Coach, Inc. v. 3D Designers Inspirations

70 F.Supp.3d 942

Coach, Inc., and Coach Services, Inc., Plaintiffs

v.3D Designers Inspirations, Does 1 through 100, and Mazhar Nadeem, d/b/a 3D Designers Inspirations, Defendants.

Case No. 4:11–cv–04092–SLD–JEH

United States District Court, C.D. Illinois, Rock Island Division.

Signed September 29, 2014

Amy Elizabeth Breihan, Bryan Cave LLP, St. Louis, MO, Mariangela M. Seale, Steven Patrick McKey, Bryan Cave LLP, Chicago, IL, for Plaintiffs.

Mazhar Nadeem, Moline, IL, pro se.

ORDER

SARA DARROW, UNITED STATES DISTRICT JUDGE

Plaintiffs Coach, Inc., and Coach Services, Inc., (collectively “Coach”) allege that Defendants 3D Designers Inspirations and its principal, Mazhar Nadeem (collectively “3D”), sold goods bearing counterfeit Coach trademarks.¹ Default has been entered against 3D, and Coach now moves for a default judgment awarding it injunctive relief and statutory damages pursuant to the Lanham Act, 15 U.S.C. §§ 1116 –17. For the following reasons, Plaintiff Coach's Motion for Default Judgment, ECF No. 43, is GRANTED.

BACKGROUND²

I. Facts

Coach manufacturers and sells leather and mixed material products such as handbags, wallets, accessories, eyewear, footwear, jewelry, and watches. Coach owns several United States Federal Trademark Registrations, trademarks that are so widely recognized as to qualify as “famous marks” under 15 U.S.C. § 1125(c)(1). Mazhar Nadeem operates 3D, which sells accessories such as purses, wallets, and satchels out of its store in South Park Mall in Moline, Illinois.

On or about August 12, 2011, an investigator hired by Coach entered the 3D location in South Park Mall. The investigator noted that 3D had approximately 10 to 15 products depicting Coach trademarks, including purses, wallets, and satchels, on display in a locked glass cabinet along with other trademarked items. The investigator purchased, for $39.99 and $29.99, respectively: (1) a blue satchel-type purse bearing at least two different registered Coach trademarks; and (2) a multi-colored wallet bearing at least three different registered Coach trademarks. Dayanara Perez, Coach's Intellectual Property Coordinator, examined images of these items on August 25, 2011, and determined that the items appeared to be counterfeit for several reasons including: 3D Designers is not an authorized Coach retailer; Coach did not manufacture those items in those particular design patterns and colors; the satchel's lining differed from the type Coach uses; the Coach trademarks are incorrect or inconsistent with those found on authentic merchandise; the quality and craftsmanship fell below Coach's standards; and Coach's suggested retail price for such a satchel and wallet are $128.00 and $198.00, respectively. Perez Aff., ECF No. 43–2.

Coach has not licensed or authorized 3D to use Coach trademarks, whose fame, strength, and associated good will 3D is aware of. Coach maintains that 3D counterfeited and infringed on its trademarks “negligently and/or knowingly and intentionally, with reckless disregard or willful blindness to Coach's rights, or with bad faith” in order to profit from the reputation of Coach products. Further, Coach claims, consumers are likely to be deceived into believing there is a connection between 3D's products and Coach. Finally, Coach believes 3D plans to continue to sell the trademark infringing products.

II. Procedural History

On October 11, 2011, Coach filed an eleven-count complaint against 3D alleging trademark infringement, trade dress infringement, trademark dilution and counterfeiting under the Lanham Act, 15 U.S.C. §§ 1114, 1116, 1117, 1125(a), (c) ; direct and contributory copyright infringement under the United States Copyright Act, 17 U.S.C. § 501 ; trademark infringement, unfair competition and unjust enrichment under Illinois common law; trademark dilution under Illinois common law and the Illinois Trademark Registration and Protection Act, 765 ILCS 1036/65 ; and unfair competition under the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505. On December 22, 2012, 3D filed an answer.

On July 5, 2013, 3D's attorney, Steven Balk, filed a motion to withdraw, claiming he had lost contact with 3D, making further representation impossible. Defs.' Mot. Withdraw as Att'y, ECF No. 17. On July 23, 2012, Balk withdrew his motion on the grounds that 3D had re-established communication. Defs.' Mot. Withdraw Mot. 19, ECF No. 19. On October 12, 2012, the Court granted a motion to compel production by Coach, noting that Coach had served 3D with written discovery requests and a request for admission in May 2012, and 3D failed to respond by both the original deadline as well as a second, extended deadline the Court granted. Oct. 12, 2012 Order 1–2, ECF No. 23. The Court awarded Coach attorney's fees for the motion, held that all facts in Coach's Requests for Admission would be deemed admitted by 3D for the purposes of this litigation, and ordered 3D to respond to Coach's other discovery requests by October 22, 2012. Id. at 2. In its Requests for Admission, Coach had requested that 3D admit to selling products bearing counterfeit Coach trademarks, specifically the purchased satchel and wallet, despite knowing that they were inauthentic and that such activity was therefore unlawful. Pls.' Mot. Default J., Ex. 1, ECF No. 43–1.

On October 12, 2012, Balk again moved to withdraw, claiming he had again lost contact with his clients. 2d Mot. Withdraw as Att'y, ECF No. 24. The Court scheduled a hearing on this motion, as well as the Court's own motion to find 3D in default, for November 21, 2012. At that hearing, Coach said the parties had reached a settlement and Balk withdrew his motion to withdraw. The parties filed a stipulation of dismissal on December 20, 2012. However, Coach moved to reinstate the action or enforce the settlement agreement on January 4, 2013, claiming that 3D had failed to pay the first of six installments due under the settlement agreement, and that Balk failed to respond to Coach's efforts to discuss the matter. At a March 6, 2013 hearing, the Court granted Coach's request to reinstate its suit, granted Balk's third request to withdraw as attorney, and gave 3D thirty days to obtain new counsel or continue pro se. At an April 8, 2013, the Court denied 3D's request for more time to obtain counsel and ordered the parties to submit a proposed scheduling order. Nadeem did not answer several attempts by the Court to include 3D in a May 8, 2013 Rule 16 Scheduling Conference, at which the Court set a deadline of May 17, 2013, for 3D to respond to Coach's written discovery requests.

On October 21, 2013, Coach moved for entry of default, stating that 3D had never responded to its discovery requests; indeed, Coach claimed it had been unable to contact Nadeem since May 2013. Pls.' Mot. for Lv. to File Mot. Entry Default, ECF No. 39. Coach mailed notice of this motion to 3D on October 21, 2013. Cole Aff., ECF No. 40. On December 5, 2013, the Court entered default, finding that 3D's failure to abide by the settlement agreement, respond to discovery requests, or even keep in contact with its own attorney, indicated that “Nadeem and his company have demonstrated a willful refusal to proceed with the defense of this litigation.” Dec. 5, 2013 Order 4–5, ECF No. 42. On December 17, 2013, Coach filed the instant motion for a default judgment. Two days later, on December 19, 2013, 3D requested an extension of time “[d]ue to holidays” to find new counsel and respond to the motion for default judgment. Defs' Mot. Ext. Time, ECF No. 44. The Court extended the response deadline until January 21, 2014, warning 3D that this would be the last extension it received due to its inability to timely retain counsel. Accordingly, the Court denied 3D's request for another extension on January 21, 2014. 3D has made no further attempt to defend its interests since then.

In its Motion for Default Judgment, Coach requests that the Court (1) enter final judgment finding that 3D willfully engaged in trademark counterfeiting under the Lanham Act, (2) enter a permanent injunction enjoining 3D from infringing Coach's trademarks, and (3) award Coach $800,000 in statutory damages pursuant to 15 U.S.C. § 1117(c)(2). Pls.' Mot. Default J. 4, 6, 15, ECF No. 43. Coach requests no relief under its state law claims.

ANALYSIS

I. Legal Standard

Default is entered when a party has failed to appear or otherwise defend. Fed. R. Civ. P. 55(a). A default judgment establishes, as a matter of law, that defendants are liable to a plaintiff on each cause of action alleged in a complaint. Dundee Cement Co. v. Howard Pipe & Concrete Products, Inc., 722 F.2d 1319, 1323 (7th Cir.1983) ; Breuer Elec. Mfg. Co. v. Tor o nado Sys. of Am., Inc., 687 F.2d 182, 186 (7th Cir.1982). The well-pleaded allegations of the complaint relating to liability are taken as true upon default. Dundee Cement Co., 722 F.2d at 1323. Allegations regarding the amount of damages, by contrast, are not assumed to be accurate. e360 Insight v. The Spamhaus Project, 500 F.3d 594, 602 (7th Cir.2007) (citing In re Catt, 368 F.3d 789, 793 (7th Cir.2004) ). The Court must conduct an inquiry to determine the amount of damages with reasonable certainty, id. and must hold a hearing concerning damages unless “the amount claimed is liquidated or capable of ascertainment from definite figures contained in the documentary evidence or in detailed affidavits,” Dundee Cement, 722 F.2d at 1323 (collecting cases). Further, in accounting for damages, the Court may not award relief different in kind or exceeding in amount what the plaintiff demanded in the complaint. Fed. R. Civ. P. 54(c).

Trademark infringement and counterfeiting are prohibited under 15 U.S.C. § 1114(a). The Lanham Act prohibits the use, without the registrant's consent, of a copy, counterfeit, or imitation of a registered trademark in connection with the advertising or sale of goods or services where such use “is likely to cause confusion, or...