Trebco Specialty Products Inc. v. Individuals

Background

Trebco Specialty Products Inc. filed a copyright-infringement and New York unfair-competition lawsuit against 109 individuals and businesses. The complaint alleged that the defendants operated online marketplaces selling counterfeit versions of Trebco’s WubbaNub animal plush toy pacifiers. Trebco is described in the opinion as a Connecticut-based corporation that manufactures and sells specialty children’s pacifiers.

Trebco later voluntarily dismissed claims against 74 defendants. The remaining 35 defendants did not appear. The court entered default judgment and a permanent injunction against those defendants on October 13, 2022, and referred the damages issue to Magistrate Judge James L. Cott. Judge Cott issued a report and recommendation recommending $1.4 million in statutory damages, an asset freeze, and authorization to release and transfer frozen assets to Trebco. No party objected.

Liability

For a defaulting defendant, well-pleaded allegations are treated as admitted for purposes of liability, but the court must still decide whether those allegations establish legal liability. The court adopted Judge Cott’s conclusion that Trebco adequately alleged both required elements of copyright infringement: ownership of valid copyrights and unauthorized copying. The alleged counterfeit products were described as strikingly similar to genuine Trebco products and were sold without Trebco’s authorization. The court therefore found liability established.

Damages

A default does not establish the amount of damages. The court concluded that Trebco’s written submissions provided a sufficient basis to evaluate the requested damages, so an evidentiary hearing was unnecessary.

Under the Copyright Act, statutory damages generally range from $750 to $30,000, and may reach $150,000 for willful infringement. Judge Cott considered the defendants’ conduct, the need for deterrence, and the parties’ conduct. He found that the defendants acted willfully, including by using privacy services and multiple fictitious names, but recommended $40,000 per defendant rather than Trebco’s requested $50,000 because Trebco had not explained specific pre-lawsuit enforcement efforts or provided evidence of cease-and-desist notices.

The court found no error in that analysis and awarded $40,000 in statutory damages against each of the 35 defaulting defendants, totaling $1.4 million. It also awarded post-judgment interest at the federal rate under 28 U.S.C. § 1961, calculated from the date the Clerk enters judgment until payment.

Asset Freeze and Disposition

The court adopted the recommendation to freeze each defaulting defendant’s assets and authorize release and transfer of those assets to Trebco until the corresponding damages award is satisfied. The court stated that New York law permits a judgment creditor to restrain transfers of a judgment debtor’s property and allows the court to compel a nonparty to surrender the debtor’s property.

Judge Gardephe adopted the report and recommendation in its entirety, granted Trebco’s request for the post-judgment asset freeze and transfer, directed the Clerk to enter judgment, and closed the case. The permanent injunction had already been entered in the court’s earlier order.