Roger Cleveland Golf Company Inc v. Prince et al

Filing 137

REPLY to Response to Motion re 127 MOTION for Attorney Fees Response filed by Roger Cleveland Golf Company Inc. (Attachments: # 1 Exhibit A - Jury Trial Discussions excerpt, # 2 Exhibit B - Verdict Form, # 3 Exhibit C - 9.29.10 ltr & Amended Notices of Depos to Doolittle, # 4 Exhibit D - Rolex v. Brown, # 5 Exhibit E - Chanel v. French, # 6 Exhibit F - Rolex v. Jones, # 7 Exhibit G - Lorillard Tobacco v. S&M Central Serv. Corp., # 8 Exhibit H - Employers Council v. Feltman, # 9 Exhibit I - Rodgers v. Anderson, # 10 Exhibit J - Silhouette v. Chakhbazian)(McElwaine, John)

Exhibit J

Page 1

LEXSEE 2004 U.S. DIST. LEXIS 19787
SILHOUETTE INTERNATIONAL SCHMIED AG & SILHOUETTE OPTICAL
LTD., Plaintiffs, -against- VACHIK CHAKHBAZIAN d/b/a VERONA EYEWEAR,
et al., Defendants.
04 Civ. 3613 (RJH) (AJP)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK
2004 U.S. Dist. LEXIS 19787

October 4, 2004, Decided
SUBSEQUENT HISTORY: Adopted by, Costs and fees
proceeding at Silhouette Int'l v. Marina's Boutique
Eyewear, 2004 U.S. Dist. LEXIS 30480 (S.D.N.Y., Oct.
26, 2004)
DISPOSITION:
Magistrate recommended that
plaintiff be awarded damages, including costs and
attorney's fees.

COUNSEL: [*1] For Silhouette International Schmied
AG, Silhouette Optical Ltd., Plaintiffs: Lara A. Holzman,
Robert Eliot Hanlon, Alston & Bird LLP, New York,
NY.

District Judge:
On August 24, 2004, Judge Holwell granted a default
judgment for plaintiffs Silhouette International Schmied
and Silhouette Optical Ltd. (collectively, "Silhouette")
against all defendants, and referred the matter to me for
an inquest as to damages, attorneys' fees and costs. (Dkt.
No. 20: 8/24/04 Default Judgment.) I directed Silhouette
to provide proof of its inquest damages by September 22,
2004 (Dkt. Nos. 21, 23), which it did, and for defendants
to file opposition papers by September 29, 2004, which
defendants did not.

JUDGES: Andrew J. Peck, United States Chief
Magistrate Judge.

For the reasons stated below, the Court should award
plaintiff Silhouette statutory damages of $ 250,000,
attorneys' fees of $ 49,596.50 and costs of $ 3,957.80, for
a total of $ 303,554.30.

OPINION BY: ANDREW J. PECK

FACTS

OPINION

REPORT AND RECOMMENDATION
ANDREW J. PECK, United States Chief Magistrate
Judge:
To the Honorable Richard J. Holwell, United States

"Where, as here, 'the court determines that defendant
[*2] is in default, the factual allegations of the complaint,
except those relating to the amount of damages, will be
taken as true.'" Chen v. Jenna Lane, Inc., 30 F. Supp. 2d
622, 623 (S.D.N.Y. 1998) (Carter, D.J. & Peck, M.J.)
(quoting C. Wright, A. Miller & M. Kane, Federal
Practice & Procedure: Civil 3d § 2688 at 58-59 (3d ed.
1998)).

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2004 U.S. Dist. LEXIS 19787, *2

The Amended Complaint (Dkt. No. 11) asserts that
defendants have infringed on plaintiffs' Silhouette
trademarks for eyewear and related products by
advertising and selling counterfeits of the Silhouette mark
on Ebay, on the internet. The amended complaint asserts
claims for federal trademark infringement and
counterfeiting (Am. Compl. PP 40-51), false advertising
(id. PP 52-57), trademark dilution (id. PP 58-65), and
various state law claims (id. PP 66-119).
Defendants retained but then dismissed their counsel
and did not provide any discovery to Silhouette. (Dkt.
No. 25: Hanlon 9/22/04 Aff. P 7.)
In granting the default judgment, Judge Holwell
found this to be an "exceptional case," thus justifying
attorneys' fees. (Dkt. No. 20: 8/23/04 Default Judgment.)
Indeed, the amended complaint asserts, and the Hanlon
Affidavit [*3] further demonstrates, that defendants'
infringement has been and is willful. (Am. Compl. PP
27-33, 42, 48, 54, 62, 68, 74, 81, 87, 94, 100; Hanlon
9/24/04 Aff. PP 14-17 & Exs. B-C.)

profits under subsection (a) of this section,
an award of statutory damages for any
such use in connection with the sale,
offering for sale, or distribution of goods
or services in the amount of (1) not less than $ 500 or more than $
100,000 per counterfeit mark per type of
goods or services sold, offered for sale, or
distributed, as the court considers just; or
(2) if the court finds that the use of the
counterfeit mark was willful, not more
than $ 1,000,000 per counterfeit mark per
type of goods or services sold, offered for
sale, or distributed, as the court considers
just.
15 U.S.C. § 1117(c)(1)-(2).

(c) Statutory damages for use of
counterfeit marks

The rationale for this section is the practical inability
to determine profits or sales made by counterfeiters. See,
e.g., Gucci America, Inc. v. Duty Free Apparel, Ltd., 315
F. Supp. 2d 511, 520 (S.D.N.Y. 2004) ("Congress added
the statutory damages provision of the Lanham Act in
1995 because 'counterfeiters' records are frequently
nonexistent, inadequate, or deceptively kept . . ., making
proving actual damages in these cases extremely difficult
[*5] if not impossible.'") (quoting Senate report); Tiffany
(NJ) Inc. v. Luban, 282 F. Supp. 2d 123, 124 (S.D.N.Y.
2003) (same); Polo Ralph Lauren, L.P. v. 3M Trading
Co., 1999 U.S. Dist. LEXIS 6251, 97 Civ. 4824, 1999
WL 33740332 at *4 (S.D.N.Y. Apr. 19, 1999) ("It is
often the case that 'counterfeiters' records are nonexistent,
inadequate or deceptively kept in order to willfully
deflate the level of counterfeiting activity actually
engaged in, making proving actual damages in these
cases extremely difficult if not impossible.'"); Sara Lee
Corp. v. Bags of New York, Inc., 36 F. Supp. 2d 161, 165
(S.D.N.Y. 1999) ("Statutory damages are most
appropriate when infringer nondisclosure during fact
finding leaves damages uncertain.").

In a case involving the use of a
counterfeit mark (as defined in section
1116(d) of this title) in connection with
the sale, offering for sale, or distribution
of goods or services, the plaintiff may
elect, at any time before final judgment
[*4] is rendered by the trial court, to
recover, instead of actual damages and

Section 1117(c) "'does not provide guidelines for
courts to use in determining an appropriate award,' as it is
only limited by what 'the court considers just.' 15 U.S.C.
§ 1117(c). However, courts have found some guidance in
the caselaw of an analogous provision of the Copyright
Act, 17 U.S.C. § 504(c), which also provides statutory
damages for willful infringement." Gucci America, Inc. v.
Duty Free Apparel, Ltd., 315 F. Supp. 2d at 520 [*6]

ANALYSIS
The Second Circuit has approved the holding of an
inquest by affidavit, without an in-person court hearing,
"'as long as [the Court has] ensured that there was a basis
for the damages specified in the default judgment.'"
Transatlantic Marine Claims Agency, Inc. v. Ace
Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997)
(quoting Fustok v. ContiCommodity Servs., Inc., 873 F.2d
38, 40 (2d Cir. 1989)).
Because defendants have failed to provide any
discovery, plaintiff Silhouette is unable to prove actual
damages, and so relies on statutory damages pursuant to
15 U.S.C. § 1117(c). (Dkt. No. 26: Silhouette Br. at 3.)
That section provides:

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2004 U.S. Dist. LEXIS 19787, *6

(citations omitted). 1 Among the appropriate factors
particularly relevant here are the deterrent effect on
defendants and others, and the defendants' failure to
produce records from which more traditional damages
could be computed. See, e.g., Gucci America, Inc. v. Duty
Free Apparel, Ltd., 315 F. Supp. 2d at 520; see also cases
cited in fn. 1 above.
1 Accord, e.g., Tiffany (NJ) Inc. v. Luban, 282 F.
Supp. 2d at 124-25; see, e.g., Polo Ralph Lauren,
L.P. v. 3M Trading Co., 1999 U.S. Dist. LEXIS
6251, 1999 WL 33740332 at *5; Sarah Lee Corp.
v. Bags of New York, Inc., 36 F. Supp. 2d at
165-67.
In this case, defendants having been found to be
willful infringers who have not provided discovery, and
based on defendants' Ebay (internet) sales, the Court
agrees with Silhouette that $ 250,000 in statutory
damages based on willful infringement is appropriate to
deter defendants [*7] and others. This amount is
consistent with (indeed, lower than) awards in similar
cases. See, e.g., Gucci America, Inc. v. Duty Free
Apparel, Ltd., 315 F. Supp. 2d at 520-21 ( $ 2 million
award for use of two counterfeit marks); Tiffany (NJ) Inc.
v. Luban, 282 F. Supp. 2d at 124-25 (Awarding plaintiff
the $ 550,000 in statutory damages sought by plaintiff
because "by virtue of the default, [defendants']
infringement is deemed willful, and therefore the Court
has discretion to award anywhere between $ 500 and $
1,000,000 per counterfeit mark per type of good sold,"
and amount plaintiff sought was "within the range of
awards in similar cases."); Rolex Watch U.S.A., Inc. v.
Brown, 2002 U.S. Dist. LEXIS 10054, 01 Civ. 9155,
2002 WL 1226863 at *2 (S.D.N.Y. June 5, 2002) (Peck,
M.J.) (awarding $ 1 million damages despite defendant's
use of multiple Rolex marks) (& cases cited therein);
Rolex Watch U.S.A., Inc. v. Jones, 2002 U.S. Dist. LEXIS
6657, 99 Civ. 2359, 2002 WL 596354 at *6 (S.D.N.Y.
Apr. 17, 2002) ("In short, statutory damages of less than
$ 1 million but more than $ 25,000 per category of
trademarked goods are appropriate to compensate the
plaintiffs [*8] for their losses and to deter [defendant]
from violating the plaintiffs' trademarks anew upon his
release from jail." Recommends award of $ 500,000 for
infringement of Rolex trademarks and $ 100,000 for
infringement of Ralph Lauren trademarks); Sara Lee
Corp. v. Bags of New York, Inc., 36 F. Supp. 2d at 170
(awarding $ 750,000 in statutory damages).

Attorneys' Fees and Costs
Judge Holwell already determined that this is an
"exceptional" case entitling Silhouette to attorneys' fees.
(Dkt. No. 20: 8/23/04 Default Judgment.) See also, e.g.,
Microsoft Corp. v. Black Cat Computer Wholesale, Inc.,
269 F. Supp. 2d 118, 124 (W.D.N.Y. 2002) ("The
Lanham Act specifically provides that 'the court in
exceptional cases may award reasonable attorney fees to
the prevailing party.' 15 U.S.C. § 1117(a). A willful
infringement may be considered an exceptional case
under the Lanham Act.") (citing Second Circuit
authority); GTFM, Inc. v. Solid Clothing Inc., 215 F.
Supp. 2d 273, 305-06 (S.D.N.Y. 2002) ("'Exceptional'
circumstances include willful infringement. . . .
[Defendant] Solid engaged in [*9] willful infringement.
If defendant's bad faith alone were not sufficient to make
this an exceptional case, its continued sales between
March and November 2001, its conduct during discovery,
and its perjury during deposition and at trial make this an
exceptional case. GTFM is entitled to reasonable
attorney's fees."); Rolex Watch U.S.A., Inc. v. Brown,
2002 U.S. Dist. LEXIS 10054, 2002 WL 1226863 at *3
(citing cases).
This Court has previously noted that there is some
question as to the availability of attorneys' fees where
statutory damages are awarded under § 1117(c) as
opposed to § 1117(a) or (b). See Rolex Watch U.S.A., Inc.
v. Brown, 2002 U.S. Dist. LEXIS 10054, 2002 WL
1226863 at *3. 2 While at least one judge has declined to
award attorneys' fees under § 1117(c), see, e.g., Gucci
America, Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d
at 522, most decisions have awarded attorneys' fees even
where the damage award is pursuant to § 1117(c). See,
e.g., Tiffany (NJ) Inc. v. Luban, 282 F. Supp. 2d at 125
(Gucci judge awards attorneys' fees without discussion);
Rolex Watch U.S.A., Inc. v. Jones, 2002 U.S. Dist. LEXIS
6657, 2002 WL 596354 at *6; [*10] Sara Lee Corp. v.
Bags of New York, Inc., 36 F. Supp. 2d at 170-71. Here,
as in my prior decision in Rolex Watch U.S.A., Inc. v.
Brown, "the Court, however, need not resolve this issue
in this default judgment case. The default judgment here
also found [defendants] liable to [plaintiff] for [false
advertising] under 15 U.S.C. § 1125(a)," which entitles
plaintiff to attorneys' fees in an "exceptional case"
pursuant to 15 U.S.C. § 1117(a). Rolex Watch U.S.A., Inc.
v. Brown, 2002 U.S. Dist. LEXIS 10054, 2002 WL
1226863 at *3. Thus, Silhouette is entitled to attorneys'
fees.

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2004 U.S. Dist. LEXIS 19787, *10

2 In Brown, I wrote:
Section 1117(a) provides for
actual damages plus attorneys' fees
in "exceptional cases," and §
1117(b) provides for enhanced
damages and attorneys' fees in
cases
where
the
defendant
intentionally used a counterfeit
mark. Rolex here, however, seeks,
and is receiving, enhanced
willfulness statutory damages
under 15 U.S.C. § 1117(c), which
refers to awarding statutory
damages "instead of" damages
under § 1117(a). . . . Perhaps
Congress intended § 1117(c) to
replace only the damages available
under § 1117(a) while leaving
available the "exceptional case"
attorneys' fee provision of §
1117(a). Or perhaps because of the
enhanced amount of statutory
damages under § 1117(c) or a
legislative oversight, attorneys'
fees are not available where
statutory damages are awarded
under § 1117(c).

Silhouette also seeks costs of $ 3,957.80, including
"traditional" costs incurred by counsel (telephone and
postage costs, online legal research, etc.) and Silhouette's
cost for a private investigator. (Hanlon 9/22/04 Aff. PP
27-31 & Exs. D, H-J.) The Court finds these costs
reasonable. The [*12] Court also notes that investigator
fees have been allowed as part of attorneys' fees and/or
costs in prior trademark cases. See, e.g., Levi Strauss &
Co. v. Shilon, 121 F.3d 1309, 1314 (9th Cir. 1997);
Ahava (USA), Inc. v. J.W.G., Ltd., 286 F. Supp. 2d 321,
325 (S.D.N.Y. 2003) (Plaintiff's "law firm retained an
outside investigator to investigate [defendant's] actions
and conduct trademark searches, incurring a cost of $
1,410.61 . . . The Court will allow the fee."); Brown v.
Party Poopers, Inc., 2001 U.S. Dist. LEXIS 9246, 00
Civ. 4799, 2001 WL 1380536 at *7 (S.D.N.Y. July 9,
2001) ("Plaintiffs' law firm retained Associated
Investigative Services, Inc. to investigate Party Poopers. .
. . The fee of $ 1,373 seems a bit high, but I will allow
it."); but see Rolex Watch U.S.A., Inc. v. Jones, 2002 U.S.
Dist. LEXIS 6657, 2002 WL 596354 at *7 (disallowing
investigator costs). While the cost of an investigator is
not a "traditional" recoverable cost (nor could it be
recovered as a cost if attorneys' fees were not awarded),
the Court believes it appropriate here (and if necessary,
could be awarded by increasing the statutory award in the
same amount).
CONCLUSION

Rolex Watch U.S.A., Inc. v. Brown, 2002 U.S.
Dist. LEXIS 10054, 2002 WL 1226863 at *3.
[*11] Silhouette seeks $ 60,096.50 in attorneys'
fees. (Dkt. No. 25: Hanlon 9/22/04 Aff. P 18.) The Court
agrees that the hours spent and the attorneys' billing rates
are reasonable. (See Hanlon 9/22/04 Aff. PP 18-26 &
Exs. D-G.) One adjustment needs to be made, however.
Silhouette includes in the amount requested 30 hours at a
"blended" billing rate of $ 350 per hour for its preparation
of this motion, its anticipated need to respond to
defendants'
objections
to
this
Report
and
Recommendation, and for oral argument. It is not clear
that defendants will file objections (in this Court's
experience, that rarely occurs in default cases) or that oral
argument will be needed. The Court therefore disallows
this $ 10,500, reducing the attorneys' fee award to $
49,596.50. In any event, the legal fees incurred but only
estimated for this motion are a small amount compared to
the statutory damages awarded.

[*13] Plaintiff should be awarded judgment for $
250,000 in statutory damages, $ 49,596.50 in attorneys'
fees and $ 3,957.80 in costs, for a total of $ 303,554.30.
SERVICE
Mr. Hanlon is to serve this Report and
Recommendation on defendants and file proof of service
with the Clerk of Court (with a courtesy copy to my
chambers).
FILING OF OBJECTIONS TO THIS REPORT
AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of
the Federal Rules of Civil Procedure, the parties shall
have ten (10) days from service of this Report to file
written objections. See also Fed. R. Civ. P. 6. Such
objections (and any responses to objections) shall be filed
with the Clerk of the Court, with courtesy copies
delivered to the chambers of the Honorable Richard J.

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2004 U.S. Dist. LEXIS 19787, *13

Holwell, 500 Pearl Street, Room 1950, and to my
chambers, 500 Pearl Street, Room 1370. Any requests for
an extension of time for filing objections must be directed
to Judge Holwell. Failure to file objections will result in a
waiver of those objections for purposes of appeal.
Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L. Ed.
2d 435 (1985); [*14] IUE AFL-CIO Pension Fund v.
Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993), cert.
denied, 513 U.S. 822, 115 S. Ct. 86, 130 L. Ed. 2d 38
(1994); Roldan v. Racette, 984 F.2d 85, 89 (2d Cir.
1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir.),
cert. denied, 506 U.S. 1038, 113 S. Ct. 825, 121 L. Ed.
2d 696 (1992); Small v. Secretary of HHS, 892 F.2d 15,
16 (2d Cir. 1989); Wesolek v. Canadair Ltd., 838 F.2d

55, 57-59 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d
234, 237-38 (2d Cir. 1983); 28 U.S.C. § 636(b)(1); Fed.
R. Civ. P. 72, 6(a), 6(e).
DATED: New York, New York
October 4, 2004
Respectfully submitted,
Andrew J. Peck
United States Chief Magistrate Judge