The Fashion Exchange LLC v. Hybrid Promotions, LLC et al

Filing 455

ORDER denying without prejudice 442 Motion for Reconsideration re 442 MOTION for Reconsideration re; 440 Memorandum & Opinion,,,, . filed by The Fashion Exchange LLC. Accordingly, because discovery has already closed and there is no basis in this record to order additional speculative and extensive discovery proceedings in this already protracted litigation, IT IS HEREBY ORDERED that Plaintiff's Motion for Reconsideration of the Court's September 29, 2022 Opinion and Order (ECF No. 442) is denied with prejudice. SO ORDERED.. (Signed by Judge Sidney H. Stein on 1/24/2023) (jca)

Case 1:14-cv-01254-SHS-OTW Document 455 Filed 01/24/23 Page 1 of 4

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
THE FASHION EXCHANGE,
14-CV-1254 (SHS)

Plaintiff,
V.

ORDER

HYBRID PROMOTIONS et al.,
Defendants.
SIDNEY H. STEIN, U.S. District Judge.
On September 29, 2022, this Court granted partial summary judgment to defendants
on plaintiff The Fashion Exchange ("TFE")' s claims for monetary relief and unfair
competition. Fashion Exch. LLC v. Hybrid Promotions, LLC, No. 14-cv-1254, 2022 WL 4554480
(S.D.N.Y. Sept. 29, 2022). Specifically, this Court held inter alia that defendants did not
willfully infringe plaintiff's marks as a matter of law, and because no other equitable factors
support a disgorgement of profits, plaintiff may not recover defendants' profits in this
lawsuit. Id. at *5-6. Plaintiff now asks this Court to reconsider its decision to grant summary
judgment as to disgorgement of defendants' profits. (ECF No. 442.)
TFE asserts that 1) the Court erred by relying on a determination that defendants did
not act in "bad faith" in order to find that they did not act willfully; 2) in light of new
evidence, the Court should reconsider its finding that defendants did not act willfully as a
matter of law; and 3) plaintiff should be permitted to brief the Court on the other equitable
factors that might justify an award of defendants' profits. (ECF No. 443.) The Court
disagrees and therefore denies plaintiff's motion for reconsideration.
Pursuant to Local Rule 6.3, "[a] motion for reconsideration should be granted only
when the [movant] identifies 'an intervening change of controlling law, the availability of
new evidence, or the need to correct a clear error or prevent manifest injustice."' Kolel Beth
Yechiel Mechil of Tartikov, Inc. v. YLL Irrevocable Tr., 729 F.3d 99, 104 (2d Cir. 2013) (citation
omitted). Reconsideration will generally be denied unless "the moving party can point to
controlling decisions or data that the court overlooked-matters, in other words, that might
reasonably be expected to alter the conclusion reached by the court." Brown v. New York City
Dep't of Educ., No. 10-cv-5023 (SHS), 2011 WL 13383431, at *1 (S.D.N.Y. Oct. 4, 2011)
(quoting Shrader v. CSX Transp., Inc., 70 F.3d 255,257 (2d Cir. 1995)). "[T]he legal standard
must be 'narrowly construed and strictly applied so as to avoid repetitive arguments on
issues that have been considered fully by the Court."' Id. (quoting Hoffenberg v. Hoffman &
Pollok, 296 F. Supp. 2d 504,505 (S.D.N.Y. 2003)).

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None of the grounds proposed by plaintiff alter the conclusion reached by the Court.

I. Defendants' conduct is not willful as a matter of law.
Plaintiff asserts that even if defendants' conduct does not rise to the level of "bad faith,"
this Court may still find that defendants' conduct was willful infringement justifying the
disgorgement of defendants' profits if it was the result of "reckless disregard ... or willful
blindness."' 4 Pillar Dynasty LLC v. New York & Co., Inc., 933 F.3d 202,210 (2d Cir. 2019)
(quoting Island Software & Comput. Serv., Inc. v. Microsoft Corp., 413 F.3d 257,263 (2d Cir.
2005)). The Court agrees. However, the Court finds that defendants did not recklessly
disregard plaintiff's allegedly superior rights to the disputed marks, nor were they willfully
blind to those alleged rights, for the same reasons set forth in the Court's September 29
Opinion and Order. Fashion Exch. LLC, No. 14-cv-1254, 2022 WL 4554480, at *5-6. Moreover,
"[a] defendant might decline to halt sales of a challenged product in a manner consistent
with non-willful infringement, if careful due diligence in response to an infringement claim
leads it to believe reasonably that it has not infringed[,]" 4 Pillar Dynasty LLC, 933 F.3d at
210, and plaintiff has not presented evidence suggesting that due diligence was not
conducted in response to plaintiff's infringement claims. 1
The cases invoked by TFE to suggest otherwise either cite the continued use of a
disputed mark together with other facts or circumstances that are much more suggestive of
willful infringement than the evidence presented here, or are wholly inapposite. See, e.g.,
Diesel S.p.A. v. Diesel Power Gear, LLC, 19-cv-9308, 2022 WL 956223, at *19 (S.D.N.Y. March
30, 2022) (plaintiff's marks had been registered for 25 years prior to defendant's first use
and many were designated incontestable); Int'l Star Class Yacht Racing Ass'n v. Tommy
Hilfiger, U.S.A., Inc., 80 F.3d 749, 751 (2d Cir. 1996) (defendant marketed its product as using
"authentic details taken from the sport of competitive sailing" and "elements and patterns
taken directly from actual racing sails.") (emphasis added); 4 Pillar Dynasty LLC v. New York &
Co., Inc., 257 F. Supp. 3d 611, 621 (S.D.N.Y. 2017) (finding "no evidence in the record that
defendants took any steps to determine whether its use of the [disputed] mark was
infringing plaintiffs' [] mark" and that "defendants did not take this litigation-and its
assertion of blatant infringement- very seriously until the eve of trial."); N.A.S. Imp., Corp.
v. Chenson Enters., Inc., 968 F.2d 250,253 (2d Cir. 1992) (defendant's infringing product was
"identical" to plaintiff's, being sold one block from plaintiff's, and defendant continued to
sell the product after its attorney represented it would cease doing so).
The "new evidence" presented by plaintiff - that in 2021, defendants began selling
apparel with one of the disputed marks on Amazon, and that in 2022, defendants'
Indeed, plaintiff admitted in response to defendants' Rule 56.1 statement that years before this
infringement action commenced, Hybrid's President and CFO consulted with Hybrid's attorneys
following the PTO' s 2011 office action and continued use of the marks because they "believed Hybrid had
a strong case" to get plaintiff's registration canceled. (Compare ECF No. 384, 'lI 25 with ECF No. 379, 'lI 25.)
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trademark registration application for use of that mark was denied but they continued to
use it (ECF No. 443 at 12) - does not affect the Court's conclusion. See Kohler Co. v. Bold Int'l
FZCO, 422 F. Supp. 3d 681, 729 (E.D.N.Y. 2018) (noting of the USPTO that "[a]n
administrative agency's finding of a likelihood of confusion for registration purposes does
not necessarily mean that a likelihood of confusion has been established for infringement
purposes.").

II. Additional briefing would not alter the Court's conclusion.
During briefing on the defendants' motion for summary judgment, the U.S. Supreme
Court held in Romag Fasteners that willfulness is not an "inflexible precondition" to recovery
of defendants' profits in a trademark infringement suit, but maintained that "a trademark
defendant's mental state is a highly important consideration" in determining whether an
award of profits is available to the plaintiff. Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct.
1492, 1497 (2020). Analyses by lower courts since then have relied upon the defendants'
mental state in addition to other equitable factors, including "(1) the degree of certainty that
the defendant benefited from the unlawful conduct; (2) the availability and adequacy of
other remedies; (3) the role of a particular defendant in effectuating the infringement; (4)
any delay by the plaintiff; and (5) plaintiff's clean (or unclean) hands." Romag Fasteners, Inc.
v. Fossil, Inc., No. 3:10CV1827 (JBA), 2021 WL 1700695, at *2 (D. Conn. Apr. 29, 2021) (citing
4 Pillar, 933 F.3d at 214).
The Second Circuit has long held that a finding of willfulness "may not be sufficient" to
award profits, because "[w ]hile under certain circumstances, the egregiousness of the fraud
may, of its own, justify an accounting ... generally, there are other factors to be
considered." George Basch Co., Inc. v. Blue Coral, Inc., 968 F.2d 1532, 1540 (2d Cir. 1992)
(listing the factors above). "The district court's discretion lies in assessing the relative
importance of these factors and determining whether, on the whole, the equities weigh in
favor of an accounting." Id. The Court in its September 29 decision ultimately "assess[ed]
the relative importance" of all of the relevant factors - including the mental state of
defendants, which was thoroughly briefed by both defendants and plaintiff - and
determined that the equities do not weigh in favor of an accounting for profits. Fashion

Exch., No. 14-cv-1254, 2022 WL 4554480, at *5-6.
Even if, as plaintiff asserts, these circumstances were properly characterized as
"judgment independent of the motion ... on grounds not raised by a party" for which
notice was not provided under Federal Rule of Civil Procedure 56(f), "when there is no
indication that the party against whom summary judgment would be entered could present
evidence that would affect the summary judgment determination," the Court may grant
summary judgment "notice-free" and sua sponte. ING Bank N. V. v. M/V Temara, IMO NO.
9333929, 892 F.3d 511, 524 (2d Cir. 2018); see also Medacist Sols. Grp., LLC v. CareFusion Sols.,
LLC, No. 19-CV-1309, 2021 WL 293568, at *4 (S.D.N.Y. Jan. 28, 2021) (quoting Bridgeway
Corp. v. Citibank, 201 F.3d 134, 140 (2d Cir. 2000)) ("[w]here it appears clearly upon the
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record that all of the evidentiary materials that a party might submit in response to a
motion for summary judgment are before the court, a sua sponte grant of summary
judgment against that party may be appropriate if those materials show that no material
dispute of fact exists and that the other party is entitled to judgment as a matter of law.").
The Court finds that additional briefing on the equitable factors is not warranted.
Plaintiff offers no evidence in its motion for reconsideration to suggest a material dispute of
fact exists that would alter this Court's conclusion. Instead, plaintiff baldly speculates that
more evidence from an expert and from the remaining 32 Retailer Defendants regarding the
equitable factors of 1) the "degree of certainty that defendant benefitted from its
infringement" and 2) "availability and adequacy of other remedies" might possibly weight
these factors in its favor. (ECF No. 443 at 18.) However, discovery has closed. (ECF Nos.
416, 447.) TFE admits that it does not have sufficient evidence to justify disgorgement of
profits unless it is afforded additional discovery when it states that "any adjudication of
whether 'equitable factors' justify an award of Defendants' profits is premature until expert
discovery and Retailer Defendants' discovery is complete." 2 (ECF No. 443 at 18.)Again,
discovery is complete.
Accordingly, because discovery has already closed and there is no basis in this record
to order additional speculative and extensive discovery proceedings in this already
protracted litigation, IT IS HEREBY ORDERED that Plaintiff's Motion for Reconsideration
of the Court's September 29, 2022 Opinion and Order (ECF No. 442) is denied with
prejudice.
Dated: New York, New York
January 24, 2023
SO ORDERED:

Plaintiff also states in a footnote that it is premature to dispose of the question of whether it can recover
defendants' profits before adjudication of defendants' liability and likelihood of confusion, (ECF No. 443
at 18 n.7), but summary judgment on entitlement to damages in an infringement action may be
appropriate even before a liability determination. See Guthrie Healthcare Sys. v. ContextMedia, Inc., No. 12cv-7992, 2014 WL 185222, at *5 (S.D.N.Y. Jan. 16, 2014) ("Accordingly, even if plaintiff can establish
liability as to any or even all of its§§ 1114 and 1125(a) Lanham Act claims, it has not raised a triable issue
as to its entitlement to its damages or defendants' costs. Summary judgment on this issue is therefore
appropriate.")
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