OMEGA S.A., et al v. GIFTLAND CO., et al

Filing 88

LETTER OPINION (permanent injunction & release of funds). Signed by Judge William J. Martini on 5/7/09. (gh, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
M A R T I N LU T H E R KIN G JR . FED E R A L BLD G . & U . S . C O U R T H O U S E 5 0 W A L N U T STR E E T , P.O . BO X 419 N E W A R K , N J 07101-0419

[phone]

WILLIAM J. MARTINI JUDGE

L E T T E R OPINION

M a y 7, 2009 J e s s M. Collen C o lle n IP 8 0 South Highland Avenue O s sin in g , New York 10562 (A tto r n e y for Plaintiffs) V o lo d ym yr Piven 1 1 2 Sunrise Drive E d is o n , New Jersey 08817 (P r o Se Defendant)

RE:

O m e g a S.A. et al. v. Giftland Co. et al. C iv . No. 03-5808 (WJM)

D e a r Counsel: T h is matter comes before the Court on the motion for a permanent injunction and s ta tu to ry damages filed by Plaintiffs Omega S.A. and The Swatch Group (US) Inc. There w a s no oral argument. Fed. R. Civ. P. 78. For the reasons stated below, Plaintiffs' motion is GRANTED. I. BACKGROUND

In December 2003, Plaintiffs filed suit against numerous defendants alleged to h a v e engaged in a scheme to sell unauthorized Omega replica watches on the internet. The website used to sell the imitation watches was www.replicaland.com, which is owned b y Defendant Giftland. Plaintiffs brought five claims in their Complaint: (1) trademark

infringement and counterfeiting (Counts One and Five); (2) unfair competition (Count T w o ); (3) false designation of origin (Count Three); and (4) dilution (Count Four). Only D e f e n d a n t Volodymyr Piven appeared to defend this action. O n February 25, 2005, Omega and Swatch filed a motion for summary judgment a n d a motion for civil contempt against Defendant Piven for violating a temporary re s tra in in g order issued by this Court. Piven was found in civil contempt, and the Court o rd e re d that Piven provide Plaintiffs with certain business records relating to the c o u n te rf e it activities conducted at the website www.replicaland.com. On July 20, 2005, in response to this court order, Piven produced copies of his corporate tax returns from 2 0 0 2 , 2003, and 2004. Three weeks later, the Court denied Plaintiffs' summary judgment motion, finding th a t Plaintiffs failed to prove that Defendant Piven was a knowing and active participant in the counterfeiting scheme. Plaintiffs then moved for reconsideration. Shortly th e re a f te r, Defendant Piven filed for bankruptcy protection under Chapter 7, and an a u to m a tic stay was imposed on the pending reconsideration motion. After Piven obtained a discharge, Plaintiffs filed a motion to have this Court reopen the instant matter, which w a s granted on May 20, 2008. This Court then granted Plaintiffs summary judgment on all counts in their c o m p la in t on November 6, 2008, based on the "newly discovered" tax returns. These tax re tu rn s demonstrate Piven's knowing participation by showing that he derived income f ro m R.Land Co., which was the entity to whom buyers of fake merchandise on w w w .re p lic a la n d .c o m were directed to provide payment. N o w , following the Court's November 2008 ruling on liability, Plaintiffs seek a p e rm a n e n t injunction to bar Defendant Piven from selling Omega watches. In addition, P la in tif f s both seek to have statutory damages imposed against Piven under the Lanham A c t and to have Piven's bank accounts unfrozen. Plaintiffs' motion is unopposed. II. D ISC U S S IO N A. P e r m a n e n t Injunction

U n d e r the Lanham Act, the Court has the authority to grant injunctive relief to p re v e n t further violations of a plaintiff's trademark rights. 15 U.S.C. § 1116. To obtain a p e rm a n e n t injunction, Plaintiffs must show that (1) the Court's exercise of equity ju ris d ic tio n is proper, (2) they succeeded on the merits, and (3) the balance of equities tips in favor of injunctive relief. See Roe v. Operation Rescue, 919 F.2d 857, 868 n.8 (3d Cir. 2

1990). To satisfy the first factor of this test, Plaintiffs must show that: (1) they have no a d e q u a te legal remedy; (2) the threatened injury is real and not imagined; and, (3) no e q u ita b le defenses exist. See id. P la in tif f s have satisfied this three-part test for a permanent injunction. First, P la in tif f s have demonstrated that the Court's exercise of equity jurisdiction is proper. In th e reconsideration opinion, this Court granted Plaintiffs summary judgment on their tra d e m a rk infringement, unfair competition, false designation of origin, and dilution c o u n ts . See November 2008 Letter Opinion at 5-6; Docket No. 85. Each of these causes o f action requires a showing that use of the counterfeit marks creates confusion or causes d ilu tio n by lessening the capacity of the mark to identify and distinguish goods or s e rv ic e s . See id. As such, Plaintiffs have shown both that they have no adequate legal re m e d y and that the threatened injury is real. Further, Defendant Piven has not raised any e q u ita b le defenses, nor can the Court think of any which would apply in this context. As s u c h , Plaintiffs have satisfied the first prong of the permanent injunction test. T h e final two prongs are satisfied as well. In November, this Court granted P la in tif f s summary judgment on all counts in their complaint. See id. Accordingly, P la in tif f s have shown their success on the merits. Finally, the balance of the equities w e ig h s in favor of granting injunctive relief. The only conceivable purpose behind D e f e n d a n t Piven's knowing participation in the operation of R. Land, Inc. and the sale of c o u n te rf e it goods was to profit from Plaintiffs' well-established reputation. Since this ille g a l conduct does not serve a legitimate purpose and harms the public interest, the b a la n c e of equities weighs strongly in favor of granting injunctive relief. Accordingly, th e Court will grant Plaintiffs' request to enjoin Defendant Piven from selling, marketing, o r promoting items bearing Plaintiffs's marks. B. L a n h a m Act Damages

P la in tif f s also request statutory damages pursuant to 15 U.S.C. § 1117(c). This p ro v is io n of the Lanham Act permits the Court to award statutory damages for a willful in f rin g e m e n t of not less than $500 and not more than $1,000,000 per counterfeit mark, p e r type of good. 15 U.S.C. § 1117(c)(1). The amount of the award is committed to the C o u rt's discretion. See Louis Vuitton Malletier and Oakley, Inc. v. Veit, 211 F. Supp. 2d 5 6 7 , 583 (E.D.Pa. 2002) ("In the absence of clear guidelines for setting a statutory d a m a g e award, courts have tended to use their wide discretion to compensate plaintiffs, as w e ll as to deter and punish defendants ..."). S ta tu to ry damages serve the dual purposes of compensation and deterrence as " th e y compensate the plaintiff for the infringement of its copyright; and they deter future 3

infringements by punishing the defendant for its actions." Schiffer Publishing, Ltd. v. C h r o n ic le Books, LLC, No. 03-4962, 2005 WL 67077, at *8 (E.D.Pa. Jan. 11, 2005). W h e n determining the appropriate amount of statutory damages, courts consider: "(1) e x p e n s e s saved and profits reaped by the infringer; (2) revenues lost by the plaintiff; (3) th e strong public interest in insuring the integrity of the copyright laws; and (4) whether th e infringement was willful and knowing or innocent and accidental." Broad. Music, Inc. v . Golden Horse Inn Corp., 709 F.Supp. 580, 581 (E.D.Pa.1989), Original Appalachian A rtw o rk s , Inc. v. J.F. Reichert, Inc., 658 F.Supp. 458, 465 (E.D.Pa.1987). Because s e v e ra l of the factors are difficult to monetize, the defendant's intent and behavior are the f o re m o s t consideration. Id. at 465. In order to award the maximum $1 million award, the defendant's willful conduct m u s t have included an "aura of indifference to plaintiff's rights" or a "deliberate and u n n e c e s s a ry duplicating of a plaintiff's mark ... in a way that was calculated to appropriate o r otherwise benefit from the good will the plaintiff had nurtured." SecuraComm C o n s u ltin g Inc. v. Securacom Inc., 166 F.3d 182, 187 (3d Cir.1999). H e re , while the infringement was clearly willful, an award of $1,000,000 per mark a p p e a rs to be disproportionate to the harm that has been demonstrated by Plaintiffs as a re s u lt of Defendant Piven's conduct. In fact, Plaintiffs' papers present no attempt to q u a n tif y Defendant Piven's profits or otherwise establish the harm that they have s u f f e re d . Instead, Plaintiffs make only a very cursory argument in favor of receiving this m a s s iv e award. Given that no amount of harm has been quantified by Plaintiffs, the C o u rt is reluctant to levy an $8,000,000 judgment against Defendant Piven. Instead, the C o u rt in its discretion holds that Plaintiffs shall be awarded $10,000 per trademark, or $ 8 0 ,0 0 0 total in statutory damages.1

On December 16, 2003, this Court granted Plaintiffs' request to freeze two checking accounts in Defendant Piven's name. Plaintiffs now seek to have those accounts unfrozen in partial satisfaction of this Court's judgment against Defendant Piven. The first checking account contains $2,914.79 and the second has $79.33. See Pls.' Mot. Ex. A. Since no arguments to the contrary have been raised, Plaintiffs' request is granted. 4

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III.

C O N C L U S IO N

F o r the foregoing reasons, Plaintiffs' motion is GRANTED. An appropriate O rd e r accompanies this Letter Opinion. /s/ William J. Martini William J. Martini, U.S.D.J.

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