking industry, (id.), the PBOC and CBRC seek to invoke the principle of comity. Comity has been defined as "the recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws." Tiffany (NJ) LLC v. Qi Andrew, 276 F.R.D. 143, 151 n.4 (S.D.N.Y. 2011) (quoting Hilton v. Guyot, 159 U.S. 113, 163-64 (1895) (internal quotation marks omitted)).
In Qi Andrew, Magistrate Judge Pitman engaged in a comity analysis to determine whether Tiffany should be required to use the procedures set forth in the Hague Convention to obtain information concerning the bank accounts of several alleged infringers whose assets had been restrained by the Court. After reviewing the factors set forth in the Restatement (Third) of Foreign Relations Law § 442(1)(c), as well as the potential hardship of compliance and the good faith of the party resisting the discovery, Judge Pitman directed Tiffany to proceed in the first instance under the Hague Convention in order to secure information from the Banks and the Bank of China. After undertaking a similar analysis in Forbse, Judge Buchwald also required Tiffany to proceed pursuant to the Hague Convention with respect to the Banks, but directed the Bank of China to provide discovery directly because the Bank of China's decision to act as an "acquiring bank for an infringing website [after receiving notice of the preliminary injunction] tip[ped] the balance of the analysis in favor of Tiffany." Forbse, 2012 WL 1918866, at *11. As Judge Buchwald explained, because of the extensive due diligence that acquiring banks generally perform with respect to merchants with whom they do business, which often includes a "physical inspection of the merchant's premises," the Bank of China was likely to have particularly valuable information concerning the identity, business activities, and location of the infringing defendants. Id. at *5, 11.
Although Judge Buchwald required Tiffany to utilize the Hague Convention in an attempt to secure information from the Banks, she declined to lift a previously-imposed asset freeze as to any of the three banks that Tiffany had given notice of the Forbse preliminary injunction. As she observed, because there was "no reasonable alternative analogous to the Hague Convention that would allow Tiffany to achieve the objective of the asset freeze," were Tiffany required to pursue Hague Convention letters of request without a freeze, there would be "little hope of recovering the illicit funds" held by the banks. Id. at *12. Judge Buchwald subsequently further concluded that the Court had the inherent power to direct the banks to state whether they had honored the asset freeze. See Tiffany (NJ) LLC v. Forbse, 11 Civ. 4976 (NRB), ECF No. 55 (order dated Nov. 14, 2012).
In an appeal from Judge Buchwald's order that remains pending before the Second Circuit, the Banks argue that (i) the district court lacks the authority to enter an asset freeze order against nonparty banks, and (ii) even if such authority exists, the Banks should not be compelled to violate Chinese law. (See, e.g., Brief for Movant-Appellant China Merchants Bank, New York Branch, Tiffany (NJ) LLC v. Forbse, No. 12-2330 (2d Cir. Apr. 16, 2013)). The record on appeal in that case includes a copy of a letter, dated May 15, 2013, from the United States Embassy of the People's Republic of China to the United States Department of State. In that letter, the People's Republic of China urges the United States government to "intervene . . . by filing a statement of interest . . . urging the relevant U.S. court to respect China's sovereignty and laws" and to stop efforts to freeze or seize money on deposit in China. (Id., ECF No. 114). Oral argument of that appeal has yet to be scheduled.
Although the Forbse appeal concerns the Court's authority to impose an asset freeze, rather than a turnover order, any decision the Court of Appeals renders will likely shed light on the objections interposed by the Banks in this matter. Moreover, even if this Court were to determine whether the Banks should be directed to disclose the Defendants' assets and turn them over to Tiffany, the losing side undoubtedly would appeal, particularly if Your Honor accepts my recommendation that judgment be entered against each of the Defendants for an amount in excess of $9 million. For these reasons, I recommend that no further enforcement action be taken until the Court of Appeals has issued its decision in Forbse. Thereafter, the Court can take whatever further action may be appropriate based on the outcome of that case. In the interim, of course, the asset freeze order should remain in effect.
V. Conclusion
For the foregoing reasons, Tiffany should be awarded $9 million in statutory damages, plus prejudgment interest at the rate set forth in 28 U.S.C. § 1961. Tiffany additionally is entitled to an injunction permanently enjoining the Defendants from further infringing its trademarks, as well as an order directing that the domain names of the infringing websites be transferred to Tiffany. The Court further should decline to act on Tiffany's request for a turnover order directed to the Banks until the Court of Appeals has issued its decision in Forbse.
VI. Notice of Procedure for Filing of Objections to this Report and Recommendation
The parties and the Banks are hereby directed that any objections to this Report and Recommendation, must be served and filed with the Clerk of the Court within fourteen days from today, with copies sent to the chambers of the Honorable George B. Daniels, United States District Judge, and to the chambers of the undersigned, at the United States Courthouse, 500 Pearl Street, New York, New York, 10007. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be directed to Judge Daniels. The failure to file timely objections will result in a waiver of those objections for purposes of an appeal. 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). Dated: New York, New York
August 9, 2013
/s/_________
FRANK MAAS
United States Magistrate Judge Copies to: Robert L Weigel, Esq. (Via ECF and Fax)
Gibson, Dunn & Crutcher, LLP (NY)
200 Park Avenue, 47th Floor
New York, NY 10166 Andrew Rhys Davies, Esq. (Via Fax)
Allen & Overy LLP
1221 Avenue of the Americas
New York, NY 10020 Dwight A. Healy, Esq. (Via Fax)
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036