Sream, Inc v. Funky Town, Ltd
1:15-cv-02904
| S.D.N.Y. | Oct 11, 2016Background
- Plaintiff Sream, Inc. is the exclusive U.S. licensee of the federally registered "RooR" trademarks and sued retail defendant 752 Tobacco Candy Inc. for selling counterfeit RooR water pipes.
- An undercover investigator purchased one counterfeit RooR pipe for $48.60 and observed approximately three RooR-branded pipes displayed at defendant’s Manhattan store. Photographs and a receipt were submitted.
- Defendant was served but never answered; the Clerk entered default and the District Court entered a default judgment in plaintiff’s favor and referred damages to a Magistrate Judge.
- Plaintiff elected statutory damages under 15 U.S.C. § 1117(c), requesting $10,000 per counterfeit item (total $30,000); it also sought costs and reserved attorneys’ fees for a later application.
- The Magistrate Judge treated the default as evidence of willfulness, evaluated statutory-damages factors (profits saved, plaintiff loss, mark value, deterrence, willfulness, cooperation, potential to discourage), and recommended $30,000 in statutory damages, $400 in costs, entry of the previously-ordered permanent injunction, and leave to file a fee application within 30 days.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default establishes liability and willfulness | Default supports liability and willfulness; defendant knowingly sold counterfeits | (No response) | Default establishes liability; default treated as evidence of willfulness for damages purposes. |
| Whether statutory or actual damages apply and proper election | Plaintiff elected statutory damages under §1117(c), calculating $10,000 per counterfeit item observed | (No response) | Election of statutory damages is permissible; court analyzes statutory-damages framework under §1117(c). |
| Proper measure of statutory damages (per-item multiplier v. per‑mark/per‑type) | Award should be $10,000 per counterfeit item observed (total $30,000) | (No response) | Statutory damages are assessed “per counterfeit mark per type of goods”; court cannot simply multiply per-item absent proof of multiple marks/types and therefore evaluates factors to set a just award — recommends $30,000 (the amount requested). |
| Recovery of costs and attorneys’ fees | Plaintiff seeks $400 filing fee, $200 service cost (unsubstantiated), and later attorneys’ fees | (No response) | Awarded $400 (filing fee); service cost denied for lack of substantiation. Attorneys’ fees potentially available given willfulness; plaintiff granted 30 days post-damages order to submit fee application. |
Key Cases Cited
- Sara Lee Corp. v. Bags of New York, Inc., 36 F. Supp. 2d 161 (S.D.N.Y. 1999) (discusses statutory damages under the Lanham Act and factors for setting damages)
- Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83 (2d Cir. 2012) (addresses awarding attorneys’ fees in exceptional trademark cases and willfulness standard)
- Vermont Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241 (2d Cir. 2004) (default admits well-pleaded allegations and liability)
- All-Star Marketing Grp., LLC v. Media Brands Co., 775 F. Supp. 2d 613 (S.D.N.Y. 2011) (exemplifies district-court practice of substantial statutory awards to deter willful trademark counterfeiting)