The Fashion Exchange LLC v. Hybrid Promotions, LLC

Background

The court previously granted defendants partial summary judgment on The Fashion Exchange LLC’s claims for monetary relief and unfair competition. It held that defendants did not willfully infringe the disputed marks as a matter of law and that no other equitable factors supported awarding defendants’ profits. TFE moved for reconsideration of the ruling concerning disgorgement of profits, meaning an award requiring defendants to surrender profits allegedly connected to the infringement.

Arguments and analysis

Under the applicable local rule, reconsideration is generally available only for an intervening change in controlling law, new evidence, or a clear error or manifest injustice. TFE argued that the court improperly treated the absence of bad faith as decisive, because willful infringement may also be based on reckless disregard or willful blindness. The court agreed with that legal principle but found that defendants did not recklessly disregard TFE’s alleged superior rights and were not willfully blind to those rights. The court also noted that TFE had not shown that defendants failed to conduct due diligence after TFE raised its infringement claims.

The court rejected TFE’s proposed new evidence that defendants sold apparel bearing one disputed mark on Amazon in 2021 and continued using the mark after a 2022 trademark-registration application was denied. The court determined that this evidence did not change its conclusion about willfulness. It also explained that the Supreme Court’s decision in Romag Fasteners made willfulness important but not an absolute requirement for recovering profits; courts must consider willfulness together with other equitable factors. The court stated that it had already considered those factors, including defendants’ mental state, and had determined that the equities did not favor an accounting of profits.

The court further ruled that additional briefing and discovery were not warranted. TFE offered no evidence showing a material factual dispute that could change the result and instead speculated that expert evidence and information from the remaining 32 Retailer Defendants might affect the analysis. Because discovery had closed, the court found no basis for ordering additional, extensive discovery in the already prolonged litigation.

Ruling

Judge Sidney H. Stein denied with prejudice TFE’s motion for reconsideration of the September 29, 2022 opinion and order. The order left in place the prior ruling that TFE could not recover defendants’ profits in the lawsuit.