AMERICAN BRIDAL & PROM INDUSTRY ASSOCIATION, INC. et al v. 2016DRESSFORPROM.COM et al

Filing 20

OPINION filed. Signed by Judge Anne E. Thompson on 9/18/2017. (km)

RECEIVED

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

AT 8:30
WILLlitA';l';M~T:::-.~W-AL_S_H_M
CLERK

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AMERICAN BRIDAL & PROM INDUSTRY
ASSOCIA~ION, INC., et al.,

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Plaintiffs,

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SEP ;f 9 2017

!

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v.

Civ. No. 16-08272

OPINION

2016DRESSFORPROM.COM, et al.,
Defendants.

THOMPSON, U.S.D.J.

INTRODUCTION
This matter comes before the Court on a Motion for Default Judgment by Plaintiffs
American Bridal & Prom Industry Association and its represented companies against
Defendants. Defendant has not opposed this motion. The Court has decided this motion based
upon the written submissions of the parties pursuant to Local Civil Rule 78.l(b). For the
foregoing reasons, the Court grants Plaintiffs' Motion for Default Judgment.

BACKGROUND
This case is a trademark counterfeiting, trademark infringement, unfair competition, and
false designation action brought by a number of bridal, prom, and formalwear designers,
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represented by the American Bridal & Prom Industry Association 1 (collectively "Plaintiffs")
against various online retailers, known by their respective internet handles (collectively

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The American Bridal and Prom· Industry Association ("AB PIA") is a trade association
organized to represent the interests of members of the formal wear industry, in part to "take any
and all appropriate and lawful action against the marketing and sale of counterfeit formalwear
.
products." (Appl. Pet. TRO Lang Deel. mf 2-3, ECF No. 5-2.)
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"Defendants''). (See Compl., ECF No. 1) Plaintiffs assert three counts against Defendants: (I)
federal trademark counterfeiting and infringement, (II) unfair competition and false designation
of origin, and (111) violations of the New Jersey Fair Trade Act. (Id.) Plaintiffs allege that
Defendants are part of "a massive internet counterfeiting scheme to advertise and sell counterfeit
products."

(Id.~

34.) Through this scheme "Defendants have manufactured, imported,

distributed, offered for sale and sold counterfeited goods ... using Plaintiffs' Marks and/or
protected images ... ."(Id.

~ 35.)

Plaintiffs filed this Complaint on November 7, 2016, with

summons issued that same day. (ECF Nos. 1, 2.) Plaintiffs filed an application and petition for a
Temporary Restraining Order on November 11, 2016. (ECF No. 5.) At a November 28, 2016
status conference the Court directed Plaintiffs to attempt further service. (ECF No. 6.)
Plaintiffs' counsel provided a declaration of further service of the Summons, Complaint, and
Application for Temporary Restraining Order by registered emails on December 6, 2017 along
with receipts of such. (Hilliard Deel., ECF No. 7; Hilliard Deel., Ex. A, ECF No. 7-1.) On
January 11, 2017 the Court issued a preliminary injunction enjoining Defendants from use of
Plaintiffs' marks and protected images, with service of this order made by registered email,
consistent with Plaintiffs' means of service. (ECF No. 13.) Two defendants have been
dismissed by consent order since the filing of this litigation. (ECF Nos. 14, 16.) On August 8,
2017, Plaintiffs filed this Motion for Default Judgment (ECF No. 19), which remains unopposed.
Default has not been entered by the Clerk of the Court.

LEGAL STANDARD
Under Federal Rule of Civil Procedure 55, following the entry of default by the Clerk of
the Court, default judgment may be entered when "a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise defend." Fed. R. Civ. P. 55(a).

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Motions for both the entry of default and default judgment can be considered simultaneously at
the court and clerk's discretion, at which point the only inquiry is whether default judgment is
appropriate. Napp Tech., LLC v. Kiel Lab., Inc., 2008 WL 5233708, at *3 (D.N.J. Dec. 12,
2008) (''Doing so does not change the Court's task: if a default judgment is appropriate, then it
follows that the lesser requirements of Rule 55(a) are satisfied."); Sys. Indus., Inc. v. Han, 105
F.R.D. 72, 74 (E.D. Pa. 1985) ("Since the court has the authority to enter a judgment by default,
it impliedly has the power to perform the ministerial function assigned to the clerk of entering a
default.").
A party who has made a proper showing under Rule 55 is not entitled to default judgment
as of right; the entry of default is within the district court's discretion. Hritz v. Woma Corp., 732
F.2d 1178, 1180 (3d Cir. 1984); United States v. $55,518.05 in U.S. Currency, 728 F.2d 192,
194-95 (3d Cir. 1984). "Default judgment is permissible only if plaintiffs factual allegations
establish a right to the requested relief." Eastern Constr. & Elec., Inc. v. Universe Techs., Inc.,
2011 WL 53185, at *3 (D.N.J. Jan. 6, 2011). The court must accept plaintiff's well-pied factual
allegations in the complaint. Chanel, Inc. v. Matos, 133 F.3d 678, 684 (D.N.J. 2015) (citing
Comdeyne L Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990)).
The court is to consider three factors in deciding whether default judgment is appropriate:

"(l) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a
litigable defense, and (3) whether defendant's delay is due to culpable conduct," taken willfully
and in bad faith. Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000). The Third
Circuit has cautioned that default judgment is a sanction of last resort-cases are more
appropriately decided on their merits where practicable. See Hill v. Williamsport Police Dep 't,
69 F. App'x 49, 51 (3d Cir. 2003); Hritz, 732 F.2d at 1181.

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DISCUSSION

A. Default Judgment
Plaintiffs filed this Motion after Defendants failed to file any answer or responsive
pleadings to their Complaint and Temporary Restraining Order. Therefore, as a threshold matter,
Plaintiffs are entirely unopposed. The Court will next consider the sufficiency of Plaintiffs'
claims and the factors outlined in Chamberlain v. Giampapa to determine whether default
judgment is warranted under the circumstances.
1. Sufficiency of Plaintiffs' Claims
In support of their Motion for Default Judgment, Plaintiffs address each count of their

Complaint, the elements and requirements of each of those counts, and the facts to support their
claims to establish their right to relief.
The same standard is used to assess Plaintiffs' claims for trademark infringement (Count
I, 15 U.S.C. § 1114), unfair competition (Count II, 15 U.S.C. §1125(a)), and false designation
(Count II, 15 U.S.C. § 1125(a)). A&H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237
F.3d 198, 210 (3d Cir. 2000) (applying the same standard to trademark infringement and unfair
competition claims); Fruit Flowers, LLC v. Jammala, LLC, 2015 WL 5722598, at *3 (D.N.J.
Sept. 29, 2015); Coach, Inc. v. Fashion Paradise, LLC, 2012 WL 194092, at *2 (D.N.J. Jan. 20,
2012) (citingA&H Sportswear for the proposition that the same standard applies to trademark
infringement and false designation claims). All three claims require proof: (1) of plaintiffs valid
and legally protected mark; (2) plaintifrs ownership over said mark; and (3) that defendant's
''use of the mark to identify goods or services causes a likelihood of confusion." A&H
Sportswear, 237 F.3d at 210; Coach, 2012 WL 194092, at *2.

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The first and second elements are satisfied here. Through its allegations in the Complaint
and the copies of numerous trademarks provided, Plaintiff sufficiently establishes ownership of a
valid mark. (Compl. if 28; Lang Deel. Ex. A.).
The third factor is a more complex inquiry. "A likelihood of confusion exists when
"consumers viewing the mark would probably assume that the product or service it represents is
associated with the source of a different product or service identified by a similar mark." A&H
Sportswear, 237 F.3d at 210 (quotingDranof.f-PerlsteinAssocs. v. Sklar, 967 F.2d 852, 862 (3d

Cir. 1992)). This element is satisfied when the original and counterfeit goods are in direct
competition, and the mark itself is typically adequate evidence of confusion.2 Id. at 211. Here,
Defendants used protected images and marks taken directly from Plaintiffs' websites to market
and sell counterfeit dresses and formalwear on their own web domains. (Compl. mf 34-37; Appl.
Pet. TRO Lang Deel., Exs. 1-100, ECF Nos. 5-4, 5-5 (showing side-by-side comparisons of
Defendants' infringing websites and Plaintiffs' websites).) This information is sufficiently
persuasive to find a likelihood of confusion.
Plaintiffs' trademark counterfeiting claim (Count I, 15 U.S.C. § 1114) has distinct
elements. Plaintiffs must establish: "(l) defendants infringed a registered trademark in violation

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For a more detailed inquiry, which courts need not conduct, the Third Circuit relies on a nonexhaustive list of factors: "( 1) the degree of similarity between the owner's mark and the alleged
infringing mark; (2) the strength of the owner's mark; (3) the price of the goods and other factors
indicative of the care and attention expected of consumers when making a purchase; (4) the
length of time the defendant has used the mark without evidence of actual confusion arising; (5)
the intent of the defendant in adopting the mark; (6) the evidence of actual confusion; (7)
whether the goods, though not competing, are marketed through the same channels of trade and
advertised through the same media; (8) the extent to which the targets of the parties' sales efforts
are the same; (9) the relationship of the goods in the minds of consumers because of the
similarity of function; [and] (10) other factors suggesting that the consuming public might expect
the prior owner to manufacture a product in the defendant's market, or that he is likely to expand
into that market." Fruit Flowers, 2015 WL 5722598, at *4 (citing Freedom Card, Inc. v.
JPMorgan Chase & Co., 432 F.3d 463, 471 (3d Cir. 2005) (internal citations omitted)).
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of the Lanham Act, 15 U.S.C. § 1114(l)(a), and (2) intentionally used the trademark knowing
that it was counterfeit or was willfully blind to such use." Chanel, Inc. v. Gordashevsky, 558 F.
Supp. 2d 532, 536 (D.N.J. 2008) (footnote omitt~d). The key distinction between this cause of
action and an infringement claim is the intent and willfulness requirement. Coach, 2012 WL
194092, at *3. Willful conduct "involves an intent to infringe or a deliberate disregard of a mark
holders' rights" and can be shown through "deliberate and unnecessary duplicating of a
plaintiff's mark ... in a way that was calculated to appropriate or otherwise benefit from the will
the plaintiff has nurtured." Coach, Inc. v. Bags & Accessories, 2011WL1882403, at *3 (D.N.J.
May 17, 2011) (internal citations omitted). Plaintiffs have provided sufficient evidence to
support their allegations that Defendants acted willfully. Plaintiffs' marks are widely promoted
and part of well-known, quality-assured, and successful brands. (Compl. ,, 29-31.)
Defendants used Plaintiffs' protected images to market counterfeit formal wear on their own
websites. ABPIA's investigations found that Defendants were marketing look-alikes of
Plaintiffs' dresses at significant discounts, and the products received were of inferior quality,
made with far cheaper substitute materials. (Lang Deel. , 9.)
Plaintiffs' final claim is under the New Jersey Fair Trade Act (Count IV, N.J.S.A. 56:41). The analysis of this claim is identical to those set forth for the federal claims above under the
Lanham Act. See Zoetis LLC v. Roadrunner Pharmacy, Inc., 2016 WL 755622, at *4 (D.N.J.
Feb. 25, 2016). Therefore the Court need not address this Count.
Accepting as true Plaintiffs' factual allegations in the Complaint, Chanel, 133 F.3d at
684, the Court is persuaded that Plaintiffs have alleged sufficient facts to establish a right to
relief on their enumerated counts, see Eastern Constr. & Elec., Inc., 2011 WL 53185, at *3.

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2. Default Judgment Factors
Because Plaintiffs are entitled to relief on their claims, the Court next examines the
equitable factors of default judgment.
First, Plaintiffs argue that they will be unfairly prejudiced if default is denied. Prejudice
refers to an impairment of a plaintiff's ability to pursue its claim. Feliciano v. Reliant Tooling

Co., 691F.2d653, 657 (3d Cir. 1982). Failure to file any responsive pleadings may leave a
plaintiff without recourse on its claims, United Comm., LLC v. Hallowell Int'l, LLC, 2012 WL
5880295, at *4 (D.N.J. Nov. 21, 2012), raising particular concerns for further, future harm, see

U.S. Commodity Futures Trading Comm 'n v. Siegel, 2014 WL 404537, at *8 (D.N.J. Dec. 30,
3014); CrossFit v. 2XR Fit Sys., Inc., 2014 WL 972158, at *8 (D.N.J. Mar. 11, 2014). Here,
Defendants have failed to participate in this litigation in any way, (Pis.' Br. at 8, ECF No. 19-1 ),
which leaves Plaintiffs without any opportunity to pursue their trademark infringement claims.
Additionally, due to the nature of Defendants' conduct, there is a high likelihood for ongoing
infringement of Plaintiffs' marks and images.
Next, Plaintiffs assert that Defendants can have no meritorious defense since they have
failed to respond. Whether a defendant has a meritorious or litigable defense is regarded as a
dispositive issue. Nat'/ Specialty Insur. Co. v. Papa, 2013 WL 1952151, at *2 (D.N.J. May 9,

2013); see also $55,518.05 in U.S. Currency, 728 F.2d at 195 ("This is a critical issue because
without a meritorious defense [Defendant] could not win at trial. Therefore, there would be no
point in setting aside the default judgment .... "). A meritorious defense is one that would
constitute a complete defense at trial. $55,518.05 in U.S. Currency, 728 F.2d at 195; Williams v.

Zhou, 2015 WL 4940817, at *1 (D.N.J. Aug. 19, 2015). Where a defendant has.not responded
and there are no defenses reflected in the record, courts cannot say whether a meritorious defense

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exists and are permitted to presume that none exists. Coach, 2011WL1882403, at *6. Here,
Defendants have provided no response to Plaintiffs' Complaint, subsequent pleadings,
Temporary Restraining Order, or this motion, and therefore, they have failed to present the Court
with any defense that could possibly be considered meritorious or permit success at trial.
Moreover, Plaintiffs have articulated a sound right to relief, supra Section I.A, and Plaintiffs'
pleadings do not contemplate any possible defenses to their claims. (Pis.' Br. at 8-14.) See

Chanel, 133 F.3d at 686 ("Defendant has failed to proffer any defense to Plaintiff's claims,
meritorious or otherwise, and the Complaint does not otherwise suggest the existence of any
meritorious defense.")
Finally, Plaintiffs argue that Defendants' failure to respond is per say culpable. Culpable
conduct refers to "actions taken willfully or in bad faith," Gross v. Stereo Component Sys., Inc.,
700 F.2d 120, 124 (3d Cir. 1983), rising above the level of mere negligence, Sourcecorp, Inc. v.

Croney, 412 F. App'x 455, 460 (3d Cir. 2011). Failure to defend, despite serviCe of a complaint,
is a product of defendant's culpable conduct. Chanel, 133 F.3d at 687. Plaintiffs served
Defendants by registered emails and made subsequent attempts to effectuate service pursuant to
the Court's direction by the end of December (ECF No. 6; Hilliard Deel., ECF No. 7), providing
over eight months to respond prior to the filing of this motion. Defendants, however, have failed

to respond, which the Court finds to be willful neglect of the pending litigation.

B. Plaintiffs' Remedies and Damages Sought
Plaintiffs specifically request two forms of relief: first, pennanent injunctive relief, and
second, damages in the form of profits, or alternatively statutory damages under the Lanham Act.
(Pl. 's Br. at 15.)

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1. Permanent Injunctive Relief
Plaintiffs ask the Court to order a Permanent Injunction against Defendants for the
conduct forming the basis of their current allegations and claims. Their proposed order enjoins
and restrains Defendants from conduct including but not limited to: future use of or passing off
of Plaintiffs' marks or reproductions, counterfeits, copies, or imitations of such; shipping,
delivering, seHing, distributing, etc. dresses or accessories bearing Plaintiffs' marks or
reproductions, counterfeits, copies, or imitations of such; and utilizing or operating their
infringing domains. (Pls.' Br. at 18-19.)
The Supreme Court has set forth the test to determine whether a permanent injunction is
appropriate.
A plaintiff must demonstrate: (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 v. MercExchange, 547 U.S. 388, 390 (2006); Ferring Pharm., Inc. v. Watson Pharm., Inc.,
765 F.3d 205, 214-15 (3d Cir. 2014) (extending the eBay requirements for permanent injunctive
relief to cases under the Lanham Act). The Third Circuit has emphasized that a party is not
entitled to a presumption of irreparable harm-it must demonstrate that such harm is likely to
result. Ferring Pharm, Inc., 765 F.3d at 217.
Plaintiffs argue that this four-factor test is satisfied based on the facts alleged. First, the
Third Circuit recognizes "trademark infringement amounts to irreparable injury as a matter of
law." Gucci Am., Inc. v. Daffy's Inc., 354 F.3d 228, 237 (3d Cir. 2003) (noting, however, this
fact cannot swallow the remaining prongs of the inquiry) (internal citations omitted). More
specifically, where trademark violations have been alleged, including diminishment of a

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plaintiff's brand and name through counterfeited products, "irreparable injury becomes the
'inescapable conclusion."' Chanel, 133 F.3d at 689 (citing Pappan Enters.,

Inc~

v. Hardee's

Food Sys., Inc., 143 F.3d 800, 805 (3d Cir. 1998)); Coach, 2011WL1882403, at *9 (reaching
the "inescapable conclusion" of irreparable injury where there is a risk of confusion caused by
the defendant's trademark_ infringement). Here, Plaintiffs have demonstrated that Defendants
used their registered marks and images to sell counterfeit dresses of inferior quality. (Compl. W
40, 41, 46, 51, 52; Appl. Pet. TRO Lang Deel., Exs. 1-100.) This conduct has created a
likelihood of confusion for consumers. (Pl.'s Br. at 10.) Therefore, the Court is satisfied that
Defendants' conduct has de facto irreparably injured Plaintiffs' names and reputations.
Second, injury to a company's reputation and goodwill are not necessarily resolved
through monetary compensation. Chanel, 133 F.3d at 689; Coach, 2011WL1882403, at *9.
While damages can compensate a plaintiff "for the injury incurred to this point, it will not protect
against future infringement." CrossFit, 2014 WL 972158, at *10. This case raises concern that.
Defendants will resume this conduct, id., and monetary relief is not enough to protect Plaintiffs'
interests, marks, and integrity from infringement and counterfeit activities.
Third, the balancing ofhardships requires courts to consider whether the defendant will
suffer any harm from enforcement of the injunction. In cases such as trademark infringement,

courts find no harm where a permanent injunction simply "requires [a] [d]efendant to abide by
the law and to refrain from infringing [] federally protected marks," and where any resulting
injury for violating the injunction would be "self-inflicted." Chanel, 133 F.3d at 689. Due to
Defendants' already established violations of federal law, supra Section I.A, "a permanent
injunction in this case would merely prohibit [Defendants] from engaging in an activity to which

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[they] have no legal right." AAMCO Transmissions, Inc. v. Dunlap, 646 F. App'x 182, 184 (3d
Cir. 2016).
Fourth, the Third Circuit specifically recognizes a prevailing public interest in favor of
protecting from the erosion of the trademark holder's property interests and avoiding public
confusion. Bill Blass, Ltd. v. SAZ Corp., 751F.2d152, 156 (3d Cir. 1984). Therefore, granting
Plaintiffs request for a permanent injunction for the alleged Lanham Act and Trademark
violations will not in any way disserve the public interest. The circumstances of this case weigh
strongly in favor of Plaintiffs' request for a permanent injunction.
2. Damages
While the court need not accept the plaintiff's allegations regarding damages as true,
Chanel, 558 F. Supp. 2d at 535, final judgment may be entered where damages are for a sum
certain, Fed. R. Civ. Pro. 55(b)(2). Under the Lanham Act, there are two options for damages:
the plaintiff may elect to recover actual damages based on the defendant's profits, or statutory
damages, typically where the actual damages and profits cannot be eas,ily calculated. Covertech
Fabricating, Inc. v. TVM Building Prods., Inc., 855 F.3d 163, 176 (D.N.J. 2017); Chanel, 558 F.
Supp. 2d at 537. It is the plaintiff's choice to make this election or establish a preference for
damages. 15 U.S.C. § 1117(c) ("The plaintiff may elect, at any time before final judgment is
rendered by the trial court, to recover instead of actual damages and profits under subsection (a),
an award of statutory damages ....").
The calculation of damages, particularly for questions of actual damages, is an equitable
analysis that lies within the court's broad discretion. See Covertech Fabricating, 855 F.3d at
176. Damages based on profits are assessed by reasonableness and should be grounded in
sufficient information and estimates in the record. Id. at 177. This is reflected in the burden

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shifting framework under the Act itself, which requires the plaintiff to first prove defendant's
sales, and then the defendant to prove any costs or deductions he alleges. 15 U.S.C. § 1117(a).
Plaintiffs articulate an argument for both actual damages and a statutory award, though
express their preference for actual damages. (See Pls.' Br. at 27.) Plaintiffs propose damages
equal to the amount currently restrained in Defendants' PayPal accounts-$2,916.56. (Pls.' Br.
at 21.) This value is well-supported and grounded in sufficient evidence of financial statements
and PayPal statements demonstrating Defendants' profits ($704,241.93), (Hilliard Deel. Ex. N,
ECF No. 19-16), and PayPal account information regarding the total funds currently found in
each Defendant's account (Hilliard Deel. Ex. 0, ECF No. 19-17). Plaintiffs' requested value of
damages only represents a small portion of Defendants' profits, minimized to reflect the amount
currently available in the accounts as opposed to the Defendants' total amount received which
would more accurately reflect the Defendants' revenue. (Id.; Pls.' Br. at 27.)
Plaintiffs also articulate an argument for treble damages due to Defendants' willful
conduct, though they express their willingness to forgo that request. (Pls.' Br. at 23.) The Court
finds these choices to be practical decisions-representative of what Plaintiffs will actually be
able to recover through garnishment, and thus a reasonable request of the Court. Therefore, the
Court will not award treble damages. Because Plaintiffs' request is a sum certain that is

equitable, reasonable, and based on adequate support, they are entitled to this value of actual
damages.

CONCLUSION
For the reasons stated herein, Plaintiffs' motion is granted. An appropriate order will
follow.

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