4 Pillar Dynasty LLC v. New York & Co., Inc.
933 F.3d 202
| 2d Cir. | 2019Background
- Plaintiffs Reflex Performance Resources, Inc. and 4 Pillar Dynasty LLC own the registered "Velocity" trademark for women’s activewear and sued New York & Company (NY&C) for selling an "NY & C Velocity" line.
- Plaintiffs sold wholesale and online; 4 Pillar holds the mark and licensed it to Reflex. Plaintiffs discovered NY&C’s product line in 2015 and sued in 2016.
- At trial Plaintiffs called only their owner Behrooz Hedvat; the parties stipulated that Defendants’ gross profits from the challenged line were $1,864,337.29. Defendants rested without calling the witnesses previewed in opening.
- A jury found infringement and returned an advisory verdict of willfulness; the district court adopted the advisory willfulness finding and initially trebled the stipulated gross profits, then amended the judgment to award the single-stipulated gross profits.
- The district court also awarded Plaintiffs attorney’s fees and prejudgment interest as an "exceptional" Lanham Act case; Defendants appealed and Plaintiffs cross-appealed the trebling reduction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether evidence supported finding of willful infringement | Willfulness shown by NY&C’s continued sales after notice, the blatant similarity, and defendants’ failure to call key witnesses | No direct evidence of state of mind; continued sales and resting case were strategic and insufficient | Affirmed: district court’s finding of willfulness not clearly erroneous given circumstantial evidence and adverse inference from missing witnesses |
| Whether actual consumer confusion is required to obtain an infringer’s profits | Not required; willfulness alone suffices under deterrence rationale | Actual consumer confusion required as prerequisite to profits award | Affirmed: Circuit clarifies George Basch allows profits disgorgement for willful/bad-faith infringement without proof of actual confusion |
| Whether trebling of profits was authorized under §1117(a) | Plaintiffs sought enhanced (trebled) award as deterrence for willful conduct | Defendants argued trebling was improper and trial court erred | Affirmed in part: district court permissibly amended judgment to remove trebling; no abuse of discretion in reducing to stipulated gross profits |
| Whether this was an "exceptional" Lanham Act case warranting attorney's fees and prejudgment interest | Plaintiffs: case and NY&C’s litigation conduct justify fees under Octane framework | Defendants: Octane Fitness standard applies and district court misapplied pre-Octane presumptions; fees unwarranted | Vacated and remanded: award of fees and prejudgment interest vacated so district court can apply Octane/Federal Circuit guidance (Sleepy’s) in first instance |
Key Cases Cited
- George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532 (2d Cir.) (profits may be awarded for bad-faith infringement as deterrence without proof of actual confusion)
- Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (U.S.) (flexible, totality-of-the-circumstances standard for defining an "exceptional" case for fee awards)
- Sleepy’s LLC v. Select Comfort Wholesale Corp., 909 F.3d 519 (2d Cir.) (Octane standard applies to Lanham Act fee awards)
- Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247 (2d Cir.) (affirming profits award may rest solely on deterrence rationale)
- Bambu Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849 (2d Cir.) (standard of review and discussion of willfulness)
- G.H. Mumm Champagne v. E. Wine Corp., 142 F.2d 499 (2d Cir.) (historic dictum on actual confusion; distinguished)
- International Star Class Yacht Racing Ass’n v. Tommy Hilfiger U.S.A., Inc., 80 F.3d 749 (2d Cir.) (profits award review and relation to willfulness)