Omega SA v. 375 Canal LLC

OMEGA SA, Plaintiffs, v. 375 Canal LLC, Defendant.

12 Civ. 6979 (PAC)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

June 12, 2019

OPINION & ORDER

A jury found 375 Canal LLC liable for contributory trademark infringement on March 4, 2019 and awarded Plaintiff Omega SA statutory damages totaling $1,100,000. Plaintiff now moves: (1) to amend the final judgment to include permanent injunctive relief; and (2) for entitlement to attorney's fees and prejudgment interest. Plaintiff's motion to amend the final judgment to include permanent injunctive relief is GRANTED, as MODIFIED; Plaintiff's motion for attorney's fees and prejudgment interest is DENIED.

BACKGROUND

Plaintiff Omega SA ("Omega") and dismissed Plaintiff Swatch SA commenced this action in September 2012 alleging that Defendant 375 Canal, LLC ("375 Canal" or "Defendant")¹ knowingly rented space at 375 Canal Street to a tenant who sold counterfeit watches. The Court denied Defendant's motion to dismiss in May 2013, Dkt. 22, and discovery closed in early 2016. Dkt. 47. After the Court denied Defendant's motion for summary judgment in December 2016,² a trial date was set. The day before the final pretrial conference was scheduled, however, 375Canal alerted the Court to falsehoods in a declaration submitted by one of Plaintiff's witnesses. Dkt. 141. Since this declaration had been relied upon in denying 375 Canal's summary judgment motion, the Court postponed the trial date and granted Defendant leave to move for reconsideration of summary judgment and for sanctions. See Transcript, Dkt. 151. On March 13, 2018, the Court denied 375 Canal's motion for sanctions and reconsideration of summary judgment. Dkt. 206. Unable to settle on the remaining claim, the parties proceeded to trial. Dkts. 219-22.

Trial began on February 25, 2019. After a four-day trial, the jury unanimously found 375 Canal liable for contributory infringement of four of Omega's federally-registered trademarks. See Dkt. 293. The jury also found that the infringing marks were counterfeit and that Defendant's conduct was willful. Id. The jury awarded Plaintiff $275,000 for each of four Omega trademarks infringed, totaling $1,100,000. Id. On March 12, 2019, the Court entered judgment for Omega and against Defendant, awarding Omega $1.1 million in damages, plus costs and post-judgment interest. Dkt. 298.

ANALYSIS

1. Injunctive Relief

A. Legal Standard

The Lanham Act expressly authorizes district courts to enter permanent injunctions to prevent future trademark infringement by a defendant. 15 U.S.C. § 1116; see, e.g., Innovation Ventures LLC v. Ultimate One Distrib. Corp., 176 F. Supp. 3d 137, 169 (E.D.N.Y. 2016). A permanent injunction is appropriate upon a showing by the plaintiff that (i) it has suffered irreparable injury; (ii) remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (iii) considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (iv) the public interest would not be disserved bya permanent injunction. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S. Ct. 1837, 1839, 164 L. Ed. 2d 641 (2006)

A court's power to enjoin future conduct, however, is not unfettered. Courts "cannot lawfully enjoin the world at large," Paramount Pictures Corp. v. Carol Pub. Grp., Inc., 25 F. Supp. 2d 372, 374 (S.D.N.Y. 1998) (quoting Alemite Mfg. Corp. v. Staff, 42 F.2d 832, 832 (2d Cir.1930)), and "injunctive relief should be no more burdensome to the defendant than necessary to provide complete relief to the plaintiffs." Califano v. Yamasaki, 442 U.S. 682, 702, 99 S. Ct. 2545, 2558, 61 L. Ed. 2d 176 (1979); Vives v. City of New York, 305 F. Supp. 2d 289, 303 (S.D.N.Y. 2003), rev'd on other grounds, 405 F.3d 115 (2d Cir. 2005). Consistent with this principle, the federal rules limit the binding effect of an injunction to "the parties[,]" "the parties' officers, agents, servants, employees, and attorneys[,]" and "other persons [with whom they] are in active concert or participation[,]" provided they receive "actual notice." Fed. R. Civ. P. 65(d)(2).

B. Analysis

375 Canal does not oppose entry of a permanent injunction in this case; but seeks to strike the provisions in Omega's proposed judgment which, in Defendant's view; (1) seek to bind buildings other than 375 Canal LLC and legal entities other than 375 Canal; (2) place affirmative burdens on 375 Canal "far more onerous than necessary to redress the minimal risk of future harm to Omega," Def. Opp. to Inj., Dkt. 319 at 1; and (3) are redundant.³

Plaintiff prevailed at trial against 375 Canal LLC for contributory trademark infringement based on the sale of a counterfeit watch at a specific location—namely, 375 Canal Street. Thelanguage in Omega's proposed amended judgment would bind 375 Canal, along with its "parent, subsidiaries, divisions, predecessors, partners, stockholders, members, affiliates, officers, directors, attorneys, agents, employees, representatives, and all persons in active concert or participation with any of them who receive actual notice," and "the land and building located at 375 Canal as well as any other real property owned or managed by 375 Canal, LLC," Pl.'s Rev. Ex. A, Dkt. 320, ¶¶ 10-11.⁴ The scope is overbroad and inconsistent with the judgment rendered at trial. Instead, the Court adopts Defendant's proposed language at ¶ 8, Def. Response, Dkt. 319, Ex. A, which is consistent with the scope of Rule 65(d), and removes all references to "any other real property owned or managed by 375 Canal, LLC" included in Omega's proposed judgment. See Pl.'s Rev. Ex. A, Dkt. 320, ¶¶ 11-13.⁵

Defendant's objection to Omega's proposed "affirmative burdens," however, is rejected. Paragraph 12 of Omega's proposed judgment orders 375 Canal to require any future tenant or subtenant to agree, through "express, written condition of any new lease or sub-lease" to "be bound by the terms of this permanent injunction" and "provide copies of such leases or sub-leases to Omega within 30 days of their execution." Pl.'s Rev. Ex. A ¶ 12. At trial, the jury found that 375 Canal failed to take remedial steps to prevent trademark infringement at 375 Canal Street even after it knew or had reason to know that counterfeit goods were being sold on the premises. Dkt. 293. Additionally, Defendant's testimony at trial revealed that notwithstanding this lawsuit,Defendant remains willing to rent its vacant retail space to souvenir shops in the future. See, e.g., Trial Tr. 2/28/19 at 611:7-9, 612:10-14. The requirement to include an express lease provision binding future tenants is hardly onerous; it is reasonably tailored to address Omega's proven risk of future harm.⁶

Paragraphs 10 through 13 are also not redundant. Paragraph 10 prohibits 375 Canal and its affiliate from infringing on Omega's trademarks and Paragraph 11 prohibits 375 Canal from allowing the premises at 375 Canal Street to be used to promote the sale of merchandise that infringes Omega's trademarks. Paragraph 12 places an affirmative duty on 375 Canal to bind its future tenants, through an express lease provision, to the permanent injunction and Paragraph 13 requires 375 Canal to notify Omega's lawyers upon learning of any allegation of trademark infringement or counterfeiting at 375 Canal Street. Each provision imposes a distinct burden, consistent with the judgment in this case, and remains.

Accordingly, with the above-mentioned modifications, and with the exception of Omega's proposed provisions awarding prejudgment interest and attorney's fees addressed below, the Court GRANTS Omega's motion to amend the final judgment to include permanent relief.

II. Attorney's Fees & Prejudgment Interest

A. Legal Standards

The Lanham Act provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). The Supreme Court has construed "exceptional cases" under the identically-worded fee shifting provision of the Patent Act, 35 U.S.C. § 285, as "simply one that stands out from others with respect to the substantive strengthof a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554, 134 S. Ct. 1749, 1756, 188 L. Ed. 2d 816 (2014). In making this determination, courts assess the "totality of the circumstances" and consider relevant factors including "frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Id. at 554 n.6 (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994)).

In 2018, the Second Circuit expressly joined the Third, Fourth, Fifth, Sixth, Ninth, and Federal Circuits in holding that the more flexible standard articulated in Octane applies to the attorneys' fees provision of the Lanham Act. See Sleepy's LLC v. Select Comfort Wholesale Corp., 909 F.3d 519, 522 (2d Cir. 2018). Prior to Sleepy's, the Second Circuit had historically limited "exceptional cases" to those involving "fraud or bad faith or willful infringement." Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 111 (2d Cir. 2012); see also Malletier v. Artex Creative Int'l Corp., 687 F. Supp. 2d 347, 358-59 (S.D.N.Y. 2010); Malletier v. Carducci Leather Fashions, Inc., 648 F. Supp. 2d 501, 505-06 (S.D.N.Y. 2009). But even under this stricter standard, bad faith did not automatically entitle a prevailing party to attorney's fees, as "courts routinely decline[d] to award attorneys' fees in cases involving willful infringement." Coty Inc. v. Excell Brands, LLC, 277 F. Supp. 3d 425, 469 (S.D.N.Y. 2017) (quoting Mister Softee, Inc. v. Boula Vending Inc., No. 10-CV-2390 (ARR) (JMA), 2011 WL 705139, at *1 (E.D.N.Y. Feb. 17, 2011). Cases in...