Ideavillage Products Corp. v. Bling Boutique Store, et al.

Filing 40

OPINION AND ORDER. This Court DENIES the Motion to Dismiss for Forum non Conveniens and DENIES the Motion to Release Frozen Funds. This resolves docket numbers 29 and 36. (Signed by Judge Kimba M. Wood on 4/21/2017) (ras)

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 4-21-17

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

IDEAVILLAGE PRODUCTS CORP.,
16-CV-9039 (KMW)

Plaintiff,

OPINION & ORDER

v.
BLING BOUTIQUE STORE D/B/A
CASH29784729, et al.,
Defendants.

KIMBA M. WOOD, District Judge:
The Court has reviewed the several Defendants’ (collectively, “Moving Defendants”)
Motion to Dismiss for Forum non Conveniens (Doc. No. 29) and Moving Defendants’ Motion to
Release Frozen Funds (“Mot. to Release”) (Doc No. 36). This Court DENIES the Motion to
Dismiss for Forum Non Conveniens and DENIES the Motion to Release Frozen Funds.
I.

INTRODUCTION

Plaintiff Ideavillage Products Corp. (“Plaintiff”) owns the trademark to Copper Fit, a line
of products designed to relieve muscle and joint pain. (Complaint ¶ 28 (Doc. No. 5)). Plaintiff
also owns registered and unregistered copyrights related to packaging and marketing materials
for its Copper Fit products, (id. ¶ 33), which Plaintiff markets and sells primarily online and
through television. (Id. ¶ 38). Plaintiff brings this action against Defendants Bling Boutique
Store, et al., for manufacturing, marketing, selling, etc. counterfeit versions of Plaintiff’s Copper
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Fit products. (Id. ¶ 1). The Complaint makes eight claims against Defendants: trademark
counterfeiting, trademark infringement, and false designation of origin under the Lanham Act;
copyright infringement under the Copyright Act; as well as violation of deceptive acts and
practices, false advertising, unfair competition, and unjust enrichment under New York state law.
(Id. ¶¶ 69−128).
II.

PROCEDURAL HISTORY

This Court granted Plaintiff’s Motion for a Preliminary Injunction on December 8, 2016
(Doc. No. 3) [“PI Order”], under Federal Rule of Civil Procedure 65 and Section 34 of the
Lanham Act, to remain in place throughout the pendency of the litigation. The Preliminary
Injunction enjoins all Defendants from manufacturing, importing, marketing, and selling, etc.
any goods bearing Copper Fit, Plaintiff’s trademark, or counterfeit versions of Copper Fit. The
Preliminary Injunction also included an Asset Freeze Order, which restrains the transfer or
dissipation of assets in Defendants’ bank accounts. (See PI Order ¶ 2). On December 19, 2016,
the Clerk of Court issued an entry of default due to Defendants’ failure to answer the Complaint.
(Doc. No. 21). On December 29, 2016, Moving Defendants filed a Motion to Vacate the Entry of
Default and a Motion to Dismiss for Forum non Conveniens. (Doc. No. 29). The Court vacated
the entry of default on February 8, 2017, in light of the Moving Defendants’ assertion that the
failure to appear or answer was unintentional, and due to the short time frame Moving
Defendants were given to appear and respond. (See Doc. No. 33). On February 23, 2017, Moving
Defendants filed a Motion to Release Frozen Funds (Doc. No. 36). This Opinion addresses both
the Moving Defendants’ Motion to Dismiss and the Motion to Release Frozen Funds.

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III.

MOTION TO DISMISS FOR FORUM NON CONVENIENS

Moving Defendants ask the Court to dismiss the Complaint based on forum non
conveniens, which this Court has the discretion to do, if another forum would be a more efficient
venue to litigate this case. See Am. Dredging Co. v. Miller, 510 U.S. 443, 448 (1994). However,
the doctrine of forum non conveniens “has continuing application [in federal courts] only in cases
where the alternative forum is abroad, and perhaps in rare instances where a state or territorial
court serves litigational convenience best.” Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp.,
549 U.S. 422, 430 (2007) (internal citations and quotation marks omitted). The alternative forum
Defendants choose is the District of New Jersey, which is not an international forum.
Alternatively, the proper course of action would be for this Court to transfer the case to a
sister federal court, under 28 U.S.C. § 1404(a), if that court is a more convenient venue for the
litigation. Id. The moving party bears the burden to demonstrate that transfer is warranted “[f]or
the convenience of the parties and witnesses, in the interest of justice.” 28 U.S.C. § 1404(a). The
Second Circuit guides district courts, in determining whether to transfer a case, to consider
factors such as: “(1) the plaintiff’s choice of forum, (2) the convenience of witnesses, (3) the
location of relevant documents and relative ease of access to sources of proof, (4) the
convenience of parties, (5) the locus of operative facts, (6) the availability of process to compel
the attendance of unwilling witnesses, and (7) the relative means of the parties.” D.H. Blair &
Co. v. Gottdiener, 462 F.3d 95, 106−07 (2d Cir. 2006) (quoting Albert Fadem Trust v. Duke
Energy Corp., 214 F. Supp. 2d 341, 343 (S.D.N.Y. 2002) (Rakoff, J.)).
Moving Defendants argue that Plaintiff should not be afforded deference for its choice of

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forum in the Southern District, because Plaintiff is incorporated in New Jersey. Nevertheless, the
Court finds that the balance of factors does not warrant a transfer to the District of New Jersey.
First, Plaintiff chose to bring this action in the Southern District of New York. Moreover,
Plaintiff’s New Jersey headquarters are a mere 50 miles from the Southern District; thus,
litigating in the District of New Jersey would offer marginal, if any, convenience over litigating
in the present forum. Second, Moving Defendants fail to identify witnesses for whom it would be
more convenient to appear in the District of New Jersey as opposed to the Southern District of
New York, or whom the Court could not compel to testify if they were unwilling to appear in the
Southern District of New York. See Am. Eagle Outfitters, Inc. v. Tala Bros. Corp., 457 F. Supp.
2d 474, 479 (S.D.N.Y. 2006) (Sweet, J.). Third, Plaintiff argues that many of the transactions
that allegedly violated Plaintiff’s trademark took place within the Southern District of New York.
(Opp’n to MTD at 15−16 (Doc. No. 31)). Thus, a significant locus of operative facts is in the
Southern District, which weighs in favor of maintaining this venue. See Am. Eagle Outfitters,
457 F. Supp. at 477. Finally, Defendants have not shown that litigating in the Southern District
of New York would be unduly burdensome in comparison to litigating in the District of New
Jersey. See NBA Props., Inc. v. Salvino, Inc., 2000 WL 323257, at *8 (S.D.N.Y. Mar. 27, 2000)
(Schwartz, J.).
Accordingly, the balance of factors and the interest of justice militate in favor of
maintaining the action in this District. The Court denies Moving Defendants’ Motion to Dismiss
for Forum non Conveniens. The Court also finds that transfer of the case pursuant to 28 U.S.C.
§ 1404(a) is not warranted.

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IV.

MOTION TO RELEASE FROZEN FUNDS

Next, Moving Defendants ask this Court to revisit the Preliminary Injunction. (Mot. to
Release at 5−8). Moving Defendants challenge the Preliminary Injunction by merely reciting the
standard that this Court used and disagreeing with this Court’s analysis. The Court denies the
Moving Defendants’ motion for the following reasons: (1) the Moving Defendants fail to present
the Court any new evidence to show that the PI Order should be amended, vacated, or
reconsidered, or any new or binding decisions to challenge the Court’s decision in the PI Order;
(2) Plaintiff has demonstrated irreparable harm, a likelihood of success on the merits, and that
the balance of hardships tips in Plaintiff’s favor—which Moving Defendants fail to rebut; (3)
Plaintiff did not unreasonably delay in bringing this action; (4) the Court has the authority to
freeze Moving Defendants’ assets; (5) the Moving Defendants fail to meet their burden to show
that the Asset Freeze Order should be lifted, or otherwise modified, because the Moving
Defendants have not demonstrated that the frozen funds are unrelated to the alleged sale of
counterfeit products; and (6) the Moving Defendants fail to show that the bond posted by
Plaintiff in connection with the Preliminary Injunction is inadequate.
A.

No Significant Change in Facts or Law

In the Second Circuit, the burden on a party seeking to modify a preliminary injunction
remains unclear. Lawsky v. Condor Capital Corp., 2014 WL 3858496, at *5 (S.D.N.Y. Aug. 1,
2014) (McMahon, J.). Several district courts in this Circuit, as well as other Courts of Appeals,
have modified a preliminary injunction only when it is “justified by a ‘significant change in facts
or law.’” Id., quoting Favia v. Indiana Univ. of Pennsylvania, 7 F.3d 332, 341 (3d Cir. 1993),

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and Concilio de Salud Integral de Loiza, Inc. v. Perez–Perdomo, 551 F.3d 10, 16 (1st Cir. 2008).
This Court will apply this same standard.
The Court based its PI Order on evidence proffered by the Plaintiff, that showed that the
Defendants are involved in the sale of counterfeit Copper Fit products. No named Defendant
appeared at the Order to Show Cause hearing to contest this Court’s issuance of a Preliminary
Injunction, despite receiving notice of it, and provided the Court with no evidence to dispute
Plaintiff’s allegations. Moving Defendants failed to comply with the Court’s Order to produce,
within 14 days, evidence regarding their identity, and the scope and extent of the counterfeiting
activities. (See Opp’n to Mot. to Release at 5). To date, Moving Defendants have still not
provided any credible evidence that they have not sold counterfeit Copper Fit products. 1
Thus, Moving Defendants have not set forth—either in the Motion to Release Frozen
Funds, or beforehand—any “significant change in facts or law,” Lawsky, 2014 WL 3858496, at
*5, which is required for this Court to vacate or amend the PI Order. Nor have the Moving
Defendants brought forth any “controlling decisions or factual matters,” that had the Court
considered, “might have reasonably altered the result before the [C]ourt,” Range Rd. Music, Inc.
v. Music Sales Corp., 90 F. Supp. 2d 390, 392 (S.D.N.Y. 2000) (Sprizzo, J.) (quoting Yurman
Design Inc. v. Chaindom Enterp., Inc., 2000 WL 217480, at *1 (S.D.N.Y. Feb. 22, 2000)
(Keenan, J.), aff’d sub nom. Yurman Design, Inc. v. Chaindom Enterprises, Inc., 4 Fed. App’x 48
(2d Cir. 2001). Alternatively, Moving Defendants could have attempted to demonstrate “the need

1

Three individual Moving Defendants submitted self-serving declarations simply denying involvement, without
providing supporting evidence. (See Attachments to Doc. No. 37).

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to correct a clear error or prevent manifest injustice,” but they have not done so. Griffin Indus.,
Inc. v. Petrojam, Ltd., 72 F. Supp. 2d 365, 368 (S.D.N.Y. 1999) (Sweet, J.).
As discussed infra, Moving Defendants fail to demonstrate that the Court clearly erred or
effected an injustice by issuing the Preliminary Injunction.
B.

Balance of Factors Weighs in Favor of Plaintiff

In order to obtain a preliminary injunction, a plaintiff must establish a likelihood of
success on the merits, a likelihood that the plaintiff will suffer irreparable harm in the absence of
an injunction, that the balance of equities tips in the plaintiff’s favor, and that such an injunction
is in the public interest. Winter v. Nat. Res. Def. Council, Inc., 129 S. Ct. 365, 374 (2008). A
preliminary injunction is an “extraordinary remedy that may only be awarded upon a clear
showing that the plaintiff is entitled to such relief.” Id. at 376.
The Second Circuit allows parties to obtain a preliminary injunction by demonstrating:
(1) “the likelihood of irreparable injury in the absence of such an injunction,” and (2) either “(a)
likelihood of success on the merits or (b) sufficiently serious questions going to the merits to
make them a fair ground for litigation plus a balance of hardships tipping decidedly toward the
party requesting the preliminary relief.” Zino Davidoff SA v. CVS Corp., 571 F.3d 238, 242 (2d
Cir. 2009).
Plaintiff is entitled to the Preliminary Injunction under either standard. Plaintiff has
demonstrated that it will suffer irreparable harm to its Copper Fit trademark in the absence of a
preliminary injunction; that Plaintiff has a likelihood of success on the merits; and that the public
interest and balance of hardships favor preserving the Preliminary Injunction.

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1.

Irreparable Harm to Plaintiff

This Court finds that Plaintiff has made a thorough showing, through declarations
supported by evidence, that Moving Defendants’ conduct will cause irreparable harm, if they are
not enjoined immediately. Plaintiff established that Moving Defendants’ counterfeit products:
(1) are virtually indistinguishable from or substantially similar to Plaintiff’s Copper Fit products;
(2) are sold at prices significantly below the market prices for Plaintiff’s products; and (3) when
sold by Moving Defendants, damaged Plaintiff’s reputation for providing high-quality products.
(See Lombardo Dec. ¶ 25). Plaintiff has demonstrated that Moving Defendants’ counterfeiting
and infringement have caused and will continue to cause Plaintiff irreparable injury in the form
of lost sales, loss of pricing power, loss of control of its reputation, and potential exposure to
legal liability for any injury to consumers from using counterfeit products. (See Opp’n to Mot. to
Release at 9). Thus, the Court issued the PI Order to stop Moving Defendants’ infringement of
Plaintiff’s Copper Fit products—not, as Moving Defendants assert, because of “[D]efendants’
status as Chinese nationals.”
2.

Plaintiff’s Likelihood of Success on the Merits

Because Plaintiff has demonstrated that Moving Defendants are involved in the sale of
counterfeit Copper Fit products, the burden shifts to the Moving Defendants to “disprov[e]
consumer confusion as the use of a counterfeit is equated with the infringer’s intent to confuse
the public.” Romag Fasteners, Inc. v. Fossil, Inc., 979 F. Supp. 2d 264, 280 (D. Conn. 2013)
(Young, J.); Coach, Inc. v. Horizon Trading USA Inc., 908 F. Supp. 2d 426, 433 (S.D.N.Y. 2012)
(Engelmayer, J.).

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Moving Defendants have not offered any evidence that the products they sold were not
counterfeit, or that they were not sold with an intent to confuse the public. In fact, Plaintiff’s
evidence clearly shows that Moving Defendants were aware of the counterfeit nature of their
products, because they used images of Plaintiff’s authentic Copper Fit products to advertise their
counterfeit products online. (See Complaint ¶ 63; Wiser Dec. Ex. A). “[C]ounterfeits, by their
very nature, cause confusion,” Gucci Am., Inc. v. Duty Free Apparel, Ltd., 286 F. Supp. 2d 284,
287 (S.D.N.Y. 2003) (Marrero, J.). The evidence demonstrates Plaintiff’s likelihood of success
on the merits of its trademark infringement claims. Moving Defendants have failed to refute this.
3.

Balance of Hardships, Public Interest Tilt Toward Plaintiff

Plaintiff has clearly identified the hardships that it will face, in the absence of the
Preliminary Injunction, including: “the destruction of the inherent value of Plaintiff’s Copper Fit
[products]; the impairment of Plaintiff’s reputation for providing quality products; the dilution of
Plaintiff’s brand and goodwill; the negative impact on Plaintiff’s relationships with its licensees
and current customers; Plaintiff’s loss of control over the reputation of its Copper Fit [products];
and the denial of Plaintiff’s fundamental right to control the quality of the goods sold under its
Copper Fit” products. (Opp’n to Mot. to Release at 13).
Where the only hardship to the Moving Defendants from this Preliminary Injunction
would be to prevent the Moving Defendants “from engaging in further illegal activity,” the
balance of hardships clearly tips in Plaintiff’s favor. N. Atl. Operating Co. v. Evergreen
Distribs., LLC, 2013 WL 5603602, at *13 (E.D.N.Y. Sept. 27, 2013) (Scanlon, M.J.).

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Additionally, the public interest is served by preventing sellers from offering and
inserting counterfeit goods into the marketplace, and from infringing registered trademarks.
“[T]he public has an interest in not being deceived—in being assured that the mark it associates
with a product is not attached to goods of unknown origin and quality.” Diesel S.P.A. v. Does,
2016 WL 96171, at *10 (S.D.N.Y. Jan. 8, 2016) (Wood, J.).
C.

Unreasonable Delay or Laches

Moving Defendants argue that Plaintiff unreasonably delayed bringing this action after it
inspected Defendants’ websites and became suspicious of the counterfeit products. (Mot. to
Release at 6). They argue that such a delay, of several months, constitutes laches, and “is
grounds for denying equitable relief.” (Id.). The Court finds that Plaintiff did not unreasonably
delay in bringing this lawsuit.
To prevail on a defense of laches, Moving Defendants must prove that they have been
prejudiced by Plaintiff’s alleged delay. Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 192
(2d Cir. 1996). Additionally, where the delay in asserting Plaintiff’s intellectual property rights is
unreasonable, “a Court may, in its discretion, deny the injunctive relief sought.” CJ Prods. LLC
v. Snuggly Plushez LLC, 809 F. Supp. 2d 127, 161−62 (E.D.N.Y. 2011) (Mauskopf, J.) (citing
King v. Innovation Books, 976 F.2d 824, 831 (2d Cir. 1992)). Various courts in this Circuit have
found that delay was justified where: (1) the plaintiff was ignorant of the defendant’s competing
product; or (2) the plaintiff made a good faith effort to investigate the alleged infringement.
Marks Org., Inc. v. Joles, 784 F. Supp. 2d 322, 333 (S.D.N.Y. 2011) (Wood, J.) (quoting Tough
Traveler, Ltd. v. Outbound Prod., 60 F.3d 964, 968 (2d Cir. 1995)).

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In August of 2016, Plaintiff hired New Alchemy Limited (“NAL”), a trademark
infringement research service, to investigate sellers of counterfeit versions of Copper Fit.
(Complaint ¶ 53). After receiving the evidence relating to the counterfeit Copper Fit products at
issue, Plaintiff immediately initiated this lawsuit. Given Plaintiff’s bona fide effort to investigate
the alleged infringement for three months, and given Moving Defendants’ failure to allege any
prejudice they have suffered as a result of the lapse of three months, this Court finds that
Plaintiff’s conduct did not constitute laches, or unreasonable delay, warranting a modification of
the Preliminary Injunction. See CJ Prods, 809 F. Supp. 2d at 162; see also King, 976 F.2d at 832.
D.

Authority to Freeze Assets Abroad

Moving Defendants contend that foreign banks are not subject to the jurisdiction of this
Court. (Mot. to Release at 8). However, the Second Circuit has held that a district court needs
only personal jurisdiction over a defendant to restrain or freeze that defendant’s property before
trial, whether that property is within the United States or outside. See Gucci Am. v. Bank of
China, 768 F.3d 122, 129 (2d Cir. 2014) (quoting United States v. First Nat’l City Bank, 379
U.S. 378, 384 (1965)). Because this Court has personal jurisdiction over Moving Defendants, 2
they are mistaken that this Court lacks the authority to issue the Asset Freeze Order over funds in
Moving Defendants’ Chinese bank accounts.

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Moving Defendants have appeared in this Court and have waived any defense of lack of personal jurisdiction “by
failing timely to raise the defense in its initial responsive pleading.” City of N.Y. v. Mickalis Pawn Shop, LLC, 645
F.3d 114, 134 (2d Cir. 2011); see also Fed. R. Civ. P. 12(h).

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E.

Moving Defendants’ Wrongfully-Derived Profits

Moving Defendants contend that the Asset Freeze Order should be lifted, without
demonstrating that their assets are not wrongfully derived from the sale of counterfeit Copper Fit
products, and without showing that they would not hide or dissipate these profits. To lift the
Asset Freeze Order, the burden is on Moving Defendants to “present documentary proof that
particular assets are not the proceeds of counterfeiting activities.” N. Face Apparel Corp. v. TC
Fashions, Inc., 2006 WL 838993, at *3 (S.D.N.Y. Mar. 30, 2006) (Berman, J.).
Despite the Moving Defendants’ declarations in which they deny selling counterfeit
Copper Fit products, the evidence Plaintiff submitted with the Complaint shows the falsity of
those declarations. Plaintiff submitted evidence that all Moving Defendants offered to sell
counterfeit products to NAL. (E.g., Wiser Dec. Ex. B). Because Moving Defendants have not
offered evidence that the assets frozen are not the result of the sale of counterfeit Copper Fit
products, Moving Defendants have failed to meet their burden. Thus, the Court will not lift or
modify the Asset Freeze Order.
F.

Plaintiff Posted Adequate Bond

Finally, as required by the PI Order, Plaintiff posted a $5,000 bond with the Court. (PI
Order at ¶ 12). Moving Defendants argue that this bond is inadequate, and if the Asset Freeze
Order is not lifted, the bond must be increased. To do so, Moving Defendants must first establish
a rational basis for the amount of the proposed bond, but they do not propose a bond amount. See
Int’l Equity Investments, Inc. v. Opportunity Equity Partners Ltd., 441 F. Supp. 2d 552, 566
(S.D.N.Y. 2006) (Kaplan, J.), aff’d, 246 F. App’x 73 (2d Cir. 2007).

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Moving Defendants have presented no evidence of damages they may suffer if the
Preliminary Injunction is later found to be wrongfully issued. Instead, Moving Defendants
conclusorily assert that their businesses have been shut down and their reputation with PayPal
has been compromised. (Mot. to Release at 8−9). Moving Defendants offer buyers means of
payment other than PayPal, and their declarations show that they are not completely reliant on
the Alibaba storefronts as a source of income. This undercuts Moving Defendants’ argument that
the Preliminary Injunction will render Moving Defendants unable to “make a living.” (Mot. to
Release at 8). Accordingly, Moving Defendants fail to show a likelihood of harm that would
warrant an increase in bond.
V.

CONCLUSION

For the foregoing reasons, this Court DENIES the Motion to Dismiss for Forum non
Conveniens and DENIES the Motion to Release Frozen Funds.
This resolves docket numbers 29 and 36.
SO ORDERED.
Dated: New York, New York
April 21, 2017
/s/
KIMBA M. WOOD
United States District Judge

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