ALLSTAR MARKETING GROUP LLC v. ANDNOV73

Background

Allstar Marketing Group LLC is the exclusive licensee of the federally registered “BASEBOARD BUDDY” trademark for hand-held baseboard-cleaning implements. Allstar alleged that the six remaining defendants—flowcarrym_2, hgttech, i_post, loonghead, loosebeads, and xiaobaicai-20—were individuals and/or businesses located in China that operated eBay storefronts and sold products in New York and elsewhere. Allstar alleged that the products and their packaging were counterfeit or confusingly similar to its Baseboard Buddy product.

The case originally included additional defendants and claims. Several defendants were voluntarily dismissed, leaving the six Defaulting Defendants. None of those defendants appeared, responded to the complaint, or responded to Allstar’s motion for default judgment. The Clerk entered a certificate of default on May 16, 2023.

Personal Jurisdiction

The court held that New York’s long-arm statute allowed it to exercise personal jurisdiction over the Defaulting Defendants. Allstar alleged that they offered counterfeit products for sale through eBay, accepted payment in U.S. dollars, offered shipping to New York, and completed transactions with New York consumers. The court concluded that these alleged activities showed that the defendants deliberately conducted business in New York and that Allstar’s claims were directly related to those activities. The court also concluded that exercising jurisdiction was consistent with constitutional fairness requirements.

Liability

Allstar sought default judgment on Counts I and II, which alleged trademark counterfeiting and trademark infringement under the federal Lanham Act. For a default judgment, well-supported allegations about liability are treated as admitted, but the court still considered whether Allstar’s allegations established liability.

The court found that Allstar plausibly established the two required elements: a valid trademark and a likelihood that the defendants’ use would confuse consumers about the source of the goods. Allstar’s federal trademark registration presumptively established that the mark was valid and protectable. Images of the defendants’ eBay listings allegedly showed products nearly indistinguishable from Allstar’s Baseboard Buddy product. The court stated that counterfeit products, by their nature, cause consumer confusion.

The court therefore granted Allstar’s motion for default judgment as to liability on the trademark counterfeiting and infringement claims. Allstar did not seek default judgment on its other claims for false designation of origin, passing off and unfair competition, federal copyright infringement, or New York common-law unfair competition.

Permanent Injunction

The court granted Allstar’s request for a permanent injunction barring the Defaulting Defendants from future counterfeiting and infringement of the Baseboard Buddy trademark. The court found that Allstar had succeeded on the merits and was entitled to a rebuttable presumption of irreparable harm. It also found that money damages alone were inadequate, the balance of hardships favored Allstar, and the public interest favored preventing consumers from being deceived about the origin and quality of products.

Statutory Damages

The court awarded statutory damages of $50,000 against each Defaulting Defendant, for a total of $300,000. The court stated that the defendants’ infringement was willful because of their default and considered their failure to appear, the inability to determine their profits and Allstar’s losses through discovery, the apparent scope of internet sales, the value of Allstar’s product, and the need for deterrence. Allstar was also awarded post-judgment interest under federal law.

Restraining Notices and Disposition

The court permitted Allstar to serve restraining notices under New York law on the Defaulting Defendants, third-party service providers, and financial institutions, as those terms were defined in Allstar’s motion. It dissolved the automatic 30-day stay on enforcement of money judgments. The court did not decide asset-turnover procedures at that time. It directed that a Final Default Judgment and Preliminary Injunction Order would be entered separately and directed the Clerk to terminate the motion.

Judge

Judge P. Castel issued the opinion and order on August 14, 2023.