4 Pillar Dynasty LLC v. New York & Co., Inc.
257 F. Supp. 3d 611
S.D.N.Y.2017Background
- Plaintiffs 4 Pillar Dynasty LLC and Reflex Performance Resources own a registered trademark "Velocity" for activewear; Reflex pays a royalty to 4 Pillar and sells Velocity-branded apparel to retailers and online.
- Defendants New York & Company marketed activewear labeled "NY&C Velocity." A buyer’s inquiry led plaintiffs to discover defendants’ use and they sued for trademark infringement under the Lanham Act in 2016.
- At trial plaintiffs presented one witness (plaintiff Hedvat) and read into evidence a stipulation that defendants’ gross profits from NY&C Velocity sales were $1,864,337.29; defendants rested without calling witnesses they had previewed in opening statements.
- A jury found infringement and returned an advisory finding of willfulness; the district court initially entered judgment awarding treble defendants’ stipulated gross profits ($5,593,011.87) and an injunction against use of "NY&C Velocity."
- Post-trial, defendants moved to vacate the monetary award arguing lack of evidence of willfulness and actual confusion; plaintiffs moved for attorneys’ fees and pre- and post-judgment interest.
- The court (Rakoff, J.) reaffirmed willfulness but held trebling unjustified, reduced the monetary award to the stipulated gross profits ($1,864,337.29), and granted plaintiffs leave to submit fee and interest calculations (pre- and post-judgment interest at prime rate).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether profits award is permissible without proof of actual consumer confusion | Profits (and enhanced profits) are available based on willfulness and to compensate for intangible harms and deter infringement | Monetary recovery requires proof of actual confusion (or other grounds); trebling profits improper | Profits award permitted based on willfulness; actual confusion not required for profits; trebling not justified here |
| Whether willfulness was supported by the record | Continued sales after notice, lack of investigation, and defendants’ failure to call promised witnesses support willfulness | No evidence of willfulness; defending use in litigation is not bad faith; plaintiffs bore burden to prove willfulness | Court affirms willfulness: defendants’ conduct and trial strategy support inference of willful infringement |
| Whether the court may enhance (treble) profits for compensation/deterrence | Enhancement needed to compensate unprovable, intangible losses and deter future infringement | Enhancement unnecessary; stipulated gross profits already compensate; plaintiffs failed to prove intangibles | Enhancement must be compensatory; plaintiffs did not prove intangible losses or need for trebling; enhancement reversed |
| Whether attorneys' fees and pre-judgment interest are warranted | Willfulness makes case "exceptional" under § 1117(a); fees and prejudgment interest (at prime) are appropriate | Willfulness alone insufficient; award would overcompensate plaintiff given gross-profits figure | Court exercises discretion to award reasonable attorneys’ fees and pre-judgment interest (prime rate); plaintiffs to submit calculations |
Key Cases Cited
- George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532 (2d Cir.) (explains monetary relief rationales under Lanham Act: unjust enrichment, compensation, deterrence; ties profits awards to willfulness)
- Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247 (2d Cir.) (approves enhanced profits awards where needed for compensation/deterrence; reiterates willfulness prerequisite)
- Getty Petroleum Corp. v. Bartco Petroleum Corp., 858 F.2d 103 (2d Cir.) (discusses compensatory nature of enhanced awards and deterrence rationale)
- Fendi Adele S.R.L. v. Filene’s Basement, Inc., 696 F.Supp.2d 368 (S.D.N.Y. 2010) (defines standard for willfulness as actual knowledge or reckless disregard)
- W.W.W. Pharmaceutical Co. v. Gillette Co., 984 F.2d 567 (2d Cir.) (addresses interplay of actual confusion and entitlement to monetary recovery)
- Manhattan Indus., Inc. v. Sweater Bee by Banff, Ltd., 885 F.2d 1 (2d Cir.) (places burden on defendant to prove deductions from gross revenue when seeking net-profit calculation)