KAWS Inc. v. Individuals

Background

KAWS, Inc. owns copyrights and trademarks relating to artistic works created by artist and designer Brian Donnelly, who works under the name KAWS. The court said the works include figurative characters and motifs with a distinctive skull-and-crossbones head and/or X eyes. KAWS, Inc. identified two copyrights and five trademarks relevant to the case.

The defendants were internet-based merchants located abroad. KAWS, Inc. alleged that they advertised, marketed, and sold unauthorized counterfeit KAWS products through online storefronts, including products shipped to New York and elsewhere in the United States. The defendants allegedly presented the products as genuine KAWS items. None of the defendants filed an answer or otherwise appeared.

KAWS, Inc. brought claims under the Copyright Act, the Lanham Act for trademark infringement and counterfeiting, and false designation of origin, as well as unfair competition under New York law. The court entered a temporary restraining order and later a preliminary injunction. KAWS, Inc. obtained a clerk’s certificate of default, then moved for default judgment. Two defendants listed in the operative schedule were later voluntarily dismissed.

Default Judgment and Liability

For purposes of deciding default judgment, the court accepted the well-pleaded factual allegations in the complaint as true. A defendant who fails to plead or otherwise defend is treated as having admitted those allegations for purposes of liability. The court still had to determine whether the allegations established legal liability.

For the copyright claims, the court found that KAWS, Inc. had demonstrated ownership of two valid copyrights and had submitted evidence showing that the defendants engaged in unauthorized copying. This established a preliminary case of copyright infringement.

For the trademark infringement and counterfeiting claims, the court found that KAWS, Inc. had pleaded ownership of valid, protected marks and facts supporting a likelihood that consumers would be confused by the defendants’ use of those marks. The court applied the same analysis to the false-designation-of-origin claim, which concerns confusion about the source of goods. The court concluded that KAWS, Inc. satisfied the requirements for default judgment on its copyright and trademark claims.

Statutory Damages

The court explained that copyright statutory damages generally range from $750 to $30,000 per infringer, but may reach $150,000 when infringement is willful. Under the Lanham Act, statutory damages range from $1,000 to $200,000 per mark for non-willful violations and may reach $2 million per mark for willful violations.

KAWS, Inc. requested $150,000 total from each defendant, covering statutory damages under both the Copyright Act and the Lanham Act. The court found a substantial award appropriate. It reasoned that the value and reputation of the KAWS copyrights supported substantial damages; the number of defendants selling counterfeit goods supported general deterrence; the similarity between the copyrighted works and the accused products supported a finding of willfulness; and the defendants’ alleged efforts to conceal their identities and failure to participate in the case also supported the award. The court awarded the requested $150,000 per defendant.

Permanent Injunction

KAWS, Inc. also requested a permanent injunction barring the defendants from selling counterfeit or infringing products, permanently disabling the domain names used for those sales, and transferring assets in the defendants’ financial accounts to KAWS, Inc. The court stated that a permanent injunction requires irreparable injury, inadequate legal remedies, a balance of hardships favoring equitable relief, and consistency with the public interest.

The court found those requirements satisfied, particularly because the defendants had not appeared or participated in discovery. It therefore granted KAWS, Inc.’s motion for default judgment as to all defendants who had not been voluntarily dismissed. The court stated that a separate judgment would be issued and directed the clerk to close the motion.