Heron Preston S.r.l. v. Aida008

Background

Heron Preston S.R.L. brought claims under the federal Trademark Act, known as the Lanham Act, and under state and common law. The claims concerned alleged manufacturing, importing, exporting, advertising, marketing, promoting, distributing, displaying, offering, and selling of goods bearing counterfeit versions of the plaintiff's federally registered and unregistered trademarks. The plaintiff moved for default judgment under Federal Rule of Civil Procedure 55 and requested a permanent injunction.

The court had authorized alternative service, and the plaintiff served the summons, complaint, temporary restraining order, and supporting documents on the defendants. The court later issued a preliminary injunction. After the defendants failed to answer, defend the case, or respond to the order to show cause, the Clerk entered a certificate of default. The plaintiff then submitted evidence supporting its motion.

Liability

Because of the defendants' default, the court treated the complaint's well-pleaded factual allegations about liability as true. The court concluded that the plaintiff's registered marks were protectible based on its federal trademark registrations. It also concluded that the unregistered mark was protectible because it was distinctive and had acquired secondary meaning.

The court explained that trademark infringement and counterfeiting require a protectible mark and use likely to confuse consumers. Because the plaintiff alleged that the defendants used counterfeit marks, the court did not need to conduct the usual detailed consumer-confusion analysis; counterfeit marks are inherently confusing. The court therefore found the plaintiff entitled to judgment on its counterfeiting and registered and unregistered trademark-infringement claims. It also found the plaintiff entitled to judgment on its federal false-designation, passing-off, and unfair-competition claims, as well as its state common-law unfair-competition claim.

The court treated all defendants except Femmeclotheswardrobe, Secretwomenclothes, and Xuehanhan as the defaulting defendants. It did not enter default judgment against those three because they had not been served with the order to show cause and supporting documents.

Statutory damages

The plaintiff requested $75,000 in statutory damages for trademark counterfeiting and infringement. The Lanham Act permits a plaintiff to choose statutory damages instead of actual damages, within statutory minimums and maximums.

The court found the requested amount appropriate. It relied on the defaulting defendants' deemed willful infringement, their failure to appear, the resulting inability to determine their profits or the plaintiff's lost revenues, the high value of the marks, and the alleged large scale of the infringement. The court awarded the requested $75,000 and stated that post-judgment interest would be awarded under 28 U.S.C. § 1961.

Permanent injunction

The court found that the plaintiff established the requirements for permanent injunctive relief: irreparable harm, inadequate monetary remedies, a balance of hardships favoring relief, and consistency with the public interest. It therefore granted the motion for a permanent injunction, but only with modifications.

The court narrowed the proposed injunction to track Federal Rule of Civil Procedure 65(d)(2). It struck references to “successors and assigns” and added the word “active” before “concert.” It also struck 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 held that it could not enjoin third parties who were not before the court and were not acting in active concert with the defaulting defendants. It also found that freezing accounts could improperly give the plaintiff priority over other creditors and that prohibiting service providers from offering services unrelated to the products at issue would be too broad.

Asset restraints and enforcement

The court dissolved the automatic 30-day stay of judgment enforcement under Rule 62 so that the judgment could be enforced immediately. It ordered the plaintiff to revise the proposed judgment to reflect the court's modifications.

The court held that post-judgment relief was governed by Federal Rule of Civil Procedure 69 and applicable state law, rather than the provisions the plaintiff had primarily cited. Under New York law, the plaintiff could serve a restraining notice under New York Civil Practice Law and Rules § 5222 concerning property in which the defaulting defendants had an interest. But the court found relief under § 5225 improper because the plaintiff had not shown that the required notice had been given and had not identified particular property. The court therefore struck the proposed judgment's Section VI concerning that relief.

Disposition

The court's final disposition was to grant the plaintiff's motion for default judgment as to all defendants except Femmeclotheswardrobe, Secretwomenclothes, and Xuehanhan; deny the motion without prejudice as to those three defendants; grant the motion for a permanent injunction with the stated modifications; dissolve the Rule 62 enforcement stay; and require a revised proposed judgment.