The opinion of the court was delivered by: Motley, District Judge.
Opinion on Statutory Damages, Attorney Fees, and Costs
Plaintiff Sara Lee Corporation ("Sara Lee") filed this action
claiming that the defendants produced and sold counterfeits of
trademarked products of Sara Lee's Coach Leatherware ("Coach")
division, in violation of the Trademark Act of 1946, codified as
amended at 15 U.S.C. § 1051, et seq. ("Trademark Act"). The
defendants failed to answer the complaint and the court entered a
default judgment in favor of Sara Lee granting injunctive relief
and retaining jurisdiction to determine damages. After hearing
and review of the filings and record, the court awards Sara Lee
$750,000 in statutory damages and $46,045.63 in attorney fees and
A. Complaint to Default Judgment
Sara Lee, through its Coach division, designs, produces, and
sells distinctive handbags, wallets, briefcases, and similar
goods. The bags all share features that distinguish them as
"Coach" bags, such as their glovetanned leather, ornamental trim,
and "Coach" hangtag suspended from a strap of the bag on a solid
brass chain. These designs are trademarked and registered with
the Patent and Trademark Office as United States Trademark
Registration Numbers 751,493, 1,071,000, 1,070,999, 1,242,098,
1,309,779, 1,746,836, 1,846,801.
On January 7, 1997, Sara Lee filed a complaint alleging that
defendants, makers and sellers of bags similar to those Coach
markets, impermissibly used Coach trademarks to sell their own
products, in violation of the Trademark Act and state law.
Following defendants' failure to appear or defend, Sara Lee
obtained a default judgment on September 3, 1997. See Order of
Default Judgment dated Sept. 3, 1997 ("Default Judgment").
Citing the Trademark Act, the Default Judgment featured
injunctive relief and a monetary award to be fixed by the court.
It ordered the defendants to destroy all infringing articles,
enjoined the defendants from using the Coach trademarks or trade
dress, and enjoined the defendants from evading these
prohibitions by any means such as assignments, transfers, or
formations of new entities or associations. Id. at 3-4. It also
ordered the defendants to pay, in an amount to be determined by
the court: the greater of treble damages or profits; statutory
damages of up to $1 million per violation; and reasonable
attorneys' fees and costs. Id. at 4.
B. Damages Determination: Filings and May 19, 1998 Hearing
For its damages determination, the court on November 18, 1997
set a December 5, 1997 deadline for Sara Lee filings. Sara Lee
sought the maximum statutory damages of $1,000,000 as well as
attorney fees and costs. On April 16, 1998, after reviewing the
Lee filings on damages, the court scheduled a damages hearing for
May 19, 1998. After hearing, the court set a July 2, 1998
deadline for Sara Lee to submit findings of fact and conclusions
of law on damages.
1. Testimony of Nabil "Billy" Helou
At the May 19, 1998 hearing, defendant Nabil "Billy" Helou
attended and testified under oath that, as illustrated by the
following timeline, he and his corporate co-defendants no longer
were in business. Since the early 1980s, Mr. Helou had been in
the handbags business at the same location, though under
different corporate names. Tr. May 19, 1998 ("Tr.") at 95-100. He
and his relatives ran the "Helou Brothers" corporation for seven
or eight years during the early and mid-1980s. In the late 1980s,
when a family split led to the dissolution of Helou Brothers, Mr.
Helou formed the "New York, New York Handbags" ("NYNYH")
corporation. Soon after, Mr. Helou then changed the business name
to "Bags of New York" ("BNY") by dissolving NYNYH and forming BNY
as a new corporation.
Mr. Helou then dissolved BNY in 1996 or 1997. Tr. at 102-103.
He sold BNY's assets for roughly $2,500 to $3,000 to his
girlfriend, Blanca Hernandez, who continues to operate there. Tr.
at 112-114, 119. Mr. Helou then was "not involved" in the
business on the old BNY premises, Tr. at 121, 129, although at
times he would visit Ms. Hernandez and "help her" with sales or
with closing the shop at night. Tr. at 120. His main work
consisted of freelance jobs for others in the industry. Tr. at
129-130. In the past two years, he has had little income,
especially since he plead guilty to charges of trademark
counterfeiting in September 1996. Tr. at 132. He had taxable
income of roughly $20,000 in 1996 and no taxable income in 1997.
Tr. at 131-132.
2. Testimony of Sara Lee Investigators
At the May 19, 1998 hearing, Sara Lee offered the testimony of
Gladys Vargas and Roger Noakes, private investigators it hired to
make undercover purchases from the defendants on the BNY
premises. Tr. at 18-20, 63-64. Four times between June and
September 1996, Ms. Vargas purchased counterfeit Coach bags from
Mr. Helou at BNY, each time spending an average of 30 minutes
there. Tr. at 34. The premises included both a showroom and
factory. Tr. at 19. In the showroom, Ms. Vargas, during each of
her visits, observed densely packed racks that were fully stocked
with several thousand bags. Tr. at 19-20, 48. In the factory, Mr.
Noakes, accompanying police during a September 5, 1996 search and
seizure, observed two large press machines that cut leather,
several sewing machines, and five or six workers on duty. Tr. at
In all four of Ms. Vargas's purchases, Mr. Helou sold her
counterfeit Coach-trademarked bags, holding them out as copies of
specific Coach products. Tr. at 18, 34, 36. The showroom racks
and the BNY catalog identified their bags by Coach style numbers.
Tr. at 19, 29-31; Pl.'s Ex. 5 (catalog). The price list
accompanying the BNY catalog explicitly stated that "all styles
pictured in catalog are Coach look-a-likes." Tr. at 55; Pl.'s Ex.
6 (price list). Mr. Helou also showed customers Coach catalogs
and explained that he sold those items. Tr. at 21, 27.
During each visit, Ms. Vargas saw three or four customers
making similar purchases, either looking through Coach catalogs
or picking up goods. Tr. at 34. When a customer placed an order,
Mr. Helou instructed factory workers to stamp the Coach
look-alike bags with Coach trademarks and serial numbers. He then
gave the customer the finished counterfeit Coach bags, each with
a matching counterfeit Coach-stamped leather tag. Tr. at 25-26,
The median price of a bag on the BNY price list was $42: $39
for the bag and $3 for the accompanying tag. Pl.'s Ex. 6 (bag
price list); Tr. at 32, 38 (tag price). Mr. Helou did not
consistently provide Ms. Vargas regular receipts for her
purchases. For example, in an August 1996 purchase, he provided
an actual receipt. Tr. at 37, 41; Pl.'s Ex. 7 (receipt). In
contrast, in a June 1996 purchase, he only wrote the price on the
back of a business card. Tr. at 31-32.
C. Ex Parte Seizure on May 28, 1998
Immediately after the May 19, 1998 damages hearing, Sara Lee
applied for an ex parte seizure order, claiming continuing
infringements. After a May 26, 1998 ex parte hearing, the court
granted the order. On May 28, 1998, United States Marshals,
accompanied by Sara Lee representatives, executed the order at
the defendants' premises. The Marshals found Mr. Helou and his
brother Fred Helou operating the business. Tr. June 1, 1998 at
During the May 1998 seizure, the premises included not only
finished counterfeits, but also Coach look-alikes and the
stamping machinery to turn them into finished counterfeits. The
Marshals seized the following: 174 counterfeit Coach handbags;
5,512 look-alike Coach handbags; 60 stamps and dies with Coach
indicia for production of counterfeit Coach bags; and 996
look-alike and stamped Coach keyfobs. Decl. Brian W. Brokate
Supp. Civil Contempt, June 16, 1998, ¶¶ 3-5; Tr. June 24, 1998 at
17-18; Tr. June 1, 1998 at 4. Mr. Noakes saw similar items during
a September 5, 1996 police seizure: small leather tags and
several stamps (dies) bearing various Coach trademarks that
appeared on the tags. Tr. at 72, 78-80.
On June 1, 1998, the court held a hearing at which it ruled
that the seizure should be confirmed. On June 16, 1998, the court
issued a written seizure confirmation order. On July 15, 1998,
the defendants moved to modify the seizure confirmation order,
arguing changed circumstances and wrongful seizure because only
174 of the over 5,000 bags seized had a Coach logo stamped on
them, while the rest only resembled Coach bags in ...