Coach Inc et al v. Trendy Texas et al
MEMORANDUM OPINION AND ORDER GRANTING 20 MOTION for Default Judgment and Permanent Injunction against Trendy Texas LLC. (Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
COACH, INC., et al.,
TRENDY TEXAS, LLC, et al.,
CIVIL ACTION H-16-3150
MEMORANDUM OPINION AND ORDER
Pending before the court is a motion for default judgment and permanent injunction against
defendant Trendy Texas, Inc. (“Trendy”). Dkt. 20. Trendy has not responded to the motion. Having
considered the motion and applicable law, the court is of the opinion that the motion should be
Plaintiffs Coach, Inc. and Coach Services, Inc. (collectively, “Coach”) own the trade name
“COACH” and the trademark for various different distinctive marks relating to that name. See
Dkt. 20 (listing different marks that are registered with the U.S. Patent and Trademark Office).
Coach contends that it has continuously used and never abandoned the marks at issue in this case.
Id. Coach also has valid copyrights for the following designs: “Legacy Stripe” design, “Signature
C” design,“Op Art” design, and “Horse & Carriage” design. Id. (listing the registration numbers).
On or about August 10, 2016, undercover officers entered Trendy’s location at 7171 Harwin
Drive, Suite 103, Houston, Texas, and purchased several allegedly counterfeit items that were for
sale. Id.; Dkt. 22 (affidavit of investigator). Investigators confirmed the items were counterfeit, and
then police officers re-entered with a search warrant and seized 371 purportedly Coach-trademarked
items. Dkts. 20, 22. Coach contends that Trendy has no license, authority, or permission from
Coach to use its trademarks, trade dress, copyrights, or design elements. Dkt. 20. Coach asserts that
Trendy has engaged in illegal counterfeiting and infringing activities negligently or knowingly and
intentionally and with reckless disregard or willful blindness, or with bad faith. Id. Moreover,
Coach alleges that Trendy’s activities are likely to create a false impression and deceive consumers
into believing its products have a connection with Coach. Id.
Coach filed this claim against Trendy and its owners, defendants Baig Mahmood and Mirza
Mohammad Dawood Baig, on October 25, 2016. Dkt. 1. In its original complaint, Coach asserted
claims of copyright infringement, various trademark violations under the Lanham Act, common law
trademark infringement, unjust enrichment, and unfair competition. Id. Coach’s original complaint
sought damages, a permanent injunction, attorneys’ fees, and costs. Id.
On November 14, 2016, Mahmood Baig filed a general denial, purportedly on behalf of
himself and Trendy. Dkt. 6. Coach amended its complaint on April 12, 2017. Dkt. 12. The
amended complaint is substantively the same as the original complaint and merely corrects Trendy’s
name. Dkt. 10. On May 24, 2017, Baig filed a general denial of the amended complaint on his own
behalf. Dkt. 16. Trendy was served with the amended complaint on May 9, 2017, but it did not
answer or otherwise respond. See Dkt. 17 (proof of service).
Coach filed a motion for default judgment against Trendy on August 18, 2017, seeking
judgment on its claims for copyright infringement, trademark infringement, trademark counterfeiting,
unfair competition, and unjust enrichment. Dkt. 20. It served the motion via certified mail return
receipt requested. Id.; Dkt. 24. Coach seeks statutory damages under both the Copyright Act and
the Lanham Act and a permanent injunction at this time. Dkt. 20. It will request that damages be
increased due to Trendy’s alleged willful violations and seek attorneys’ fee via a separate motion
after the default judgment has been entered. Id. Trendy has not responded. The motion for default
judgment is now ripe for disposition.
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 55(a), “[w]hen a party against whom judgment for
affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by
affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. Civ. P. 55(a). Under Rule
55(b)(2), a party may apply for the court to enter a default judgment, and the “court may conduct
hearings or make referrals—preserving any federal statutory right to a jury trial—when, to enter or
effectuate judgment, it needs to: (A) conduct an accounting; (B) determine the amount of damages;
(C) establish the truth of any allegation by evidence; or (D) investigate any other matter.” Fed. R.
Civ. P. 55(b)(2).
A default judgment is a “drastic remedy, not favored by the Federal Rules[,] and resorted to
by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass’n, 874
F.2d 274, 276 (5th Cir. 1989). “The Federal Rules of Civil Procedure are designed for the just,
speedy, and inexpensive disposition of cases on their merits, not for the termination of litigation by
procedural maneuver.” Id. A default judgment, thus, “must be ‘supported by well-pleaded
allegations’ and must have ‘a sufficient basis in the pleadings.’” Wooten v. McDonald Transit
Assoc., Inc., 788 F.3d 490, 498 (5th Cir. 2015) (quoting Nishimatsu Constr. Co. v. Hou. Nat’l Bank,
515 F.2d 1200, 1206 (5th Cir. 1975)). The well-pleaded allegations in the complaint are assumed
to be true. Nishimatsu, 515 F.2d at 1206.
A court may not enter a default judgment against a minor or incompetent person unless the
person is represented by a general guardian, conservator, or other like fiduciary who has appeared.
Fed. R. Civ. P. 55(b). Additionally, a court may not enter a default judgment if the plaintiff does not
file an affidavit regarding the defendant’s military status. 50 App. U.S.C. § 521(1). If the defendant
is in the military service, “the court may not enter a judgment until after the court appoints an
attorney to represent the defendant.” Id. § 521(2). Local Rule 5.5 requires that motions for default
judgment “be served on the defendant-respondent by certified mail (return receipt requested).” S.D.
Tex. L.R. 5.5.
“The decision to grant or deny permanent injunctive relief is an act of equitable discretion
by the district court.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S. Ct. 1837
(2006). District courts should not automatically grant a permanent injunction upon a finding that
a copyright has been infringed. Id. at 392–93. Instead, a plaintiff seeking a permanent injunction
must show “(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as
monetary damages, are inadequate to compensate that injury; (3) that, considering the balance of
hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that public
interest would not be disserved by a permanent injunction.” Id. at 391.
The court finds that Coach has served the motion for default judgment on Trendy via certified
mail, return receipt requested, as required by the Local Rules, and Coach has shown that Trendy, a
company, is not a minor or incompetent person and is not in the military. Additionally, Coach’s
complaint contains well-pleaded allegations that Trendy infringed Coach’s copyrights and
trademarks and that the allegations in the complaint, taken as true, sufficiently support Coach’s false
designation of origin, unfair competition, and unjust enrichment claims. The court will first address
each of these claims and then consider Coach’s request for an entry of a permanent injunction.
The Copyright Act
“Copyright protects the expression of ideas.” Eng’g Dynamics, Inc. v. Structural Software,
Inc., 26 F.3d 1335, 1344 (5th Cir. 1994). “[C]opyright law ultimately serves the purpose of
enriching the general public through access to creative works.” Fogerty v. Fantasy, Inc., 510 U.S.
517, 517–18, 114 S. Ct. 1023 (1994). “[I]f a work is entitled to copyright protection, its author [or
creator] is granted exclusive rights over its reproduction, adaptation, distribution, performance, and
display, . . . [and] [u]se of a copyrighted work by one who does not own the copyright constitutes
infringement under federal law.” Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 787–88 (5th
Cir. 1999). In a copyright infringement case, the plaintiff must prove that (1) it owns a valid
copyright; and (2) the defendant copied it. Norma Ribbon & Trimming, Inc. v. Little, 51 F.3d 45,
47 (5th Cir. 1995). The plaintiff generally establishes ownership “by proving the originality and
copyrightability of the material and compliance with the statutory formalities”; however, if the
plaintiff has copyright certificates of registration, the certificates create “a rebuttable presumption
that the copyrights are valid.” Id. The plaintiff proves copying by proving that (1) the defendant had
access to the material; and (2) “there is a substantial similarity between the two works.” Id.
Coach contends that it owns copyrights in the Coach Design Elements used on its products.
Dkt. 12. Specifically, it asserts that it has valid copyrights that are registered with the Copyright
Office for the “Legacy Stripe,” “Signature C,” “Op Art”, and “Horse & Carriage” designs, and it
provides the registration numbers for these designs. Id. Coach alleges that Trendy violated 17
U.S.C. § 501 by copying the Coach & Lozenge Design, Coach Leatherware Est. 1941 & Design, CC
and Design (Signature C), Amended CC & Design (Signature C), and other Coach Design elements.
Under 17 U.S.C. § 501(a), “[a]nyone who violates any of the exclusive rights of the copyright
owner . . . is an infringer of the copyright or right of the author, as the case may be.” 17 U.S.C.
§ 501(a). Taking the allegations in the amended complaint as true, Trendy infringed on Coach’s
Coach & Lozenge Design, Coach Leatherware Est. 1941 & Design, CC & Design, Amended DD &
Design, and other Design Elements. See Dkt. 12. Therefore, the motion for a default judgment on
Coach’s Copyright Act claim is GRANTED.
Under 17 U.S.C. §504(c), a copyright owner may elect to recover statutory damages rather
than actual damages, and Coach has elected statutory damages. 17 U.S.C. §504(c)(1); Dkt. 20. The
court may award,
for all infringements involved in the action, with respect to any one
work, for which any one infringer is liable individually, or for which
any two or more infringers are liable jointly and severally, in a sum
of not less than $750 or more than $30,000 as the court considers just.
Id. If the court finds a willful violation, it “may increase the award of statutory damages to a sum
of not more than $150,000.” 17 U.S.C. § 504(c)(2). An infringement is “willful” under § 504 if the
infringer “knows his [or her] actions constitute an infringement.” Broadcast Music, Inc. v. Xanthas,
Inc., 855 F.2d 233, 236 (5th Cir. 1988); Microsoft Corp. v. Software Wholesale Club, Inc., 129 F.
Supp. 2d 995, 1002 (S.D. Tex. 2000) (Rosenthal, J.). Conversely, if the court finds that the infringer
either was unaware or had no reason to believe his or her acts infringed a copyright, the court may
reduce the statutory damages award “to a sum of not less than $200.” Id. The district court has wide
discretion in awarding damages. Broadcast Music, 855 F.2d at 237. However, “damages may not
be awarded ‘without a hearing or a demonstration by detailed affidavits establishing the necessary
facts.’” Id. (quoting United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)).
Here, Coach contends that Trendy’s infringement was willful and requests statutory damages
of $150,000 for each of its two copyrights at issue.1 Dkt. 20. However, the affidavit provided
addresses trademarks rather than copyrights. See Dkt. 22. Accordingly, the court defers ruling on
damages for the Copyright Act violation until Coach has provided briefing and evidence that will
enable the court to determine an appropriate award under the statute.
The Lanham Act
A “trademark” is “any word, name, symbol, or device, or any combination thereof . . . used
by a person, or which a person has a bona fide intention to use in commerce . . . to identify and
distinguish his or her goods, including a unique product, from those manufactured or sold by others
and to indicate the source of the goods, even if that source is unknown.” 15 U.S.C. § 1127. The
Lanham Act “provide[s] remedies for unfair and misleading use of trademarks.” Schlotzsky’s, Ltd.
v. Sterling Purchasing & Nat’l Distribution Co., Inc., 520 F.3d 393, 399 (5th Cir. 2008).
Coach alleges violations of the following sections of the Lanham Act: 15 U.S.C. §§ 1114,
1125(a), 1125(c). The claims under 15 U.S.C. § 1114 are for trademark counterfeiting and
infringement. Dkt. 12. Section 1114 prohibits using counterfeit “imitation[s] of a registered mark
in connection with the sale, offering for sale, distribution, or advertising of any goods or services on
or in connection with which such use is likely to cause confusion, or to cause mistake, or to deceive,”
and prohibits counterfeiting “a registered mark and applying it to labels, signs, prints, packages,
wrappers, receptacles or advertisements intended to be used in commerce . . . .” 15 U.S.C. § 1114.
The amended complaint actually alleges that Trendy “had access to and copied the Coach
& Lozenge Design, Coach Leatherware Est. 1941 & Design, CC & Design (Signature C), Amended
CC & Design (Signature C), and other Coach Design Elements present on Coach Products.” Dkt. 12
at 21. The motion for default, however, asserts, when seeking willful infringement damages, that
only two copyrights are at issue. Dkt. 20 at 23.
Coach contends that Trendy has used or continues to use marks that are identical to or substantially
indistinguishable from Coach’s trademarks and that it intended to cause, has caused, or is likely to
continue to cause confusion or mistake, or to deceive consumers, the public, and the trade into
believing Trendy’s products are genuine or authorized products of Coach. Dkt. 12.
The claim under § 1125 for which Coach seeks a default judgment is for false designation
of origin.2 Dkt. 20. Under 15 U.S.C. § 1125(a), a person may not use in commerce “a word, term
name, symbol, or device, or any combination thereof, or any false designation of origin, false or
misleading description of fact, or false or misleading representation of fact” that is likely to cause
confusion “as to the origin, sponsorship, or approval of his or her goods, services, or commercial
activities by another person” or misrepresents the origin of the goods, services, or commercial
activities in commercial advertising or promotion. Coach contends in its complaint that Trendy’s
promotion, advertising, distribution, sale, and/or offering for sale of the infringing products is
intended to and likely to cause parties to believe the products have been authorized or sponsored,
licensed, approved, or endorsed by Coach or that Trendy is somehow affiliated with Coach. Dkt. 12.
These allegations are well pleaded and adequately assert claims for trademark counterfeiting,
trademark infringement, and false designation of origin. Accordingly, Coach’s motion for default
judgment on these claims is GRANTED.
Coach’s motion for default does not address the other trademark claims in its amended
complaint. Compare Dkt. 12 (asserting claims for trademark counterfeiting, trademark infringement,
trade dress infringement, false designation of origin and false advertising, and trademark dilution),
with Dkt. 20 at 2 (“Plaintiffs move for a Default Judgment holding Trendy Texas liable on each of
Plaintiffs’ claims for copyright infringement, trademark infringement, trademark counterfeiting,
unfair competition, and unjust enrichment”), and Dkt. 20 at 18 (asserting that the amended complaint
“contains well-pleaded charges of Trendy Texas’s copyright infringement, trademark infringement,
false designation of origin, and unfair competition” claims).
With regard to statutory damages under the Lanham Act,
[i]n a case involving the use of a counterfeit mark . . . 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 .
. ., 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 $1,000 or more than $200,000 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 $2,000,000 per counterfeit mark per type of goods or
services sold, offered for sale, or distributed, as the court considers
15 U.S.C. § 1117(c).
Here, the affidavit submitted by Coach indicates that undercover officers from Houston
Police Department seized 371 items bearing Coach trademarks, and it provides photographs of
various tags, labels, wallets, bracelets, sunglasses, and other items bearing Coach marks. Dkt. 22.
Coach’s expert states that he is of the opinion that all of the items are counterfeit. Id. He does not,
however, provide the number of different marks that were infringed.3 See id. The court cannot
ascertain the appropriate amount of damages under the statute without information about how many
marks were infringed. See 15 U.S.C. § 1117(c) (indicating that the amount of the statutory damages
award is “per counterfeit mark per type of goods or services sold”). Accordingly, the court defers
The court notes that the amended complaint appears to list all of Coach’s trademarks and
does not delineate which specific marks are at issue in this case. See Dkt. 12. The motion for default
judgment provides a shorter list of marks that are allegedly at issue in this case, but it does not cite
an affidavit to support the assertion. Dkt. 20. The proposed order includes a list of marks and
requests that the court find Trendy liable for infringement of “one or more of” the marks on the list.
Dkt. 20-2. The affidavit provides pictures of seized items, but it does not list which of Coach’s
registered trademarks (or copyrights) were copied on these items. Dkt. 22.
ruling on damages for the Lanham Act violations until Coach has provided briefing and evidence
that will enable the court to determine an appropriate award under the statute.
Unfair Competition and Unjust Enrichment
Coach’s unfair competition and unjust enrichment claims are both common law claims
asserted under Texas law. Dkt. 12.
The elements of an unfair competition or common law
misappropriation claim [in Texas] are: (1) the creation of plaintiff’s
product (i.e. the trade secret information) through extensive time,
labor, skill and money; (2) the defendant’s use of that product in
competition with the plaintiff, thereby gaining a special advantage in
that competition (i.e., a ‘free ride’) because defendant is burdened
with little or none of the expense incurred by the plaintiff; and (3)
commercial damage to the plaintiff.
BP Auto., L.P. v. RML Waxahachie Dodge, L.L.C., 448 S.W.3d 562, 571–72 (Tex. App.—Houston
[1st Dist.] 2014, no pet.). With regard to unjust enrichment, under Texas law, a “party may recover
under the unjust enrichment theory when one person has obtained a benefit from another by fraud,
duress, or the taking of undue advantage.” Heidenfels Bros., Inc. v. City of Corpus Christi, 832
S.W.2d 39, 41 (Tex. 1992). The doctrine “applies the principles of restitution to disputes which for
one reason or another are not governed by a contract between the contending parties.” Burlington
N. R.R. Co. v. Sw. Elec. Power Co., 925 S.W.2d 92, 97 (Tex. App.—Texarkana 1996), aff’d, 966
S.W.2d 467 (1998).
Coach contends that Trendy has made and will continue to make substantial profits to which
it is not lawfully entitled and that its actions constitute unjust enrichment. Dkt. 12. It asserts that
it has been damaged by these activities. See id. However, Coach does not appear to be seeking
separate damages for these claims.4 See Dkt. 20; Dkt. 20-3 (proposed order). The court therefore
GRANTS Coach’s motion for default judgment on these claims but declines to award damages.
Taking the allegations against Trendy in the amended complaint as true, the court finds that
Coach has suffered an irreparable injury, monetary damages are inadequate to compensate that
injury, a remedy in equity is warranted, and the public interest would be served by granting a
permanent injunction that bars Trendy from further activity that infringes on Coach’s intellectual
property rights. Coach’s motion for a permanent injunction is therefore GRANTED. The court will
issue the injunction in a separate document filed concurrently with this order.
Signed at Houston, Texas on October 17, 2017.
Gray H. Miller
United States District Judge
It is unclear whether Coach would even be entitled to damages under these common law
theories in addition to the statutory damages it seeks under the Copyright and Lanham Acts. Cf.
Mary Kay, Inc. v. Weber, 601 F Supp. 2d 839, 864 (N.D. Tex. 2009) (Fish, J.) (finding that the
plaintiff may be entitled to damages under the Lanham Act and was not entitled to the same damages
under a theory of unjust enrichment).
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