River Light V, L.P. et al v. Zhangyali, et al.

Filing 80

MEMORANDUM Opinion and Order. Signed by the Honorable Manish S. Shah on 8/22/2016: Plaintiffs' motion for summary judgment, 50 , is granted. Enter permanent injunction prohibiting defendant from violating plaintiffs' rights in the Tory Burch mark. Statutory damages in the amount of $100,000, attorney's fees, and costs shall be awarded. Plaintiffs' motion for attorney's fees and bill of costs is due by 9/12/16, defendant's response is due by 9/26/16, and plaintiffs' reply is due by 10/11/16. [For further detail see attached order.] Notices mailed by Judicial Staff. (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
RIVER LIGHT V, L.P.
and TORY BURCH LLC,
Plaintiffs,

No. 15 CV 5918

v.

Judge Manish S. Shah

ZHANGYALI, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Defendant I Love You To The Moom And Back operates an online store and
sold earrings bearing a counterfeit Tory Burch trademark. The owners of that
trademark, plaintiffs River Light V, L.P. and Tory Burch LLC, brought claims
under the Lanham Act and the Illinois Uniform Deceptive Trade Practices Act.
Plaintiffs now move for summary judgment and seek statutory damages of
$150,000. For the following reasons, summary judgment is granted in favor of
plaintiffs, and statutory damages in the amount of $100,000 will be awarded.
I.

Legal Standards
Summary judgment is appropriate if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law. Spurling v. C & M Fine Pack, Inc., 739 F.3d 1055, 1060 (7th Cir.
2014); Fed. R. Civ. P. 56(a). A genuine dispute as to any material fact exists if “the
evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The party seeking

summary judgment has the burden of establishing that there is no genuine dispute
as to any material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A
court must “construe all facts and reasonable inferences in the light most favorable
to the non-moving party.” Apex Digital, Inc. v. Sears, Roebuck, & Co., 735 F.3d 962,
965 (7th Cir. 2013).
II.

Facts
Plaintiffs River Light V, L.P. and Tory Burch LLC hold a valid and

incontestable trademark in the shape of two capital T’s, registered with the United
States Patent and Trademark Office under the number 3,029,795. [52] ¶ 1.1
Defendant I Love U To The Moom And Back advertised, offered for sale, and sold
earrings featuring a counterfeit Tory Burch trademark, without plaintiffs’
authorization, through an online Aliexpress.com store. [52] ¶¶ 2–4. It listed the
earrings for $1.80, and described them as “Hot fashion follow out big classic double
T stud earrings the branded styled fashion rose gold button earrings for women.”
[52] ¶ 2. Defendant advertised and offered to ship the earrings to potential
customers in Illinois and elsewhere in the United States. [52] ¶ 4.
Bracketed numbers refer to entries on the district court docket. The facts are taken from
plaintiffs’ LR 56.1 statement. Because defendant did not follow the court’s local rules by
submitting a paragraph-by-paragraph response to plaintiffs’ LR 56.1 statement, see LR
56.1(b)(3)(a)–(b), plaintiffs’ facts are undisputed. Defendant also decided not to file a
statement of additional facts, which is authorized under LR 56.1(b)(3)(c). Instead,
defendant filed two expert reports that are labeled “declarations,” see [62-1] and [62-3], with
over 10,000 pages of attachments. These expert reports do not meet the requirements of LR
56.1, and “a district court is entitled to expect strict compliance with Rule 56.1.” Ammons v.
Aramark Unif. Services, Inc., 368 F.3d 809, 817 (7th Cir. 2004). Thus, any statements of
facts that may be contained therein will not be considered. Defendant also filed with its
response brief the declaration of Zhenggui Wang, [62-4], who purports to be defendant’s
president, but neither party mentions that declaration anywhere in the briefing. Wang’s
declaration is therefore excluded, as well.
1

2

III.

Analysis
A.

Expert Reports

In its response to this motion, defendant refers to and attaches the
declarations of Wenquing Li and Michal Malkiewicz—two expert reports that opine
on plaintiffs’ actual damages and defendant’s willfulness in infringing upon
plaintiffs’ trademarks. See [62-1], [62-3]. Plaintiffs request that the expert reports
be stricken, because defendant never disclosed the identities of, or its intent to use,
any expert witnesses. Under Rule 37(c), “[i]f a party fails to provide information or
identify a witness as required by Rule 26(a) or (e), the party is not allowed to use
that information or witness to supply evidence on a motion, at a hearing, or at a
trial, unless the failure was substantially justified or is harmless.” Fed. R. Civ. P.
37(c). Exclusion is “automatic and mandatory,” unless the sanctioned party can
show that nondisclosure was either justified or harmless. David v. Caterpillar, Inc.,
324 F.3d 851, 857 (7th Cir. 2003) (quoting Salgado v. Gen. Motors Corp., 150 F.3d
735, 742 (7th Cir.1998)).
Defendant concedes that it failed to make any initial disclosures or
disclosures of expert testimony, and that the Li and Malkiewicz declarations
constitute expert opinions. Its only excuse is that it did not have an opportunity to
provide the necessary disclosures. Defendant claims that it did not decide to
commission expert reports until after December 16, 2015, when the briefing
schedule for this motion was set and discovery was stayed, and that the expert
reports were not ready until six days before its response brief was due. This excuse

3

is not sufficient justification. Defendant both requested and received the reports
before the filing deadline for its response brief, and it could have moved to lift the
stay or amend the briefing schedule under Federal Rule of Civil Procedure 56(d).
What it should not have done was use a stay of discovery as an opportunity to
attach an expert report to its response brief without warning.
Defendant also claims that its nondisclosure was harmless. The following
factors should be considered in determining whether nondisclosure was harmless:
(1) the prejudice or surprise to the party against whom the evidence is
offered; (2) the ability of the party to cure the prejudice; (3) the
likelihood of disruption to the trial; and (4) the bad faith or willfulness
involved in not disclosing the evidence at an earlier date.
Tribble v. Evangelides, 670 F.3d 753, 760 (7th Cir. 2012). Defendant concedes that
plaintiffs may have been surprised by its experts’ existence, but argues that they
should not be surprised by the content of the expert reports, because they are
consistent with and support “what the defendant [has] been claiming throughout
this case.” [74] at 4. Defendant makes no mention at all of the prejudice arising
from plaintiffs’ inability to adequately respond to the expert declarations. “Without
proper disclosures, a party may miss its opportunity to disqualify the expert, retain
rebuttal experts, or hold depositions for an expert not required to provide a report.”
Tribble, 670 F.3d at 759–60. Plaintiffs had no such opportunity, and defendant has
not offered one. Allowing defendant to rely on expert reports that were disclosed for
the first time in a response to plaintiffs’ summary judgment motion would be
prejudicial. Despite defendant’s arguments to the contrary, it had the opportunity to
make expert disclosures (or seek permission in advance) but did not, and this
4

indicates a willful decision to not comply with the rules. The declarations of Li and
Malkiewicz are therefore excluded.2
B.

Liability

Plaintiffs seek summary judgment on their federal claims of trademark
infringement and counterfeiting under 15 U.S.C. § 1114 (count I) and false
designation of origin under 15 U.S.C. § 1125(a) (count II), and their Illinois claims,
based on the same conduct, under the Illinois Uniform Deceptive Trade Practices
Act, 815 ILCS § 510/1 et seq. (count IV). Defendant does not dispute liability and
concedes that it owes plaintiffs statutory damages under 15 U.S.C. § 1117(c). The
only issue in dispute is the amount of those damages. Thus, summary judgment is
granted with respect to counts I, II, and IV.3
C.

Statutory Damages

Plaintiffs seek an award of statutory damages in the amount of $150,000.
Under § 1117(c)(1), a plaintiff may seek statutory damages between $1,000 and
$200,000 “per counterfeit mark per type of goods or services sold, offered for sale, or
distributed, as the court orders just.” 15 U.S.C. § 1117(c)(1). The statute increases
the upper limit of the statutory award to $2,000,000 per mark per type of goods or
services “if the court finds that the use of the counterfeit mark was willful.” Id.
§ 1117(c)(2). The statute is analogous to the provision for statutory damages for
copyright infringement under 17 U.S.C. § 504(c). See Chi-Boy Music v. Charlie Club,
Plaintiffs also stated concerns over the relevance of the reports or the qualifications of the
experts, but those concerns need not be addressed.
2

Count III of the amended complaint, [21], does not pertain to defendant. That cause of
action was alleged against other defendants in this case who are not subject to this motion.
3

5

Inc., 930 F.2d 1224, 1229 (7th Cir. 1991). In Chi-Boy, the Seventh Circuit said that
courts enjoy wide discretion in determining statutory damage figures and may
consider factors such as “the difficulty or impossibility of proving actual damages,
the circumstances of the infringement, and the efficacy of the damages as a
deterrent to future copyright infringement.” Id. (quoting F.E.L. Publications v.
Catholic Bishop of Chi., 754 F.2d 216, 219 (7th Cir. 1985)). In addition, in the case
of willful infringement, “the statutory damages award may be designed to penalize
the infringer and to deter future violations.” Id. at 1230.
Defendant requests that the lowest possible damages award be given, and its
primary argument is simple: “It made an unintentional mistake and it is sorry.” [62]
at 8. In other words, defendant argues that its infringement was not willful, and as
a result, the damages award should not be designed to penalize defendant or deter
future infringement. Infringement was willful if the infringer knew that its conduct
constituted infringement or if it acted in reckless disregard of the owner's rights.
See Wildlife Exp. Corp. v. Carol Wright Sales, Inc., 18 F.3d 502, 511–12 (7th Cir.
1994); see also Louis Vuitton S.A. v. Lee, 875 F.2d 584, 590 (7th Cir. 1989) (“Willful
blindness is knowledge enough.”). Knowledge may be inferred from the infringer’s
conduct. Wildlife, 18 F.3d at 511. Plaintiffs argue that the infringement was willful,
because defendant was aware of the possibility that it was selling infringing
products but conducted no due diligence of its own. Defendant admits this, but says
that it relied on the Chinese government and the entities responsible for the online
marketplace that hosts defendant’s store, Alibaba and AliExpress, to weed out

6

counterfeiters and prevent infringement. And it states, without any supporting
evidence, that it purchased the infringing products from another AliExpress store,
and that it assumed that store’s products were not infringing.4 Defendant claims
that this reflects its naivety, but not a reckless indifference to plaintiffs’ rights.
Defendant’s argument is unpersuasive. Even if defendant had provided
evidence to support its claims that Alibaba and AliExpress actively patrolled the
online marketplace for infringing activity, it admits that Alibaba’s measures consist
only of conducting audits on randomly selected merchants and removing the listings
of infringing products. It provides no reason to believe that its listings were ever
audited, or that this practice obviates the need for individual merchants to monitor
their own listings. Defendant does not describe the efforts undertaken by
AliExpress or the Chinese government, but it says the Chinese government imposes
fines on counterfeiters. Defendant’s argument actually supports plaintiffs’ position.
Performing no due diligence of its own on its product listings and risking a fine by
the Chinese government is not just naïve, it shows a reckless indifference to the
trademark owner’s rights.
Moreover, plaintiffs point out that defendant’s wording of the product
description, written in English, seems designed to ensure that the product can be
easily found by a search engine without calling attention to the brand name—it
includes the words “double T” and “branded” but not “Tory Burch.” Plaintiffs say
Defendant’s expert declarations are excluded, but it is worth noting that one of them
attaches purchase records of the infringing products and screenshots from the supplier’s
website, all of which suggest that defendant bought the products from 1688.com, which does
not appear to be an AliExpress website. See [62-14].
4

7

this is consistent with the actions of an intentional infringer, who would try to
maximize sales of infringing products while minimizing the risk of the infringement
being discovered. Defendant claims, without support in the record, that it merely
copied the English-language description from its supplier and, not knowing English,
did not have a clear understanding of what it said or meant, even after looking up a
translation.5 Plaintiffs also argue that the Tory Burch trademark is so popular and
recognizable that defendant must have known that its products were infringing,
while defendant says, again without support, that it did not recognize the
trademark. Defendant’s unsupported arguments are unpersuasive, and even taking
all reasonable inferences in defendant’s favor, it is clear that defendant was, at the
very least, willfully blind to the counterfeit nature of the earrings. Thus, its
infringement was willful, which calls for a higher damages award to both penalize
defendant and deter future infringing activities.
Defendant’s remaining arguments relate to its calculation of actual damages
incurred. Defendant claims that plaintiffs’ requested award of $150,000 is excessive
in relation to the actual damages as calculated by defendant’s experts, and that the
award would constitute a windfall. Defendant’s expert reports are excluded, so its
determination of actual damages will not be considered. Plaintiffs do not provide a
competing assessment of its actual damages, and having elected to seek statutory
The only possible support for defendant’s explanation is a statement in Wang’s
declaration, [62-4] ¶ 16, but defendant does not cite to that declaration. Moreover,
defendant’s explanation conflicts with an attachment to Li’s excluded expert declaration,
[62-14]. According to Li’s declaration, the attachment contains screenshots of the supplier’s
website and purchase records of the infringing earrings. [62-1] at 15 n.53. None of these
documents contain English-language product descriptions.
5

8

damages under § 1117(c), they do not need to. It is true that there is no evidence in
the record to suggest that defendant is a large-scale counterfeiter or that plaintiffs
suffered substantial harm. Nevertheless, in light of the undisputed facts supporting
a finding of willfulness, the requested relief is not so high as to be considered a
windfall.
Plaintiffs emphasize the willfulness of the infringement, and the fact that
defendant had the ability to reach a vast customer base over the internet. These
factors do militate in favor of a high award to compensate plaintiff, penalize
defendant, and deter future infringement. Defendant advertises and sells its
products worldwide through its online store; it does not review its products for
possible infringement, though it understands that such a possibility exists; and the
product description of the infringing earrings that it did sell was worded to ensure
maximum exposure and minimal risk of getting caught. The proliferation of lowerquality, counterfeit goods damages a brand’s value and goodwill, and a significant
award is required to deter defendant and others from engaging in similar conduct.
The requested award of $150,000 is also much lower than the maximum award of
$2,000,000 that is authorized under § 1117(c)(2) for instances of willful
infringement. However, defendant’s willful infringement is mitigated to some extent
by the fact that it hired counsel and appeared in this action, rather than defaulting.
And despite defendant’s global reach, there is no evidence to suggest that plaintiffs
suffered significant damages as a result of defendant’s conduct. Of all the factors to
consider, the need to punish and deter willful infringement is the most important

9

under the circumstances of this particular defendant’s conduct, and I conclude that
$100,000 is a sufficient award of statutory damages.
D.

Permanent Injunction

In addition to statutory damages, plaintiffs requests that defendant be
permanently enjoined from advertising, offering for sale, and selling products that
bear a counterfeit Tory Burch trademark or otherwise violate plaintiffs’ rights in
the mark. Defendant does not explicitly refer to this request, but insists repeatedly
that it will never engage in the sale of Tory Burch products again. Plaintiffs have
established that infringement occurred, and the harm to its brand from the sales of
counterfeit goods is irreparable—the confusion caused by knock-off products in the
stream of commerce damages the value of the brand and cannot be compensated by
money alone. There is no harm to the defendant to being enjoined from violating the
law, and the public interest is served by eliminating potential consumer confusion.
Plaintiffs request that the permanent injunction order third-party domain name
registrars and online marketplaces to disable any account linked to defendant,
linked to any e-mail addresses used by defendant, or linked to the defendant’s
internet store. They also request that defendant be enjoined from owning or
operating any domain name or online marketplace account that could be used to sell
infringing products in the future. These requests are overbroad in that they
disproportionately harm defendant’s ability to conduct legitimate business. The
request for injunctive relief is otherwise granted.

10

E.

Attorney’s Fees and Costs

Finally, plaintiffs seek recovery of its attorney’s fees and costs. Attorney’s
fees are recoverable under § 1117(a) and § 1117(b) in certain circumstances,
including when the infringement was willful. 15 U.S.C. §§ 1117(a)–(b); see also
BASF Corp. v. Old World Trading Co., 41 F.3d 1081, 1099 (7th Cir. 1994).
Defendant correctly notes that those provisions relate to awards of actual damages
rather than statutory damages, but attorney’s fees are available when plaintiffs opt
to receive statutory damages under § 1117(c), as well. See Louis Vuitton Malletier
S.A. v. LY USA, Inc., 676 F.3d 83, 111 (2d Cir. 2012). Accordingly, reasonable
attorney’s fees shall be awarded to plaintiffs. Costs are available to plaintiffs, as the
prevailing party, under Federal Rule of Civil Procedure 54(d)(1).
IV.

Conclusion
Plaintiffs’ motion for summary judgment, [50], is granted. Enter permanent

injunction prohibiting defendant from violating plaintiffs’ rights in the Tory Burch
mark. Statutory damages in the amount of $100,000, attorney’s fees, and costs shall
be awarded. Plaintiffs’ motion for attorney’s fees and bill of costs is due by 9/12/16,
defendant’s response is due by 9/26/16, and plaintiffs’ reply is due by 10/11/16.
ENTER:
___________________________
Manish S. Shah
United States District Judge

Date: 8/22/16

11