Malletier v. Carducci Leather Fashions, Inc. et al
REPORT AND RECOMMENDATIONS TO THE HONORABLE JOHN F. KEENAN, I now recommend that Louis Vuitton be awarded judgment against Bonini in the amount of $405,568.14, consisting of $400,000 in statutory damages and attorneys fees and costs in the amount of $5,568.14. Objections to R&R due by 8/7/2009 (Signed by Magistrate Judge Frank Maas on 7/21/09) Copies Mailed By Chambers.(pl)
UNITED STATES DISTRICT COURT S O U T H E R N DISTRICT OF NEW YORK - - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- - -- x L O U IS VUITTON MALLETIER, P l a in tif f , - against CARDUCCI LEATHER FASHIONS, INC., IR F A N GOKOLAN, BONINI ITALIAN H A N D B A G S , INC. and JOHN DOES 1-10, Defendants. : : : : : : USDC SDNY DOCUMENT ELECTRONICALLY FILED DOC #: _________________ DATE FILED: 7/21/2009 R E P O R T AND R E C O M M E N D A T IO N T O THE HONORABLE J O H N F. KEENAN * 0 4 Civ. 497 (JFK)(FM)
----------------------------------------------------------x F R A N K MAAS, United States Magistrate Judge.
I n tr o d u c tio n In this action, plaintiff Louis Vuitton Malletier ("Louis Vuitton") alleges
th a t defendant Bonini Italian Handbags, Inc. ("Bonini"), a New York corporation, u n la w f u lly sold or attempted to sell counterfeit versions of Louis Vuitton's trademarked h a n d b a g s , in violation of the Lanham Act and New York law. By order dated September 20, 2007, Your Honor held that Louis Vuitton w a s entitled to a default judgment against Bonini and referred the matter to me for an in q u e st regarding damages. (See Docket No. 19). Unfortunately, because there was no s e p a ra te order of reference, I did not learn of the referral until September 2008.
This Report and Recommendation was prepared with the assistance of Mai-Khoi Nguyen-Thanh, a student at the Washington University in St. Louis School of Law.
T h e re a f ter , by order dated September 24, 2008, I directed Louis Vuitton to serve and file its inquest papers by November 25, 2008, and that Bonini respond by December 9, 2008. (Docket No. 20). Louis Vuitton complied with its deadline, but Bonini has not submitted a n y papers to this Court. As set forth below, I now recommend that Louis Vuitton be awarded ju d g m e n t against Bonini in the amount of $405,568.14, consisting of $400,000 in s ta tu to ry damages and attorneys' fees and costs in the amount of $5,568.14. II. S ta n d a rd of Review In light of Bonini's default, Louis Vuitton's well-pleaded allegations c o n c e rn in g issues other than damages must be accepted as true. See Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 9 7 3 F.2d 155, 158 (2d Cir. 1992); Time Warner Cable of N.Y.C. v. Barnes, 13 F. Supp. 2 d 543, 547 (S.D.N.Y. 1998). Additionally, although a plaintiff seeking to recover damages against a d ef au lting defendant must prove its claim though the submission of evidence, the Court n e e d not hold a hearing as long as it has (a) determined the proper rule for calculating d am ag es, see Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1 9 9 9 ), and (b) the plaintiff's evidence establishes, with reasonable certainty, the basis for th e damages specified in the default judgment, see Transatlantic Marine Claims Agency
In c . v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997). As set forth below, in this c a s e both requirements have been met. III. F a c ts L o u is Vuitton's complaint and inquest papers establish as follows: L o u is Vuitton is a French corporation engaged in the business of importing, m a n u f ac tu rin g , selling, and distributing various designer items, including luggage and h a n d b a g s under federally registered trademarks. (Am. Compl. ("AC") ¶ 7). Bonini is a New York corporation engaged in the manufacture, importation, a n d sale of handbags and fashion accessories in this District and elsewhere. (Id. ¶ 10). This case concerns Louis Vuitton's trademarked "Epi Leather" handbags w h ic h feature a unique man-made textured pattern. (Id. ¶ 13). Louis Vuitton holds nine tra d e m a rk s related to its Epi Leather products, which cover the Epi Leather design with a n d without color and with and without the logo "LV," as well as the design in blue, ye llo w , red, gold, black, green, and brown. (Id. ¶ 13-14). The first of these federal tra d e m a rk registrations, for the "LV" logo Epi Leather design, was issued on September 3 , 1991. (Id. Ex. A). Subsequent trademarks relating to the Epi Leather design were re g is te re d between 1995 and 1998. (Id.). When this action was commenced, Carducci Leather Fashions, Inc. (" C a rd u c c i") , was the sole named defendant. (See Docket No. 1). Subsequently, Louis V u itto n evidently learned that Bonini was the source of a counterfeit Epi Leather handbag
p u rc h a se d from Carducci by an investigator. (See Decl. of Charles A. LeGrand, Esq. ("L eG ran d Decl."), dated Dec. 3, 2008, ¶ 4 & Ex. C).2 That handbag was green. (Id.). In or around September 2005, Bonini furnished Louis Vuitton or its counsel w ith invoices reflecting Bonini's sales of approximately $11,000 worth of goods to C ard u cc i between March 30, 2001, and June 27, 2003. (Id. Ex. B). Although Bonini's "S p rin g 2003" handbag line included twenty-two infringing models, (see id. Ex. A), B o n in i did not provide any invoices reflecting sales of most of these models. Indeed, B o n in i did not provide any invoices reflecting sales of its counterfeit Louis Vuitton to any c u sto m e rs other than Carducci. (Id. Ex. B; Pl.'s Proposed Findings of Fact and C o n c lu s io n s of Law ("Pl.'s PFOF") ¶¶ 18-19). In March 2006, Louis Vuitton amended its complaint to add Irfan Gokolan (" G o k o la n " ), Carducci's principal, and Bonini as defendants. (Docket No. 10). Carducci a n d Gokolan thereafter settled their differences with Louis Vuitton. (Docket No. 12). Bonini, however, has never responded to either the amended complaint or Your Honor's o rd e r directing Bonini to show cause why a default judgment should not be entered. (Docket Nos. 18, 19).
Louis Vuitton's inquest papers include two declarations by Mr. LeGrand, both dated December 3, 2008. (See Docket Nos. 23, 24). The declaration, bearing Docket No. 23, relates exclusively to Louis Vuitton's attorneys' fees and costs and is hereinafter referred to as the "LeGrand Fee Decl." 4
D is c u ss io n A. L a n h a m Act 1. D amages
U n d e r the Lanham Act, a trademark owner may choose to recover statutory damages or actual damages in cases of infringement. 15 U.S.C. §§ 1117(c), (d). In its in q u e st papers, Louis Vuitton cryptically states that it "may elect, at any time before final ju d g m e n t is rendered by the trial court, to recover, instead of actual damages and profits . . ., an award of statutory damages." (Pl.'s PFOF ¶ 84) (emphasis added). Its papers then g o on to calculate actual damages. (Id. ¶¶ 86- 91). Louis Vuitton hence does not make c le a r whether it seeks statutory or actual damages. Since the potential statutory damages d w a rf any possible actual damages, I have assumed that what Louis Vuitton in fact seeks to recover is statutory damages. Pursuant to 15 U.S.C. § 1117(c), statutory damages may be awarded in the a m o u n t of 1) not less than $1000 or more than $200,000 per counterfeit m a rk per type of goods or services sold, offered for sale, or d is trib u te d , as the court considers just; or 2 ) if the court finds that the use of the counterfeit mark was w illf u l, not more than $2,000,000 per counterfeit mark per typ e of goods or services sold, offered for sale, or distributed, a s the court considers just. 15 U.S.C. § 1117(c).
H ere , by virtue of its default, Bonini has admitted Louis Vuitton's a lle g a tio n that it acted knowingly and intentionally or with reckless disregard or willful b lin d n e ss to Louis Vuitton's rights. Cotton, 4 F.3d at 181. Accordingly, Louis Vuitton is e n title d to statutory damages in the amount of "not less than $1000" nor "more than $ 2 ,0 0 0 ,0 0 0 " per counterfeit mark used by Bonini. As noted above, Louis Vuitton's in v e s tig a to r purchased a green counterfeit handbag. (LeGrand Decl. ¶ 4 & Ex. C). Additionally, Bonini's invoices indicate that it sold Carducci black and red counterfeit b ag s. (Id. Ex. B). It follows that Bonini infringed at least four of Louis Vuitton's tra d e m a rk registrations (including the Louis Vuitton trademark without any color d e s ig n a tio n ). The key question is consequently where along the broad statutory spectrum o f $4,000 to $8,000,000 the award against Bonini should lie. In the absence of any g u idelines for determining the appropriate award in a case involving willful trademark v io la tio n s , courts often have looked for guidance to the better developed case law under th e Copyright Act, 17 U.S.C. § 504(c), which permits an award of statutory damages for w illf u l copyright infringement. See, e.g., Guess?, Inc. v. Gold Ctr. Jewelry, 997 F. Supp. 4 0 9 , 411 (S.D.N.Y. 1998), rev'd on other grounds sub nom. Gucci Am., Inc. v. Gold Ctr. J e w e lry, 158 F.3d 631 (2d Cir. 1998); Sara Lee Corp. v. Bags of N.Y., Inc., 36 F. Supp. 2 d 161, 166 (S.D.N.Y. 1999) (Motley, J.); Polo Ralph Lauren, L.P. v. 3M Trading Co., N o . 97 Civ. 4824 (JSM) (MHD), 1999 WL 33740332, at *5 (S.D.N.Y. Apr. 19, 1999).
A s those cases indicate, where, as here, a defendant is shown to have acted willfully, a s ta tu to ry award should incorporate not only a compensatory, but also a punitive c o m p o n e n t to discourage further wrongdoing by the defendants and others. See, e.g., F itz g e ra ld Publ'g Co. v. Baylor Publ'g Co., 807 F.2d 1110, 1117 (2d Cir. 1986); N.A.S. Im p o rt, Corp. v. Chenson Enters., 968 F.2d 250, 252 (2d Cir. 1992). In Sara Lee, 36 F. Supp. 2d at 170, Judge Motley awarded statutory d a m a g e s in the amount of $750,000 after estimating the defendants' ill-gotten gains and tre b lin g them to "deter and punish a willful continuous course of infringements and d e f ia n c e of the judicial process." In several other cases involving trademark willful in f rin g e m e n t, however, judges in this District have awarded only $25,000 per infringing m a rk or group of marks. See Gucci Am., Inc. v. Gold Ctr. Jewelry, 997 F. Supp. 399, 4 0 1 , 406 (S.D.N.Y. 1998) (awarding $25,000 per trademark violation sought by p la in tif f s); Polo Ralph Lauren, 1999 WL 33740332, at *7 (awarding $25,000 per tr a d e m a r k violation in order to deter defendants and compensate plaintiffs); see also O d e g a rd , Inc. v. Costikyan Classic Carpets, Inc., 963 F. Supp. 1328, 1341 (S.D.N.Y. 1 9 9 7 ) (awarding $25,000 in statutory damages under the Copyright Act despite plaintiffs' f a ilu re to show that they lost profits or that the defendants benefitted financially). As Louis Vuitton correctly notes, there also are cases in the Second Circuit in which courts have awarded $1 million for each trademark infringed. (See Pl.'s PFOF ¶ 85) (citing Nike, Inc. v. Top Brand Co., No. 00 Civ. 8179 (KMW) (RLE), 2006 WL
2 9 4 6 4 7 2 , at *3 (S.D.N.Y. Feb. 27, 2006); Phillip Morris USA, Inc. v. Marlboro Express, N o . CV-03-1161, 2005 WL 2076921, at *6 (E.D.N.Y. Aug. 26, 2005); Gucci America, In c . v. Duty Free Apparel, Ltd., 315 F. Supp. 2d 511, 521-22 (S.D.N.Y. 2004). In each of th o s e cases, there was reason to believe that the defendant's sales were substantial. For e x a m p le , in Nike there was evidence that the defendant's operations "led to the p ro d u c tio n of millions of infringing goods." Nike, 2006 WL 2946472, at *2. H e re , because Bonini has failed to participate in this suit, it is impossible to e stim a te the scope of its counterfeiting operation. On the one hand, it seems unlikely that B o n in i would have gone to the trouble of presenting a color catalog of its "Spring 2003" lin e unless its sales were substantial. On the other hand, if Bonini had flooded the w h o les a le market with counterfeit Epi Leather handbags, Louis Vuitton presumably w o u ld have made more than one undercover purchase from a retailer. In these circumstances, I conclude that $100,000 per trademark is an a p p ro p ria te statutory damages award. The total statutory damages to be awarded for the f o u r marks infringed consequently is $400,000.3
Louis Vuitton contends that the brown Epi Leather trademark also was infringed. (Pl.'s PFOF ¶ 20). Suffice it to say, I see no evidence that there were sales of brown counterfeit handbags embodying the Epi Leather design. Accordingly, I have limited the recommended statutory damages award to $400,000. 8
A tto rn e ys' Fees and Costs
T h e Lanham Act provides that a prevailing party may also recover "the c o s ts of the action" and in "exceptional cases" its "reasonable" attorneys' fees. 15 U.S.C. § 1117(a). When willfulness has been established, courts consider the case to be " e x ce p tio n a l" within the meaning of the statute and therefore award attorneys' fees. See, e .g ., Bambu Sales, Inc. v. Ozak Trading, Inc., 58 F.3d 849, 854 (2d Cir. 1995) ("the f in d in g of willfulness determines the right to attorneys' fees"); see also Twin Peaks P r o d s . v. Publ'n Int'l, Ltd., 996 F.2d 1366, 1383 (2d Cir. 1993) (exceptional cases involve e v id e n c e of fraud or bad faith). In this case, by failing to respond to the amended c o m p la in t, Bonini has admitted that it acted "knowingly and intentionally or with a re c k le s s disregard or willful blindness" to Louis Vuitton's trademark rights. (AC ¶ 28). Louis Vuitton consequently is entitled to recover its reasonable attorneys' fees. H.W. C a rte r & Sons, Inc. v. William Carter Co., 913 F. Supp. 796, 805 (S.D.N.Y. 1996) (citing G etty Petroleum Corp. v. Bartco Petroleum Corp., 858 F.2d 103, 113-14 (2d Cir. 1988)) (f e es may be awarded when party acts "willfully, intentionally and with a callous and re c k le s s disregard for plaintiffs' rights"). In this Circuit, a party seeking such an award of attorneys' fees must s u p p o rt its request with contemporaneous time records that show "for each attorney, the d a te , the hours expended, and the nature of the work done." N.Y. State Ass'n for
R e ta rd e d Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983). Fee applications th a t do not contain such supporting data "should normally be disallowed." Id. at 1154. Louis Vuitton alleges that it incurred attorneys' fees in the amount of $ 4 ,9 6 6 .5 1 , and it has supported its claim with a detailed declaration by its counsel to w h ic h it has attached its legal bills. (LeGrand Fee Decl. Ex. A). Although the rates of $ 2 0 0 or more per hour for paralegals seem high, the total of their billings is only $246 and is more than fully offset by the across-the-board discounts that Louis Vuitton's lawyers g a v e their client and the additional reductions to their indicated billings that counsel v o lu n te e re d . I therefore find that Louis Vuitton's attorneys' fee request should be a w a rd e d in full. The costs that a party may recover include such items as filing fees, fees for s e rv ic e process, and witness fees. See 28 U.S.C. § 1920; Fed. R. Civ. P. 54(d)(1); Local C iv . R. 54.1. Here, Louis Vuitton incurred $601.63 in such costs which it is entitled to rec o v er. (See LeGrand Fee Decl. Ex. B) B. N e w York Law Punitive damages are not available under the Lanham Act. See Bartco P e tro leu m , 858 F.2d at 108-13 (2d Cir. 1988). However, in the context of an unfair c o m p e titio n claim, the Second Circuit has recognized that "New York law clearly permits p u n itiv e damages where a wrong is aggravated by recklessness or willfulness, . . . w h e th e r or not directed against the public generally." Getty Petroleum Corp. v. Island
T ra n sp . Corp., 878 F.2d 650, 657 (2d Cir. 1989) (ellipsis in original). Louis Vuitton s u g g e sts that it therefore should be awarded $100,000 in punitive damages. The s u b s ta n tia l sum that I previously have recommended as a statutory damages award under th e Lanham Act includes a punitive component. Accordingly, Louis Vuitton is not e n title d to an additional award under New York law. V. Conclusion F o r the reasons set forth above, I recommend that Louis Vuitton be awarded ju d g m e n t against Bonini in the amount of $405,568.14, consisting of $400,000 in sta tu to ry damages under the Lanham Act, $4,966.51 in attorneys' fees, and $601.63 in c o s ts . VI. N o tic e of Procedure for Filing of Objections to this Report and Recommendation T h e parties shall have ten days from the service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 7 2 (b ) of the Federal Rules of Civil Procedure. See also Fed. R. Civ. P. 6(a) and (d). Any s u c h objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable John F. Keenan and to the chambers of the undersigned a t the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to a n y opposing parties. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b). Any
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