Donnelly v. Anand

Background

Brian Donnelly and KAWS, Inc. sued defendants over the sale of counterfeit KAWS goods. The claims involved counterfeiting, trademark infringement and dilution, and copyright infringement under the Lanham Act and the Copyright Act. The motion addressed three defendants: Dylan Jovan Leong Yi Zhi, The Penthouse Theory, and The Penthouse Collective, which the court collectively called the “Singapore Defendants.” The opinion states that Leong is a person residing in Singapore and that the two companies are Singapore corporations with their principal places of business in Singapore.

Plaintiffs identified 154 counterfeit goods, including plush dolls, vinyl figures, and sculptures. The goods were offered through websites associated with The Penthouse Theory and The Penthouse Collective. Plaintiffs submitted evidence of three registered trademarks and two registered copyrights. The court found that the allegations and evidence showed that the defendants sold unauthorized, infringing, and counterfeit KAWS goods.

Procedural History

The Singapore Defendants initially appeared through counsel and moved to dismiss, arguing that service was inadequate, that the court lacked personal jurisdiction, and that the case should be heard elsewhere. The court denied that motion on September 22, 2022. Their lawyer later withdrew after stating that the defendants had instructed him not to file an answer and had not paid his fees.

The court warned the two corporate defendants that they could appear only through a lawyer admitted to practice in the court. It also directed Leong to appear in person or through an admitted lawyer. The warning stated that failure to comply could result in striking the defendants’ answers and entering default judgment. Leong participated by telephone at a January 17, 2023 conference, but none of the three defendants had filed an answer. The Clerk issued a certificate of default on January 26, 2023. None of the defendants later responded to the motion for default judgment.

Liability

The court granted plaintiffs’ motion for entry of default judgment as to liability. A default judgment is a judgment entered when a defendant fails to defend the case; in this setting, the well-pleaded allegations in the complaint are treated as admitted. The court concluded that plaintiffs had established ownership of their registered trademarks and copyrights and that the Singapore Defendants had sold counterfeit and infringing KAWS goods. The court also found evidence supporting willful conduct, including the defendants’ description of their products as “hand-reworked reproductions” and evidence that plaintiffs had previously sent cease-and-desist letters and takedown notices.

Damages

Plaintiffs requested $36,000,000 in statutory damages under the Lanham Act. They asserted that the defendants used two infringing marks across nine types of goods and sought the maximum statutory amount for willful counterfeiting. The court instead awarded $900,000 in total statutory damages. The award represented $50,000 for each of two infringing marks across nine categories of goods and was imposed jointly and severally, meaning the defendants share responsibility for the full amount.

The court considered the identified goods’ total retail price of $63,749.99, evidence of harm to the market and reputation associated with KAWS products, the expense of anti-counterfeiting efforts, and the likelihood that the defendants sold other unidentified counterfeit goods. It concluded that $900,000 was sufficient to punish the defendants’ willful counterfeiting and compensate plaintiffs for resulting damages.

Injunctive Relief and Disposition

The court granted plaintiffs’ application for permanent injunctive relief under the Lanham Act and Copyright Act. The opinion states that the specific terms appear in a separate Default Judgment and Permanent Injunction Order. The court’s conclusion states that plaintiffs’ motion for entry of default judgment against Dylan Jovan Leong Yi Zhi, The Penthouse Theory, and The Penthouse Collective was granted, and it directed the Clerk to terminate the motion.

Classification

This is classified as a procedural order because the court entered a default judgment following the defendants’ failure to defend, even though it determined liability and awarded damages based on the complaint and supporting submissions.