Coach Inc et al v. Tom's Treasure Chest
OPINION AND ORDER GRANTING 11 MOTION for Default Judgment as to Tom's Treasure Chest. Toms Treasure Chest is ORDERED to pay Coach $30,000 in statutory damages, $1,097.50 for reasonable attorneys fees, $744.53 for investigative costs, $350.00 in courts costs, and $240.00 in service fees. The Clerk is directed to treat this matter as TERMINATED. Signed by Chief Judge Philip P Simon on 9/21/11. (kjp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
COACH, INC. and
COACH SERVICES, INC.
TOM’S TREASURE CHEST
CAUSE NO. 2:10-cv-00243
OPINION AND ORDER
This matter is before the Court on Plaintiffs Coach, Inc. and Coach Services, Inc.’s
(referred to together as “Coach”) Motion for Entry of Default. [DE 11.] Because the Clerk has
already entered default in this case, I read this as a motion for default judgment. For the
following reasons, the motion is GRANTED.
First, the facts as they’re alleged in the Complaint. Coach engages in the manufacture,
marketing, and sale of high end handbags, wallets, accessories, and jewelry throughout the
United States. [DE 1 ¶ 10.] The brand name Coach is widely recognized and the products are
popular, with sales exceeding three billion dollars per year. [Id. ¶ 12.] Coach holds numerous
legally-protected trademarks, trade dresses, and design elements/copyrights and has expended
substantial resources advertising and promoting these marks. [Id. ¶¶ 10-12.] Defendant Tom’s
Treasure Chest is a retail store located in Gary, Indiana. [Id. ¶ 6].
On May 12, 2010, an investigator hired by Coach purchased two handbags from Tom’s
Treasure Chest labeled as “Coach” bags, despite the fact that Coach never manufactured, sold, or
offered this style of handbag. [Id. ¶ 27.] The investigator observed additional Coach knock-offs
at the store, and store personnel stated that similar items were received on a regular basis. [Id.]
Tom’s Treasure Chest is not an authorized retailer of the Coach brand nor has license, authority,
or permission to utilize any of the Coach trademarks, trade dresses, or design elements. [Id. ¶¶
27, 29.] The two handbags contained six Coach trademarks. [DE 12 at 13.]
On June 17, 2010, Coach brought this action alleging trademark and trade dress
infringement and counterfeiting under the Lanham Act; copyright infringement under the
Copyright Act; trademark infringement and unfair competition under Indiana law; and state
claims of forgery and counterfeiting. [DE 1 ¶ 1.] According to an affidavit filed by Coach’s
process server, Coach served the summons and complaint on Tom’s Treasure Chest’s registered
agent on September 20, 2010.1 [DE 6.] But Tom’s Treasure Chest has not filed a response to the
complaint, and the Clerk entered default on January 19, 2011. [DE 10.] As a result, Coach filed
this motion for default judgment, [DE 11], and Tom’s Treasure Chest has not responded to the
motion. Coach seeks $600,000 in statutory damages for six infringed marks under the Lanham
Act, $1,097.50 in attorney’s fees, $744.53 in investigation fees, and $590.00 in costs. [DE 12.]
Federal Rule of Civil Procedure 55 governs the entry of default and default judgment.
Fed. R. Civ. P. 55. Prior to obtaining a default judgment under Rule 55(b)(2), there must be an
entry of default as provided by Rule 55(a). See Wolf Lake Terminals, Inc. v. Mut. Marine Ins.
Co., 433 F. Supp. 2d 933, 941 (N.D. Ind. 2005). Under Rule 55(a), the clerk is to enter the
On August 4, 2011, I ordered Coach to demonstrate that Tom’s Treasure Chest was
properly served under Fed. R. Civ. P. 4(h). I am satisfied by Coach’s response.
default of a party against whom a judgment is sought when that party has failed to plead or
otherwise defend. Fed. R. Civ. P. 55(a). Because the clerk has already entered default against
Tom’s Treasure Chest, I may now enter a default judgment under Rule 55(b)(2).
Courts may consider a number of factors when deciding a motion for default judgment.
Those factors include the amount of money potentially involved, whether material issues of fact
or issues of substantial public importance are present, whether the default is largely technical,
whether plaintiff has been substantially prejudiced by the delay involved, and whether the
grounds for default are clearly established or are in doubt. 10A Wright et al., Fed. Prac. & Proc.
Civ. 3d § 2685 (3d ed. 2007); see Cameron v. Myers, 569 F. Supp. 2d 762, 764 (N.D. Ind. 2008).
In this case, the grounds for default are clearly established. This case has been pending
since June 2010, yet Tom’s Treasure Chest has shown no intention to respond to the complaint
in the several months since it was served. The default is thus not a simple technicality. And no
material issues of fact have been presented due to Tom’s Treasure Chest’s failure to participate
in the lawsuit. Further, it’s in the public’s interest to protect intellectual property from trademark
A default judgment establishes, as a matter of law, that a defendant is liable to the
plaintiff for each cause of action in the complaint. O’Brien v. R.J. O’Brien & Assocs., Inc., 998
F.2d 1394, 1404 (7th Cir. 1993). When a court determines that a defendant is in default, all wellpleaded allegations in the complaint will be taken as true. Black v. Lane, 22 F.3d 1395, 1399
(7th Cir. 1994). Here, this means that I must accept as true Coach’s assertions that Tom’s
Treasure Chest willfully infringed Coach trademarks by selling knock-off handbags containing
Yet while the factual allegations relating to liability are taken as true, the amount of
damages must be proved. Dundee Cement Co. v. Howard Pipe & Concrete Prods. Inc., 722 F.2d
1319, 1323 (7th Cir. 1983). This often means that the court must hold a hearing or conduct an
investigation to determine the amount of damages. But no such inquiry is necessary if “the
amount claimed is liquidated or capable of ascertainment from definite figures contained in the
documentary evidence or in detailed affidavits.” Id.; see also Pope v. United States, 323 U.S. 1,
12 (1994). Moreover, an evidentiary hearing is often unnecessary where a party seeks statutory
damages. See Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., 2008
WL 1775512, at *3 (N.D. Ill. April 17, 2008) (citing Ortiz-Gonzalez v. Fonovisa, 277 F.3d 59,
63-64 (1st Cir. 2002)).
Here, Coach seeks statutory damages under the Lanham Act, 15 U.S.C. § 1117. If a
plaintiff elects statutory damages for a willful violation under § 1117(c), he may receive
damages ranging from $1,000 to $2,000,000 per counterfeit mark per type of goods or services
sold. 15 U.SC. § 1117(c). In determining damages within this range, courts are not required to
follow a rigid formula and, in fact, enjoy “wide discretion in awarding statutory damages.”
Brown v. Walker, 2010 WL 2346242, at *7 (N.D. Ind. May 25, 2010) (citing Chi-Boy Music v.
Charlie Club, 930 F.2d 1224, 1229 (7th Cir. 1991)). Some courts look to case law addressing
analogous statutory language in the Copyright Act for guidance and consider factors such as the
difficulty of proving actual damages, the circumstances of the infringement, the efficacy of the
damages as a deterrent, and whether the infringement was willful. Id.
Courts agree, however, that statutory damages must both “bear some relation” to actual
damages and serve to deter future violations. Bly v. Banbury Books, Inc., 638 F.Supp. 983, 987
(E.D. Pa. 1986); Square D Co. v. Breakers Unlimited, Inc., 2010 WL 381334, at *4 (S.D. Ind.
Jan. 25, 2010). As a result, courts often look to the size and scope of the defendant’s operation
to determine an appropriate baseline for damages. See Chanel v. Banks, 2011 WL 121700, at
*11 (D.Md. Jan. 13, 2011) (“[T]he broader measure of damages available [under § 1117(c)] is
intended to address situations involving sophisticated, large-scale counterfeiters”); Coach Inc. v.
Diva Shoes & Assessories, 2011 WL 1483436, at *7 (N.D. Cal. Apr. 19, 2011) (rejecting
Coach’s damages award where there was “no evidence that Defendants were importing large,
commercial quantities of counterfeit Coach merchandise”). Courts also award high damages
where a defendant’s counterfeiting activities attract wide market exposure through Internet
traffic or advertisement. Compare Coach, Inc. v. Ocean Point Gifts, 2010 WL 2521444, at *6
(D.N.J. June 14, 2010) (finding high damage awards in counterfeit cases were “due in part to the
wide market exposure that the Internet can provide”) with Burberry LTD & Burberry USA v.
Designers Imports, Inc., 2010 WL 199906, at *10-11 (S.D.N.Y. Jan. 19, 2010) (awarding
$100,000 per infringed mark, in part, “because of Defendant’s ability to reach a vast customer
base through internet advertising”).
In this case, Coach seeks $100,000 for each of the six infringed trademarks, which would
equal a statutory award totaling $600,000. Coach argues that this award is appropriate because
Tom’s Treasure Chest willfully sought to benefit from Coach’s reputation, and the total is
modest in comparison to the statutory maximum of $12,000,000. It also cites to cases in which
district courts have awarded similar damages in trademark counterfeiting cases involving
comparable luxury goods.
I find the $100,000 baseline excessive. First, Coach has provided no evidence
demonstrating actual damages or the scope of Tom’s Treasure Chest’s counterfeiting activities.
All I know is that an investigator hired by Coach purchased two counterfeit handbags from
Tom’s Treasure Chest, and “[t]here were additional Coach-labeled Infringing Products offered
for sale at the store in question.” [DE 1 ¶ 27.] Also, store personnel stated that the store
received similar items on a regular basis. [Id.] But this does not tell me the size and scope of the
operation or the value of the inventory on the day the investigator visited the store. In fact,
Coach has provided little factual basis for the amount of damages it requests. See Coach, Inc. v.
Linda’s Accesorios Y Cellulares, 2011 WL 2601525, at *1 (N.D. Tex. June 30, 2011) (“Had this
been an instance in which Plaintiffs conducted an extensive investigation that established the
duration, frequency, and quantity of items infringed over a period of time, the court might be
more willing to award [$100,000 per mark] in damages.”); Ocean Point, 2010 WL 2521444, at
*7-8 (awarding $10,000 per mark where investigator visited retail shop on multiple occasions
and provided evidence of the defendant’s inventory of counterfeit goods).
Indeed, it appears that Tom’s Treasure Chest was not a large scale operation with wide
market exposure for its counterfeiting activities, but rather a single retail storefront selling goods
to walk-up customers. And, unlike the majority of cases cited by Coach, Tom’s Treasure Chest
did not sell or advertise its illegal wares on the Internet. So actual damages were probably
modest. See Coach Services, Inc. v. K Ya Intern., Inc., 2010 WL 2771897, at *3 (S.D.N.Y. Jun.
10, 2010) (awarding Coach $6,667 per infringement where operation was small retail shop).
This is especially true since Tom’s Treasure Chest is located in a section of Gary, Indiana that is
widely known as one of the most economically depressed areas in the country.2 What’s more, it
is unlikely Coach lost any revenues as a result of Tom’s Treasure Chest’s infringing activities.
I take judicial notice of this fact. See Fed. R. Evid. 201(b) (a court may take judicial
notice of a fact that is “not subject to reasonable dispute” and “generally known within the
territorial jurisdiction of the trial court”).
See Diva Shoes & Assessories, 2011 WL 1483436, at *8 (“Given that the counterfeit bags sold
by Defendants are significantly less expensive than authentic Coach merchandise, the shoppers
who buy from Defendants are arguably not likely to purchase authentic Coach products.”).
In sum: Coach has not demonstrated that Tom’s Treasure Chest was operating a large
scale counterfeiting operation or that Coach suffered significant damages as a result of the
defendant’s activities. In fact, the evidence suggests otherwise. As a result, I find that a $5,000
baseline is warranted, for a total damages award of $30,000. See Linda’s Accessorios, 2011 WL
2601525, at *1 (awarding Coach $5,000 per mark rather than $100,000 where investigator
visited store on one occasion and presented little evidence of the scope of counterfeiting
activities). This number takes into account the value of Coach’s trademarks, the defendant’s
willfullness, and will deter Tom’s Treasure Chest and others from similar violations.
Coach also seeks its attorneys’ fees and costs. The Lanham Act permits a prevailing
party to recover the costs of an action and, in “exceptional cases,” reasonable attorney fees. 15
U.S.C. § 1117(a)). “‘Exceptional cases’ include those where the infringement is ‘malicious,
fraudulent, deliberate, or willful.’” Brown, 2010 WL 2346242, at *9 (quoting BASF Corp. v. Old
World Trading Co., Inc., 41 F.3d 1081, 1099 (7th Cir. 1994)).
Here, based on the uncontested allegations of Tom’s Treasure Chest’s willfulness, this is
an “exceptional case” in which reasonable attorney fees should be awarded. And Coach submits
an affidavit from its attorney containing a sufficiently itemized statement of the time spent on
each task for which Coach seeks fees, along with the rate charged for each task. Coach also
includes proof of filing and service fees and investigative costs. [DE 12-1; 12-2.]; see Ocean
Point, 2010 WL 2521444, at *8 (“Attorneys fees can include fees for investigators working
under the direction of an attorney.”). I find these claims reasonable.
For the foregoing reasons, Plaintiffs’ Motion for Entry of Default is GRANTED. [DE
11.] Tom’s Treasure Chest is ORDERED to pay Coach $30,000 in statutory damages,
$1,097.50 for reasonable attorneys’ fees, $744.53 for investigative costs, $350.00 in courts costs,
and $240.00 in service fees. The Clerk is directed to treat this matter as TERMINATED.
ENTERED: September 21, 2011.
s/ Philip P. Simon
PHILIP P. SIMON, CHIEF JUDGE
UNITED STATES DISTRICT COURT
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