GREENBERG TRAURIG LLP 200 Park Avenue MetLife Building New York, New York Tel: (212) Attorneys for Tory Burch LLC & River Light V, LP

Transcription

1 Tory Burch LLC, et al v. Yong Sheng International Trade Co., Ltd, et al Doc. 24 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK TORY BURCH LLC; RIVER LIGHT V, L.P. CIVIL ACTION NO. 10 Civ (DAB) Plaintiffs, v. YONG SHENG INTERNATIONAL TRADE CO., LTD; CONGDADA PENA; BINGFENG QUI; LI YAXIACHAI; LI BIN et al. Defendants. MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS APPLICATION FOR A DEFAULT JUDGMENT AND PERMANENT INJUNCTION ORDER GREENBERG TRAURIG LLP 200 Park Avenue MetLife Building New York, New York Tel: (212) Attorneys for Tory Burch LLC & River Light V, LP Dockets.Justia.com

2 TABLE OF CONTENTS TABLE OF AUTHORITIES... iii PRELIMINARY STATEMENT...1 I. FACTUAL BACKGROUND...3 A. Procedural History...3 B. Tory Burch Owns Protectable Trademark Rights in Its TORY BURCH Trademarks...4 C. Defendants Have Willfully Counterfeited the TORY BURCH Marks...6 D. Defendants Continue to Establish New Web Sites and Sell Counterfeit Products in Violation of the Injunction...10 II. ARGUMENT...11 A. Defendants Are Subject To Personal Jurisdiction...11 B. Tory Burch Has Met the Prerequisites for Default Judgment...14 C. Tory Burch Should Prevail on Its Trademark Counterfeiting and Cybersquatting Claims Tory Burch Has Proven Its Claims for Trademark Counterfeiting...15 a. The TORY BURCH Marks Are Valid And Protectable...16 b. Consumers Are Likely to Be Confused as to the Source of Defendants Counterfeit Products Tory Burch Has Proven Its Claims for Cybersquatting...17 a. The TORY BURCH Marks Are Distinctive And Famous...18 b. The Infringing Domain Names Are Identical Or Confusingly Similar to the TORY BURCH Marks...18 c. Defendants Have Shown Bad Faith Intent to Profit from the TORY BURCH Marks...19 D. The Court Should Award Maximum Statutory Damages for Willful Trademark Counterfeiting and Cybersquatting...19 E. The Court Should Permanently Enjoin Defendants Counterfeiting Operations...23

3 F. The Court Should Grant Tory Burch On-Going Injunctive Relief in Order to Curtail Defendants Counterfeiting Operations...24 III. CONCLUSION...25 ii

4 Cases TABLE OF AUTHORITIES Banff, Ltd. v. Federated Dept. Stores Inc., 841 F.2d 486 (2d Cir. 1988)... 15, 16 Bensusan Restaurant Corp. v. King, 126 F.3d 25 (2d. Cir 1997) Best Van Lines, Inc. v. Walker, 490 F.3d 239 (2d Cir. 2007) Burberry Ltd. v. Euro Moda, Inc., 2009 U.S. Dist. LEXIS (S.D.N.Y. Dec. 4, 2009) Chloe v. Queen Bee of Beverly Hills, 616 F.3d 158 (2d Cir. 2010)... 11, 13 Columbia Pictures Indus. v. King, 2010 U.S. Dist. LEXIS (E.D.N.Y. Mar. 29, 2010) Cutco Industries, Inc. v. Naughton, 806 F.2d 361 (2d. Cir 1986) Diarama Trading Co., Inc. v. J. Walter Thompson U.S.A., Inc., 2005 U.S. Dist. LEXIS (S.D.N.Y. Sept. 6, 2005) Freedom Calls Found. v. Bukstel, 2006 U.S. Dist. LEXIS (E.D.N.Y. Mar. 3, 2006) Gucci America, Inc. v. MyReplicaHandbag.com, No. 07 Civ (JGK), 2008 WL (S.D.N.Y. Feb. 26, 2008) Hanson v. Denckla, 357 U.S. 235 (1958) ICG Am., Inc. v. Wine of the Month Club, Inc., No. 3:09-cv-133 (PCD), 2009 U.S. Dist. LEXIS (D. Conn. Aug. 28, 2009) International Shoe Co. v. Washington, 326 U.S. 310 (1945) John Wiley & Sons, Inc. v. Swancoat, No. 08 Civ (JGK), 2009 U.S. Dist. LEXIS (S.D.N.Y. Aug. 14, 2009) Lorillard Tobacco Co. v. Jamelis Grocery, Inc., 378 F. Supp. 2d 448 (S.D.N.Y. 2005)... 15, 16 Louis Vuitton Malletier & Oakley, Inc. v. Veit, 211 F. Supp. 2d 567 (D. Pa. 2002) Louis Vuitton Malletier v. WhenU.com, Inc, No. 05 Civ (LAK), 2007 WL (S.D.N.Y. Jan. 26, 2007) Lucas Nursery v. Grosse, 359 F.3d 806 (6th Cir. 2004) iii

5 Lyons P'ship, L.P. v. D&L Amusement & Entm't, 2010 U.S. Dist. LEXIS (E.D.N.Y. Mar. 2, 2010) Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L., 264 F.3d 32 (2d Cir. 2001) Mattel, Inc. v. Internet Dimensions, Inc., 55 U.S.P.Q. 2d (BNA) 1620 (S.D.N.Y. 2000) Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560 (2d Cir. 1996) N.A.S. Import, Corp. v. Chenson Enters., Inc., 968 F.2d 250 (2d Cir. 1992) New York v. Green, 420 F.3d 99 (2d Cir. 2005) Otokoyama Co. Ltd. v. Wine of Japan Import, Inc., 175 F.3d 266 (2d Cir. 1999) Parker Waichman Alonso v. The Orlando Firm, 09 Civ (CM), 2010 U.S. Dist. LEXIS (S.D.N.Y. May 14, 2010) Phillip Morris USA Inc., No. CV (CPS), 2005 WL (E.D.N.Y. Aug. 26, 2005) Phillip Morris v. Veles LTD., No. 06 CV 2988 (GBD), 2007 U.S. Dist. LEXIS (Mar. 13, 2007) Philip Morris United States, Inc. v. U.S. Sun Star Trading, Inc., 2010 U.S. Dist. LEXIS (E.D.N.Y. Mar. 11, 2010)... 16, 20 Polaroid Corp. v. Polarad Elecs. Corp. 287 F.2d 492 (2d Cir. 1961), cert. denied, 368 U.S. 820 (1961) Prime Publishers, Inc. v. Am.-Republican, Inc., 160 F. Supp. 2d 266 (D. Conn. 2001) Rolex Watch U.S.A., Inc. v. Brown, No. 1 Civ. 9155, 2002 WL (S.D.N.Y. June 5, 2002)... 21, 22 Sara Lee Corp. v. Bags of New York, Inc., 36 F. Supp. 2d 161 (S.D.N.Y. 1999)... 20, 21 Silhouette Int'l Schmied AG v. Chakhbazian, No. 04 Civ RJH AJP, 2004 WL (S.D.N.Y. Oct. 4, 2004) System Federation No. 91 Railway Employees' Dep't v. Wright, 364 U.S. 642 (1961)... 24, 25 Tiffany (NJ) Inc. v. Luban, 282 F. Supp. 2d 123 (S.D.N.Y. 2003) Zippo Mfg. Co. v. Zippo DOT Com, Inc., 952 F. Supp (W.D. Pa. 1997) iv

6 Federal Statutes 15 U.S.C. 1057(b) U.S.C. 1116(a) U.S.C. 1116(d) U.S.C. 1117(c)... passim 15 U.S.C. 1117(c)(2)... 19, 20, U.S.C. 1125(d)... 17, U.S.C U.S.C U.S.C , U.S.C U.S.C. 1117(d) Lanham Act (15 U.S.C. 1125(a)... 1, 15 Pub. L (July 2, 1996)... 1 State Statutes New York General Business Law Federal Rules Fed. R. Civ. P. 55(a) Fed. R. Civ. P. 55(b)(2)... 2 Fed. R. Civ. P. 8(b)(6) v

7 Tory Burch LLC and River Light V, L.P. (collectively, Plaintiffs or Tory Burch ) submit this Memorandum of Law in support of their Application for a Default Judgment and Permanent Injunction Order as against YONG SHENG INTERNATIONAL TRADE CO., LTD; CONGDADA PENA; BINGFENG QUI; LI YAXIACHAI; LI BIN, et al. (collectively, Defendants ) for trademark counterfeiting and cybersquatting pursuant to the Trademark Act of 1946, 15 U.S.C et seq., as amended by the Trademark Counterfeiting Act of 1984, Public Law (October 12, 1984), the Anti-Cybersquatting Consumer Protection Act of 1996, Pub. L (July 2, 1996), and the Prioritizing Resources and Organization for Intellectual Property Act of 2007, H.R (October 13, 2008) (the Lanham Act ). This Court has original jurisdiction over this action pursuant to 28 U.S.C. 1331, 1332 and 1338(a) and (b); and 15 U.S.C and PRELIMINARY STATEMENT Tory Burch, the New York-based fashion house which produces the extremely popular TORY BURCH brand of footwear, handbags, apparel, accessories and other products and owns all rights in its TORY BURCH trademarks, brought this action against a group of interrelated Defendants selling counterfeit Tory Burch products. Defendants have sold counterfeit Tory Burch products on dozens of rogue Internet web sites designed to trick consumers in the US, including in this Judicial District, into believing they are buying genuine Tory Burch products, often from Tory Burch itself. These sites are written in English, accept payment in US dollars, allow payment by PayPal and/or major credit card, often use domain names incorporating the TORY BURCH trademarks and copy original photos, proprietary designs and language directly from Tory Burch s own web site. Tory Burch has demonstrated how each Defendant has operated under a number of inconsistent and false identities in order to avoid liability. Defendants counterfeiting has been and continues to be incredibly damaging both to consumers

8 who are being deceived into believing Tory Burch products Defendants sell are genuine, when they are not and to Tory Burch, which is deprived of sales of its legitimate Tory Burch products and subject to a loss of goodwill from these low-quality counterfeits. Tory Burch was granted a temporary restraining order followed by a preliminary injunction, inter alia, enjoining Defendants sale of counterfeit Tory Burch products and operation of these rogue web sites. Despite each Defendant having been properly served with both of these orders as well as the Summons, Complaint and other papers, Defendants have uniformly ignored this Court s injunction and have continued to operate rogue web sites and to sell counterfeit Tory Burch products unabated except in those instances in which third-party service providers have halted Defendants infringing conduct pursuant to the injunction. Even after Defendants web sites have been disabled by domain name registries pursuant to the injunction, many Defendants have simply continued their sales of counterfeit Tory Burch products on new rogue web sites. Each Defendant is in default and all of the prerequisites for a default judgment have been met. Each Defendant has failed to answer the Complaint or otherwise appear. The Clerk of this Court has entered a default against each Defendant. Tory Burch now seeks a final judgment under Fed. R. Civ. P. 55(b)(2) that each Defendant is liable on all counts of Tory Burch s Complaint. Tory Burch further seeks an award of maximum statutory damages for willful trademark counterfeiting under 15 U.S.C. 1117(c) against each Defendant for four million dollars ($4,000,000) for maliciously counterfeiting the TORY BURCH trademarks and a permanent injunction prohibiting Defendants from selling counterfeit Tory Burch products, including an order that the domain names used by Defendants to sell counterfeit TORY BURCH products be transferred to Tory Burch. Furthermore, in order to give practical effect to this 2

9 permanent injunction and as it is likely that many Defendants will continue to offer and sell counterfeit Tory Burch products in violation of the Court s injunction, Tory Burch seeks ongoing injunctive relief ordering that any additional rogue web sites operated by Defendants selling counterfeit Tory Burch products be disabled and allowing Tory Burch to restrain and eventually recover newly discovered assets and infringing domain names utilized by Defendants in their sale of counterfeit Tory Burch products. I. FACTUAL BACKGROUND A. Procedural History On December 14, 2010, Tory Burch initiated this action by filing a Complaint against Defendants and seeking ex parte injunctive relief to stop Defendants sale of counterfeit Tory Burch products. On December 17, 2010, Tory Burch was granted a Temporary Restraining Order, Seizure Order, Asset Restraining Order, Domain Name Transfer Order, Expedited Discovery Order and Order to Show Cause for Preliminary Injunction ( Temporary Restraining Order ). Pursuant to the Temporary Restraining Order, Tory Burch properly served each Defendant with the Summons, Complaint, Temporary Restraining Order and all other papers filed in this action on December 22, 2010, specifically alerting each Defendant in a cover letter of the show cause hearing on January 4, (Declaration of Scott Gelin dated January 3, ). No Defendant or Defendant s counsel appeared at the show cause hearing. The same day, the Court entered a Preliminary Injunction Order ( Preliminary Injunction ) against each Defendant, extending the key terms of the Temporary Restraining Order. Each Defendant has been properly served with the Preliminary Injunction. (Declaration of Scott Gelin dated April 5, 2011 ( April 5 Gelin Decl. ) 4). Despite service, no Defendant has filed an Answer to the Complaint, moved to dismiss or otherwise appeared in any way. (Id. 5). On January 21, 2011 the Clerk of the Court entered a default against each Defendant. (Id. 7; Exhibit A). 3

10 B. Tory Burch Owns Protectable Trademark Rights in Its TORY BURCH Trademarks As set forth in the Memorandum of Law in Support of the Temporary Restraining Order and supporting declarations, the TORY BURCH brand of clothing and accessories for women, including footwear, handbags, apparel, accessories and other products ( Tory Burch Products ) bearing Tory Burch s well-known, federally registered trademarks (collectively, the TORY BURCH Marks ) has become one of the most popular and sought-after American women s fashion brands. (Declaration of Amanda Sachs, dated December 13, 2010 ( Sachs Decl. ) 4). The TORY BURCH brand, founded in early 2004, is an attainable, luxury, lifestyle brand defined by classic American sportswear with an eclectic sensibility, which embodies the personal style and spirit of its co-founder and creative director, Ms. Tory Burch. (Id.). Among the most well-known and popular of the Tory Burch Products are the iconic REVA ballerina-style flats, bearing Tory Burch s famous logo. (Id. 4). Tory Burch is the owner of a well-established family of famous trademarks, including, inter alia, TORY BURCH, REVA, and for use with its collection of footwear, handbags, apparel, accessories and other related goods and services. (Id. 10). In addition to the common law rights Tory Burch has developed in the TORY BURCH Marks, Tory Burch is the owner of numerous federal trademark and service mark registrations with the US Patent and Trademark Office for the TORY BURCH Marks, including, inter alia, the following federal registrations: Registration Number Trademark Goods and Services 3,428,374 TORY BURCH Handbags; Umbrellas; Cosmetic bags sold empty 3,386,532 TORY BURCH Retail clothing stores 3,428,816 TORY BURCH Jewelry 4

11 3,428,373 TORY BURCH Coats; Dresses; Footwear; Headwear; Jackets; Pants; Shirts; Shorts; Skirts; Sleepwear; Sweaters; Swim wear; Tops 3,479,178 REVA Footwear 3,563,326 A full line of women's clothing and footwear; A full line of handbags 3,024,142 Retail clothing apparel and accessories stores 3,029,795 Jewelry; Accessories, namely, handbags; Clothing, namely, shirts, tops, sweaters, pants, skirts, shorts, dresses, bathing suits, bikinis, sarongs, shoes, socks, belts, undergarments, robes and headwear; Outerwear, namely, scarves, jackets, vests and coats and other products 2,990,110 Retail luxury clothing apparel and fashion accessories stores, excluding, footwear. (Id.; see Complaint for more expansive list of registrations.) All of the TORY BURCH Marks are valid, subsisting, unrevoked and uncancelled. (Sachs Decl. 10). Tory Burch displays its TORY BURCH Marks and Tory Burch Products in its advertising and promotional materials. 5

12 (Id. 13). To date, Tory Burch has spent millions of dollars in advertising and promoting its TORY BURCH Marks and Tory Burch Products resulting in substantial sales of Tory Burch Products and invaluable goodwill for the TORY BURCH brand. (Id.). Tory Burch maintains strict quality control standards for all of its Tory Burch Products. Genuine Tory Burch Products are inspected and approved by Tory Burch or its agents prior to distribution and sale. (Id. 7). Genuine Tory Burch Products are also distributed in Tory Burch boutiques, through Tory Burch s Internet web store located at (the Tory Burch Web Store ) and through a worldwide network of authorized licensees, distributors, and retailers. (Id. 8). The Tory Burch Web Store, featuring Tory Burch s proprietary images and designs, including images of the Tory Burch Products and of Ms. Burch, enjoys hundreds of thousands of unique visitors per month. (Id. 9). Based on this work and investment promoting its brand, Tory Burch has acquired and enjoys an outstanding reputation and significant goodwill associated with its TORY BURCH Marks on the Tory Burch Products, and the TORY BURCH Marks have thus become invaluable assets to Tory Burch. (Id. 15). C. Defendants Have Willfully Counterfeited the TORY BURCH Marks As set forth in more detail in the Memorandum of Law in Support of the Temporary Restraining Order and supporting declarations, Defendants are an interrelated group of anonymous counterfeiters manufacturing, distributing, importing, offering to sell and selling counterfeit versions of Tory Burch Products bearing the TORY BURCH Marks ( Counterfeit Products ) to consumers in New York and elsewhere in the US. Defendants activities are deceiving consumers, who believe they are buying genuine Tory Burch Products, and causing irreparable harm to the TORY BURCH brand. Defendants have established more than two hundred (200) different stand-alone web sites to sell counterfeit Tory Burch Products (the 6

13 Infringing Web Sites ) designed to appear to unknowing consumers to be Tory Burch itself or some other legitimate US-based web store authorized to sell genuine Tory Burch Products. (Declaration of Matthew Hewlett, dated December 10, 2010 ( December 10 Hewlett Decl. ) 6-7, 22; Declaration of Matthew Hewlett, dated April 5, 2011 ( April 5 Hewlett Decl. ) 4-8). The Infringing Web Sites are written in English, accept payment in US dollars and allow payment through PayPal and/or major credit cards. (December 10 Hewlett Dec. 7; April 5 Hewlett Decl. 4, 8). These sites copy Tory Burch s proprietary images, designs and photos of the Tory Burch Products, and detailed product descriptions directly from the Tory Burch Web Store in order to appear themselves to be authorized Tory Burch web sites. (Id.; see Sachs Decl. Exhibit C). In order to further deceive customers and so that their sites would rank highly on web browser searches for Tory Burch, Defendants set up many of the Infringing Web Sites at domain names registered by Defendants containing the TORY BURCH Marks (the Infringing Domain Names ). (December 10 Hewlett Decl. 9; April 5 Hewlett Decl. 5). Defendants claim to sell genuine Tory Burch Products, but, in fact, all of the Tory Burch Products they sell are counterfeit. (December 10 Hewlett Decl ). In the course of the investigation prior to bringing the action, Tory Burch s investigators purchased forty-one (41) items sold as genuine Tory Burch Products, at least one from each named Defendant and each has been identified as a Counterfeit Product. (Id.). These Counterfeit Products bear similar irregularities and indicia of being counterfeit to one another, indicating that the Counterfeit Products were manufactured by and come from a common source and that Defendants are interrelated. (Id. 16). The Tory Burch products that Defendants are selling can be identified as counterfeit in other ways, including the following: 1) none of the sellers of Tory Burch products on the Infringing Web Sites are authorized manufacturers, distributors or sellers of Tory Burch 7

14 Products, 2) Tory Burch has received numerous complaints from its consumers, indicating that they purchased on several of the Infringing Web Sites what they believed were authentic Tory Burch Products, but which were actually Counterfeit Products, 3) many of the alleged Tory Burch products offered on the Infringing Web Sites can be identified as counterfeit based on the photographs of the products alone, and 4) the prices and quantities of the Tory Burch products offered on the Infringing Web Sites indicate they are counterfeit. (Sachs Decl. 20). To avoid detection, Defendants are using multiple fake names and addresses for each of the different facets of their business. The Infringing Web Sites are devoid of any identifiable names or addresses of Defendants. (December 10 Hewlett Decl. 29; April 5 Hewlett Dec. 9). Defendants communicate with potential customers exclusively via the Infringing Web Sites and/or by and without revealing their true identities. (December 10 Hewlett Decl. 30). When Defendants are required to disclose their identity, such as on a domain name registration or shipping label, they instead provide false or incomplete names and addresses. (Id. 17). The Internet Corporation for Assigned Names and Numbers (ICANN), the body that governs domain names, requires all who register domain names to provide accurate registration information, which is compiled in a network of publicly-available databases commonly referred to as WhoIs. (Id. 23, Exhibit D). In domain name registrations for the Infringing Web Sites, as visible in the WhoIs database, Defendants listed names and addresses are incomplete, nonsense, randomly-typed letters, or street addresses with no cities or states listed. (Id. 23). Defendants uniformly use separate false identities in connection with their shipments of Counterfeit Products to the US to avoid detection and liability for counterfeiting by US Customs and Border Protection ( CBP ) and/or by brand owners. All of the purchases received to date in Tory Burch s investigation were shipped from China via China Courier Service Corporation s Express 8

15 Mail Service ( EMS ). These goods all arrived in similar packages with similar markings to one another, suggesting that many of them come from common or related sources. (Id. 17). CBP regulations require that all packages entering the US from another country be accompanied by Declaration Form CN22 or Declaration Form CN23 (for commercial shipments) that must be completed in English. (Id. 18). The EMS waybill also contains the following instructions in English and Chinese: FOR PARCEL, PLEASE FILL IN THE DECLARATION FORM CN23, PROVIDE COMMERCIAL INVOICE OR PRO FORMA INVOICE AND CAREFULLY COMPLETE THE FORM BELOW IN ENGLISH. (Id. 20). These instructions were disregarded in every one of the parcels containing Counterfeit Products received to date. (Id. 21). Based on limited discovery of financial records from Defendants operations obtained to date from a third party merchant account provider, Defendants counterfeiting businesses are highly lucrative, with certain merchant accounts associated with an Infringing Web Site showing more than one hundred thousand dollars in sales of Counterfeit Products and other counterfeit goods. (April 5 Gelin Decl. 9). It is likely that Defendants revenues from the sales of Counterfeit Products are much higher given the illicit nature of their businesses and their use of multiple false identities, payment accounts and web sites. Defendants Counterfeit Products are not genuine, and Defendants are in no way authorized to sell the Counterfeit Products or operate the Infringing Web Sites. (Sachs Decl ; 25). Tory Burch did not manufacture, inspect, package, or approve the Counterfeit Products. (Id. 25). The Counterfeit Products are so similar in appearance to genuine Tory Burch Products that consumers are being deceived, just as Defendants intend, into believing the Counterfeit Products are genuine. (Id. 27). While the Counterfeit Products have been designed 9

16 to be exact copies of genuine Tory Burch Products and are being sold as such, they are not of the same quality as genuine Tory Burch Products. (Id. 26). Defendants sale of Counterfeit Products is incredibly damaging to Tory Burch s reputation and goodwill. (Id. 28). D. Defendants Continue to Establish New Web Sites and Sell Counterfeit Products in Violation of the Injunction Defendants have uniformly ignored the Court s injunction and are continuing to operate the Infringing Web Sites and sell Counterfeit Products except in those instances in which thirdparty service providers have disabled these sites or otherwise halted Defendants infringing conduct pursuant to the injunction. Following the execution of the Temporary Restraining Order and Preliminary Injunction, Tory Burch s investigators have learned that many Defendants, upon having their Infringing Web Sites disabled, have merely continued their operations on a number of different infringing web sites ( New Infringing Web Sites ) and continued to offer to sell and sell Counterfeit Products, undeterred by this Court s injunction. (April 5 Hewlett Decl. 7). As before, Defendants New Infringing Web Sites are designed to appear to unknowing consumers to be legitimate web stores authorized to sell genuine Tory Burch Products. (Id. 7). The New Infringing Web Sites are sophisticated-looking, written in English and feature proprietary Tory Burch images, graphics and detailed product descriptions taken directly from the Tory Burch web site. (Id. 7). The New Infringing Web Sites appear to unknowing consumers to be located in the US and are directed to US customers. (Id. 5). Once again, Defendants attempt to further deceive customers by operating many of the New Infringing Web Sites at domain names containing the TORY BURCH Marks. (Id. 5). Defendants continue to intentionally conceal their true identities and when they must provide names and addresses, such as in the context of registering a domain name, are using a series of false and incomplete names and addresses. (Id. 9). As was the case with the Infringing Web Sites, Tory Burch has received numerous 10

17 complaints from customers and potential customers who claim to have been deceived by the New Infringing Web Sites. (April 5 Gelin Decl. 10). II. ARGUMENT A. Defendants Are Subject To Personal Jurisdiction As set forth in more detail in the Memorandum in Support of the Temporary Restraining Order, Defendants are all subject to personal jurisdiction in New York and in this Judicial District. While it appears that Defendants are all non-residents of New York and located in China (Hewlett Decl. 8, 10), Defendants have more than sufficient contacts with New York to establish personal jurisdiction in this forum based on the fact that each Defendant has operated one or more fully-interactive Internet web sites through which it offers to sell and sells Counterfeit Products directly to customers in this Judicial District and elsewhere in the US. (Id. 7-8). Personal jurisdiction over a non-resident defendant is determined by the law of the jurisdiction where the federal court sits, in this case by New York law. See Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d. Cir 1997). Because New York does not extend personal jurisdiction to the full extent permitted under the Due Process Clause of the US Constitution, a two-fold inquiry is required: (1) whether New York s Civil Practice Law and Rules provide for jurisdiction in this action and (2) whether exercising jurisdiction comports with due process. See id.; International Shoe Co. v. Washington, 326 U.S. 310 (1945). Each Defendant is subject to personal jurisdiction under C.P.L.R. 302(a)(1) because each has offered and supplied counterfeit goods in New York. Jurisdiction is appropriate under 302(a)(1) when a defendant purposefully avails itself of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws. Cutco Industries, Inc. v. Naughton, 806 F.2d 361, 365 (2d. Cir 1986), quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958). A defendant 11

18 need not be physically present in New York to transact business there within the meaning of 302(a)(1). Chloe v. Queen Bee of Beverly Hills, 616 F.3d 158, 169 (2d Cir. 2010). Not only does each Defendant, through one or more of the Infringing Web Sites, offer to ship Counterfeit Products to any address in the United States, including New York, each Defendant has actually shipped at least one Counterfeit Product to New York as part of the investigation leading up to this action. (Hewlett Decl ). Additionally, Defendants transact business in New York because each Defendant offered to sell and sold Counterfeit Products via one or more fully interactive Internet web sites accessible in this Judicial District, giving rise to personal jurisdiction under C.P.L.R. 302(a)(1). The Second Circuit, like many jurisdictions, has recognized the district court s analysis in Zippo Mfg. Co. v. Zippo DOT Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997) to determine personal jurisdiction based on a web site s interactivity, to be useful for analyzing personal jurisdiction under 302(a)(1) insofar as it helps to decide whether the defendant transacts any business in New York. Best Van Lines, Inc. v. Walker, 490 F.3d 239, 252 (2d Cir. 2007). Under the Zippo test, which measures the nature and quality of commercial activity of a web site, personal jurisdiction is proper when a non-resident, doing business over the Internet, enters into contracts with residents of a particular state which involve the knowing and repeated transmission of computer files over the Internet. Zippo Mfg, 952 F. Supp at Accordingly, courts in the Second Circuit routinely find that that defendants who sell counterfeit goods on fully-interactive web sites are subject to personal jurisdiction. See, e.g., Phillip Morris v. Veles LTD., No. 06 CV 2988 (GBD), 2007 U.S. Dist. LEXIS (Mar. 13, 2007); ICG Am., Inc. v. Wine of the Month Club, Inc., No. 3:09-cv-133 (PCD), 2009 U.S. Dist. LEXIS 77151, at *10-11 (D. Conn. Aug. 28, 2009) ( [i]nteractive, commercial websites permit personal jurisdiction to be 12

19 exercised over a defendant ). In Chloe v. Queen Bee, the Second Circuit recently found jurisdiction over a non-resident online counterfeiter, concluding that the defendant had transacted business within the state under 302(a)(1) based on its sale and shipment of at least one counterfeit handbag in to New York and its operation of a highly interactive website that offered to sell and sold counterfeit goods anywhere in the US, including New York. Chloe, 616 F.3d at 169. In the case at hand, each Defendant s transaction of business in New York is evidenced by the fact that each of the Infringing Web Sites, written in English, allows buyers to complete the purchase of Counterfeit Products over the Internet in US dollars using PayPal or major credit cards and have such purchase shipped to any address in the US, including New York. (December 10 Hewlett Decl. 8, 11-13; April 5 Hewlett Decl. 4). The due process inquiry contains two parts, the minimum contacts inquiry and the reasonableness inquiry. See Parker Waichman Alonso v. The Orlando Firm, 09 Civ (CM), 2010 U.S. Dist. LEXIS 47957, at *6 (S.D.N.Y. May 14, 2010). Under the minimum contacts inquiry, courts ask whether the claim arises out of or relates to defendants contacts with the state, which it clearly does in this instance, given that the entire claim relates to Defendants sale of Counterfeit Products to US and New York residents. Mario Valente Collezioni, Ltd. v. Confezioni Semeraro Paolo, S.R.L., 264 F.3d 32, 37 (2d Cir. 2001). The reasonableness inquiry then determines whether defendant purposefully availed itself of the privilege of doing business in the forum so that defendant could reasonably foresee being haled into the forum s courts and whether the assertion of jurisdiction comports with traditional notions of fair play and substantial justice. Id. at 38; Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 568 (2d Cir. 1996). The notions of fair play and substantial justice support a finding a personal jurisdiction here, where each Defendant has purposefully availed itself of the privilege of doing 13

20 business in New York by selling illicit products to residents in this Judicial District and could have reasonably foreseen being subjected to jurisdiction in New York. This is particularly true here as a matter of social policy given the enormous harm to consumers and commerce caused by Defendants counterfeiting operations. See, e.g., John Wiley & Sons, Inc. v. Swancoat, No. 08 Civ (JGK), 2009 U.S. Dist. LEXIS 71820, at *8-9 (S.D.N.Y. Aug. 14, 2009). B. Tory Burch Has Met the Prerequisites for Default Judgment Rule 55 of the Federal Rules of Civil Procedure provides a two-step process for obtaining a default judgment. See Columbia Pictures Indus. v. King, 2010 U.S. Dist. LEXIS 30091, at *1 (E.D.N.Y. Mar. 29, 2010). First, under Fed. R. Civ. P. 55(a), the clerk must enter a notation of default [w]hen a party against whom judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise. Under Local Rule 55.1, [a] party applying for a certificate of default by the clerk pursuant to Federal Rule of Civil Procedure 55(a) shall submit an affidavit showing (1) that the party against whom a notation of default is sought is not an infant, in the military, or an incompetent person; (2) that the party has failed to plead or otherwise defend the action; and (3) that the pleading to which no response has been made was properly served. Id. citing S.D.N.Y. and E.D.N.Y. L. Civ. R Tory Burch has submitted such a declaration. Upon such a submission by Tory Burch, the Clerk of the United States District Court for the Southern District of New York, Ruby J. Krajick, entered a default against each Defendant on January 21, (April 5 Gelin Decl. 7; Exhibit A). Second, upon obtaining a clerk s notation of default, a plaintiff must next seek a judgment by default under Rule 55(b). New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005). In assessing whether to enter default judgment, the Court must accept as true all well-pleaded 14

21 allegations in the Complaint, except those pertaining to the amount of damages. Fed. R. Civ. P. 8(b)(6); Philip Morris United States, Inc. v. U.S. Sun Star Trading, Inc., 2010 U.S. Dist. LEXIS 52795, at *8 (E.D.N.Y. Mar. 11, 2010). Even without this presumption, Tory Burch has shown that Defendants are liable for trademark counterfeiting and cybersquatting. 1 C. Tory Burch Should Prevail on Its Trademark Counterfeiting and Cybersquatting Claims 1. Tory Burch Has Proven Its Claims for Trademark Counterfeiting A counterfeit mark is defined in the Lanham Act as a spurious mark which is identical with, or substantially indistinguishable from, a registered mark on the Principal Register of the United States Patent and Trademark Office used by an unauthorized producer. See 15 U.S.C. 1116(d) and Tory Burch has established that: (1) the marks used by Defendants on the Counterfeit Products are identical to or substantially indistinguishable from the TORY BURCH Marks which Tory Burch is using in commerce on its genuine Tory Burch Products; and (2) Defendants use of the TORY BURCH Marks on the Counterfeit Products is not authorized by Tory Burch. (Supra at pp. 8-9). To prevail on its trademark counterfeiting claims, Tory Burch must prove: (1) the TORY BURCH Marks are entitled to protection; and (2) there is a likelihood of confusion between Defendants Counterfeit Products and genuine Tory Burch Products bearing the TORY BURCH Marks. See, e.g., Otokoyama Co. Ltd. v. Wine of Japan Import, Inc., 175 F.3d 266, 270 (2d Cir. 1999); Banff, Ltd. v. Federated Dept. Stores Inc., 841 F.2d 486, (2d Cir. 1988); see also Lorillard Tobacco Co. v. Jamelis Grocery, Inc., 378 F. Supp. 2d 448, 455 (S.D.N.Y. 2005). 1 In addition to trademark counterfeiting and cybersquatting, in its Complaint, Tory Burch alleged federal unfair competition under the Lanham Act (15 U.S.C. 1125(a)) and unlawful deceptive acts and practices under New York General Business Law 349. Tory Burch seeks a final default judgment only for trademark counterfeiting and cybersquatting. 15

22 a. The TORY BURCH Marks Are Valid And Protectable Through its pleadings, Tory Burch has established that it is the owner of all right, title and interest in and to the TORY BURCH Marks in connection with the same types of goods and services being counterfeited by Defendants, namely footwear, handbags and other accessories. (Supra at pp. 5-6). Tory Burch has also demonstrated that its marks are the subject of multiple federal trademark registrations. (Id.; Sachs Decl. Exhibit D; Complaint pp. 8-9). These registrations are prima facie evidence of the validity of the TORY BURCH Marks, as well as Tory Burch s exclusive right to use its marks in commerce and in connection with the goods or services specified in the registrations. See 15 U.S.C. 1057(b). Tory Burch has shown that its TORY BURCH Marks are valid and protectable. b. Consumers Are Likely to Be Confused as to the Source of Defendants Counterfeit Products In the Second Circuit, likelihood of confusion is assessed by the factors enunciated in Polaroid Corp. v. Polarad Elecs. Corp. 287 F.2d 492, (2d Cir. 1961), cert. denied, 368 U.S. 820 (1961); see also Banff, Ltd., 841 F.2d at Here, each of the eight, nonexhaustive Polaroid factors used to analyze whether there is likelihood of confusion favor Tory Burch: (1) the strength of the TORY BURCH Marks; (2) the high degree of similarity between the TORY BURCH Marks and those used on the Counterfeit Products; (3) the proximity of the products, as the Counterfeit Products are designed to appear to be identical to the Tory Burch Products, thus (4) have bridged the gap; (5) the sophistication of the buyers; (6) the quality of the Defendants products; (7) actual confusion; and (8) the Defendants bad intent in using the TORY BURCH Marks on the Counterfeit Products. See Polaroid Corp., 287 F.2d at 495. Furthermore, this Court has held that, where counterfeit marks are involved, it is not necessary to perform the step-by-step examination of each Polaroid factor because counterfeit marks are 16

23 inherently confusing. Lorillard Tobacco, 378 F. Supp. 2d at 455. Additionally, Tory Burch has learned that consumers are, in fact, being deceived by purchasing what they believe are genuine Tory Burch Products from Defendants on these rogue web sites, only to learn when the goods arrive that they have purchased lower-quality Counterfeit Products. (Sachs Decl. 18). Consumers continue to be deceived by Defendants continuing sale of Counterfeit Products and operation of New Infringing Web Sites. (April 5 Gelin Decl. 10). As such, Tory Burch has demonstrated consumer confusion, and the Court should not hesitate to find each Defendant liable for trademark counterfeiting. 2. Tory Burch Has Proven Its Claims for Cybersquatting. The Anticybersquatting Consumer Protection Act of 1996 ( ACPA ) is applicable in instances in which a domain name registrant has a bad faith intent to profit by cybersquatting a domain name that is identical or confusingly similar to or dilutive of the distinctive or famous mark of another. 15 U.S.C. 1125(d). Courts have often stated that one of the focuses of the ACPA is to address counterfeit sellers who register well-known marks to prey on consumer confusion by misusing the domain name to divert customers from the mark owner s site to the cybersquatter s own site, and target distinctive marks to defraud consumers. Diarama Trading Co., Inc. v. J. Walter Thompson U.S.A., Inc., 2005 U.S. Dist. LEXIS 19496, at *38 (S.D.N.Y. Sept. 6, 2005) quoting Lucas Nursery v. Grosse, 359 F.3d 806, 809 (6th Cir. 2004). Defendants are doing just that, having registered and used dozens of Infringing Domain Names containing the TORY BURCH Marks to divert consumers to Infringing Web Sites where they sell Counterfeit Products. Defendants have registered and are using the Infringing Domain Names containing the TORY BURCH Marks to sell Counterfeit Products. In order to prevail on its ACPA claim, Tory Burch must show that (1) its marks are distinctive and famous, (2) 17

24 Defendants have registered domain names containing the identical marks and (3) Defendants are acting in bad faith. Mattel, Inc. v. Internet Dimensions, Inc., 55 U.S.P.Q. 2d (BNA) 1620, (S.D.N.Y. 2000). a. The TORY BURCH Marks Are Distinctive And Famous Tory Burch has shown that its federally-registered TORY BURCH Marks are closely linked with Tory Burch s success, as these marks symbolize one of the most sought after American women s fashion brands. (Sachs Decl. 5-8). As a result, the TORY BURCH Marks have a high degree of acquired distinctiveness, and, in turn, Tory Burch has demonstrated that its TORY BURCH Marks are distinctive and famous. b. The Infringing Domain Names Are Identical Or Confusingly Similar to the TORY BURCH Marks Tory Burch has demonstrated that the Infringing Domain Names are identical or confusingly similar to the TORY BURCH Marks, as they each contain the mark TORY BURCH in its entirety. The inclusion of a plaintiff s trademark combined with usage of the mark on the web site in question has been held to be sufficient for a finding of confusing similarity for ACPA purposes. See Mattel, Inc., 55 U.S.P.Q. 2d Courts have found that the addition of generic or geographic terms, such as buy, sales, store, or online, are not sufficient to distinguish the domain name from a protected mark that it contains. See, e.g., Prime Publishers, Inc. v. Am.-Republican, Inc., 160 F. Supp. 2d 266, (D. Conn. 2001); Freedom Calls Found. v. Bukstel, 2006 U.S. Dist. LEXIS 19685, at *40-41 (E.D.N.Y. Mar. 3, 2006). The fact that the entire mark TORY BURCH appears without alteration in all of these domain names and each is used in connection with the sale of counterfeit Tory Burch Products is sufficient to show that these Infringing Domain Names are identical and/or confusingly similar to the TORY BURCH Marks. 18

25 c. Defendants Have Shown Bad Faith Intent to Profit from the TORY BURCH Marks Courts have held that the registration of a trademark owner s mark as part of a domain name used to sell counterfeit versions of the trademark owner s goods is a particularly egregious form of bad faith. See, e.g., Louis Vuitton Malletier & Oakley, Inc. v. Veit, 211 F. Supp. 2d 567, (D. Pa. 2002). Bad faith could hardly be more clear than in a case like this, where Defendants are using the TORY BURCH Marks in the Infringing Domain Names used for the Infringing Web Sites masquerading as authentic sources of Tory Burch Products but are in fact selling Counterfeit Products. Based on the foregoing, the Court should find each Defendant liable for willful trademark counterfeiting and cybersquatting of the TORY BURCH Marks under 15 U.S.C. 1114, 1117 and 1125 (d) and should enter final default judgment against each Defendant. D. The Court Should Award Maximum Statutory Damages for Willful Trademark Counterfeiting and Cybersquatting If the defaulted complaint suffices to establish liability, the court must conduct an inquiry sufficient to establish damages to a reasonable certainty. Philip Morris United States, Inc. v. U.S. Sun Star Trading, Inc., 2010 U.S. Dist. LEXIS 52795, at *9-10. Tory Burch has elected to recover statutory damages under the Lanham Act, which in cases of willful trademark counterfeiting provides an award of up to $2,000,000 for each counterfeited mark per type of good offered. 15 U.S.C. 1117(c)(2). 15 U.S.C. 1117(c)(2) states in pertinent part: In a case involving the use of a counterfeit mark (as defined in section 34(d) (15 U.S.C. 1116(d))) in connection with the sale, offering for sale, or distribution of goods or services, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits under subsection (a), an award of statutory damages for any such use in connection with the sale, offering for sale, or distribution of goods or services in the amount of... (2) if the court finds that the use of 19

26 the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just. 15 U.S.C. 1117(c)(2). Tory Burch may also elect to recover statutory damages for Defendants willful cybersquatting under the Lanham Act, which in the case of willful trademark cybersquatting provides an award of up to $100,000 for each Infringing Domain Name (15 U.S.C. 1117(d)), as well as reasonable attorney s fees. 15 U.S.C. 1117(d). There can be no question that Defendants counterfeiting of the Tory Burch Marks on Counterfeit Products is willful. Willfulness is determined by whether the defendant had knowledge that [its] conduct represented infringement or recklessly disregarded the possibility. Phillip Morris USA Inc., No. CV (CPS), 2005 WL , at *6 (awarding $4,000,000 statutory damages in summary judgment motion against trademark counterfeiter). Knowledge need not be proven directly but may be inferred from the defendant s conduct. N.A.S. Import, Corp. v. Chenson Enters., Inc., 968 F.2d 250, 252 (2d Cir. 1992) (internal citation omitted). Indeed, where a defendant has defaulted, the Court may infer willfulness on that ground alone. Tiffany (NJ) Inc. v. Luban, 282 F. Supp. 2d 123, 124 (S.D.N.Y. 2003) (awarding $550,000 statutory damages default judgment against trademark counterfeiters.) Tory Burch has shown that each Defendant has willfully engaged in the manufacture, distribution and sale of Counterfeit Products designed to look exactly like Tory Burch Products via the operation of one or more Infringing Web Sites. Such willfulness is further established by each Defendant s disregard of the Temporary Restraining Order and Preliminary Injunction. Enhanced statutory damages are intended to serve as both compensatory and punitive relief for a plaintiff who has been harmed by a willful counterfeiter. Sara Lee Corp. v. Bags of New York, Inc., 36 F. Supp. 2d 161, 165 (S.D.N.Y. 1999). Statutory damages also serve as a 20

27 deterrent against future counterfeiting, which is especially necessary where Defendants have engaged in flagrant counterfeiting activities. Silhouette Int l Schmied AG v. Chakhbazian, No. 04 Civ RJH AJP, 2004 WL , at *2 (S.D.N.Y. Oct. 4, 2004); Rolex Watch U.S.A., Inc. v. Brown, No. 1 Civ. 9155, 2002 WL , at *2 (S.D.N.Y. June 5, 2002). These damages are necessary due to the harsh reality that counterfeiters often do not keep or secrete records of their unlawful activities, thus making proof of the extent of the plaintiff s injury or the counterfeiters profits impossible as a practical matter. Sara Lee Corp., 36 F. Supp. 2d at 165 (internal citations omitted). Courts have wide latitude in awarding statutory damages. In similar actions, Courts in the Second Circuit have granted other plaintiffs large statutory damages including up to the maximum statutory amount for willful counterfeiting. See, e.g., The National Football League and NFL Properties LLC v. Chen Cheng, et al., Civil Action No. 11-Civ (WHP) (S.D.N.Y. March 24, 2011) (awarding plaintiffs statutory damages of $4,000,000 against each defendant who operated one more rogue websites offering counterfeit products); The North Face Apparel Corp and PRL USA Holdings Inc v. Fujian Sharing Import & Export Ltd. Co. d/b/a b2bsharing.com, et al., Civil Action No. 10-Civ-1630 (S.D.N.Y. 2010) (awarding plaintiffs $78,000,000 in statutory damages for willful infringement in default judgment against Internet counterfeiters operating rogue web sites); Gucci America, Inc. v. Curveal Fashion, No. 09 civ (RJS) (S.D.N.Y. January 20, 2010) (awarding statutory damages of more than $13,000,000 based on the willful nature of infringement); Gucci America, Inc. v. MyReplicaHandbag.com, No. 07 Civ (JGK), 2008 WL (S.D.N.Y. February 26, 2008) (awarding $4,300,000 statutory damages default judgment against trademark counterfeiter); Burberry Ltd. v. Euro Moda, Inc., 2009 U.S. Dist. LEXIS , at *25 (S.D.N.Y. December 4, 2009) (awarding 21

28 $4,000,000 in statutory damages against trademark counterfeiter); Louis Vuitton Malletier v. WhenU.com, Inc, No. 05 Civ (LAK), 2007 WL (S.D.N.Y. Jan. 26, 2007) (awarding $1,100,000 statutory damages default judgment against trademark counterfeiter); Rolex Watch, 2002 WL (awarding $1,000,000 statutory damages, and additional attorneys fees and costs in default judgment against trademark counterfeiter). In each Defendant s sale of Counterfeit Products and operation of one or more Infringing Web Sites, each has counterfeited a number of the TORY BURCH Marks, including, inter alia, the TORY BURCH, REVA and trademarks on a variety of products, in addition to registering and using Infringing Domain Names containing these marks in violation of ACPA. Despite the number of TORY BURCH Marks infringed and cybersquatted by each Defendant and the number of different types of Counterfeit Products being sold by each Defendant, Tory Burch believes it would be appropriate for the Court to award maximum statutory damages for each Defendant s willful counterfeiting of Tory Burch s federally-registered TORY BURCH and trademarks. Thus, Tory Burch respectfully requests entry of judgment against each Defendant in the amount of $4,000, as authorized by 15 U.S.C. 1117(c)(2). This requested damages award is inclusive of statutory damages for other counterfeited TORY BURCH Marks, and Defendants use of the TORY BURCH Marks on other goods and services, Defendants cybersquatting of the Infringing Domain Names. 2 While this requested damages award is high, the amount is fair given the massive profits that Defendants have made and continue to make from their sales of Counterfeit Products and the harm that such counterfeiting causes Tory Burch and its TORY BURCH Marks. Further, an 2 Tory Burch does not seek to recover attorneys fees and costs. 22

29 award of this size is essential to creating a deterrent to both these Defendants and future counterfeiters. Tory Burch is facing the next generation of counterfeiting schemes -- one that is extraordinarily complex and sophisticated and designed specifically to avoid liability. Unless Defendants believe that the cost of engaging in such a scheme is so great as to outweigh the millions of dollars in profits that they are generating, consumers will continue to be deceived into buying what they think is the real thing at a discounted price rather than counterfeit goods and legitimate brand owners such as Tory Burch have no hope of ever curtailing the damage to the goodwill and reputation they have spent years building. E. The Court Should Permanently Enjoin Defendants Counterfeiting Operations In addition to the foregoing relief, Tory Burch respectfully requests entry of a permanent injunction enjoining Defendants from infringing or otherwise violating the Tory Burch s registered trademark rights in the TORY BURCH Marks, including an order directing that the domain names associated with the Infringing Web Sites be transferred to Tory Burch. A court may issue an injunction on a motion for default judgment provided that the moving party shows that (1) it is entitled to injunctive relief under the applicable statute and (2) it meets the prerequisites for the issuance of an injunction. Lyons P'ship, L.P. v. D&L Amusement & Entm't, 2010 U.S. Dist. LEXIS 28571, at *30 (E.D.N.Y. Mar. 2, 2010). Under Section 34 of the Lanham Act, the court has the power to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable. 15 U.S.C. 1116(a). To obtain a permanent injunction, the movant must establish that 1) absent injunctive relief, it will suffer irreparable harm, and 2) actual success on the merits. Lyons P'ship, 2010 U.S. Dist. LEXIS 28571, at * As set forth in Tory Burch s Memorandum of Law in Support of the Temporary Restraining Order, Tory Burch has demonstrated that it is being irreparably harmed by Defendants 23