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 F

Page 1

LEXSEE 2002 U.S. DIST. LEXIS 6657
ROLEX WATCH U.S.A., INC., and PRL USA HOLDINGS, INC., Plaintiffs,
-against- RUFUS TODD JONES a/k/a TODD JONES, individually and d/b/a
DEALS BY TODD; DEAL BY TODD; REPLICA4U; SHIRTS ARE US, Defendant.
99 Civ. 2359 (DLC)(FM)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK
2002 U.S. Dist. LEXIS 6657

April 17, 2002, Decided
DISPOSITION:
[*1] Magistrate recommended that
judgment be entered against defendant, with costs and
attorney's fees.

COUNSEL: For ROLEX WATCH U.S.A., INC.,
plaintiff: Brian W. Brokate, Gibney, Anthony & Flaherty,
L.L.P., New York, NY.
For PRL USA HOLDINGS, INC., plaintiff: Kenneth
David Suzan, Gibney, Anthony & Flaherty, L.L.P., New
York, NY.
Rufus Todd Jones, Pro se, Omaha, Nebraska.
JUDGES: FRANK MAAS, United States Magistrate
Judge. HONORABLE DENISE L. COTE.
OPINION BY: FRANK MAAS
OPINION

("Jones") by plaintiffs Rolex Watch USA, Inc. ("Rolex")
and PRL USA Holdings, Inc. ("PRL"), which are
engaged in the manufacture and sale of high-end
trademarked goods, including, respectively, Rolex
watches and Ralph Lauren clothing. After Your Honor
[*2] granted the plaintiffs' motion for summary judgment
on October 13, 2000, the matter was referred to me for an
inquest by order dated January 2, 2001. The completion
of that inquest was delayed by the plaintiffs' efforts to
secure discovery in aid of the assessment of damages, an
endeavor that they now have abandoned.
As set forth below, on the basis of the limited
information that is available concerning Jones' infringing
activities, I recommend that judgment be entered against
Jones in the amount of $ 622,050.20, consisting of
statutory damages in the amount of $ 500,000 for Rolex
and $ 100,000 for PRL, attorney's fees in the amount of $
16,788.50 for Rolex and $ 5,111.70 for PRL, and costs in
the amount of $ 150.
I. Relevant Procedural History

REPORT AND RECOMMENDATION
HONORABLE DENISE L. COTE

TO

THE

FRANK MAAS, United States Magistrate Judge.
This trademark infringement action was instituted
against a single pro se defendant, Rufus Todd Jones

Plaintiffs filed their original complaint on March 31,
1999, and their First Amended Complaint on July 1,
1999. The First Amended Complaint sought relief under
the Trademark Act of 1946, 15 U.S.C. § 1051, et seq.,
including an order permanently enjoining Jones' sales of
goods bearing counterfeit Rolex and Ralph Lauren

Page 2
2002 U.S. Dist. LEXIS 6657, *2

trademarks.

discovery they sought.

Jones was personally served with the original
complaint on April 1, 1999, and [*3] the First Amended
Complaint on August 3, 1999. (Docket Nos. 3, 9). In
response to at least the first of these pleadings, Jones sent
a letter to the Court in late July 1999, in which he
attempted to respond to the plaintiffs' claims for relief,
suggesting that his activities should not be enjoined or
penalized because "replica" watches, such as the ones he
was offering, "are sold all day long on the street not four
blocks from the law office of [plaintiffs' counsel]." (See
letter from Jones to Judge Cote dated July 30, 1999).
Despite his letter, Jones never formally responded to
either the original or the First Amended Complaint.

On January 15, 2002, Jones resurfaced, sending a
letter from a jail in Douglas County, Nebraska. In his
letter, Jones advised the Court that he would like to plead
"not guilty," and asked about the "next step" in this case.
(See letter from Jones to the Court dated Jan. 7, 2002). In
response, I sent Jones a letter informing him that
summary judgment had been granted and that the next
step would be for him to cooperate with the plaintiffs'
efforts to obtain discovery. (See letter from the Court to
Jones dated Jan. 18, 2002). That letter was addressed to
Jones at the Nebraska jail but was returned with a
notation that Jones was "not there."

On May 12, 2000, pursuant to a further order of
reference, I held the first part of a two-part settlement
conference in this case. At the close of that proceeding,
Jones undertook to send me some authority which he
believed established that his activities were lawful. He
also agreed to participate by telephone in the second half
of the settlement conference which was scheduled for
July 6, 2000. On that date, however, Jones failed to
contact the Court. I also learned that day that the
telephone number that Jones provided to the Court during
the May 12th [*4] conference had been disconnected.
Despite having been granted two extensions and
warned of the consequences of failing to respond, Jones
also failed to submit any papers in opposition to a motion
for summary judgment that the plaintiffs timely filed on
June 13, 2000. Subsequently, by Opinion and Order dated
October 13, 2000, Your Honor granted the plaintiffs'
motion and directed that a proposed permanent injunction
be submitted. See Rolex Watch, USA, Inc. v. Jones, No.
99 Civ. 2359, 2000 U.S. Dist. LEXIS 15082, 2000 WL
1528263 (S.D.N.Y. Oct. 13, 2000) .
An order of permanent injunction eventually was
entered on January 2, 2001. The order also referred this
matter to me to conduct an inquest concerning damages.
Accordingly, by order dated April 16, 2001, I established
a schedule for the submission of materials relevant to the
inquest by both sides. Thereafter, however, the plaintiffs
moved for discovery in aid of an assessment of damages.
Although I granted that motion on May 24, 2001, the
copy of my memorandum endorsement sent to Jones' last
known address was returned as undeliverable. Not
surprisingly, over the course of the next eight months, the
plaintiffs were unable to obtain the damages-related [*5]

Finally, on February 11, 2002, plaintiffs' counsel
informed the Court that the plaintiffs were waiving their
right to further discovery in light of Jones' "recent
conviction in Federal Court in Omaha" and continued
incarceration. (See letter from Wm. Lee Kinnally, Jr.,
Esq. to the Court dated Feb. 11, 2002). Rather than
submitting any new motion papers, the plaintiffs have
relied upon papers which were submitted in 1999
following the entry of a default judgment that Your
Honor later vacated.
Thus, after considerable [*6] delay, the Court is
today confronted with the very same facts and issues as it
was in 1999. Since neither side has provided me with any
further submissions, this Report and Recommendation is
based upon the papers submitted in connection with the
1999 inquest.
In response to the plaintiffs' earlier papers, Jones
submitted a two-page letter stating that the $ 10 million
penalty sought by the plaintiffs was "extremely high,"
and well beyond his means. (See letter from Jones to the
Court dated Dec. 17, 1999). Nevertheless, Jones did not
request a hearing regarding the question of damages.
II. Evidence Regarding Damages
In or around 1999, Jones was the owner of several
Web
sites,
including
www.dealsbytodd.com,
www.dealbytodd.com,
www.replica4u.com,
www.shirtsareus.com,
www.qualitytime.com,
and
www.relicacity.com, through which he offered for sale
trademarked Rolex watches and "Polo by Ralph Lauren"
clothing. (Decl. of Marc Ragovin, Esq., dated Dec. 3,
1999 ("Ragovin Decl."), P 3). Jones also was listed as the
"administrative contact" for two additional Web sites,

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2002 U.S. Dist. LEXIS 6657, *6

www.knockoffalley.com and www.watchesinc.com. (Id.
Ex. C). According to the plaintiffs, Jones [*7] sales of
infringing products through these sites commenced as
early as February 1999, and continued until at least
December 3, 1999, the date that counsel's declaration was
filed. 1 (Id. P 3).
1 I conducted my own Web search on March 30,
2000, which revealed that these sites are no longer
in operation. In its response papers, plaintiffs
contend that Jones' sales of counterfeit goods
"still continues today." (Pl. Findings of Fact and
Conclusions of Law in Supp. of Pl. Req. for
Damages at P 15).
In support of their request for an award of damages,
the plaintiffs submitted copies of pages downloaded from
several of the Web sites, including www.dealbytodd.com,
which apparently was an elaborate site offering "best
quality replicas" of Rolex watches for sale at prices
ranging from $ 140 to $ 900. (Ragovin Decl. Ex. D at 2).
That Web site indicated that customers could purchases
watches using a credit card. (Id.). The site also
incorporated images of watches clearly bearing one or
more registered Rolex [*8] trademarks, including the
Rolex name and crown symbol and style and model
names such as "Submariner," "Yacht Master,"
"DayDate," and "Oyster Perpetual." (Id. at 3-14). A
counter that was part of the site also indicated that it had
received 90,831 visitors as of December 2, 1999. (Id. at
2). Plaintiffs also submitted copies of pages downloaded
from the www.knockoffalley.com Web site which offered
for sale clothing clearly bearing trademarked "Polo by
Ralph Lauren" logos. (Id.).
On February 26, 1999, counsel for Rolex sent an
email to [e-mail], which was listed on the
Internet as the email address where the person
responsible for the sites could be contacted. (See id. Ex.
B at 1). In the email message, counsel informed
ROLEX4U1 that he had discovered that ROLEX4U1 was
illegally offering for sale and selling through Ebay
watches bearing one or more of the Rolex trademarks,
that ROLEX4U1's merchandise was counterfeit, and that
the address should "immediately cease any and all further
distribution and sale of [the] merchandise." (Id.). In
response, counsel received an email signed by someone
named "Todd," stating that "all these are replicas and not
[*9] sold as real rolexs [sic] and look nothing like a
'REAL' rolex. And you would be surprised at how many

real rolexes I sell for ROLEX Thanks[.]" (Id. at 2).
On March 9, 1999, plaintiffs' counsel sent another
email message to ROLEX4U1, acknowledging receipt of
Jones' February 26, 1999 response, and informing him
that he was, in fact, selling "COUNTERFEIT"
merchandise through the Internet, and that legal action
would be taken against him if he did not stop. (Id. at 3).
In a curt response, Jones opined that his watches were
"not counterfeit" because they clearly state these are not
real rolex's [sic]." (Id.).
Apparently as a result of this interchange, Jones
added a disclaimer to several of his Web sites stating that
"all of my watches are replicas and are for entertainment
purposes only. . . they are replicas, and are not being sold
as real Rolex's [they] are not meant to dilute or hurt the
Rolex name. . . . The owner of this website takes no
responsibility for what people say or do with these
watches after they get them and assumes no civil or
criminal liability for selling these replica products." (Id.
Ex. D at 2 (www.dealbytodd.com), 19 (www.qualitytime.
[*10]
com), 46 (www.relicacity.com), and 60
(www.knockoffalley.com)). Additionally, Jones added a
notice to his www.dealsbytodd.com Web site which noted
that "Ebay is canceling my accounts as fast [as] I can
make them because they say I am infringing on the Rolex
trademark. I now have a reference page on here so you
can buy in confidence. Thank you and stop by again."
(Decl. of John Macaluso, Esq., dated Sept. 17, 1999, Ex.
3 at 2). Jones also sent an email to plaintiffs' counsel
threatening to bring suit in Nebraska "for lost wages of
[$]2000.00 per day" if the plaintiffs' succeeded in their
efforts to have his Internet service providers deny him
access to the Internet. (Id. Ex. E). When the plaintiffs
were able to shut down his access to the Internet through
such third-party providers, Jones managed to continue his
sales activities by operating as a Web host. (Ragovin
Decl. at P 5). He reestablished his sites at
www.y2khosting.net. (Id.).
Because they have been unable to secure meaningful
discovery, the plaintiffs, not surprisingly, have offered no
proof as to the profits that Jones may actually have
derived through his sale of counterfeit versions of their
[*11] trademarked goods. The plaintiffs also have failed
to adduce any evidence concerning their own lost profits.
Instead, the plaintiffs seek statutory damages, pursuant to
15 U.S.C. § 1117(c)(2), in the amount of $ 10 million -- $
9 million for violations of nine federally-registered Rolex

Page 4
2002 U.S. Dist. LEXIS 6657, *11

trademarks, and an additional $ 1 million for violation of
PRL's "Ralph Lauren" trademarks. (Pls.' Mem. at 2). The
plaintiffs also seek $ 16,788.50 for attorney's fees
incurred by Rolex, $ 5,111.50 for attorney's fees incurred
by PRL, and costs in the amount of $ 2,255.66. (Ragovin
Decl. P 8 & Exs. E-G).
III. Discussion
A. Relevant Statute
The Anticounterfeiting Consumer Protection Act of
1996, Pub. L. No. 104-153, 110 Stat. 1386 (the "Act"),
was promulgated in an effort to reduce the distribution of
counterfeit trademarked goods by permitting trademark
holders, at their option, to recover statutory damages
against infringers without the need to prove their actual
damages.
Section 7 of the Act provides that:
(a) When a violation of any right of the
registrant of a mark registered in the
Patent and Trademark Office . . . shall
have been established in [*12] any civil
action arising under this chapter, 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. . . . The
court in exceptional cases may award
reasonable attorney fees to the prevailing
party.
(b) In assessing damages under
subsection (a) of this section, the court
shall, unless the court finds extenuating
circumstances, enter judgment for three
times such profits or damages, whichever
is greater, together with a reasonable
attorney's fee, in the case of any violation
of section 1114(1)(a) of this title or section
380 of Title 36 that consists of
intentionally using a mark or designation,
knowing such mark or designation is 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. . . .

(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 [*13]
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).
B. Application of Law to Facts
1. Statutory Damages
In this case, by virtue of his default, Jones has
admitted the allegation in the First Amended Complaint
that he acted wilfully. In addition, in granting summary
judgment, Your Honor previously has found that "Jones'
bad faith is manifest." Rolex, 2000 U.S. Dist. LEXIS
15082, 2000 WL 1528263, at *3. Accordingly, the
plaintiffs argue that they have the option of collecting
[*14] statutory damages pursuant to Section 1117(c)(2)
in the amount of $ 10 million ($ 1 million per counterfeit
mark per type of goods sold). (See Ragovin Decl. PP
5-7). On its face, Section 1117(c)(2) would appear to

Page 5
2002 U.S. Dist. LEXIS 6657, *14

support such an award provided that the Court considers
it "just."
In the absence of any guidelines for determining the
appropriate award in a case involving wilful trademark
violations, several courts in this Circuit have looked for
guidance to the better developed case law under Section
504(c) of the Copyright Act, 17 U.S.C. § 504(c), which
permits an award of statutory damages for wilful
copyright infringement. See, e.g., Guess?, Inc. v. Gold
Ctr. Jewelry, 997 F. Supp. 409, 411 (S.D.N.Y.)(Kaplan,
J.), rev'd on other grounds sub nom. Gucci Am., Inc. v.
Gold Ctr. Jewelry, 158 F.3d 631 (2d Cir. 1998); Sara Lee
Corp. v. Bags of N.Y., Inc., 36 F. Supp. 2d 161, 166
(S.D.N.Y. 1999)(Motley, J.); Polo Ralph Lauren, L.P. v.
3M Trading Co., Inc., No. 97 Civ. 4824, 1999 U.S. Dist.
LEXIS 7913, at *13-14 (S.D.N.Y. Mar. 23, 1999)(Report
and Recommendation of Dolinger, Mag. J.), adopted
without [*15] objection, 1999 U.S. Dist. LEXIS 6251
(S.D.N.Y. Apr. 19, 1999). As those cases indicate, where,
as here, a defendant is shown to have acted wilfully, a
statutory damages award should incorporate not only a
compensatory, but also a punitive component to
discourage further wrongdoing by the defendants and
others. See, e.g., Fitzgerald Publ'g Co., Inc. v. Baylor
Publ'g Co., Inc., 807 F.2d 1110, 1117 (2d Cir. 1986);
N.A.S. Import, Corp. v. Chenson Enters., Inc., 968 F.2d
250, 252 (2d Cir. 1992).
In Sara Lee, 36 F. Supp. 2d at 170, Judge Motley
awarded statutory damages in the amount of $ 750,000
after estimating the defendants' ill-gotten gains and
trebling them to "deter and punish a willful continuous
course of infringement and defiance of the judicial
process." In several other cases involving trademark
wilful infringement, judges in this District have awarded
$ 25,000 per infringing mark or group of marks. See
Gucci Am., Inc. v. Gold Ctr. Jewelry, 997 F. Supp. 399,
401, 406 (S.D.N.Y. 1998)(Kaplan, J.)(awarding $ 25,000
per trademark violation sought by plaintiffs); 2 3 M
Trading Co., 1999 U.S. Dist. LEXIS 7913, [*16] at *
18; see also Odegard, Inc. v. Costikyan Classic Carpets,
Inc., 963 F. Supp. 1328, 1341 (S.D.N.Y. 1997)(awarding
$ 25,000 in statutory damages under the Copyright Act
despite plaintiffs' failure to show that they lost profits or
that the defendants benefitted financially). In the latter
cases, however, the defendants were engaged in sales of
counterfeit goods from storefront operations, rather than a
network of Internet sites such as that operated by Jones.
In view of the virtually limitless number of customers

available to Jones through his Web sites and his
unwillingness to terminate his infringing activities
despite ample warning, it is clear that an award of $
25,000 for each category of trademarked goods would
plainly be inadequate to compensate the plaintiffs.
Indeed, one of Jones' Web sites alone had more than
90,000 visitors. Jones also has claimed that the plaintiffs'
efforts to deprive him of an ISP resulted in lost wages of
$ 2,000 per day, or more than $ 700,000 per year.
2
Judge Kaplan later reduced his award per
statutory violation to $ 4,500 based upon the
defendant's evidence of his minimal income. See
Guess?, 997 F. Supp. at 412. On appeal, however,
the Second Circuit reinstated Judge Kaplan's
original award. See Gucci, 158 F.3d at 635 (2d
Cir. 1998).
[*17] 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 for their losses and to deter Jones from violating
the plaintiffs' trademarks anew upon his release from jail.
In light of his extensive and protracted efforts to avoid
having his Internet sales network shut down, I
recommend that the Court award statutory damages in the
amount of $ 500,000 for Jones' infringement of the Rolex
trademarks and $ 100,000 for his infringement of the
Ralph Lauren trademarks.
2. Attorney's Fees and Costs
Under 15 U.S.C. § 1117(b), attorney's fees must be
awarded in cases involving wilful infringement unless the
Court finds "extenuating circumstances." See Sara Lee,
36 F. Supp. 2d at 170; Guess?, 997 F. Supp. at 412.
Additionally, 15 U.S.C. § 1117(a) permits a plaintiff to
recover "the costs of the action," subject to "principles of
equity," even without a showing of wilfulness. Sara Lee,
36 F. Supp. 2d at 170-71.
Turning first to the issue of attorney's fees, as set
forth above, there can be no question [*18] as to Jones'
wilful infringement of the plaintiffs' trademarks.
Moreover, his conduct throughout this litigation has
unquestionably substantially increased the plaintiffs' legal
expenses. Although Jones contends that he lacks the
resources to honor a substantial judgment, he has
provided absolutely no details concerning his financial
situation. Accordingly, he has not shown that there are
any extenuating circumstances to preclude the entry of an

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2002 U.S. Dist. LEXIS 6657, *18

award of attorney's fees against him.
In this Circuit, a party seeking such an attorney's fee
award must submit "contemporaneous time records
specifying 'the date, the hours expended and the nature of
the work done'" for each attorney involved. Pressman v.
Estate of Steinvorth, 886 F. Supp. 365, 367 (S.D.N.Y.
1999)(Carter, J.)(quoting N.Y.S. Ass'n for Retarded
Children v. Carey, 711 F.2d 1136, 1147-48 (2d Cir.
1983)). Alternatively, summaries of such records,
accompanied by affidavits attesting that the summaries
are accurate, may be submitted to reduce the burden on
counsel. See id. (citing Cruz v. Local Union No. 3 of Int'l
Bhd. of Elec. Workers, 34 F.3d 1148, 1160 (2d Cir.
1994)). [*19] See also Bankers Fed. Savings Bank FSB
v. Off W. Broadway Developers, 224 A.D.2d 376, 378,
638 N.Y.S.2d 72, 74 (1st Dep't 1996)("award of fees
must be predicated upon a proper and sufficient affidavit
of services")(internal quotations and citations omitted).
The plaintiffs have submitted detailed time records
which indicate that Rolex has incurred legal fees in the
amount of $ 16,788.50. (Ragovin Decl. P 8 & Ex. E). In
addition, the plaintiffs have submitted detailed time
records which indicate that PRL has incurred legal fees in
the amount of $ 5,111.70 for this matter. (Id. P 8 & Ex.
F). Accordingly, the judgment to be entered in this case
should award the plaintiffs a total of $ 21,900.20 for
attorney's fees.
Finally, the plaintiffs seek to recover $ 2,255.66 in
costs. Taxable costs under 28 U.S.C. § 1920 and Local
Civ. R. 54.1(c) include the $ 150 filing fee for a federal
action, but do not include the expense of investigators
hired to purchase the counterfeit product. Accordingly,
costs should only be allowed in the amount of $ 150.
IV. Conclusion

For the reasons set forth above, I recommend that the
Court enter judgment [*20] against Jones in the amount
of $ 622.050.20, consisting of statutory damages pursuant
to 15 U.S.C. § 1117(c)(2) in the amount of $ 500,000 for
Rolex and $ 100,000 for PRL, attorney's fees in the
amount of $ 16,788.50 for Rolex and $ 5,111.70 for PRL,
and costs in the amount of $ 150.
V. Procedure for Filing of Objections to This Report And
Recommendation
The parties shall have ten days from the service of
this Report and Recommendation to file written
objections pursuant to 28 U.S.C. § 636(b)(1) and Rule
72(b) of the Federal Rules of Civil Procedure. See also
Fed. R. Civ. P. 6(a) and (e). Any such objections shall be
filed with the Clerk of the Court, with extra copies
delivered to the chambers of the Honorable Denise L.
Cote, at the United States Courthouse, 500 Pearl Street,
New York, NY 10007, to the chambers of the
undersigned, at the United States Courthouse, 500 Pearl
Street, New York, NY 10007, and to any opposing
parties. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a),
6(e), 72(b). Any requests for an extension of time for
filing objections must be directed to Judge Cote. Failure
to file [*21] timely objections will result in a waiver of
those objections for purposes of appeal. See Thomas v.
Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L. Ed. 2d 435
(1985); Fed. R. Civ. P. 6(a), 6(e), 72(b).
Dated: New York, New York
April 17, 2002
FRANK MAAS
United States Magistrate Judge