Samsonite IP Holdings S.ar.l. v. Shenzhen Liangyiyou E-Commerce Co., Ltd.

Background

Samsonite IP Holdings S.ar.l. and Speculative Product Design, LLC alleged violations of the Copyright Act, the Digital Millennium Copyright Act, the Lanham Act, New York’s General Business Law, and New York common law. Samsonite owned the copyrights and Speck was the worldwide licensee for copyrights and trade dress involving the packaging and design of iGuy portable electronic-device cases. Plaintiffs alleged that Shenzhen Liangyiyou E-Commerce Co., Ltd., also identified in the opinion by several alternate business names, sold products that were identical or substantially similar to the iGuy design without authorization.

The defendant did not oppose plaintiffs’ motion for default judgment or appear at the show-cause hearing. On November 4, 2019, the court entered a default judgment and permanent injunction against Shenzhen and referred the damages issues to Magistrate Judge Debra C. Freeman. After an inquest, Judge Freeman recommended statutory copyright damages, an award based on Shenzhen’s profits under the Lanham Act, attorneys’ fees, costs, and interest. Plaintiffs objected only to the recommendation rejecting their request for treble Lanham Act damages.

Court’s analysis

The court reviewed the unchallenged portions of the Report and Recommendation for clear error and reviewed the challenged treble-damages issue independently.

For copyright damages, the court agreed that the infringement was willful because of the defendant’s default and that the factors governing statutory damages supported the maximum award. It therefore awarded $150,000 under the Copyright Act.

For Lanham Act damages, the court held that an enhanced award of profits can be available in some circumstances under 15 U.S.C. § 1117(a). But it rejected plaintiffs’ request for three times Shenzhen’s sales, which plaintiffs treated as a proxy for profits. The court explained that an enhanced profits award is appropriate only when recovery based on profits is inadequate. Plaintiffs had not argued or shown that the recommended award of Shenzhen’s entire estimated revenue, without deductions for expenses, was inadequate. The court also found that the circumstances were not comparable to the unusually serious facts in a prior appellate decision involving a market created by the plaintiff and alleged market-share usurpation. The court therefore awarded $1,045,363.62, representing Shenzhen’s estimated profits, rather than $3,136,090.86.

The court found no error in Judge Freeman’s reduction of the requested attorneys’ fees because of vague and duplicative time entries, staffing that was disproportionately senior, and the amounts typically awarded in default cases. It awarded $56,132.62 in attorneys’ fees. The court also awarded costs for specified filing, delivery, copying, transcript, and electronic-record expenses, while excluding categories that were too vague to evaluate.

The court adopted the recommendation to award pre-judgment interest on the copyright and Lanham Act damages. It set the period from May 7, 2019, when the second amended complaint was filed, through the date of final judgment, using the rate and compounding method in 28 U.S.C. § 1961(a). It also stated that post-judgment interest is mandatory under that statute.

Post-judgment discovery and disposition

Plaintiffs asked the court to order discovery to help locate Shenzhen’s assets. The court denied that request because judgment creditors may generally pursue post-judgment discovery under Federal Rule of Civil Procedure 69 without first obtaining a separate court order. The court noted that plaintiffs could move to compel responses if appropriate discovery requests were resisted.

Judge Gardephe adopted the Report and Recommendation as set forth in the order. The court awarded total damages of $1,195,363.62, consisting of $150,000 in copyright statutory damages and $1,045,363.62 under the Lanham Act, plus pre-judgment interest, $56,132.62 in attorneys’ fees, and $2,009.40 in costs. It directed the Clerk of Court to enter judgment and close the case.