BIDI VAPOR, LLC. v. ALDFACTORY

Background

Bidi Vapor, LLC. sued Aldfactory, Dgmengou, Dhgateius, Ecigarettedirect, Ecigcto, Ecigmanufacture, Ecigshop88, Italy_Nest1, Linjiuyong, One Cloud Puff, Rach elshouse, Soullily, Sunrise Store, Vapeforever, Wonderfulecigs, and X102 for allegedly selling vaping products online that used counterfeit versions of Bidi Vapor’s federally registered trademarks. The complaint asserted trademark counterfeiting, registered-trademark infringement, false designation of origin, passing off, and unfair competition under the federal trademark statute, as well as common-law unfair competition.

The court first issued a temporary restraining order and later entered a preliminary injunction. The defendants were served through alternative service authorized by the court, but they did not appear at the show-cause hearing, answer the complaint, defend the action, or respond to the order directing them to explain why default judgment should not be entered. The Clerk of Court then entered a certificate of default.

Liability

The court explained that, after a default, well-pleaded factual allegations concerning liability are treated as true. It found that Bidi Vapor had shown its marks were legally protectable through United States trademark registrations. It also found that the alleged marks were counterfeit. Because counterfeit marks are identical or substantially indistinguishable from registered marks, the court said they inherently create consumer confusion, so a detailed factor-by-factor confusion analysis was unnecessary.

Based on those findings, the court concluded that Bidi Vapor was entitled to judgment against every defendant on every cause of action in the complaint. It further concluded that the federal trademark findings supported the false-designation, passing-off, and unfair-competition claims. For the common-law unfair-competition claim, the court relied on the alleged use of counterfeit marks and the resulting presumption of bad faith.

Statutory damages

Bidi Vapor requested statutory damages of $50,000 from each defendant for trademark counterfeiting and infringement. The federal trademark statute permits a plaintiff to choose statutory damages instead of actual damages, subject to statutory minimums and maximums for each counterfeit mark.

The court found the requested amount appropriate. In doing so, it considered the defendants’ default, which made their infringement willful for purposes of the damages analysis; the difficulty of determining their profits and Bidi Vapor’s lost revenue; the value of Bidi Vapor’s marks; and the scale of the infringement. Evidence showed that the defendants had made between one and twenty-one infringing uses of the marks, although the court noted that the available information likely understated the number of products sold. The court approved $50,000 from each defaulting defendant and awarded post-judgment interest under federal law.

Permanent injunction

The court found that Bidi Vapor satisfied the requirements for a permanent injunction: likely irreparable harm, inadequate monetary remedies, a balance of hardships favoring Bidi Vapor, and consistency with the public interest. It therefore granted Bidi Vapor’s motion for a permanent injunction, subject to modifications.

The court narrowed the proposed language describing people who could be bound by the injunction. It struck references to “successors and assigns” and required the phrase “active concert” to track the federal rule governing injunctions against certain nonparties. It also removed provisions requiring retention of documents unrelated to the counterfeit products at issue.

The court struck the proposed provisions directed at financial institutions and third-party internet service providers. It explained that it could not enjoin nonparties that were not actively acting with the defendants, freeze the defendants’ accounts in a way that would give Bidi Vapor priority over other creditors, or block internet services unrelated to the products at issue.

Post-judgment asset relief

Bidi Vapor also sought to restrain and transfer assets after judgment under several federal rules and the federal trademark statute. The court ruled that any available post-judgment enforcement relief was governed by New York law. Under one New York procedure, Bidi Vapor may serve a restraining notice on defendants or entities holding their property, subject to statutory exceptions.

The court rejected the proposed broader asset-relief provision under another New York procedure. Bidi Vapor had not shown that it provided the notice required for that relief, and that procedure requires identification of particular property rather than a general freeze on assets. The court therefore struck Section VI of the proposed judgment.

Disposition

Judge Analisa Torres granted Bidi Vapor’s motion for default judgment as to all defendants. She granted the motion for a permanent injunction with the modifications described in the order and directed the entry of a separate judgment reflecting those modifications.