MOOSE TOYS PTY LTD v. ADDITION

Background

Moose Toys Pty LTD, Moose Creative Pty LTD, Moose Enterprise Pty LTD, and Moose Creative Management Pty LTD develop, market, and sell children’s products, including Pikmi Pops. They alleged that 20 defendants used Wish.com merchant accounts to advertise and sell counterfeit or infringing Pikmi Pops products to consumers in the United States, including New York. The plaintiffs asserted claims under the Lanham Act, the Copyright Act, New York’s General Business Law, and New York common law.

The defendants were served with the lawsuit and earlier restraining and injunction orders, but none appeared at the October 23, 2018 hearing. Some defendants failed to answer or otherwise respond by November 6, 2018. The Clerk later entered certificates of default, and the plaintiffs moved for default judgment against the 20 nonappearing defendants.

Default-judgment standard

Federal Rule of Civil Procedure 55 requires an entry of default before a court can enter default judgment. A default admits the well-pleaded factual allegations, but it does not admit legal conclusions or establish the amount of damages. The court therefore considered whether the allegations were legally sufficient and separately examined the requested remedies.

The court also considered personal jurisdiction over the 20 defendants and whether joining them in one case was proper. Relying on substantially the same reasoning as in a prior related proceeding, the court answered both questions affirmatively.

Claims

The court granted default judgment on the plaintiffs’ first three Lanham Act claims: trademark counterfeiting, trademark infringement, and false designation of origin, passing off, and unfair competition. The plaintiffs alleged that the defendants’ products were virtually identical to Pikmi Pops products and used copies or close imitations of the plaintiffs’ registered marks. The court held that these allegations established protected marks and a likelihood of consumer confusion.

The court also granted default judgment on copyright infringement. The plaintiffs alleged ownership of registered copyrights covering Pikmi Pops guides, characters, and packaging. The court found that the alleged products and packaging were so similar to the plaintiffs’ works that the allegations established copying and substantial similarity.

The court did not grant default judgment on the New York General Business Law claims concerning deceptive practices and false advertising. It held that the complaint did not allege a specific and substantial injury to the public beyond ordinary trademark infringement. The court also rejected the unjust-enrichment claim because it duplicated the plaintiffs’ other intellectual-property and tort claims. The court did grant default judgment on the New York common-law unfair-competition claim, finding that the counterfeit-mark allegations established bad faith, misappropriation, and likely confusion.

Remedies

The court entered a permanent injunction barring further violations of the plaintiffs’ trademark and copyright rights. It found irreparable harm, inadequate legal remedies, a balance of hardships favoring the plaintiffs, and a public interest in preventing consumer deception.

The court approved the plaintiffs’ election of statutory damages under the Lanham Act. It awarded $25,000 from each defaulting defendant in the first tier with fewer than 10 counterfeit-product sales, $50,000 from each remaining defaulting defendant in the first tier, and $75,000 from the lone defaulting defendant in the second tier. Post-judgment interest was awarded under 28 U.S.C. § 1961.

The court also granted relief under New York Civil Practice Law and Rules § 5222, prohibiting the defaulting defendants from selling, assigning, transferring, or interfering with property in which they had an interest, subject to specified statutory exceptions. It dissolved the automatic 30-day stay under Federal Rule of Civil Procedure 62 and allowed immediate enforcement of the judgment.

The court declined to enter an asset-transfer order. It denied the plaintiffs’ alternative request under New York Civil Practice Law and Rules § 5225 without prejudice because the plaintiffs had not shown that they had provided the required notice and had not identified particular property for turnover. The Clerk was directed to close the case, and the court stated that a revised judgment would be entered separately.