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Coach, Inc. and Coach v. Fashion Paradise

January 20, 2012

COACH, INC. AND COACH HON. JEROME B. SIMANDLE SERVICES, INC., PLAINTIFFS,
v.
FASHION PARADISE, LLC, NAMAN RAFI AND DOES 1 THROUGH 10, DEFENDANTS.



The opinion of the court was delivered by: Simandle, Chief Judge:

OPINION

I. INTRODUCTION

This matter comes before the Court on the motion of Plaintiffs Coach, Inc. and Coach Services, Inc.'s ("Coach" or "Plaintiffs") for default judgment [Docket Item 16] as against Defendants Fashion Paradise, LLC, and Naman Rafi ("Defendants"). For the reasons expressed below, the Court will grant Plaintiffs' motion.

I. BACKGROUND

A. Facts*fn1

The instant action arises out of the Defendants unlawfully selling counterfeit goods, knowingly and intentionally for the purpose of trading on the reputation of the Plaintiff. The Plaintiff maintains that the Defendants will continue to do so unless otherwise restrained. (Am. Compl. ¶¶ 30, 32.)

Coach is a manufacturer and distributor of luxury fashion accessories. Coach sells its goods through its own specialty retail stores, department stores, catalogs, and via the Internet throughout the United States. Coach owns a number of trademarks, trade dresses, and design elements/copyrights that it uses on its products.

Based on information obtained from a private investigator and Coach staff, Coach alleges that Defendants Fashion Paradise, LLC, and registered owner Naman Rafi have sold counterfeit Coach items at the store located at 2607-A Boardwalk, Atlantic City, New Jersey. (Am. Compl. ¶¶ 6, 27; Drobny Decl. ¶¶ 3-4.) For example, Defendants sold a $16.04 imitation of a $98.00 Coach belt that bore three Coach trademarks. (Am. Compl. ¶ 27B,C.)

Neither Fashion Paradise, LLC, nor Naman Rafi have been given permission to use the Coach trademarks. (Walden Decl. ¶ 12; Am. Compl. ¶ 29.)

B. Procedure

On September 22, 2010, the Plaintiffs filed a ten-count complaint against Defendants and ten John Does presenting claims of trademark counterfeiting (15 U.S.C. § 1114), trademark infringement (15 U.S.C. § 1114), trade dress infringement (15 U.S.C. § 1125(a)), false designation of origin and false advertising (15 U.S.C. § 1125(a)), trademark dilution (15 U.S.C. § 1125(c)), copyright infringement (17 U.S.C. §§ 501 et seq.), trademark counterfeiting (N.J. Stat. Ann. § 56:3-13.16), unfair competition (N.J. Stat. Ann. §§ 56:4-1 et seq.), common law trademark infringement, and unjust enrichment. Plaintiffs served Defendant Fashion Paradise, LLC, and Defendant Naman Rafi with a copy of the summons and complaint on October 9, 2010. [Docket Items 7 and 8.]

Plaintiffs then amended their complaint on November 2, 2010. [Docket Item 9.] The Amended Complaint alleges the same ten causes of action detailed above. Plaintiffs served Defendant Fashion Paradise, LLC, and Defendant Naman Rafi with a copy of the summons and Amended Complaint on November 24, 2010. [Docket Item 11.]

Despite being properly served, the Defendants have failed to respond to the Amended Complaint. On February 23, 2011, Plaintiffs filed a request for default, which the Clerk of Court entered pursuant to Rule 55(a), Fed. R. Civ. P., on February 24, 2011. [Docket Items 13 and 14.] Plaintiffs now move the Court to enter a default judgment against Defendants and seek a permanent injunction, statutory damages, and an award of attorney fees, investigator fees, and costs. [Docket Item 16.]

III. DISCUSSION

Fed. R. Civ. P. 55(b)(2) authorizes the entry of a default judgment against a party that has defaulted. However, default judgment is not a right. The decision about whether default judgment is proper is primarily within the discretion of the district court. Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984).

A. Standard of Review

Once a party has defaulted, the consequence is that "the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." DIRECTV, Inc. v. Pepe, 431 F.3d 162, 165 n.6 (3d Cir. 2005) (quoting Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990)). Entry of default judgment where damages are not a sum certain requires an application to the Court to prove, inter alia, damages. Fed. R. Civ. P. 55(b)(2); Comdyne, 908 F.2d at 1149. In addition, liability is not established by default alone. D.B. v. Bloom, 896 F. Supp. 166, 170 n.2 (D.N.J. 1995) (citing 10 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure, § 2681 (2d ed. 1983)). The Court must determine whether a sufficient cause of action was stated, Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535 (D.N.J. 2008), and whether default judgment is proper. Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000).

B. Sufficiency of Causes of Action

In the present case, after being properly served on November 24, 2010, the Defendants failed to appear or otherwise defend, and the Clerk of the Court entered a default. Therefore, the first issue is whether the Plaintiffs have stated a sufficient cause of action. As will be explained below, the Court determines that Coach has established Defendants' liability for the purposes of this default judgment motion.

1. Federal Claims

In their Amended Complaint, Plaintiffs have asserted six federal claims against the Defendants: trademark counterfeiting (15 U.S.C. § 1114(1)(a)); trademark infringement (15 U.S.C. § 1114(1)(a)); trade dress infringement (15 U.S.C. § 1125(a)); false designation of origin and false advertising (15 U.S.C. § 1125(a)(1)(A)); trademark dilution (15 U.S.C. § 1125(c)); and copyright infringement (17 U.S.C. §§ 501 et seq.). As discussed below, each was stated sufficiently to establish liability based on federal law.

a. Trademark Infringement (15 U.S.C. § 1114(1)(a)) and False Designation (15 U.S.C. § 1125(a)(1)(A))

Trademark infringement (Count II) and false designation (Count IV) are measured by identical standards. A & H Swimwear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000). The record must show: (1) the plaintiff has a valid and legally protectable mark, (2) the plaintiff owns the mark, and (3) the defendant's use of the mark causes a likelihood of confusion. Id.

The first two elements are satisfied by the Plaintiffs' registration and ownership of the relevant trademarks. (Am. Compl. ¶¶ 14-15.) The third element is also satisfied. In the Amended Complaint (Am. Compl. ¶¶ 43-44) and through exhibits, (e.g. Drobny Decl., Ex. A) the record has uncontested assertions and evidence that are sufficient to show a likelihood of confusion between the counterfeit belt and the genuine Coach product. Specifically, the photographs of the belt purchased by the investigator on August 30, 2010, clearly show a reproduction of the "Coach Op Art" registered trademark, the "Signature C" registered trademark, and the "Coach" registered trademark. (Drobny Decl. Ex. A; Am. Compl. ¶ 14.) Further, it is reasonable to believe that some consumers would be confused by these counterfeit products. See Coach, Inc. v. Cellular Planet, Civ. No. 09-00241, 2010 WL 1853424, at *1, *4 (S.D. Ohio, May 7, 2010) (holding that although the counterfeit items could be distinguished from genuine Coach items because they were being sold out of a trunk of a car, the counterfeit nature of the products meant they were inherently likely to cause confusion). Therefore, a cause of action for trade infringement and false designation has been sufficiently established.

b. Trademark Counterfeiting (15 U.S.C. § 1114(1)(a))

To establish trademark counterfeiting (Count I) the record must show (1) the defendant infringed a registered trademark in violation of the Lanham Act, 15 U.S.C. § 1114(1)(a) and (2) the defendant intentionally used the trademark knowing it was counterfeit or was willfully blind to such use. Chanel v. Gordashevsky, 558 F. Supp. 2d at 537. "The only distinction between the standard for federal trademark counterfeiting and the standard for establishing infringement is that to obtain treble or statutory damages for a counterfeiting claim, a plaintiff must show that the defendant intentionally used the plaintiff's trademark, knowing that it was a counterfeit." Id. at 536-537. The Third Circuit has stated that "willful" infringement "involves an intent to infringe or a deliberate disregard of a mark holder's rights." Securacomm Consulting Inc. v. Securacom Incorporated, 166 F.3d 182, 187 (3d Cir. 1999) superseded by statute on other grounds as recognized by Banjo Buddies, Inc. v. Renosky, 399 F.3d 182, 187 (3d Cir. 1999). Such willful conduct can be shown through "deliberate and unnecessary duplicating of a plaintiff's mark . . . in a way that was calculated to appropriate or otherwise benefit from the good will the plaintiff had nurtured." Id. quoting W.E. Bassett Co. v. Revlon, Inc., 435 F.2d 656, 662 (2d Cir. 1970) (internal punctuation omitted).

Here, both elements of trademark counterfeiting are met. It

has already been established that Defendants infringed the "Coach Op Art" trademark, the "Signature C" trademark, and the "Coach" trademark. In addition, Coach alleges that Defendants' infringement and counterfeiting was willful and intentional. (Am. Compl. ¶ 30.) Coach has also alleged, and the Court must now accept as true, that "products bearing the Coach Marks are widely recognized and exclusively associated by consumers, the public, and the trade as being high quality products sourced from Coach." (Am. Compl. ¶ 13.) Such well-known brands "are often imitated in order to profit from the company's reputation for high-end products." Coach, Inc. v Cosmetic House, Civ. No. 10-2794, 2011 WL 1211390 at * 4 (D.N.J., March 29, 2011). The Court infers from the sale of the infringing belt ...


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