C & L International Trading Inc. et al v. Chung Kee (USA) International Inc. et al

Filing 140

OPINION AND ORDER. C&L's motion for summary judgment on the issue of damages (Dkt. No. 148) is denied. So ordered. re: (148 in 1:13-cv-02763-LLS, 114 in 1:13-cv-02638-LLS) MOTION for Judgment on Damages filed by C&L International Trading Inc., C & L International Trading Inc. (Signed by Judge Louis L. Stanton on 4/22/2015) Filed In Associated Cases: 1:13-cv-02638-LLS, 1:13-cv-02763-LLS Copies Mailed By Chambers. (rjm)

DQR~GINAL
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

lLi:.<. i H.O:,h..~LLY FILED
DOC#:
I
I .•

DATE FILED:

C&L INTERNATIONAL TRADING INC., KAM
NG, and K&C INTERNATIONAL TRADING
INC,
Plaintiffs,

jjJJ-jj.J
I

.1

13 Civ. 2638 (LLS)
13 Civ. 2763 (LLS)

- against -

OPINION & ORDER
AMERICAN TIBETAN HEALTH INSTITUTE,
INC., CHUNG KEE (USA) INTERNATIONAL
INC., YAT CHAU (USA) INC., TUNG REN
TANG, RON FENG TRADING INC., FARGO
TRADING INC., YONG LONG SUPERMARKET
INC., and PO WING HONG FOOD MARKET
INC.,
Defendants.

AMERICAN TIBETAN HEALTH INSTITUTE,
INC.,
Plaintiff,
- against -

KAM NG, C&L INTERNATIONAL TRADING,
INC., KANG LI TRADING, INC., and K&C
INTERNATIONAL TRADING, INC.,
Defendants.
After a jury verdict against it in these cross-suits making
reciprocal claims of trademark infringement, C&L International
Trading, Inc.

( "C&L") now moves for summary judgment denying all

the successful American Tibetan Health Institute, Inc.'s
("ATHI") claims for damages. For the reasons that follow, the
motion is denied.

BACKGROUND

This consolidated action concerns who has the right to sell
medicinal herbal tea under the trademark TIBETAN BAICAO TEA:
ATHI and its New York City retailers or Kam Ng, Kang Li Trading,
Inc.

( "Kang Li") , K&C International Trading, Inc.

( "K&C")

(two

corporations controlled by Ms. Ng), and Ms. Ng's distributor,
C&L (together "defendants") .
Procedural History

In April 2013, Ms. Ng and C&L sued seven New York City
retailers of ATHI's Tibetan Baicao Tea, claiming they were
infringing her exclusive rights to the TIBETAN BAICAO TEA
trademark. Three days later, ATHI sued Ms. Ng, the Ng companies,
and C&L claiming that it was ATHI that owned the mark. The two
cases were consolidated, and Ms. Ng and C&L amended their
complaint to add claims against ATHI.
ATHI moved for a preliminary injunction against defendants'
use of the mark. The parties agreed that their products,
packaging, and trademarks were virtually identical and that the
only material issues in substantial dispute were which of them
had first used the mark in commerce in the United States and, if
it was ATHI, whether ATHI had thereafter abandoned the marks.
Accordingly, the trial of the merits was advanced on consent and
consolidated with the preliminary injunction hearing. See Fed.
R. Civ. P. 65(a) (2). A jury trial of the two stipulated issues

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was held from March 24 to 27, 2014. The jury determined that
ATHI was the first to use its trademarks in commerce and that it
did not later abandon the marks.
Consistent with all parties' understanding, I issued an
order to show cause (Dkt. No. 65 1 ) "why the Court should not
enter an order granting a permanent injunction and judgment on
the merits in favor of ATHI, and respectfully referring the
case

to Magistrate Judge Gabriel

w.

Gorenstein to hold an

inquest, hear and determine the amount of damages to be
recovered by ATHI.

11

In response, no party raised any issues or

questions of the propriety of that relief except for Ms. Ng's
claim she was an innocent prior user with common law rights to
the mark in the New York market, which I rejected in an opinion
and injunction dated June 25, 2014
on December 3, 2014

(Dkt. No. 84), later amended

(Dkt. No. 118).

After the issuance of the injunction, defendants discharged
their original trial counsel. Appearing through new counsel, C&L
now claims that it did not consent to be named a plaintiff in
this litigation, was unaware that it had been sued by ATHI, and
in any event cannot be liable for any damages incurred by Ms. Ng
and her controlled companies.

1

All docket numbers refer to the docket for case No. 13 Civ. 2763 (LLS).

-3-

C&L's Relationship with Ms. Ng and its Original Counsel

C&L is a New York corporation organized in June 2011.
ATHI's Rule 56.1 Statement of Disputed and Undisputed Material
Facts ("ATHI SOF") ! 1, Mar. 30, 2015, Dkt. No. 163. It is now
solely owned by Sammy Chow who is listed as C&L's Chief
Executive Officer by the New York Secretary of State. See id.
!

3. C&L is a distributor who helps place goods in Chinatown

grocers. Id. ! 2.
C&L's precise relationship with Ms. Ng is disputed. Id. On
a motion for summary judgment, the court construes the evidence
in the light most favorable to the non-moving party (ATHI) and
draws all reasonable inferences in its favor. Lindsay v. Ass'n
of Prof'l Flight Attendants, 581 F.3d 47, 50 (2d Cir. 2009).
Under that standard, having reviewed the evidence submitted in
support of and opposition to the motion,

I accept for its

purposes ATHI's summary of the record:
C&L's relationship with Ms. Kam Ng and her companies
started around August 2011, when C&L began renting
space from K&C's retail store location at 84 Hester
Street, New York, NY. (Deposition Transcript of Sammy
Chow attached as Exhibit A to the Declaration of Otto
Lee filed herewith ("Chow Depo. Tr."), 43:5-14, 49:1725, 53:20-25.) Shortly thereafter, Sammy Chow, Manager
of C&L, authorized Kam Ng to use C&L's name in
promoting her business. (Chow Depo. Tr. 12:9-11,
45:18-47:16.)
. In early March 2012, C&L
began a relationship with Kam Ng selling K&C's tea
product under the mark "Tibetan Baicao Tea." (Chow
Depo. Tr., 54:18-25.) Kam Ng's business card presented

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name, "C&L Int'l Trading Inc." and "Kang Li Trading
Inc." (Chow Depo. Tr., 44:16-45:25; Chow Depo. Tr.
Exh. 2.) Defendants' joint representations continued
online, where C&L was listed on the "Contact Us" page
of the website www.us-tt.net, along with Kam Ng's
address, her email address, and a phone number routed
to Kam Ng's cell phone. (Deposition Transcript of Kam
Ng dated Mar. 21, 2014 attached as Exhibit D to the
Declaration of Otto Lee filed herewith ("Ng Depo. Tr.,
Mar. 21, 2014"), 12:2-15:25, Ng Depo., Mar. 21, 2014,
Exh. 15.) TIBETAN BAICAO TEA products were prominently
displayed on C&L's said website. (Ng Dep., Mar. 21,
2014, Exh. 15.) With things coming full circle, Kam Ng
is "renting an office desk now" from C&L in a shared
space at the 6221 20th Avenue, New York, NY retail
store location. (Chow Depo Tr., 47:22-24.)
ATHI Opp'n Mem. 1-2, Mar. 30, 2015, Dkt. No. 162.
Mr. Chow was introduced to C&L's original counsel, Giuttari
& Mertz Law Office, P.C., by Ms. Ng. ATHI SOF

~

20. The firm had

previously registered trademarks for Ms. Ng, and Mr. Chow
engaged the firm to register trademarks on his behalf as well,
id.

~

21-22, including one application filed three days before

Ms. Ng and C&L sued ATHI's retailers, see Wong Decl. Ex I, at 2,
Mar. 15, 2015, Dkt. No. 150.
On March 15 2013, a cease and desist letter was sent to New
York City merchants claiming that Ms. Ng's company Kang Li owned
exclusive rights to the TIBETAN BIACAO TEA mark and threatening
legal action for its unauthorized use. Wong Decl. Ex. D. The
letter's heading listed Giuttari & Mertz, C&L, and Kang Li. It
was signed by Ms. Ng as CEO of Kang Li and two attorneys. The
letter was republished as an advertisement for Kang Li's Tibetan
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Baicao Tea in the Sing Tao Daily newspaper for several days in
late March 2013. Chow Dep. Final Tr. 85:5-16, Nov. 20. 2014,
filed as Lee Decl. Ex. A, Mar. 30, 2015, Dkt. No. 164; Lee Decl.
at ATHI Trial Ex. 17

~

3.

Mr. Chow claims he first saw the letter in the Sing Tao
Daily, but that K&C gave him a Chinese language version of the
letter, which was also sent to local merchants. Chow Dep. Draft
Tr. 86:4-6, 89:3-8, Nov. 20, 2014, filed as Wong Decl. Ex. A. He
states the letter was sent without his knowledge, and he spoke
to both Ms. Ng and a Giuttari & Mertz attorney, but neither
would explain the letter to him. Id. at 89:9-18, 91:3-10.
By an arrangement with Ms. Ng, Giuttari & Mertz then
represented C&L is this matter, and Ms. Ng coordinated with them
on C&L's behalf. Ng Dep. 7:5-8:13, March 21, 2014, filed as Lee
Decl. Ex. D.

Defendants' Knowledge of ATHI's Rights and Registration
The record shows that "Mr. Chow first saw ATHI's TIBETAN
BAICAO TEA less than a month after he began selling Ms. Ng's
product." C&L's Resp. to New Facts Introduced in ATHI SOF
Apr. 6, 2015, Dkt. No. 171. As summarized by ATHI,
Sammy Chow has testified for C&L that he first saw
ATHI's TIBETAN BAICAO TEA less than a month after he
began selling Kam Ng's product, in March 2012. (Chow
Depo. Tr., 54:18-25; 57:2-58:1; 61:13-62:8.) Around
the end of March 2012, a representative from ATHI's
distributor Wah Bo informed C&L that C&L was not
authorized to sell Kam Ng's "Tibetan Baicao Tea"
-6-

~

43,

product. (Chow Depo. Tr. 62:9-14.) During this time,
ATHI published a notice in the Sing Tao Daily
newspaper advertising the sale of its TIBETAN BAICAO
TEA product. (ATHI Trial Exh. 43; Trial Tr., 87:715.) Sammy Chow testified that he first heard of ATHI
and its TIBETAN BAICAO TEA products from a notice in
the Sing Tao Daily. (Chow Depo. Tr., 84:7-9.) When
asked further about the first time he saw ATHI's
TIBETAN BAICAO TEA product, Sammy Chow responded, "I
felt this was very strange because the name was very
similar .
" (Chow Depo. Tr., 57:5-6.)
ATHI Opp'n Mem. 3-4 (ellipsis in original).
The cease and desist letter erroneously claimed ownership
of ATHI's United States trademark application for the TIBETAN
BIACAO TEA mark, referring to it by serial number. Wong Decl.
Exs. D, J. After ATHI filed suit, the parties stipulated that
Kang Li, C&L, and Giuttari & Mertz would publish a retraction
letter signed by Ms. Ng and the two attorneys stating that ATHI
owned that trademark application. Stipulated Order for Temporary
Relief, May 13, 2013, Dkt. No. 23.
Finally, on May 17, 2013, ten days after registering the
TIBETAN BAICAO TEA mark, ATHI filed an amended complaint (Dkt.
No. 27), which added claims for infringement of its registered
trademark. A copy of the certificate of registration for the
mark was attached to the amended complaint, and it was served on
Giuttari & Mertz.

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DISCUSSION
Summary Judgment Standard
"The court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." Fed. R. Civ.
P. 56(a). "An issue of fact is genuine if the evidence is such
that a reasonable jury could return a verdict for the nonmoving
party. A fact is material if it might affect the outcome of the
suit under the governing law." Lindsay v. Ass'n of Prof'l Flight
Attendants, 581 F. 3d 47, 50

(2d Cir. 2009).

Limitations on Monetary Remedies for Trademark Infringement
Once liability for trademark infringement is established,
"the plaintiff shall be entitled, subject to the provisions of
sections 1111 and 1114 of this title, and subject to the
principles of equity, to recover (1) defendant's profits,
(2) any damages sustained by the plaintiff, and (3) the costs of
the action." 15 U.S.C.

§

1117(a)

(emphasis added).

Section 1114(1) defines the elements of infringement of a
registered trademark:
Any person who shall, without the consent of the
registrant-(a) use in commerce any reproduction,
counterfeit, copy, or colorable imitation of a
registered mark in connection with the sale,
offering for sale, distribution, or advertising
of any goods or services on or in connection with

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which such use is likely to cause confusion, or
to cause mistake, or to deceive;
shall be liable in a civil action by the registrant
for the remedies hereinafter provided.
Section 1114(2) then limits the available remedies in cases of
innocent infringement by printers and publishers, limitations
that are not at issue in this action.
C&L advances three primary arguments that it is protected
by§ 1117's limitations. First, it reads an "affixation"
requirement into § 1114 and argues that, as a mere distributor
of the infringing goods, it is not liable for monetary remedies
because it did not affix ATHI's mark to the goods or their
packaging. Second, an award of damages would be inconsistent
with equitable principles. Third, ATHI did not comply with
§ 1111's notice requirements so it cannot recover damages or
profits. Ultimately, none of those arguments entitle C&L to
summary judgment.
Affixation
C&L argues that § 1114 (1) (a) does not simply define
trademark infringement but that, by using the phrase "use in
commerce," it creates an independent limitation on remedies.
Relying on 15 U.S.C. §1127's definition of "use in commerce,"
it argues that it did not use ATHI's mark in commerce because it
did not itself affix the mark to the goods. That section states:
For purposes of this chapter, a mark shall be deemed
to be in use in commerce--

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(1) on goods when-(A) it is placed in any manner on the goods
or their containers or the displays
associated therewith or on the tags or
labels affixed thereto, or if the nature of
the goods makes such placement
impracticable, then on documents associated
with the goods or their sale, and
(B) the goods are sold or transported in
commerce
Use in commerce is an element of liability. Rescuecom Corp.
v. Google Inc., 562 F. 3d 123, 127

(2d Cir. 2009)

("[A] complaint

fails to state a claim under the Lanham Act unless it alleges
that the defendant has made 'use in commerce' of the plaintiff's
trademark .

."); Estee Lauder Inc. v. The Gap, Inc., 108

F.3d 1503, 1508

(2d Cir. 1997)

("In order to prevail on a claim

of trademark infringement in violation of the Lanham Act, a
plaintiff must show (1) that it has a valid mark that is
entitled to protection under the Act, and (2) that use of the
defendant's mark infringes, or is likely to infringe, the mark
of the plaintiff."); Born to Rock Design Inc. v. CafePress.com,
Inc., No. 10 Civ. 8588
U.S.P.Q.2d 1538

(CM), 2012 WL 3954518, at *5, 104

(S.D.N.Y. Sept. 7, 2012)

('"Use in commerce' is

a defined element of section 1114 and 1125 claims.").
There is no affixation requirement as C&L describes it. "It
is no defense that a distributor did not actually affix the
infringing mark to the goods, since actual sale of the goods
with an infringing mark is itself infringement." 4 McCarthy on

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Trademarks and Unfair Competition § 25.27

(4th ed. 2105); accord

El Greco Leather Prods. Co. v. Shoe World, Inc., 806 F.2d 392,
396 (2d Cir. 1986)

("Even though Shoe World was involved neither

in the manufacture nor the affixing of the CANDIE'S trademark to
the shoes, its sale of the shoes was sufficient 'use' for it to
be liable for the results of such infringement and its claimed
lack of knowledge of its supplier's infringement, even if true,
provides no defense."); GMA Accessories, Inc. v. BOP, LLC, 765
F. Supp. 2d 457, 463 (S.D.N.Y. 2011)

("However, even if Electric

Wonderland did not manufacture or label the goods, it is well
settled that a retailer's direct sale of an infringing product
is sufficient to create liability."), aff'd sub nom. GMA
Accessories, Inc. v. Elec. Wonderland, Inc., 558 F. App'x 116
(2d Cir. 2014). This is true for both liability and monetary
remedies. Aris Isotoner Inc. v. Dong Jin Trading Co., No. 87
Civ. 890

(RO), 1989 WL 236526, at *5, 17 U.S.P.Q.2d 1017

(S.D.N.Y. Sept. 22, 1989)

("Thus it can be concluded that

although Dong Jin did not itself manufacture the infringing
gloves, it sold them with knowledge that they were intended to
look like Isotoner gloves and it intended to reap the benefit of
that similarity.

. An accounting for profits is therefore

appropriate.").
Equitable Limitations on Awarding Profits
C&L argues that "[e]quity bars recovery of any profits in

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this case" because "the record shows no facts that satisfy any
of the Second Circuit's criteria for a monetary award." C&L
Supp. Mem. 2, 8, Mar. 15, 2015, Dkt. No. 151.
Under the Second Circuit's interpretation of§ 1117(a), "a
plaintiff must prove that an infringer acted with willful
deception before the infringer's profits are recoverable by way
of an accounting." George Basch Co. v. Blue Coral, Inc., 968
F.2d 1532, 1540 (2d Cir. 1992). "[S]o long as willfulness is
established, an accounting of profits may be based upon
1) unjust enrichment, 2) damages, or 3) deterrence of a willful
infringer." Banff, Ltd. v. Colberts, Inc.,
Cir. 1993)

996 F.2d 33, 35 (2d

(citing George Basch Co., 968 F.2d at 1538).

A finding of willfulness is necessary in order to award
profits, but it may not be sufficient:
While under certain circumstances, the egregiousness
of the fraud may, of its own, justify an accounting,
see W.E. Bassett Co., 435 F.2d [656, 664 (2d Cir.
1970)], generally, there are other factors to be
considered. Among these are such familiar concerns as:
(1) the degree of certainty that the defendant
benefited from the unlawful conduct; (2) availability
and adequacy of other remedies; (3) the role of a
particular defendant in effectuating the infringement;
(4) plaintiff's laches; and (5) plaintiff's unclean
hands.
George Basch Co., 968 F.2d at 1540. The weighing of those
factors is left to the discretion of the district court
according to the circumstances of the case. Id. at 1540-41

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(quoting 15 U.S.C. § 1117(a)).
In this case, there is a genuine question of whether C&L
acted in bad faith. Based on the circumstances described above,
a reasonable jury could find that Mr. Chow knew or should have
known of the infringing nature of C&L's distribution of the
product as marked. A reasonable jury could find that Ms. Ng was
acting as an agent of C&L, that she knew or should have known of
the infringing nature of C&L's distribution, and that her
knowledge should be imputed to C&L.
The other equitable considerations mentioned in George
Basch Co., as usual, involve factual determinations
inappropriate for summary judgement.
Section 1111's Notice Requirement
Finally, C&L argues that ATHI cannot recover damages or
profits for infringement of ATHI's registered mark because ATHI
did not give notice of its registration and C&L did not have
actual notice of the registration. 2

C&L also argues that ATHI is not entitled to monetary recovery under 15
U.S.C. § 1114 for infringement prior to ATHI's registration of the TIBETAN
BAICAO TEA mark. ATHI does not seek to recover under § 1114 for infringement
prior to its date of registration, but under 15 U.S.C. § 1125(a) which
protects unregistered marks. See GTFM, Inc. v. Solid Clothing, Inc., 215 F.
Supp. 2d 273, 306 (S.D.N.Y. 2002) ("For any infringement occurring before
December 26, 2000, the registration date of the '05' mark, GTFM may recover
profits and damages under the provisions of Section 35 of the Act [15 U.S.C.
§ 1125] which apply to unregistered marks.")
(citing 15 U.S.C. § 1117(a)).
2

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15 U.S.C. § 1111 states:
[An owner of a registered mark] may give notice that
his mark is registered by displaying with the mark the
words "Registered in U.S. Patent and Trademark Office"
or "Reg. U.S. Pat. & Tm. Off." or the letter R
enclosed within a circle, thus ®; and in any suit for
infringement under this chapter by such a registrant
failing to give such notice of registration, no
profits and no damages shall be recovered under the
provisions of this chapter unless the defendant had
actual notice of the registration.
While there is no dispute that ATHI did not display the
notice described by

§

1111, there exists a genuine issue of fact

whether C&L had actual notice of ATHI's registration.
ATHI registered the TIBETAN BAICAO TEA mark with the U.S.
Patent and Trademark Office on May 7, 2013. On May 17, 2013,
ATHI filed its first amended complaint, which added claims for
infringement of its registered mark. A copy of the certificate
of registration for the TIBETAN BAICAO TEA mark was attached to
the amended complaint as an exhibit and served on Giuttari &
Mertz, C&L's original counsel.
Accordingly, a jury will decide whether C&L had actual
notice of the registration.

CONCLUSION
C&L's motion for summary judgment on the issue of damages
(Dkt. No. 148 3 ) is denied.

3

Dkt. No. 114 in case No. 13 Civ. 2638 (LLS).

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So ordered.
Dated:

New York, New York
April 22, 2015

t,.i, 4 L · -'~(,.,._
LOUIS L. STANTON
U.S.D.J.

Copies by mail to:
Kam Ng
6221 20th Avenue
Brooklyn, NY 11204
Kang Li Trading, Inc.
6221 20th Avenue
Brooklyn, NY 11204
K&C International Trading, Inc.
6221 20th Avenue
Brooklyn, NY 11204

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