Excelled Sheepskin & Leather Coat Corp. v. Oregon Brewing Company

Filing 140

MEMORANDUM DECISION AND ORDER: Adopting REPORT AND RECOMMENDATION. Magistrate Judge Ellis' Report and Recommendation to award statutory damages, attorneys' fees, and injunctive relief is adopted. Plaintiff is awarded statutory damages in th e amount of $1,000, plus reasonable attorneys' fees to be determined upon submission of contemporaneous time records or other relevant evidence. Pursuant to 15 U.S.C. § 1116, and the law of the State of New York, Defendant OBC and each of its agents, servants, employees, attorneys, assigns, and all others in privity or acting in concert with it are preliminarily and permanently enjoined from: Using or authorizing others to use the name and mark ROGUE or any other name, mark or dom ain name containing these terms, or any confusingly similar names or marks, in the advertising or sale of any clothing in Department and Clothing Stores; or in any trade channels other than where OBC's ROGUE branded beer is sold as complements t o and in promotion of Defendant's own brewing and beverage business. The Clerk of Court is directed to close the motion at ECF No. 128. SO ORDERED., Motions terminated: 128 MOTION for Attorney Fees filed by Excelled Sheepskin & Leather Coat Corp.. (Signed by Judge George B. Daniels on 9/28/2016) (ama)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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EXCELLED SHEEPSKIN & LEATHER COAT
CORP.,
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Plaintiff,
MEMORANDUM DECISION
AND ORDER

-againstOREGON BREWING COMPANY,

12 Civ. 1416 (GBD) (RLE)

Defendant.
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GEORGE B. DANIELS, United States District Judge:
Plaintiff Excelled Sheepskin & Leather Coat Corporation ("Excelled") brought this action
against Defendant Oregon Brewing Company ("OBC") alleging violations of the Lanham Act, 15
U.S.C. § 1051, et seq. (Compl., (ECF No. 1).) On August 5, 2014, this Court granted summary
judgment in favor of Excelled's trademark infringement, counterfeiting, false designation, and
unfair competition claims.

This Court also dismissed OBC's counterclaims for trademark

infringement and breach of contract, and Excelled's unfair trade practices claim under the New
York General Business Law. ("Summary Judgment Order," (ECF No. 109).) On August 20, 2014,
this Court referred this case to Magistrate Judge Ronald Ellis for an inquest on damages and
injunctive relief. (ECF No. 110.)
On October 6, 2015, Excelled moved for attorneys' fees and the entry of an injunction.
(ECF No. 128.) Excelled argued that it was entitled to mandatory attorneys' fees under 15 U.S.C.
§ 1117(b) or, alternatively, statutory damages and attorneys' fees under§§ l 117(a) and (c) because
the case is "exceptional." (Memorandum of Law in Support ("Pl.'s Mem."), (ECF No. 129), at 2.)
Excelled also argued that a jury trial was not necessary for this Court to award attorneys' fees. Id.
OBC has conceded that a jury trial was not necessary if Excelled only received minimum statutory

damages under section l 117(c). (Memorandum of Law in Opposition ("Def.'s Opp."), (ECF No.
132), at 3.) However, OBC argued that Excelled is not entitled to attorneys' fees. (Id. at 2.)
Before this Court is Magistrate Judge Ellis' August 12, 2016 Report and Recommendation
("Report," (ECF No. 135)), recommending that this Court find that OBC's jury trial right is not
implicated, enter judgment for Excelled in the amount of $1,000 plus reasonable attorneys' fees to
be determined upon application, and enter a permanent injunction against OBC. 1 (Report, at 2.)
This Court adopts those recommendations.
I.

LEGALSTANDARD

This Court may accept, reject, or modify, in whole or in part, the findings set forth in the
Report. 28 U.S.C. § 636(b)(l)(C). When there are objections to the Report, the Court must make
a de nova determination of those portions of the Report to which objections are made. Id; see also
Rivera v. Barnhart, 423 F. Supp. 2d 271, 273 (S.D.N.Y. 2006). The district judge may also receive

further evidence or recommit the matter to the magistrate judge with instructions. See Fed. R. Civ.
P. 72(b); 28 U.S.C. § 636(b)(l)(C). The Court need not conduct a de nova hearing on the matter.
See United States v. Raddatz, 447 U.S. 667, 675-76 (1980). Rather, it is sufficient that the Court

"arrive at its own, independent conclusion" regarding those portions of the Report to which
objections were made. Nelson v. Smith, 618 F. Supp. 1186, 1189-90 (S.D.N.Y. 1985) (quoting
Hernandez v. Estelle, 711 F.2d 619, 620 (5th Cir. 1983)). When no party files objections to a

Report, the Court may adopt the Report if "there is no clear error on the face of the record." Adee
Motor Cars, LLC v. Amato, 388 F. Supp. 2d 250, 253 (S.D.N.Y. 2005) (quoting Nelson, 618 F.

Supp. at 1189). If a party's objection reiterates a prior argument, or consists entirely of conclusory

1

The relevant procedural and factual background is set forth in greater detail in the Report, and is
incorporated herein.

2

or general arguments, the Court should review the Report for clear error. See McDonaugh v.
Astrue, 672 F. Supp. 2d 542, 547 (S.D.N.Y. 2009); DiPilato v. 7-Eleven, Inc., 662 F. Supp. 2d

333, 339-40 (S.D.N.Y. 2009).
Magistrate Judge Ellis advised the parties that failure to file timely objections to the Report
would constitute a waiver of those objections on appeal. (Report, at 18-19). OBC filed timely
objections to the Report. (Objections to Report and Recommendation ("Def.'s Obj."), (ECF No.
136).) There is no clear error on the face of the record as to those portions of the report to which
no objections were made. This Court has considered the issues raised in OBC's objections and
reviews de novo the objected-to portions of the Report.
II.

STATUTORY DAMAGES

The Report recommended that statutory damages be awarded to Excelled in the amount of
$1,000. (Report, at 12.) OBC objects to this award by protesting simply that OBC did not engage
in trademark counterfeiting and that this Court erred by holding otherwise in its August 5, 2014
and July 8, 2015 Orders. 2 (Def.'s Obj., at 9.) As a result, OBC argues that it cannot be liable for
statutory damages.
Under the Lanham Act, "a plaintiff seeking damages for counterfeiting and infringement
has the option of seeking either actual or statutory damages, but not both." Louis Vuitton Malle tier
SA. v. LY USA, Inc., 676 F.3d 83, 105 (2d Cir. 2012). A plaintiff may seek statutory damages: (1)

between $1,000 and $200,000 per counterfeit mark per type of goods sold, offered for sale, or
distributed; or (2) if the court finds that the use of the counterfeit mark was willful, not more than

2

OBC has already made this same argument in its Motion for Relief from this Court's grant of summary
judgment to Plaintiff. (ECF No. 112.) This Court rejected that argument in its July 8, 2015 Order. (ECF
No.119.)

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$2,000,000 per counterfeit mark per type of goods sold, offered for sale, or distributed. 15 U.S.C.

§ 1117(c).
Absent any evidence of Defendant's profits, there is no basis to calculate actual damages.
Alternatively, Excelled seeks minimum statutory damages under 15 U.S.C. § 1l17(c), which is
reserved for cases, such as this, involving the use of a counterfeit mark. (Pl.'s Mem., at 19-20.)
Having previously granted Excelled's motion for summary judgment for trademark counterfeiting,
among other claims, (ECF No. 119), this Court finds that statutory damages should be awarded to
Excelled in the amount of $1, 000.
III.

ATTORNEYS' FEES

The Lanham Act authorizes the award of attorneys' fees to prevailing parties m
"exceptional cases." 15 U.S.C. § 1117(a). When a plaintiff elects statutory damages under 15
U.S.C. § 1117(c), attorneys' fees are available "so long as the 'exceptional case' requirement of
section 11l7(a) is met." Louis Vuitton, 676 F.3d at 106-09.
A finding of willfulness, fraud, or bad faith is necessary, but not sufficient, for a case to be
"exceptional" so as to warrant an award of attorneys' fees. See Mister Softee of Brooklyn, Inc. v.
Boula Vending Inc., 484 F. App'x 623, 624 (2d Cir. 2012) (internal citations omitted). "Usually,

the type of conduct that has sufficed to make out an 'exceptional case' is intentional, deliberate, or
willful infringement." Guess?, Inc. v. Gold Ctr. Jewelry, 997 F. Supp. 409, 412 (S.D.N.Y. 1998)
(quotation omitted), rev 'don other grounds, 158 F.3d 631 (2d Cir. 1998). See also Int 'l Star Class
Yacht Racing Ass 'n v. Tommy Hilfiger, U.S.A., Inc., 80 F.3d 749, 753 (2d Cir. 1996) ("[A]n award

of attorney fees may be justified when bad faith infringement has been shown."); Bambu Sales,
Inc. v. Ozak Trading Inc., 58 F.3d 849, 854 (2d Cir. 1995) ("The finding of willfulness determines

the right to attorneys' fees. . . . 'Exceptional' circumstances include willful infringement.")

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(internal quotation marks and citation omitted). Attorneys' fees may also be awarded against a

party making a claim that "is entirely without color and has been asserted wantonly, for purposes
of harassment or delay, or for other improper reasons." Baker v. Health Management Systems,
Inc., 264 F.3d 144, 149 (2d Cir. 2001) (internal citations omitted). "Courts have inferred bad faith
where a plaintiff's claims are meritless." Therapy Products, Inc. v. Bissoon, No. 07-CV-8696,
2009 WL 2709279, at *2 (S.D.N.Y. Aug. 26, 2009) (internal citations omitted).
The Magistrate Judge properly found that OBC willfully infringed Excelled's mark, and
therefore attorneys' fees are proper. (Report, at 16.) As stated in this Court's Summary Judgment
Order, it is undisputed that Excelled "was the first to use and the first to register its Rogue marks
for use throughout the United States in the department and clothing store markets." (Summary
Judgment Order, at 10.) Further, that Order found "no evidence upon which a reasonable juror
could conclude that OBC has priority of the Rogue mark for the sale of clothing in department and
clothing stores." (Id. at 10-11.)
The record clearly shows that OBC knew of Excelled's superior trademark rights in the
department and clothing store trade channels prior to 2011, but decided to enter those channels
anyway. Indeed, OBC acknowledged the likelihood of confusion between its mark and Excelled's
mark years before OBC entered those markets. In March 2006, the U.S. Patent and Trademark
Office ("PTO") notified OBC that "potentially conflicting marks in a [sic] prior-filled pending
applications may present a bar to registration." (Id. at 5.) In June 2007, the PTO specifically cited
its concern that both OBC and Excelled would sell their goods "everywhere that is normal for such
items, i.e., clothing and department stores." (Id. at 6.) In response, OBC executed a settlement
agreement with Excelled and amended its trademark application twice to overcome the likelihood
of confusion. (Id. at 5-6.) Ultimately, OBC narrowed its trademark application to certain types of

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clothing outside of Excelled's clothing market "sold primarily in the trademark owner's brewpubs
and web site, as compliments [sic l to and in promotion of the trademark owner's brewing and
beverage businesses." (Id. at 6.)
Despite this history, in 2011, for the first time, OBC began selling its Rogue-branded
clothing in department and clothing stores; in 2012, it began offering and selling its Rogue-clothing
via its online store, eBay, and Amazon. (Id. at 4.) Moreover, in this litigation, OBC raised a
counterclaim for trademark infringement-even though it knew Excelled was the first to use and
register the mark for use in department and clothing stores. OBC also knew about the likelihood
of confusion between the marks. (Id. at 5, 10.)
On this record, this Court finds that OBC knowingly entered into Excelled's trade channels
in 2011 and thereby willfully infringed upon Excelled's trademarks. As such, Excelled is entitled
to reasonable attorneys' fees in this case.

IV.

INJUNCTION

In order to obtain a permanent injunction under the Lanham Act, a plaintiff must (1)
succeed on the merits and (2) demonstrate irreparable harm if the relief is not granted. Chanel,

Inc. v. Gardner, No. 07 CIV 6679, 2011WL204911, at *4 (S.D.N.Y. Jan. 21, 2011). "To prevail
on the merits of a trademark infringement claim, a plaintiff must prove that (1) it has legally
protectable trademarks, and (2) defendants' misuse of the trademarks creates a likelihood of
confusion among customers." Id.
Per this Court's Summary Judgment Order, Excelled has succeeded on the merits of its
trademark and counterfeiting claims. Further, Excelled has established irreparable harm because
"counterfeit marks are inherently confusing." Fendi Adele S.R.L. v. Burlington Coat Factory

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Warehouse Corp., 689 F. Supp. 2d 585, 597 (S.D.N.Y. 2010), amended on reconsideration (Mar.

23, 2010) (internal citations omitted).
OBC objects that a permanent injunction corresponding to the injunction requested in
Plaintiffs Complaint would be overbroad and vague and would also contravene this Court's
limitation on the scope ofrelief in the Summary Judgment Order. (Def. 's Obj., at 4.) OBC further
objects to "the entry of any injunction by this Court premised on 'department or clothing stores'
without an evidentiary hearing and only after which reasonably certain meanings are ascribed to
those terms." (Id. at 15-16.)
In the Summary Judgment Order, this Court held that any injunction "will be limited to
OBC's clothing that is sold in department and clothing stores, and will not apply to OBC's clothing
sold as complements to and in promotion of OBC's brewing and beverage business, sold primarily
in OBC's brewpubs and on its website." (Summary Judgment Order, at 19 n. 20.) Indeed, the
Report recognizes that the Summary Judgment Order "enjoined OBC from using the ROGUE
mark, but limited the injunction to clothing sold in department and clothing stores." (See Report,
at 16.)
Accordingly, this Court has determined to issue an injunction, which is based upon the
injunction proposed in Plaintiffs Complaint, but excludes the language considered to be vague
and unnecessarily broad. OBC's request for an evidentiary hearing is denied.

V.

CONCLUSION

Magistrate Judge Ellis' Report and Recommendation to award statutory damages,
attorneys' fees, and injunctive relief is adopted. Plaintiff is awarded statutory damages in the
amount of $1,000, plus reasonable attorneys' fees to be determined upon submission of
contemporaneous time records or other relevant evidence.

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Pursuant to 15 U.S.C. § 1116, and the law of the State ofNew York, Defendant OBC and
each of its agents, servants, employees, attorneys, assigns, and all others in privity or acting in
concert with it are preliminarily and permanently enjoined from:
Using or authorizing others to use the name and mark ROGUE or any other name,
mark or domain name containing these terms, or any confusingly similar names or
marks, in the advertising or sale of any clothing in Department and Clothing Stores;
or in any trade channels other than where OBC's ROGUE branded beer is sold as
complements to and in promotion of Defendant's own brewing and beverage
business.
The Clerk of Court is directed to close the motion at ECF No. 128.
Dated: New York, New York
September 28, 2016
SO ORDERED.

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