Royce v. ROLLS-ROYCE USA, INC.

688 F.Supp.2d 150

ROLLS-ROYCE PLC and Rolls-Royce Motor Cars Limited, Plaintiffs, v. ROLLS-ROYCE USA, INC., Defendant.

No. 09-CV-1381(RRM)(VVP).

United States District Court, E.D. New York.

February 18, 2010.

Sean Christopher Sheely, Holland & Knight LLP, New York, NY, for Plaintiffs.

ORDER

MAUSKOPF, District Judge.

By Motion filed May 28, 2009, Plaintiffs moved for default judgment. By Order entered May 29, 2009, this Court referred that motion to the assigned Magistrate Judge, the Honorable Viktor V. Pohorelsky, for a Report and Recommendation. On January 27, 2010, Judge Pohorelsky issued a Report and Recommendation (the "R & R") recommending that (1) Plaintiffs' motion be granted; (2) Plaintiff Rolls-Royce plc be awarded damages of $1,000,000; (3) Plaintiff Rolls-Royce Motor Cars Limited be awarded damages of $1,000,000; and that (4) Defendant be permanently enjoined from using Plaintiffs' name and trademarks for commercial purposes. Judge Pohorelsky reminded the parties that, pursuant to Rule 72(b), any objection to the R & R was due February 10, 2010. No party has filed any objection.

Pursuant to 28 U.S.C. § 636(b) and Federal Rule of Civil Procedure 72, the Court has reviewed the R & R for clear error and, finding none, concurs with the R & R in its entirety. See Covey v. Simonton, 481 F.Supp.2d 224, 226 (E.D.N.Y.2007). Accordingly, it is hereby ORDERED that:

(1) Plaintiffs' motion for default judgment is GRANTED;

(2) Plaintiff Rolls-Royce plc is awarded damages of $1,000,000;

(3) Plaintiff Rolls-Royce Motor Cars Limited is awarded damages of $1,000,000;

(4) Defendant, Rolls-Royce USA, Inc., and its officers, agents, employees, servants, successors and assigns, and all other persons in active concert or participation with them are permanently enjoined from:

a. using the name "Rolls-Royce USA, Inc.," the marks ROLLS-ROYCE USA and RR, or any other reproduction, copy, or colorable imitation of the Rolls-Royce Marks or any of them, in any manner in connection with the conduct of its business, website or domain name, either alone or in conjunction with other words; and

b. making any other representation or taking any other action that may lead the public to believe that the business being conducted by Defendant under the name Rolls-Royce USA, Inc. is the business of Plaintiffs or of any of their authorized representatives, or is in any way affiliated or connected therewith;

(5) Defendant, Rolls-Royce USA, Inc., and its officers, agents, employees, servants, successors and assigns, and all other persons in active concert or participation with them shall:

a. obliterate, delete and remove the said corporate and business title and the names and marks "Rolls-Royce," and "RR" from its website, business offices, stationery, telephone and other listings, signs, advertising, promotional material and wherever else the same appear and to destroy or to surrender to Plaintiff any and all materials, including, but not limited to all clothing and apparel in their possession or subject to its control wherein the names "ROLLS-ROYCE" and the other Rolls-Royce Marks may appear; and

b. change its corporate name and to cause the cancellation, withdrawal or amendment of all filings, licenses and permits issued by or with federal, state or local governmental authorities or agencies so as to omit the names "Rolls-Royce," and the Rolls-Royce Marks or any of the them, or any reproduction, copy, counterfeit or colorable imitation thereof, from their business or corporate titles.

The Clerk of the Court is directed to close the case.

SO ORDERED.

REPORT AND RECOMMENDATION

VIKTOR V. POHORELSKY, United States Magistrate Judge.

The Honorable Roslynn R. Mauskopf referred this matter to the undersigned for a report and recommendation as to whether default judgment is appropriate, and if so, as to the amount of damages to be awarded to the plaintiffs Rolls-Royce plc and Rolls-Royce Motor Cars Limited. The plaintiffs have brought this action for trademark infringement and associated claims under the Federal Trademark Act of 1946 (the "Lanham Act" or "the Act"), 15 U.S.C. §§ 1051 et seq., and various New York state statutes.¹ The plaintiffs seek monetary relief as well as an injunction barring future infringement of the plaintiffs' trademarks. On the basis of the plaintiffs' submissions and the prior proceedings in this action, the undersigned makes the recommendations below regarding liability and damages.

I. Liability

The plaintiffs commenced this action against Rolls-Royce USA on April 6, 2009. The defendant was properly served with process, but failed to answer or respond to the complaint, or otherwise move or appear in this action. See Declaration of Sean C. Sheely in Support of Default Judgment, dated May 28, 2009, ¶ 3; Docket No. 3. The plaintiffs moved for a default judgment, and on May 8, 2009, the Clerk of Court entered a default against Rolls-Royce USA pursuant to Federal Rule of Civil Procedure 55(a). Thereafter, Judge Mauskopf referred the plaintiffs' motion for a default judgment to the undersigned for a report and recommendation, including as to damages, if appropriate.

Because of the default, the well-pleaded allegations of the Complaint are deemed admitted, except as to the amount of damages. See, e.g., Greyhound Exhibit-group v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.1992); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). Even so, "after default ... it remains for the court to consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit conclusions of law." Leider v. Ralfe, No. 01-CV-3137, 2004 WL 1773330, at *7 (S.D.N.Y. July 30, 2004) (quoting In re Indus. Diamonds Antitrust Litig., 119 F.Supp.2d 418, 420 (S.D.N.Y. 2000)). Put differently, liability does not automatically attach from the well-pleaded allegations of the complaint, as it remains the court's responsibility to ensure that the factual allegations, accepted as true, provide a proper basis for liability and relief. See Au Bon Pain, 653 F.2d at 65.

The plaintiff, Rolls-Royce Motor Cars, manufactures and markets Rolls-Royce luxury automobiles, as well as associated parts and equipment. Complaint ¶ 6. Rolls-Royce plc, the other plaintiff, manufactures gas turbine engines for use in aircraft and other technologically advanced machinery. Complaint ¶ 5. Since 1907, the plaintiffs collectively (and their predecessors in interest) have used the mark "Rolls-Royce," the Rolls-Royce insignia of two interlocked "R"s², and the badge "Rolls-RR-Royce"³ in carrying on their businesses. Complaint ¶ 8. Rolls-Royce plc owns trademarks with the United States Patent and Trademark Office (hereafter the "PTO") for the use of all three marks for aircraft engines and other products. Complaint ¶ 9, Exhibits A-J. Rolls-Royce Motor Cars also owns trademark registrations for the "Rolls-RR-Royce" badge, the letters "RR" and the mark "Rolls-Royce" for automobiles and other products.⁴ Complaint ¶ 10, Exhibits A-J. The registrations for each mark (which have been renewed and remain in force), as well as the registration number and date of issuance for both plaintiffs, are summarized in the table below. Complaint ¶¶ 9-10, Exhibits A-J.

                    "Rolls-Royce"      Letters "RR"         "Rolls-RR-Royce"
Rolls-Royce plc     Reg. No. 325,316   Reg. No. 1,068,023   Reg. No. 1,068,022
                    June 18, 1935      June 21, 1977         June 21, 1977
                    Reg. No. 912,848                        Reg. No. 1,160,411
                    June 8, 1971                            July 7, 1981
                                                            Reg. No. 1,275,757
                                                            May 1, 1984
Rolls-Royce Motor   Reg. No. 325,195   Reg. No. 344,372     Reg. No. 197,089
 Cars Ltd.          June 11, 1935      March 23, 1937       April 7, 1925

The defendant, Rolls-Royce USA, is a New York corporation unaffiliated with the plaintiffs or with Rolls-Royce in general. Complaint ¶ 7. The defendant's business includes the production, marketing, and sale of clothing, including athletic apparel. Complaint ¶ 7. The defendant produced and sold clothing bearing the name "Rolls-Royce USA" and the mark "RR." Complaint ¶ 16. The plaintiffs never consented to or authorized the defendant's use of their trademarks. Complaint ¶ 22. In July 2008, the defendant applied to the PTO for a registration of the mark "RR Rolls Royce USA"⁵ to use in connection with numerous items of clothing.⁶ Complaint ¶ 17, Exhibit L. That application shows that the defendant used the mark it sought to register as early as May 21, 2007, and that it first used it in commerce as early as June 1, 2007. Complaint, Exhibit L. In October 2008, the PTO refused the defendant's application to register the mark "RR Rolls Royce USA," noting that the similarities to the plaintiffs' trademarks for use on similar products would engender consumer confusion. Complaint ¶ 19. Before filing this lawsuit, the plaintiffs repeatedly demanded that the defendant cease and desist from using the plaintiffs' name and trademarks, but the defendant did not comply. Complaint ¶ 27. It is unclear whether the defendant continues to produce and sell the infringing clothing.

The Lanham Act, broadly speaking, provides the federal courts with subject matter jurisdiction over matters involving violations of patents and trademarks. 15 U.S.C. § 1121. Registration of trademarks give registrants the exclusive and incontestable right (with some exceptions, none of them applicable here) to use of the trademarks for commercial purposes. See 15 U.S.C. §§ 1065, 1115. The Lanham Act correspondingly makes it illegal to "use in commerce any reproduction, counterfeit, copy, or colorable imitation of a registered trademark in connection with the sale, offering for sale, distribution, or advertising of any goods or...