PALACE SKATEBOARDS GROUP v. ADMZING STORE

Background

Palace Skateboards is described as a London-based skateboard shop and clothing brand. GSLT Holdings Limited is Palace’s parent company. GSLT holds trademarks in various Palace logos and graphics and licenses those marks exclusively to Palace.

The plaintiffs sued retailers operating on Alibaba.com, AliExpress.com, and DHGate.com. They alleged that the defendants offered products bearing graphics identical or confusingly similar to the Palace trademarks without a license or permission. The plaintiffs asserted trademark and unfair-competition claims under the Lanham Act.

The plaintiffs requested temporary and preliminary restraints, restrictions on defendants’ storefronts and assets, alternative service, and expedited discovery. The court granted those requests and entered preliminary injunctions. After the defendants failed to respond, the court entered default judgments and referred damages and prejudgment-interest issues to Magistrate Judge Sarah Netburn for an inquest.

Report and Recommendation

Magistrate Judge Netburn recommended finding the defendants liable for trademark counterfeiting and awarding $75,000 in statutory damages per defendant, plus applicable interest. No party objected. Judge George B. Daniels reviewed the recommendation for clear error, found none, and adopted it in its entirety.

Because the defendants defaulted, the properly pleaded allegations were accepted as true except those concerning damages. The court concluded that the plaintiffs’ trademark registrations showed ownership and exclusive rights in the Palace Marks, and that the defendants’ use of identical or indistinguishable graphics was likely to confuse consumers. The court therefore upheld the finding of liability for trademark counterfeiting.

Damages

The court approved statutory damages under 15 U.S.C. § 1117(c), rather than actual damages, because the defendants provided no records from which actual profits and losses could reasonably be calculated. It also approved enhanced statutory damages based on willful conduct. The court relied on the defendants’ default, their failure to participate in the damages inquest, and their use of graphics nearly identical to the Palace Marks.

The court found that $75,000 per defendant was reasonable after considering the relevant damages factors, including the plaintiffs’ lost revenues, the value of the trademarks, deterrence, the defendants’ willfulness, and their failure to provide records. The amount was below the statutory maximum of $2,000,000 per counterfeit mark per type of goods or services for willful counterfeiting and was within the range of awards in similar cases.

The court awarded post-judgment interest under 28 U.S.C. § 1961(a). In Case No. 20 Civ. 6103, involving 16 defaulting defendants, the total award was $1,200,000. In Case No. 20 Civ. 6108, involving 31 defaulting defendants, the total award was $2,325,000.

Permanent Injunction

The court concluded that the requirements for a permanent injunction were met. It applied the factors concerning irreparable harm, the inadequacy of monetary damages, the balance of hardships, and the public interest. The court relied in part on the presumption of irreparable harm available after a finding of trademark liability and found that the defendants had not rebutted that presumption.

The preliminary injunction provisions were converted into permanent injunctions. The defendants were permanently barred from further counterfeiting or infringing the plaintiffs’ Palace Marks as described in the preliminary-injunction orders.

Disposition

Judge George B. Daniels adopted Magistrate Judge Netburn’s Report and Recommendation in its entirety, awarded $75,000 per defaulting defendant plus post-judgment interest, issued permanent injunctions, and directed the clerk to close both cases.