Kaws v. Individuals

Background

KAWS, Inc. sued the individuals and business entities identified on Schedule A for copyright infringement, trademark infringement and counterfeiting, false designation of origin under the Lanham Act, and unfair competition under New York common law. The complaint alleged that the defendants operated online stores and sold or offered products that infringed KAWS, Inc.’s copyrights and trademarks. The opinion states that KAWS, Inc. owns registered KAWS copyrights and trademarks and did not authorize the defendants to use them.

The court had previously issued and extended a temporary restraining order. It authorized service by electronic means and publication under Federal Rule of Civil Procedure 4(f)(3), and found that service was completed for each defendant. After the Clerk entered a certificate of default, KAWS, Inc. sought default judgment against all defendants except those voluntarily dismissed or involved in settlement discussions. The order applied only to the 134 defendants identified as defaulting defendants.

Jurisdiction and Default

The court found that federal-question and copyright jurisdiction existed under the Copyright Act and the Lanham Act, and that supplemental jurisdiction covered the related New York state-law claims. It also found personal jurisdiction over the defaulting defendants based on their alleged business contacts with New York and their targeting of consumers in the United States, including consumers in the district.

Under Rule 55, a default judgment may be entered against a party that fails to plead or otherwise defend. The court explained that a default admits well-pleaded allegations concerning liability, but does not admit damages. Because the defendants failed to appear after proper service, the court treated their defaults as willful. It also found no evidence of a potentially successful defense and concluded that denying judgment would prejudice KAWS, Inc.

Liability

For copyright infringement, the court applied the requirements of ownership of a valid copyright and copying of original elements. It found that KAWS, Inc. satisfied both requirements based on its copyright registrations and allegations that the defendants sold, marketed, distributed, and advertised products embodying the copyrighted works without permission.

For trademark infringement, counterfeiting, and false designation of origin, the court applied the requirements that the marks be entitled to protection and that the defendants’ use be likely to cause confusion. It found that the KAWS trademarks were registered, distinctive, and used without authorization, and that the use was likely to mislead ordinary purchasers about the products’ source. The court held the defaulting defendants liable on those claims.

The court did not make findings on the New York common-law claims because KAWS, Inc. did not seek default judgment on those claims.

Damages

The court awarded statutory damages rather than actual damages because information about the defendants’ sales and profits was unavailable. It found the infringement and counterfeiting willful and awarded $25,000 per defaulting defendant for the copyright and trademark infringements. The award covered 134 defendants and totaled $3,350,000. The court also awarded post-judgment interest beginning on the date judgment was entered, at the rate specified by 28 U.S.C. § 1961(a).

Permanent Injunction

The court permanently enjoined the defaulting defendants and persons acting with them from using KAWS copyrights, trademarks, counterfeit copies, or confusing imitations in connection with unauthorized products. The injunction also barred passing off products as genuine KAWS products, conduct likely to confuse consumers about sponsorship or approval, and operation or hosting of websites involved in selling or promoting unauthorized products bearing KAWS copyrights or trademarks.

Disposition

Judge Hellerstein granted KAWS, Inc.’s motion for default judgment. The Clerk was directed to enter judgment, tax costs, and terminate the motion. The ruling did not state a separate disposition of the defendants who had been voluntarily dismissed or were involved in settlement discussions.