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RODGERS v. ANDERSON

April 26, 2005.

NILE RODGERS, Plaintiff,
v.
ALFA ANDERSON, NORMA JEAN WRIGHT & LUCI MARTIN, Defendants.



The opinion of the court was delivered by: ANDREW PECK, Magistrate Judge

REPORT AND RECOMMENDATION

To the Honorable Richard J. Holwell, United States District Judge:

Plaintiff Nile Rodgers, one of the founders of the 1970's disco era musical group "Chic," and owner of the registered service mark "Chic," commenced this action against defendants Alfa Anderson, Norma Jean Wright and Luci Martin, who were employed as vocalists in "Chic," for their performing under the name "Chic," thereby violating plaintiff's trademark rights. (See generally Dkt. No. 1: Compl.) On December 23, 2004, Judge Holwell granted Rodgers a default judgment including injunctive relief against defendants, and referred the matter to me for an inquest as to damages and attorneys' fees. (Dkt. No. 17: 12/23/04 Default Judgment.) Plaintiff submitted papers on the inquest seeking statutory damages and attorneys fees. (Dkt. Nos. 21-23, 26.)*fn1 Defendants have not submitted any opposition papers, and the deadline for doing so has long passed. (See Dkt. Nos. 18 & 20: Scheduling Orders.)

  For the reasons stated below, the Court should award plaintiff Rodgers $250,000 in statutory trademark damages.

  FACTS

  "Where, as here, `the court determines that defendant is in default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.'" Chen v. Jenna Lane, Inc., 30 F. Supp. 2d 622, 623 (S.D.N.Y. 1998) (Carter, D.J. & Peck, M.J.) (quoting C. Wright, A. Miller & M. Kane, Federal Practice & Procedure: Civil 3d § 2688 at 58-59 (3d ed. 1998)).

  In 1977, plaintiff Nile Rodgers founded a partnership with Bernard Edwards under the name "Chic" and obtained a service mark for "Chic." (Dkt. No. 1: Compl. ¶¶ 10-12; Dkt. No. 22: Rodgers Aff. ¶¶ 2-3.)*fn2 They performed under that name, with defendants Anderson, Wright and Martin as employee backup singers. (Compl. ¶ 14; Rodgers Aff. ¶ 7.) "At all times defendants occupied the status of employee, and never were they grant [sic] any right or permission to use the Trademark in any fashion." (Compl. ¶ 14; see also Rodgers Aff. ¶ 7.) "`Chic' was one of the top groups of the disco era in the 1970's, and had . . . many Top 10 hits." (Rodgers Aff. ¶ 2.) Indeed, Chic has been described as "disco's greatest band." See Steve Huey, "All Music Guide," Chic: Bio, available at http://www.MTV.com. Beginning in November 2003, Rodgers learned that defendants were performing as "Chic" or "Chic Live!," without Rodgers' consent. (Compl. ¶¶ 15-18; Rodgers Aff. ¶¶ 8-9 & Exs. B-J).*fn3 The complaint asserts claims under the federal trademark laws (Compl. ¶¶ 21-32) and state law claims (id. ¶¶ 33-45).

  As noted above, on December 23, 2004, Judge Holwell granted plaintiff a default judgment and permanent injunction against defendants Anderson, Wright and Martin, and referred the matter to me for an inquest to "determine the amount of damages and attorneys' fees due plaintiff as a result of defendants' infringement on plaintiff's `Chic' trademark." (Dkt. No. 17: Default Judgment.)

  ANALYSIS

  The Second Circuit has approved the holding of an inquest by affidavit, without an in-person court hearing, "`as long as [the Court has] ensured that there was a basis for the damages specified in the default judgment.'" Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997) (quoting Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)).

  Plaintiff Rodgers seeks $500,000 in statutory damages pursuant to 15 U.S.C. § 1117(c). (See Dkt. No. 21: Rodgers Br. at 5-6.) Section 1117(c) provides:
(c) Statutory damages for use of counterfeit marks
In a case involving the use of a counterfeit mark (as defined in section 1116(d) of this title) 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) of this section, 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 —
(1) not less than $500 or more than $100,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just; or
(2) if the court finds that the use of the counterfeit mark was willful, not more than $1,000,000 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)(1)-(2).

  The rationale for this section is the practical inability to determine profits or sales made by counterfeiters. See, e.g., Silhouette Int'l Schmied AG v. Chakhbazian, 04 Civ. 3613, 2004 WL 2211660 at *2 (S.D.N.Y. Oct. 4, 2004) (Peck, M.J.); Gucci America, Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d 511, 520 (S.D.N.Y. 2004) ("Congress added the statutory damages provision of the Lanham Act in 1995 because `counterfeiters' records are frequently nonexistent, inadequate, or deceptively kept . . ., making proving actual damages in these cases extremely difficult if not impossible.'") (quoting Senate report); Tiffany (NJ) Inc. v. Luban, 282 F. Supp. 2d 123, 124 (S.D.N.Y. 2003) (same); Polo Ralph Lauren, L.P. v. 3M Trading Co., 97 Civ. 4824, 1999 WL 33740332 at *4 (S.D.N.Y. Apr. 19, 1999) ("It is often the case that `counterfeiters' records are nonexistent, inadequate or deceptively kept in order to willfully deflate the level of counterfeiting activity actually engaged in, making proving actual damages in these cases extremely difficult if not impossible.'"); Sarah Lee Corp. v. Bags of New York, Inc., 36 F. Supp. 2d 161, 165 (S.D.N.Y. 1999) ("Statutory damages are most appropriate when infringer nondisclosure during fact finding leaves damages uncertain.").

  Section 1117(c) "`does not provide guidelines for courts to use in determining an appropriate award,' as it is only limited by what `the court considers just.' 15 U.S.C. § 1117(c). However, courts have found some guidance in the caselaw of an analogous provision of the Copyright Act, 17 U.S.C. § 504(c), which also provides statutory damages for willful infringement." Gucci America, Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d at 520 (citations omitted).*fn4 Among the appropriate factors particularly relevant here are the deterrent effect on defendants and others, and the defendants' failure to produce records from which more traditional damages could be computed. See, e.g., Gucci America, Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d at 520; see also cases cited in n. 4 above.

  In this case, defendants have defaulted and by virtue of their default, are deemed to be willful infringers. While Rodgers seeks $500,000, he has not provided any basis for that figure nor any cases in analogous situations that would support such an amount. The Court believes that $250,000 in statutory damages based on willful infringement is sufficient and appropriate to deter defendants and others. This amount is consistent with (indeed, lower than) awards in similar cases. E.g., Silhouette Int'l Schmied AG v. Chakhbazian, 2004 WL 2211660 at *2 (awarding $250,000 for more clearly willful trademark infringement); see, e.g., Gucci America, Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d at 520-21 ($2 million award for use of two counterfeit marks); Tiffany (NJ) Inc. v. Luban, 282 F. Supp. 2d at 124-25 (Awarding plaintiff the $550,000 in statutory damages sought by plaintiff because "[b]y virtue of the default, [defendants'] infringement is deemed willful, and therefore the Court has discretion to award anywhere between $500 and $1,000,000 per counterfeit mark per type of good sold," and amount plaintiff sought was "within the range of awards in similar cases."); Rolex Watch U.S.A., Inc. v. Brown, 01 Civ. 9155, 2002 WL 1226863 at *2 (S.D.N.Y. June 5, 2002) (Peck, M.J.) (awarding $1 million damages despite defendant's use of multiple Rolex marks) (& cases cited therein); Rolex Watch U.S.A., Inc. v. Jones, 99 Civ. 2359, 2002 WL 596354 at *6 (S.D.N.Y. Apr. 17, 2002) ("In short, statutory damages of less than $1 million but more than $25,000 per category of trademarked ...


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