Luxottica USA LLC v. The Partnerships and Unincorporated Associations Identified on Schedule "A"

Filing 87

MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 6/18/2015:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

LUXOTTICA USA LLC,
Plaintiff,
Case No. 14 c 9061
v.
Judge Harry D. Leinenweber
THE PARTNERSHIPS AND
UNINCORPORATED ASSOCIATIONS
IDENTIFIED ON SCHEDULE “A”,
Defendants.

MEMORANDUM OPINION AND ORDER
This case arises from the unauthorized sale of counterfeit
Ray-Ban eyewear through various online seller accounts.

Default

judgment has been entered against most Defendants, while others
have

been

voluntarily

dismissed.

A

single

Defendant

(“Defendant”), who has been identified by two eBay seller IDs,
remains.
Before

the

Court

is

Plaintiff

Luxottica

USA

LLC’s

(“Luxottica”) Motion for Summary Judgment, Statutory Damages of
$450,000, Permanent Injunction, and Attorneys’ Fees and Costs
[ECF No. 77].

For the reasons stated herein, Luxottica’s Motion

is granted, except that the Court awards statutory damages in
the amount of $150,000.

I.

BACKGROUND

Luxottica is the exclusive wholesale distributor of genuine
Ray-Ban products in the United States and holds the exclusive
right to enforce RAY-BAN trademarks within the United States.
(Joint Stmt. of Stipulated Facts, ECF No. 75, ¶1.)

RAY-BAN

marks have been used continuously and exclusively by Luxottica
and

its

predecessors

Luxottica

has

registering
Patent

protected

the

and

since
the

following

Trademark

as

early

value

1937.

the

of

trademarks

Office:

as

Ray-Band

with

Reg.

the

No.

(Id.

¶3.)

brand

United

1,080,886,

by

States
Reg.

No. 1,320,460, Reg. No. 3,522,603. (Id. ¶1.)
Defendant stipulates that up until November 2014, it sold
and

offered

RAY-BAN

for

sale
via

online

products

featuring

marketplace

counterfeit

accounts

associated

with the eBay seller IDs “g7178a” and “qhgypchyh2.”

(Id. ¶¶5–

8.)

trademarks

knockoff

(The introductory paragraph of the parties’ joint statement

of stipulated facts refers to the seller IDs as “g7178” and
“qhgypchyh.”)

Defendant has stipulated to owning the online

marketplace accounts associated with these seller IDs, as well
as

seven

addresses.

PayPal

accounts

(Id. ¶4.)

associated

with

various

email

Defendant sold at least 106 counterfeit

Ray-Ban products at prices ranging from $6.29 to $6.99 each.
(Id. ¶5.)

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II.
Luxottica
judgment

in

requests
its

ANALYSIS

that

favor

on

this

the

Court

two

(1)

summary

asserted

claims

enter

against

Defendant, (2) award statutory damages of $450,000 pursuant to
15 U.S.C. § 1117(c), (3) enter a permanent injunction against
Defendant

and

transfer

to

Luxottica

all

assets

currently

restrained in PayPal accounts that are connected to Defendant,
and (4) award attorneys’ fees and costs pursuant to 15 U.S.C.
§ 1117(a)–(b).
A.

Summary Judgment

Luxottica argues that it is entitled to summary judgment on
its claims for false designation of origin under the Lanham Act,
15

U.S.C.

§

1125(a),

and

violation

of

the

Illinois

Deceptive Trade Practices Act, 815 ILCS § 510, et seq.

Uniform
Summary

judgment is appropriate when “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a
FED. R. CIV. P. 56(a).

matter of law.”
admitted

liability

on

the

Defendant has already

above-mentioned

counts

in

a

Joint

Statement of Stipulated Facts filed with the Court on April 7,
2015.

(ECF

offered

No.

for

75

sale

¶¶6–8
and

(“Defendant

sold

at

least

knowingly
one

and

hundred

willfully
six

(106)

Counterfeit Ray-Ban Products. . . . Defendant admits liability
for false designation of origin using counterfeit trademarks and
violation

of

the

Illinois

Uniform
- 3 -

Deceptive

Trade

Practices

Act.”).)

Summary

judgment

is

therefore

entered

in

favor

of

Luxottica.
B.
Luxottica

seeks

a

Statutory Damages
total

damages

award

of

$450,000

—

$150,000 for each of the three trademarks that Defendant used on
the

counterfeit

damages

of

generated

products.

no

more

than

only

$800

in

Defendant
$7,440

total

are

revenue

argues

that

appropriate
from

the

statutory
because

sale

of

it
the

counterfeit goods, and only a fraction of that amount within the
United States.
Under 15 U.S.C. § 1117(c), a plaintiff in a case involving
the use of a counterfeit mark may elect to recover an award of
statutory damages of “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”

or,

in

the

case

of

willful

infringement, “not more than $2,000,000 per counterfeit mark per
type

of

goods

distributed.”

or

services

sold,

offered

for

sale,

or

Although the Lanham Act permits a plaintiff to

choose either actual or statutory damages, statutory damages are
“most

appropriate”

when

actual damages uncertain.

an

infringer’s

nondisclosure

makes

Sara Lee Corp. v. Bags of N.Y., Inc.,

36 F.Supp.2d 161, 165 (S.D.N.Y. 1999).
Though

§

1117(c)

places

a

dollar

range

on

possible

statutory damages awards, the statute provides no guidance on
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how to select a figure within that range.

Lorillard Tobacco Co.

v. S & M Cent. Serv. Corp., No. 03 C 4986, 2004 WL 2534378, at
*4

(N.D.

Ill.

Nov.

8,

2004).

Accordingly,

“[c]ourts

interpreting section 1117(c) have looked by analogy to case law
applying the statutory damage provision of the Copyright Act
contained in 17 U.S.C. § 504(c).”

Id.

The Seventh Circuit’s standard for the award of statutory
damages in copyright infringement cases is set forth in Chi-Boy
Music

v.

1991).

Charlie

Club,

Inc.,

930

F.2d

1224,

1229

(7th

Cir.

Under Chi-Boy, “district courts enjoy wide discretion in

awarding fees and may consider various factors such as [1] the
difficulty or impossibility of proving actual damages, [2] the
circumstances of the infringement, and [3] the efficacy of the
damages as a deterrent to future copyright infringement.”
at 1229–30 (citation and internal quotations omitted).

Id.

Courts

have also considered the value of a plaintiff’s brand, “and the
efforts

taken

to

protect,

promote,

Lorillard, 2004 WL 2534378, at *6.

and

enhance

that

brand.”

Ultimately, § 1117(c) looks

to both “compensatory considerations” such as “actual losses and
trademark value,” as well as “punitive considerations” such as
“deterrence of other infringers and redress of wrongful defense
conduct.”

Sara

Lee,

36

F.Supp.2d

at

165;

see

also,

Sands,

Taylor & Wood v. Quaker Oats Co., 34 F.3d 1340, 1347 (7th Cir.
1994) (noting that statutory damages under § 1117(c) are not
- 5 -

merely

remedial

but

serve

an

important

public

interest),

modified on reh'g in part, 44 F.3d 579 (7th Cir. 1995).
The

Court

turns

Although

there

is

first

“no

to

compensatory

necessary

considerations.

mathematical

relationship

between the size of [a statutory damages award] and the extent
or profitability of the defendant's wrongful activities,” Sara
Lee, 36

F.Supp.2d

relation”

to

Chest, No.
Sept.

actual

165,

2011)

may

statutory

damages,

2:10-CV-00243,

21,

Courts

at

look

operations

to

statutory

to

damages

may

WL

and

the

determine

Coach,

2011

(citation

size

a

Inc.

internal
and

at

“bear

Tom’s
*3

of

a

when

Ind.

omitted).

defendant’s

damages.

appropriate

some

Treasure

(N.D.

quotations

scope
for

must

v.

4399355,

baseline

be

damages

Id.

High

counterfeiting

activities take place online and are capable of reaching a wide
audience.

Id.

Here, Defendant argues that “the parties have a complete
record

of

all

PayPal

records

approximately

the

sales

of

documenting

$800

the

accused

Defendant’s

worldwide

and

$372

(Def.’s Resp., ECF No. 82, at 11.)

products”
sales,

in

the

—

namely,

which

totaled

United

States.

Plaintiff counters that

Defendant’s evidence — which was submitted without a declaration
—

is

For

unauthenticated
instance,

the

and

contains

figures

contradictory

displayed

on

the

information.
webpages

for

Defendant’s eBay storefronts indicate that Defendant sold more
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than 200 pairs of sunglasses, (see, Ex. 2 to Joint Stmt. of
Stipulated
Defendant

Facts,
submits

ECF

No.

75-2),

show

only

106

(Def.’s Resp., ECF No. 82, at 5.)
exact

sales

figures,

no

but
pairs

the
of

PayPal

figures

sunglasses

sold.

While the parties dispute the

evidence

submitted

Defendant is a large-scale counterfeiter.

suggests

that

For instance, all

seven PayPal accounts that have been “connected” to Defendant
contain only $75,000.

(See, id. at 2–3.)

On the other hand, Defendant’s counterfeiting took place on
the

Internet,

enabling

Defendant

to

reach

a

“vast

customer

base,” Burberry Ltd. & Burberry USA v. Designers Imports, Inc.,
No.

07

CIV.

3997

(PAC),

2010

WL

199906,

at

*10

(S.D.N.Y.

Jan. 19, 2010), and making Luxottica’s actual losses difficult
to calculate, Brown v. Walker, No. 1:06-CV-218, 2010 WL 2346242,
at

*7

(N.D.

Ind.

May

25,

2010),

report

and

recommendation

adopted as modified, No. 1:06-CV-218-TLS, 2010 WL 2346225 (N.D.
Ind. June 9, 2010).

In cases involving the online sale of

counterfeit goods, courts have found substantial damages awards
appropriate.

See,

e.g.,

id.

(awarding

Burberry, 2010 WL 199906, at *10
Deckers

Outdoor

Corp.

v.

Does

$50,000

per

mark);

(awarding $100,000 per mark);
1-55,

No.

11

C

10,

2011

WL

4929036, at *5 (N.D. Ill. Oct. 14, 2011) (awarding $750,000 per
mark).

In this case, the Court has already awarded damages of

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$2 million against each defaulting Defendant.

(See, ECF No. 65

¶4.)
In addition, the RAY-BAN marks are well known and highly
valuable.

As noted, Luxottica and its predecessors have used

the RAY-BAN marks continuously and exclusively since as early as
1937, and the marks at issue in this lawsuit are all federally
registered.

Luxottica submits that it has expended significant

resources in promoting the Ray-Ban brand, making Ray-Ban the
“undisputed world leader in the field of sun and prescription
eyewear.”

(Pl.’s Mem., ECF No. 78, at 10.)

Luxottica has also

filed numerous lawsuits within this District in an effort to
protect the RAY-BAN marks and their associated goodwill.

(See,

id. at 11 n.6.)
The Court now turns to punitive considerations.
the

purpose

of

statutory

damages

is

to

deter

violator and other potential future violators.”
WL 2534378, at *6.

“[P]art of
the

current

Lorillard, 2004

Damages awards limited to lost profits are

typically ineffective deterrents because “[a] counterfeiter must
fear more than just having to turn over his ill-gotten gains to
the rightful owners.”

Id.

Here, Defendant has stipulated that

it engaged in willful infringement.

However, Defendant has also

mitigated the degree of willfulness by ceasing the sale of the
counterfeit

products

immediately,

retaining

voluntarily providing information to Luxottica.
- 8 -

an

attorney,

and

Because this is not a case of default, and based on the
mitigating

factors

identified

above,

the

Court

finds

it

appropriate to reduce the statutory damages Luxottica seeks by
two-thirds.

Pursuant to 15 U.S.C. § 1117(c), the Court awards

Luxottica statutory damages in the amount of $50,000 per mark,
for a total award of $150,000.
C.

Permanent Injunction

Luxottica seeks permanent injunctive relief pursuant to 15
U.S.C.

§

1116(a),

which

enables

district

courts

to

grant

injunctions, “according to the principles of equity and upon
such

terms

as

the

court

may

deem

reasonable.”

A

plaintiff

seeking a permanent injunction must demonstrate the following:
(1) that it has suffered an irreparable injury; (2)
that remedies available at law, such as monetary
damages, are inadequate to compensate for that injury;
(3) that, considering the balance of hardships between
the plaintiff and defendant, a remedy in equity is
warranted; and (4) that the public interest would not
be disserved by a permanent injunction.
eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006);
accord e360 Insight v. The Spamhaus Project, 500 F.3d 594, 604
(7th Cir. 2007).
The Seventh Circuit has “clearly and repeatedly held that
damage

to

a

trademark

holder’s

goodwill

can

constitute

irreparable injury for which the trademark owner has no adequate
legal remedy.”
(7th

Cir.

Re/Max N. Cent., Inc. v. Cook, 272 F.3d 424, 432

2001).

As

this

Court

- 9 -

recognized

in

granting

Luxottica’s

Motion

for

Preliminary

Injunction,

a

Temporary

Restraining

counterfeiting

has

Order

eroded

and

consumer

goodwill in the RAY-BAN trademarks and constitutes irreparable
harm for which there is no adequate remedy at law.
because

Defendant’s

hardships

favors

Partnerships

&

conduct

was

Luxottica.

willful,

the

balance

of

Bulgari,

See,

Unincorporated

Further,

S.p.A.

v.

Identified

On

Associations

Schedule “A”, No. 14-CV-4819, 2014 WL 3749132, at *6 (N.D. Ill.
July 18, 2014), report and recommendation adopted, No. 14 CV
4819, 2014 WL 3765854 (N.D. Ill. July 29, 2014).
interest

also

favors

Luxottica,

because

The public

“enforcement

of

the

trademark laws prevents consumer confusion,” Eli Lilly & Co. v.
Natural Answers, Inc., 233 F.3d 456, 469 (7th Cir. 2000), and
consumers have a legitimate “interest in knowing with whom they
do business.”

Re/Max N. Cent., 272 F.3d at 433.

As part of the injunction, Luxottica seeks the immediate
transfer

of

“all

PayPal,

Inc.

and

assets
linked

in
to

financial
Defendant,

discovered assets, to Luxottica.”
12.)

accounts
as

well

operated
as

any

by

newly

(Pl.’s Mem., ECF No. 78, at

In granting Luxottica’s Motion for Preliminary Injunction,

the Court previously froze assets held in accounts “connected”
to Defendant on the basis that Luxottica sought an accounting of
profits

as

an

alternative

to

statutory

damages.

See,

CSC

Holdings, Inc. v. Redisi, 309 F.3d 988, 996 (7th Cir. 2002)
- 10 -

(upholding asset freeze where plaintiff sought accounting in the
alternative to statutory damages).

Now, relying on the PayPal

records, Defendant argues that the asset freeze is too broad,
sweeping up accounts “wholly unrelated to the accused products.”
(Def.’s Resp., ECF No. 82, at 8.)

Defendant urges the Court to

scale back the asset freeze to $7,440, an amount it contends is
“more

than

adequate

to

satisfy

the

Court’s

preserving any equitable accounting of profits.”

interests

in

(Id. at 10.)

In arguing that the asset restraint should be modified,
Defendant relies on Klipsch.

In Klipsch, after a preliminary

injunction hearing in which a defendant submitted evidence that
it had only sold a few thousand dollars’ worth of counterfeit
goods, a court reduced a prejudgment asset restraint from $2
million to $20,000.

Klipsch Grp., Inc. v. Big Box Store Ltd.,

No. 12 CIV. 6283 AJN, 2012 WL 5265727, at *3 (S.D.N.Y. Oct. 24,
2012).

The court held that, under the Supreme Court’s ruling in

Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc.,
527 U.S. 308 (1999), asset freezes are limited to preserving the
equitable remedy of an accounting for profits.

Klipsch, 2012 WL

5265727, at *3.
To exempt assets from an asset freeze, “[t]he burden is on
the

party

seeking

particular
activities.”

assets

relief
[are]

to
not

present
the

documentary

proceeds

of

proof

that

counterfeiting

N. Face Apparel Corp. v. TC Fashions, Inc., No. 05
- 11 -

CIV. 9083 (RMB), 2006 WL 838993, at *3 (S.D.N.Y. Mar. 30, 2006)
(citation and internal quotations omitted).

Defendant claims

that only two of Defendant’s seven PayPal accounts contain any
profits related to the sale of counterfeit Ray-Ban goods.

In

support of this argument, Defendant has submitted a spreadsheet
of

transactions

addresses,

as

associated

well

as

an

with

one

of

untranslated

Chinese

Exs. K & L to Def.’s Resp., ECF No. 82-1.)
remaining

accounts,

Defendant

has

Defendant’s

email

email.

(See,

To rule out the five

submitted

PayPal

account

summaries it claims show no connection to the eBay Seller IDs
“g7178a” and “qhgypchyh2.”
No. 82-1.)
eBay

Defendant has also provided several hundred pages of

feedback

showing

(See, Exs. C–I to Def.’s Resp., ECF

that

sunglasses.

ratings
it

sold

associated
a

variety

with
of

the

two

products

seller

in

IDs,

addition

to

(See, Ex. N to Def.’s Resp., ECF No. 82-1.)

Luxottica, however, disputes the authenticity and validity
of

this

evidence

evidence.
was

transaction
glasses

not

and

instance,

accompanied

spreadsheet

sold,

information

For

that

displayed

does

by

Luxottica
a

not

the

declaration,

that

the

that

the

identify

the

sales

figures

contradict

storefronts.

Despite

Defendant’s
on

notes

eBay

quantity

of

Defendant’s contention that it is unconnected to five of the
seven

PayPal

accounts,

Defendant

has

admitted

to

owning

the

PayPal accounts associated with the email addresses shown in the
- 12 -

account

summaries.

No. 75,

¶5.)

accounts
through

(Joint

Luxottica

“was

based

PayPal’s

Stmt.

submits

on

that

PayPal,

proprietary

of

Stipulated
the

Facts,

restraint

on

ECF
these

Inc.’s . . . determination

methods,

which

have

disclosed to Luxottica or Luxottica’s counsel.”

not

been

(Gaudio Decl,

Ex. 1 to Pl.’s Reply, ECF No. 84-1, ¶ 2.)
The Court cannot conclude, based on the evidence before it,
that Defendant has met its burden in showing that the asset
restraint should be limited to only a portion of two of the
seven PayPal accounts and declines to modify the asset restraint
on this basis.
D.

Attorneys’ Fees and Costs

Finally, Luxottica seeks an award of attorneys’ fees and
costs.

As the prevailing party, Luxottica is entitled to costs

under Federal Rule of Civil Procedure 54(d)(1).

Under 15 U.S.C.

§

of

1117(a),

which

addresses

recovery

in

terms

profits

and

actual damages, a court may, “in exceptional cases . . . award
reasonable attorney fees to the prevailing party.”

Exceptional

cases include those in which a defendant’s conduct is willful.
BASF Corp. v. Old World Trading Co., 41 F.3d 1081, 1099 (7th
Cir.

1994).

In

assessing

damages

under

§

1117(a),

courts

“shall” award attorneys’ fees, absent extenuating circumstances,
in cases involving the intentional use of a counterfeit mark.
15 U.S.C. § 1117(b).

An award of attorneys’ fees is available
- 13 -

where, as here, a plaintiff “opt[s] to receive statutory damages
under section 1117(c).”

Louis Vuitton Malletier S.A. v. LY USA,

Inc., 676 F.3d 83, 111 (2d Cir. 2012); accord Coach, Inc. v.
Treasure Box, Inc., No. 3:11CV468-PPS, 2014 WL 888902, at *5
(N.D.

Ind.

Mar.

6,

Defendant’s

willful

reasonable

2014).

attorneys’

Accordingly,

counterfeiting,
fees

and

costs

III.

herein,

in

Luxottica
in

an

light

is

of

awarded

CONCLUSION

stated

and

amount

to

be

determined by the Court.

For

the

reasons

Luxottica’s

Motion

for

Summary Judgment and Statutory Damages is granted in part and
denied in part.
The Court enters summary judgment in favor of Luxottica and
against Defendant.

Pursuant to 15 U.S.C. § 1117(c), the Court

awards Luxottica $150,000 in statutory damages.

The Court also

awards Luxottica reasonable attorneys’ fees and costs, and will
enter

a

permanent

injunction

prohibiting

Defendant

from

violating Luxottica’s rights in the RAY-BAN marks.
Within seven (7) days of the entry of this order, Luxottica
shall submit a revised Final Judgment Order consistent with this
opinion.

The parties are to attempt to reach an agreement on

the issue of attorneys’ fees in accordance with Local Rule 54.3.
If an agreement cannot be reached, Luxottica is to file a Motion

- 14 -

for Attorneys’ Fees within thirty (30) days of the entry of this
Order.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court

Dated: June 18, 2015

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