Foxmind Canada Enterprises LTD. v. Beijing Hui Xin Zhi Xiang Shangmao Youxian…

Background

FoxMind Canada Enterprises Ltd. alleged that the defendants counterfeited and sold products bearing FoxMind’s registered “POP IT!” trademark. The claims included trademark counterfeiting and infringement under the Lanham Act, false designation of origin, passing off, and unfair competition under federal and state law. FoxMind sought statutory damages under 15 U.S.C. § 1117(c), post-judgment interest, and a permanent injunction.

The defendants were individuals and/or businesses located in China that conducted business in the United States through user accounts and merchant storefronts on Fruugo. The opinion states that they offered products that appeared identical to FoxMind’s Pop It products and sold or offered them to United States consumers, including consumers in New York. The defendants were not authorized to deal in FoxMind’s products.

The Clerk entered default against the defendants on January 25, 2023. The Court later ordered them to show why a default judgment and permanent injunction should not be entered, but they did not appear or respond. The Court stated that fifteen defaulting defendants were subject to the judgment; the individual defendants are listed in the glossary of the judgment, not in the opinion text provided here.

Default Judgment and Liability

Federal Rule of Civil Procedure 55 requires entry of a default followed by entry of a default judgment. The Court found that all three relevant factors favored judgment: the defendants’ failure to respond indicated willful conduct, the Court was unaware of any meritorious defense, and FoxMind would be prejudiced without a judgment because it would have no other remedy.

Although default meant that the Court accepted the well-pleaded factual allegations as true and drew reasonable inferences for FoxMind, it still had to determine whether those allegations established liability as a matter of law. The Court found that it had personal jurisdiction over the defaulting defendants because their online storefronts made the accused products available for purchase in New York, including through purchases made by FoxMind’s counsel.

The Court held that FoxMind established liability for trademark counterfeiting and infringement. FoxMind owned a valid registered trademark, and the alleged distribution of counterfeit products bearing that mark established a likelihood of confusion. The Court also held that these allegations established liability for false designation of origin, passing off, and federal unfair competition. It further found that the allegations established the state-law unfair competition claim because the counterfeiting showed actual confusion and bad faith.

Damages

The Court explained that a default establishes liability but does not admit the amount of damages. It therefore reviewed FoxMind’s submissions to determine damages with reasonable certainty and concluded that an evidentiary hearing was unnecessary.

Under the Lanham Act, statutory damages for counterfeit marks may range from $1,000 to $200,000 per counterfeit mark per type of goods or services, or up to $2,000,000 when the use was willful. The Court found willfulness based on the defendants’ default and the apparent similarity between their products and FoxMind’s mark.

Applying the factors used to determine a just statutory-damages award, the Court considered the defendants’ failure to provide records, the online distribution of the counterfeit products, the lack of specific evidence of FoxMind’s lost revenue or the defendants’ profits, the recognition of the Pop It products and mark, and the need for deterrence. The Court awarded $50,000 against each of the fifteen defaulting defendants. It also awarded post-judgment interest under 28 U.S.C. § 1961.

Permanent Injunction

The Court entered permanent injunctions substantially similar to the preliminary injunctions previously entered in the case. It concluded that the Lanham Act authorized the injunction and that FoxMind had shown actual success on the merits, irreparable harm, no adequate remedy at law, a balance of hardships favoring FoxMind, and that the public interest would not be harmed. The injunction prohibits various activities needed to prevent continued infringement of FoxMind’s Pop It mark and continued false designation of origin.

Disposition

The Court directed the Clerk to enter judgment for FoxMind and against the defaulting defendants as reflected in the Final Default Judgment and Permanent Injunction Order. It also directed the Clerk to close pending motions and close the case.