Allstar Marketing Group, LLC. v. bigbigdream320

Background

Allstar Marketing Group, LLC alleged that the defendants operated merchant accounts and storefronts on eBay and used them to advertise and sell counterfeit MagicBax products. Allstar alleged that the products were sold to consumers in the United States, including New York, and that the defendants’ products and packaging copied or closely imitated Allstar’s registered trademarks and copyrighted materials.

The defendants were served with the complaint and other case papers but did not appear or respond. The court had previously entered a temporary restraining order and then a preliminary injunction against the defendants. The Clerk later entered certificates of default, and Allstar moved for default judgment.

Default Judgment and Liability

The court applied the two-step procedure for default judgment: first, entry of default based on a defendant’s failure to defend; and second, entry of judgment after determining whether the complaint’s factual allegations were legally sufficient. The court also determined that it had personal jurisdiction over the defaulting defendants and that joining them in the action was appropriate.

The court granted default judgment on Allstar’s first three claims under the Lanham Act: trademark counterfeiting, trademark infringement, and false designation of origin, passing off, and unfair competition. Allstar alleged that it owned a registered “MAGICBAX” trademark and that the defendants’ products were virtually identical and used copies or colorable imitations of Allstar’s marks. The court found those allegations sufficient to establish protected marks, counterfeit use, and a likelihood of consumer confusion.

The court also granted default judgment on Allstar’s copyright-infringement claim. Allstar alleged ownership of registered copyrights covering its retail packaging, instruction manual, website, and commercial. The court found the allegations sufficient to establish copyright ownership, actual copying, and substantial similarity.

The court granted default judgment on Allstar’s New York common-law unfair-competition claim. It concluded that the allegations of counterfeit trademark use established the required bad faith, misappropriation, and likelihood of confusion. The court did not grant the unjust-enrichment claim, concluding that it duplicated Allstar’s conventional trademark, copyright, and unfair-competition claims.

Remedies

The court entered a permanent injunction. It found irreparable harm, inadequate legal remedies, a balance of hardships favoring Allstar, and a public interest in preventing consumer deception and further infringement.

The court approved statutory damages under the Lanham Act based on willful infringement. The awards were tiered according to the number of documented sales: $25,000 from each defaulting defendant in the first tier with fewer than 10 sales; $50,000 from each remaining defendant in the first tier; $75,000 from each defendant in the second tier; $125,000 from each defendant in the third through sixth tiers; and $250,000 from each defendant in the seventh tier. Post-judgment interest was awarded under 28 U.S.C. § 1961.

The court also granted Allstar relief under New York Civil Practice Law and Rules § 5222. The defaulting defendants were forbidden to sell, assign, transfer, or interfere with property in which they had an interest, subject to specified statutory exceptions. The court dissolved the automatic 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 alternative request under New York Civil Practice Law and Rules § 5225 without prejudice because Allstar had not shown that it provided the required notice and had not identified specific property for turnover.

Disposition

The court granted Allstar’s motion for entry of default judgment as to liability for trademark counterfeiting, trademark infringement, false designation of origin, passing off, and unfair competition under the Lanham Act; copyright infringement; and common-law unfair competition. It approved the permanent injunction and statutory damages, granted the § 5222 relief, dissolved the Rule 62 stay, and declined to enter an asset-transfer order. The Clerk was directed to close the case, and the court stated that it would enter a revised judgment by separate order.