Court: District Court, S.D. Florida; April 28, 2016; Federal District Court
Plaintiff Chanel, Inc. filed a Motion for Entry of Final Default Judgment against Defendants, who failed to respond to the Complaint despite proper service. A Clerk’s Default was entered on April 20, 2016. Chanel, Inc. alleges trademark counterfeiting and infringement under the Lanham Act, false designation of origin, common-law unfair competition, and common law trademark infringement. The Defendants are accused of selling goods that unlawfully bear similar trademarks, causing irreparable harm to Chanel, Inc. by misleading the public and undermining its trademark rights. The Plaintiff seeks a final default judgment, an injunction against further infringement, and statutory damages. The Court, referencing Federal Rule of Civil Procedure 55(b)(2), notes that while a defendant's default allows for judgment, the Court must ensure that the Complaint sufficiently supports the claims. Upon review, the Court finds that liability is adequately pled, thus granting the Plaintiff’s Motion for Default Judgment.
Plaintiff is the registered owner of valid trademarks known as the "Chanel Marks," which are listed on the Principal Register of the United States Patent and Trademark Office and are associated with high-quality goods. Defendants have been found to advertise, promote, and sell goods that Plaintiff claims are counterfeits or infringements of these trademarks. Evidence indicates that while not every Defendant has infringed all Chanel Marks across all product categories, each has infringed at least one or more of the marks. Defendants lack authorization to use or replicate the Chanel Marks.
To investigate this infringement, Plaintiff engaged AED Investigations, Inc., whose officer, Eric Rosaler, accessed the Defendants' e-commerce stores and successfully purchased products bearing counterfeit Chanel Marks. These transactions were completed online, and web page captures of these products were provided to Plaintiff's representative for review. Additionally, Plaintiff's legal counsel also accessed the stores, documenting examples of trademark infringement and the shipping origins of the products. Upon inspection, Plaintiff's representative confirmed that the items offered by Defendants were non-genuine and unauthorized versions of Chanel products.
Trademark counterfeiting and infringement claims under 15 U.S.C. § 1114 require the plaintiff to prove prior rights to the trademark and that the defendant's mark is identical or confusingly similar, likely causing consumer confusion. The standard for false designation of origin under 15 U.S.C. § 1125(a) parallels this, necessitating proof that the defendant's use of a mark is likely to deceive regarding affiliation or origin. Florida common law also evaluates unfair competition and trademark infringement based on the likelihood of confusion, with the same legal principles applying as under the Lanham Act. The plaintiff's complaint is deemed sufficient, as it provides detailed factual allegations supported by sworn declarations, establishing the defendants’ liability across all claims. Consequently, a default judgment is warranted under Federal Rule of Civil Procedure 55.
Injunctive relief under the Lanham Act allows district courts to issue injunctions to prevent trademark violations, as outlined in 15 U.S.C. 1116(a). This remedy is favored in trademark cases due to the inadequacy of legal remedies for ongoing infringement, as established in Burger King Corp. v. Agad and Century 21 Real Estate Corp. v. Sandlin. Even in default judgments, injunctive relief is applicable, supported by cases like PetMed Express, Inc. v. MedPets.com, Inc. The defendants' lack of response in this case hinders the plaintiff's ability to prevent further infringement, as highlighted in Jackson v. Sturkie.
For permanent injunctive relief to be granted, a plaintiff must show: (1) irreparable injury, (2) no adequate remedy at law, (3) that the balance of hardships favors an equitable remedy, and (4) that the injunction serves the public interest, as stated in eBay, Inc. v. MercExchange, L.L.C. The plaintiff has demonstrated all four factors, with a strong indication that likelihood of confusion over counterfeit goods represents a substantial threat of irreparable harm, as noted in McDonald’s Corp. v. Robertson and Levi Strauss & Co. v. Sunrise Int'l Trading Inc.
The plaintiff's complaint indicates that the defendants' actions have already caused irreparable injury and will continue to do so without a permanent injunction. The counterfeit goods sold by the defendants closely resemble the plaintiff's genuine products, leading to consumer confusion. The plaintiff lacks an adequate legal remedy to address the damage to its reputation and sales, while the defendants would face no hardship from ceasing their illegal activities. Furthermore, the public interest is served by preventing misleading consumer practices, as supported by Nike, Inc. v. Leslie. The defendants' online counterfeiting scheme underscores the need for a permanent injunction to halt their unlawful activities.
Statutory damages for the use of counterfeit marks, as per 15 U.S.C. 1117(c), allow a plaintiff to choose an award between $1,000 and $200,000 per counterfeit mark per type of goods before final judgment. If the court determines that the counterfeiting was willful, damages may be increased up to $2,000,000 per mark. The plaintiff has opted for statutory damages in this case. The court holds significant discretion in setting the damage amount, and statutory damages can be awarded even if actual damages are not proven. The statutory damages framework was established due to the challenges in proving a defendant's profits from counterfeiting. Courts can award these damages without an evidentiary hearing if the evidence is uncontested. Here, the complaint's allegations, accepted as true, show that the defendants intentionally copied the Chanel Marks to exploit the plaintiff's reputation. The evidence indicates that the defendants engaged in activities that involved counterfeit marks. Therefore, the plaintiff requests a statutory damage award of $100,000 against each defendant, aiming to deter future counterfeiting, compensate the plaintiff, and punish the defendants, aligning with the objectives of 15 U.S.C. 1117(c). The court agrees that this proposed award is appropriate.
The Plaintiff's Complaint includes claims for false designation of origin under Section 43(a) of the Lanham Act (Count II), with damages limited to the amount awarded in Count I and any equitable relief granted. Additionally, the Complaint asserts claims for common law unfair competition (Count III) and trademark infringement (Count IV), both of which are similarly constrained to the damages awarded in Count I and requested equitable relief. The court has ordered that the Plaintiff's motion (ECF No. 29) is granted against the specified Defendants listed in Schedule “A.” A final default judgment will be issued separately. The factual background referenced includes details from the Plaintiff's initial Complaint, the motion for judgment, and supporting evidence, including printouts from e-commerce stores linked to the Defendants, which were obtained via GenuNet Internet Monitoring and later provided to Chanel. The evidence includes printouts demonstrating the Defendants' infringement of Chanel's trademarks.
