OFF-WHITE LLC v. Beinjing Yinyu Trade Co.

Background

Off-White LLC sued merchants operating online storefronts through Alibaba and AliExpress. It alleged that the merchants advertised, sold, and shipped products bearing Off-White’s registered and unregistered trademarks, including designs involving parallel diagonal lines and intersecting arrows. The court stated that the defendants targeted New York customers through their online stores and, in some instances, shipped allegedly infringing products to New York purchasers.

The defendants covered by the motion did not formally appear, answer the complaint, respond to correspondence, or oppose the motion. The clerk issued a certificate of default. The court therefore treated the complaint’s well-pleaded factual allegations as admitted, along with the uncontroverted documentary evidence submitted with the motion. The court had previously issued a temporary restraining order and preliminary injunction against the defendants’ alleged infringement.

Default judgment and trademark infringement

A default judgment is a judgment entered when a party fails to defend the case. Before entering one, the court considered whether the defendants’ defaults were willful, whether they had a potentially meritorious defense, and whether Off-White would be prejudiced without a judgment. The court found that all three considerations favored Off-White. It then determined that Off-White had established ownership of valid registered marks and protectable unregistered marks.

For most defendants, the court found that the products bore counterfeit marks identical or substantially indistinguishable from Off-White’s registered marks. For the remaining defendants, the court applied the factors used to evaluate likely consumer confusion, including the strength and similarity of the marks, the relationship between the products and markets, evidence of bad faith, product quality, and consumer sophistication. Five factors favored Off-White, while three were neutral. The court concluded that consumers were likely to be confused by those defendants’ use of partial marks, similar designs, and product descriptions referring to “Off-White” or similar language.

The court therefore entered default judgment for Off-White against all defaulting defendants on the trademark-infringement claims.

Permanent injunction

The court granted Off-White a permanent injunction. It found that continued infringement would cause irreparable harm by depriving Off-White of control over its trademarks’ reputation and goodwill, that money damages would not adequately compensate for that harm, that the balance of hardships favored Off-White, and that an injunction served the public interest by protecting consumers and trademarks.

The injunction permanently barred the defaulting defendants, and persons acting with them who received actual notice, from manufacturing, importing, exporting, advertising, marketing, distributing, displaying, offering for sale, selling, or otherwise dealing in infringing products or products bearing Off-White’s marks or confusingly similar marks. It also barred conduct likely to confuse consumers about affiliation, origin, sponsorship, or approval. The defendants were ordered to deliver infringing products and related packaging, labels, advertising, and promotional materials for destruction.

Statutory damages

Off-White requested $75,000 in statutory damages from each defaulting defendant. The court granted that request as to the defendants it classified as counterfeiters. It awarded $75,000 per infringement against those defendants, finding statutory damages appropriate in light of the counterfeiting, the defendants’ willful default, the value of Off-White’s marks, the need for deterrence, and the absence of discovery about the defendants’ profits and expenses.

The court denied statutory damages as to the remaining defendants. It explained that statutory damages under the cited Lanham Act provision were available for use of a counterfeit mark, and that Off-White had not shown that those defendants used marks identical or substantially indistinguishable from registered marks. Some of those defendants allegedly infringed unregistered marks, while others used partial or similar representations rather than counterfeit registered marks.

Asset restraint and enforcement

The court denied Off-White’s request to continue the pre-judgment asset restraint and transfer assets held by third parties under the federal rules and the Lanham Act. It held that enforcement of a money judgment had to follow the procedure required by Federal Rule of Civil Procedure 69 and applicable New York law. Off-White had not brought the required proceeding against the relevant third parties.

The denial was without prejudice to Off-White’s issuing restraining notices under New York law and making later applications under the applicable state procedure. The court relieved Off-White from the usual 30-day stay on enforcement, allowing it to execute on the judgment immediately. Post-judgment interest was ordered at the legal rate. The court retained jurisdiction to interpret and enforce the order, directed the clerk to enter judgment, and closed the case.