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 D

Page 1

LEXSEE 2002 U.S. DIST. LEXIS 10054
ROLEX WATCH U.S.A., INC., Plaintiff, -against- ADAM BROWN dba LEXUS
WATCHES & WWW.LEXUSWATCHES.COM, Defendant.
01 Civ. 9155 (JGK) (AJP)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK
2002 U.S. Dist. LEXIS 10054

June 5, 2002, Decided
DISPOSITION:
[*1] Recommended that plaintiff
be awarded statutory damages of $ 1 million, attorneys'
fees of $ 5,000 and costs of $ 1,150, for a total award of
$ 1,006,150.

COUNSEL: For ROLEX WATCH U.S.A., INC., plaintiff: John Macaluso, Gibney, Anthony & Flaherty,
L.L.P., New York, NY.
JUDGES: ANDREW J. PECK, United States Magistrate
Judge. Honorable John G. Koeltl, United States District
Judge.
OPINION BY: ANDREW J. PECK
OPINION
REPORT AND RECOMMENDATION
ANDREW J. PECK, United States Magistrate
Judge:
To the Honorable John G. Koeltl, United States
District Judge:
On April 8, 2002, Judge Koeltl granted plaintiff Rolex Watch U.S.A., Inc. a default judgment on liability,
including a permanent injunction, and referred the matter
to me for an inquest on damages, attorneys' fees and
costs. (Dkt. No. 7: 4/8/02 Default Judgment on Liability.) The default judgment further found that "the defendant is liable to Rolex for willful trademark counterfeiting under federal law, 15 U.S.C. § 1114 et seq. . . . resulting from his use in commerce of replica watches,
watch parts and accessories bearing unauthorized copies

of" Rolex's trademark registrations. (4/8/02 Default
Judgment on Liability, [*2] at 3.)
For the reasons set forth below, the Court recommends
an award of statutory damages of $ 1 million, attorneys'
fees of $ 5,000 and costs of $ 1,150, for a total of $
1,006,150.
FACTS
"Where, as here, 'the court determines that defendant
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 10A C. Wright, A. Miller & M. Kane, Federal
Practice & Procedure: Civil 2d § 2688 at 58-59 (3d ed.
1998)). 1
1
Accord, e.g., King Vision Pay-Per-View
Corp. v. Drencia Rest. Corp., 2002 U.S. Dist.
LEXIS 8636, 01 Civ. 9777, 2002 WL 1000284 at
*1 (S.D.N.Y. May 15, 2002) (Peck, M.J.); Ainbinder v. Bernice Mining & Contracting, Inc.,
2002 U.S. Dist. LEXIS 4910, 01 Civ. 2492, 2002
WL 461576 at *2 (S.D.N.Y. Mar. 26, 2002)
(Peck, M.J.); Sterling Nat'l Bank v. A-1 Hotels
Int'l, Inc., 2002 U.S. Dist. LEXIS 4944, 00 Civ.
7352, 2002 WL 461574 at *3 (S.D.N.Y. Mar. 26,
2002) (Peck, M.J.); King Vision Pay-Per-View
Corp. v. Papacito Lidia Luncheonette, Inc., 2001
U.S. Dist. LEXIS 19968, 01 Civ. 7575, 2001 WL
1558269 at *1 (S.D.N.Y. Dec. 6, 2001) (Peck,
M.J.); Trustees of the Pension & Welfare Funds
of the Moving Picture Mach. Operators Union,

Page 2
2002 U.S. Dist. LEXIS 10054, *

Local 306 v. Gordon's Film & Co. (New York)
Int'l Inc., 2001 U.S. Dist. LEXIS 18455, 00 Civ.
8452, 2001 WL 1415145 at *1 (S.D.N.Y.Nov.
13, 2001) (Peck, M.J.); Coast To Coast Fabrics,
Inc. v. Tracy Evans, Ltd., 2001 U.S. Dist. LEXIS
1, 00 Civ. 4417, 2001 WL 5037 at *1 (S.D.N.Y.
Jan. 2, 2001) (Peck, M.J.); Starbucks Corp. v.
Morgan, 2000 U.S. Dist. LEXIS 14677, 99 Civ.
1404, 2000 WL 949665 at *1 (S.D.N.Y. July 11,
2000) (Peck, M.J.); King Vision Pay-Per-View,
Ltd. v. New Paradise Rest., 2000 U.S. Dist.
LEXIS 8792, 99 Civ. 10020, 2000 WL 378053 at
*1 (S.D.N.Y. Apr. 11,2000) (Peck, M.J.); Independent Nat'l Distrib., Inc. v. Black Rain Communications, Inc., 1996 U.S. Dist. LEXIS 22576,
94 Civ. 8464, 1996 WL 238401 at *2 (S.D.N.Y.
Apr. 4, 1996) (Keenan, D.J. & Peck, M.J.).

by May 24, 2002, later extended at Rolex's request to
May 31, 2002. (Dkt. Nos. 10-11: 5/16/02 & 5/17/02 Orders.) Rolex timely submitted its brief; defendant Brown
has not submitted any papers.

[*3] The complaint alleges that defendant Adam
Brown resides in Campbell Hall, New York and does
business on the internet under the names "Lexus Watches" and www.lexuswatches.com. (Dkt. No. 1: Compl. P
6.) Rolex owns the Rolex registered trademark and related registered trademarks for watches and related
products. (Compl. PP 12-13.) Defendant Brown advertises and sells "Replica Rolex Watches" bearing counterfeits of one or more of the Rolex Trademarks through
his website www.lexuswatches.com. (Compl. P 20.)

2
Accord, e.g., King Vision Pay-Per-View
Corp. v. Drencia Rest. Corp., 2002 U.S. Dist.
LEXIS 8636, 01 Civ. 9777, 2002 WL 1000284 at
*1 (S.D.N.Y. May 15, 2002) (Peck, M.J.); Ainbinder v. Bernice Mining & Contracting, Inc.,
2002 U.S. Dist. LEXIS 4910, 01 Civ. 2492, 2002
WL 461576 at *2 (S.D.N.Y. Mar. 26, 2002)
(Peck, M.J.); Sterling Nat'l Bank v. A-1 Hotels
Int'l, Inc., 2002 U.S. Dist. LEXIS 4944, 00 Civ.
7352, 2002 WL 461574 at *3 (S.D.N.Y. Mar. 26,
2002) (Peck, M.J.); King Vision Pay-Per-View
Corp. v. Papacito Lidia Luncheonette, Inc., 2001
U.S. Dist. LEXIS 19968, 01 Civ. 7575, 2001 WL
1558269 at *1 (S.D.N.Y. Dec. 6, 2001) (Peck,
M.J.); Trustees of the Pension & Welfare Funds
of the Moving Pictures Mach. Operators Union,
Local 306 v. Gordon's Film & Co. (New York)
Int'l Inc., 2001 U.S. Dist. LEXIS 18455, 00 Civ.
8452, 2001 WL 1415145 at *1 (S.D.N.Y. Nov.
13, 2001) (Peck, M.J.); Coast To Coast Fabrics,
Inc. v. Tracy Evans, Ltd., 2001 U.S. Dist. LEXIS
1, 00 Civ. 4417, 2001 WL 5037 at *1 (S.D.N.Y.
Jan. 2, 2001) (Peck, M.J.); Starbucks Corp. v.
Morgan, 2000 U.S. Dist. LEXIS 14677, 99 Civ.
1404, 2000 WL 949665 at *2 (S.D.N.Y. July 11,
2000) (Peck, M.J.); King Vision Pay-Per-View,
Ltd. v. New Paradise Rest., 2000 U.S. Dist.
LEXIS 8792, 99 Civ. 10020, 2000 WL 378053 at
*1 (S.D.N.Y. Apr. 11, 2000) (Peck, M.J.); Chen
v. Jenna Lane, Inc., 30 F. Supp. 2d 622, 624
(S.D.N.Y. 1998) (Carter, D.J. & Peck, M.J.); see
also, e.g., Semi Conductor Materials, Inc. v.
Agriculture Inputs Corp., 1998 U.S. Dist. LEXIS
22939, 96 Civ. 7902, 1998 WL 388503 at *8
(S.D.N.Y. June 23, 1998) (Kaplan, D.J. & Peck,
M.J.).

On May 22, 2001, Rolex's counsel notified Brown
by email and first class mail that he was infringing on
Rolex's trademarks. (Compl. P 21 & Ex. 4.) Nevertheless, on July 10, 2001 Rolex's investigators ordered a
Replica Rolex Watch from Brown's website, and received the Replica Rolex Watch on August 4, 2001.
(Compl. PP 24-26 & Ex. 7.) That watch bears various
counterfeit Rolex trademarks. (Compl. P 27 & Ex. 8.)
The complaint alleges that Brown's "acts constitute
willful and deliberate infringement of Rolex's rights in
Rolex Trademarks." (Compl. P 29.) The complaint asserts claims for trademark counterfeiting, 15 U.S.C. §
1114 (Compl. PP 33-41), trademark infringement [*4]
(Compl. PP 42-52), false designations of origin, 15
U.S.C. § 1125(a) (Compl. PP 53-60), federal trademark
dilution, 15 U.S.C. § 1125(c) (Compl. PP 61-68), and
state law claims (Compl. PP 69-72).
Proceedings in This Action
As noted above, on April 8, 2002, Judge Koeltl
granted Rolex a default judgment on liability, including a
finding that defendant Brown was a willful infringer.
(Dkt. No. 7: 4/8/02 Default Judgment on Liability.)
Noting that Rolex was seeking statutory, not actual,
damages, I ordered Rolex and Brown to submit memoranda of law in support of and in opposition to damages,

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) [*5]
(quoting Fustok v. Conti Commodity Servs., Inc., 873
F.2d 38, 40 (2d Cir. 1989)). 2 Here, of course, the issue is
statutory damages, making it even more appropriate to
hold the inquest on a paper record.

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2002 U.S. Dist. LEXIS 10054, *

[*6] The Anticounterfeiting Consumer Protection
Act of 1996, codified in relevant part at 15 U.S.C. §
1117(c), provides for damages for use of counterfeit
trademarks, as follows:
(c) 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 is
rendered by the trial court, to recover, instead of actual damages and 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) (emphasis added); 3 [*7] see generally 5 J. Thomas McCarthy, McCarthy on Trademarks
& Unfair Competition § 30:95 (4th ed.).
3 Section 1116(d) defines counterfeit mark, as
follows:
(B) As used in this subsection
the term "counterfeit mark" means
-(i) a counterfeit
of a mark that is
registered on the
principal register in
the United States

Patent and Trademark Office for
such goods or services sold, offered
for sale, or distributed and that is in
use, whether or not
the person against
whom relief is
sought knew such
mark was so registered; or
(ii) a spurious
designation that is
identical with, or
substantially indistinguishable from, a
designation as to
which the remedies
of this chapter are
made available by
reason of section
380 of Title 36; . . .
.

15 U.S.C. § 1116(d)(1)(B).
Statutory Damages Under § 1117(c)
Rolex here seeks $ 8 million in statutory damages,
which it describes as the maximum statutory damages.
(E.g., Rolex 5/31/02 Damages Br. at [*8] 1.) 4
4 The Court finds that somewhat confusing,
because it appears from the complaint that defendant Brown has infringed more than eight Rolex trademarks. (E.g., Compl. PP 13, 27 & Exs. 1,
3.) In any event, because the Court is awarding
Rolex less than the maximum statutory willfulness counterfeit trademark damages that Rolex
seeks, the Court need not determine if Rolex
could have sought even more than it did.
The Court believes the $ 1 million maximum statutory damage amount, without multiplication for multiple
Rolex marks, is sufficient to serve as a deterrent to
Brown (and infringers like him) and to compensate Rolex. Defendant Brown was selling the "replica," i.e.,
counterfeit, Rolex watches for between $ 45 to $ 199
each, depending on the model. (Compl. Ex. 3.) Assuming
that Brown had an average profit of $ 100 per watch, a $
1 million damage award would wipe out Brown's profits
on the sale of 10,000 watches. There is no evidence in

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2002 U.S. Dist. LEXIS 10054, *

the record as to the scope of Brown's business, but the
Court [*9] believes the $ 1 million damage amount is
appropriate and sufficient. See, e.g., Rolex Watches
U.S.A., Inc. v. Jones, 2002 U.S. Dist. LEXIS 6657, 99
Civ. 2359, 2002 WL 596354 at *1-6 (S.D.N.Y. Apr. 17,
2002) (awarding Rolex $ 500,000 in counterfeiting statutory damages in similar case involving sale of "replica"
Rolex watches via the internet) (collecting cases); Altadis
U.S.A., Inc. v. Monte Cristi de Tabacos, 96 Civ. 4209,
2001 U.S. Dist. LEXIS 6892 at *15-17 (S.D.N.Y. May
17, 2001) (although plaintiff sought $ 2 million in counterfeit damages for two marks, court awards $ 250,000);
Microsoft Corp. v. Compusource Distrib., Inc., 115 F.
Supp. 2d 800, 812 (E.D. Mich. 2000) (in a counterfeit
trademark case where the Court found defendant's willful
conduct "egregious," the court awarded statutory damages under § 1117(c) "of $ 50,000.00 for each of its eight
trademarks at issue"); Rolex Watch U.S.A., Inc. v. Voiers,
No. 99-11328, unpublished Report & Rec. at pp. 6-7
(S.D.N.Y. Aug. 10, 2000) (refusing to award Rolex multiples of $ 1 million as "excessive", and finding $ 1 million sufficient), adopted by unpublished order (S.D.N.Y.
Aug. 25, 2000); Sara Lee Corp. v. Bags of New York,
Inc., 36 F. Supp. 2d 161, 168-70 (S.D.N.Y. 1999) [*10]
($ 750,000); but see Playboy Enter., Inc. v. Asiafocus
Int'l, Inc., 1998 U.S. Dist. LEXIS 10459, No. Civ. A.
97-734, 1998 WL 724000 at *9 (E.D. Va. Apr. 10, 1998)
(counterfeit case, awarding $ 1 million for internet site
itself and $ 500,000 each for four merchandise categories
of infringing merchandise sold on the website).
Attorney's Fees and Costs
Rolex also seeks reasonable attorneys' fees and
costs. (Rolex 5/31/ 02 Br. at 1 & Ex. 4.) 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). (See page 4 above.) 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, [*11] attorneys' fees are not available where statutory damages
are awarded under § 1117(c). The Court, however, need
not resolve this issue in this default judgment case. 5 The
default judgment here also found Brown liable to Rolex
for unfair competition under 15 U.S.C. § 1125(a). (Dkt.
No. 7: 4/8/02 Default Judgment on Liability, at 3.) That
entitles Rolex to attorneys' fees in "exceptional cases."
15 U.S.C. § 1117(a); see, e.g., New York State Soc. of

Certified Public Accountants v. Eric Louis Assoc., Inc.,
79 F. Supp. 2d 331, 347 (S.D.N.Y. 1999); 5 J. Thomas
McCarthy, McCarthy on Trademarks & Unfair Competition § 30:104. The Court also already has found Brown's
violation to be willful, and a willful violation satisfies the
"exceptional case" requirement of § 1117(a), thus justifying the award of attorneys' fees and costs. See, e.g.,
International Star Class Yacht Racing Ass'n v. Tommy
Hilfiger, U.S.A., Inc., 80 F.3d 749, 753 (2d Cir. 1996)
("an 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)
[*12] ("'Exceptional' circumstances include willful infringement."); Sara Lee Corp. v. Bags of New York, Inc.,
36 F. Supp. 2d 161, 170 (S.D.N.Y. 1999); 5 J. Thomas
McCarthy, McCarthy on Trademarks & Unfair Competition § 30:99 (citing Senate Committee report for proposition that willfull infringement constitutes "exceptional
case"), § 30:100 (courts routinely awarded attorneys' fees
to prevailing plaintiffs in counterfeiting cases even before enactment of 1996 counterfeiting amendments, citing cases).
5
The Court notes that prior cases have
awarded statutory damages under § 1117(c) and
also awarded attorneys' fees and costs, without
discussion of the interplay between § 1117(c) and
§ 1117(a). (See, e.g., cases cited on page 6
above.) Most of these cases, like this one, have
involved default judgments.
Rolex's counsel's computer printout of work performed shows 80.4 hours for a total of $ 13,365.50 in
legal fees. The Court has reviewed those time entries.
Unfortunately, there appears [*13] to be duplication of
effort by the two attorneys who worked on the matter,
and more importantly, excessive work on issues that Rolex and its current law firm researched and drafted before. Indeed, the Court has reviewed the complaints and
damage submissions in the two Rolex cases in this District cited above -- Rolex v. Jones and Rolex v. Voiers (in
both of which Rolex was represented by its current law
firm, Gibney, Anthony & Flaherty) -- and finds them
very similar to the submissions in this case. Accordingly,
the Court believes $ 5,000 is a more appropriate amount
for reasonable attorneys' fees in this case.
Rolex also seeks costs of $ 2,907.24. The bulk of
that, $ 2,500, is for investigative fees. The Court has no
way to know if that was on a flat fee or hourly basis, or
what the investigators did besides buy one watch from
defendant's web site. Nor does the Court know what was
photocopied or sent by Federal Express, or why. The
Court therefore allows $ 1,000 for investigative fees and
the $ 150 court filing fee. If the Court is being conserva-

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2002 U.S. Dist. LEXIS 10054, *

tive in these areas, it is more than offset by the award of
$ 1 million in statutory damages.
CONCLUSION
For the [*14] reasons set forth above, the Court
should award Rolex statutory damages of $ 1 million,
attorneys' fees of $ 5,000 and costs of $ 1,150, for a total
of $ 1,006,150.
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 John G. Koeltl,
500 Pearl Street, Room 1030, and to my chambers, 500
Pearl Street, Room 1370. Any requests for an extension
of time for filing objections must be directed to Judge
Koeltl. 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);
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); [*15] 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 Health & Human Servs., 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
June 5, 2002
Respectfully submitted,
Andrew J. Peck
United States Magistrate Judge