Linhope Int'l v. Jianqing, Ltd.

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Linhope International Ltd.; House of CB USA, LLC; Sirens Design, LLC; and Original Beauty Technology Co., Ltd. PLAINTIFFS v. Jianqing Ltd., and Jianqing Chen. DEFENDANTS

No. 21-cv-00871 (VLB)

United States District Court, D. Connecticut

March 13, 2023

RULING AND ORDER ON DAMAGES

Hon Vanessa L. Bryant United States District Judge

In this trademark infringement action, the Court has already granted default judgment on liability and issued injunctive relief. The only remaining issue is monetary damages. The Court incorporates its recitation of the facts from its Memorandum of Decision on the Motion for Default Judgment. Plaintiff Linhope International Ltd. (“Linhope”), the only plaintiff entitled to default judgment, seeks $1.4 million in statutory damages pursuant to 15 U.S.C. § 1117(d); $101,423.55 in attorneys' fees and costs ($99,937.80 in attorneys' fees and $1,485.75 in costs) pursuant to 15 U.S.C. § 1117(a); and an unspecified amount of punitive damages pursuant to the Connecticut Unfair Trade Practices Act (“CUTPA”), Conn. Gen. Stat. § 42-110g(a). For the following reasons, the Court awards statutory damages in the amount of $1,050,000.00 (i.e $75,000.00 per mark); costs in the amount of $1,485.75; and punitive damages in the amount of $2,484.00. The Court denies the request for attorneys' fees.

I. PROCEDURAL BACKGROUND

The Court issued a memorandum of decision on September 30, 2022, granting in part and denying in part Plaintiffs' motion for default judgment. [See Dkt. 30 (Mem. Decision).] With respect to liability, the Court found default judgment warranted as to Linhope on the following counts: Count 1, false designation of origin (counterfeit) in violation of 15 U.S.C. § 1125(a)(1); Count 2, dilution in violation of 15 U.S.C. § 1125(c)(1); Count 3, cyberpiracy in violation of 15 U.S.C § 1125(d)(1); Counts 4 through 15, cancellation of trademark registrations under 15 U.S.C. §§ 1052(d), 1064 and 1119; Counts 19 and 20, violation of the Connecticut Unfair Trade Practices Act, Conn. Gen. Stat. § 42-110g(a); and Count 21, common law trademark infringement. The Court denied default judgment for all other claims as to Linhope and for all claims as to the other plaintiffs. The Court also ruled that Defendant Jianqing Chen is liable for the actions of Defendant Jianqing Ltd. (“Company”).

As for relief, the Court granted in part the requested injunctive relief but concluded that the amount of monetary damages, attorneys' fees, and costs required additional briefing. Specifically, the Court stated: “Because of the outstanding legal issues, the Court finds that an award of statutory damages, punitive damages, and attorneys' fees and costs are premature at this time. Plaintiffs may submit evidence supporting damages should they believe evidence would aid the Court.” [Id. at 21.]

Linhope filed a motion for monetary damages, seeking $1.4 million in statutory damages and $101,423.55 in attorneys' fees and costs. Linhope supplemented its motion to request an unspecified amount of punitive damages for the CUTPA violation. Linhope only submitted evidence concerning its attorneys' fees request. Defendants failed to respond to the motion.

II. DISCUSSION

As the Court explained in its decision on liability, “a defendant who defaults ... admits all well-pleaded factual allegations contained in the complaint.” City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011). Even though the allegations are deemed admitted for the purposes of liability, default is not an admission of damages. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). It is the plaintiff's burden to prove damages by a preponderance of the evidence for Lanham Act damages. See Octane Fitness, LLC v. Icon Health & Fitness, Inc., 572 U.S. 545 (2014) (holding the preponderance of the evidence standard applies, in the patent case, because the statute “demands a simple discretionary inquiry” and “imposes no specific evidentiary burden, much less such a high one”); Koon Chun Hing Kee Soy & Sauce Factory, Ltd. v. Star Mark Mgmt., Inc., 628 F.Supp.2d 312, 322 (E.D.N.Y. 2009) (finding preponderance of the evidence standard applied to 15 U.S.C. § 1117(b), a subsection that similarly lacks burden of proof language). The preponderance of the evidence standard applies to CUTPA damages too. See Whitaker v. Taylor, 99 Conn.App. 719, 735 (2007) (stating “the ordinary preponderance of the evidence standard is appropriate” when seeking punitive damages under CUTPA); see also Stuart v. Stuart, 296 Conn. 26, 39 (2010) (using CUTPA punitive damages statute as an example in stating the “general rule [is] that when a civil statute is silent as to the applicable standard of proof, the preponderance of the evidence standard governs factual determinations required by that statute”) (internal quotation marks omitted).

A. Lanham Act Damages

Section 1117 of Title 15 of the United States Code permits a plaintiff to recover (1) defendant's profits; (2) plaintiff's damages; and (3) costs for a defendant's violation of the counterfeit and cyberpiracy statutes, 15 U.S.C. §§ 1125(a), (d), and for a defendant's willful dilution of the mark, 15 U.S.C. § 1125(c). See 15 U.S.C. § 1117(a). Instead of profits or damages, a plaintiff may alternatively recover statutory damages for a cyberpiracy violation under 15 U.S.C. § 1117(d). For “exceptional cases,” the prevailing party is entitled to “reasonable attorney fees.” 15 U.S.C. § 1117(a).

Linhope seeks $1.4 million in statutory damages for the cyberpiracy violation under § 1117(d)(1). Having obtained default judgment for other Lanham Act violations, it appears Linhope has elected to forego actual damages under those counts. Linhope also seeks $101,423.55 in attorneys' fees and costs under § 1117(a).

1. Statutory Damages

When a defendant violates the cyberpiracy statute, 15 U.S.C. § 1125(d)(1), a plaintiff may recover statutory damages “in the amount of not less than $1,000 and nor more than $100,000 per domain name, as the court considers just.” 15 U.S.C. § 1117(d). Statutory damages serve both a compensatory and a punitive purpose. See Mamiya Am. Corp. v. HuaYi Bros., Inc., No. 09-CV-5501 (ENV)(JO), 2011 WL 1322383, at *7 (E.D.N.Y. Mar. 11, 2011). “Congress enacted the statutory damages remedy in trademark counterfeiting cases because evidence of a [cyberpirate's] profits is almost impossible to ascertain since records are frequently nonexistent, inadequate, or deceptively kept.” Spin Master Ltd. v. 158, 463 F.Supp.3d 348, 371 (S.D.N.Y. 2020) (internal quotation marks omitted). Statutory damages are “particularly useful” for default judgment actions where the plaintiff does not have the benefit of discovery. Campbell v. Huertas, No. 20-CV-3471 (KAM), 2023 WL 1967512, at *7 (E.D.N.Y. Feb. 13, 2023); Church & Dwight Co., Inc. v. Kaloti Enter. of Michigan, LLC, 697 F.Supp.2d 287, 291 (S.D.N.Y. 2009) (citation omitted) (“The award of statutory damages is particularly appropriate in the default judgment context where plaintiff is without the benefit of any disclosure by the infringer, leaving damages uncertain.”).

Neither the United States Supreme Court nor the Second Circuit has ever established how to determine “just” statutory damages in a trademark infringement case. The Second Circuit has, however, evaluated identical language in a copyright case, Fitzgerald Publishing Company v. Baylor Publishing Company, 807 F.2d 1110 (2d Cir. 1986). There, the Second Circuit outlined seven factors: (1) “expenses saved and the profits reaped,” (2) plaintiff's lost revenue, (3) “the value of the copyright,” (4) deterrent effect on others, (5) defendant's innocence / willfulness, (6) defendant's cooperation in providing records, and (7) “potential for discouraging the defendant.” Id. at 1117. Since then, courts within the Second Circuit have adopted these factors for trademark infringement cases. See, e.g., Spin Master, 463 F.Supp.3d at 371; Experience Hendrix, L.L.C. v. Pitsicalis, No. 17 Civ. 1927 (PAE) (GWG), 2020 WL 3564485, at *10 n.5 (S.D.N.Y. July 1, 2020); Mamiya, 2011 WL 1322383, at *7. “Within the[ ] statutory limits courts have considerably broad discretion to balance the punitive, deterrent function of an award against the direction that it not constitute a windfall for prevailing plaintiffs.” Louis Vuitton Malletier S.A. v. LY USA, Inc., 472 Fed.Appx. 19, 22 (2d Cir. 2012) (internal quotation marks omitted).

Expenses and Profits Reaped / Lost Revenue. The first and second factors cannot be readily determined by virtue of Defendants' default. See, Experience Hendrix, 2020 WL 3564485, at *11 (collecting cases); Mamiya, 2011 WL 1322383, at *7 (stating defendant's “default having made it impossible for [plaintiff] to determine the profits accrued ... through the unauthorized use of the Profoto Marks, statutory damages are particularly appropriate here”). Courts have inferred “a broad scope of operations in cases dealing specifically with websites that ship and sell to a wide geographic range.” AW Licensing, LLC v. Bao, No. 15-cv-1373 (KBF), 2016 WL 4137453, at *3 (S.D.N.Y. Aug. 2, 2016). As Linhope explained in its motion, the quantity and breadth of Defendants' infringement-14 domain names on a “global scale”-weighs in favor of a statutory damages award at the high end. [Dkt. 31 (Mot. Damages) at 4.]

Mark's Value. The HOUSEOFCB brand targets women between ages 17 and 34, “who are interested in celebrity pop culture fashion and social media.” [Dkt. 1 (Compl.) ¶ 38.] Linhope's HOUSEOFCB Instagram account has 3.2 million followers. [Id. ¶ 40.] Plaintiff Linhope's combined brick-and-mortar and website sales totaled $21.5 million in 2018, $24.0 million in 2019, and $21.5 million in 2020. “C...