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Martal Cosmetics, Ltd. v. International Beauty Exchange Inc.

March 22, 2007

MARTAL COSMETICS, LTD., PLAINTIFF,
v.
INTERNATIONAL BEAUTY EXCHANGE INC., JACOB AINI, RACHEL AINI, A/K/A GINA AINI A/K/A RAQUEL AINI, SYMCHA HOROWITZ, HARRY AINI, JOHN DOES 1-10, BEING PERSONS OR ENTITIES PARTICIPATING IN THE COUNTERFEITING OF THE SUBJECT PRODUCT, K.A.K. GROUP, INC. A/K/A INTERNATIONAL BEAUTY EXCHANGE INC., I.C.E. MARKETING, CORP. A/K/A I.C.E. INTERNATIONAL COSMETICS EXCHANGE MARKETING, HOMEBOYS DISCOUNT, INC., HOMEBOYS INTERNATIONAL, INC., AND I.B.E. COSMETICS, INC., DEFENDANTS.



The opinion of the court was delivered by: Feuerstein, J.

OPINION & ORDER

Before the Court are objections by (1) defendants I.C.E. Marketing, Corp. a/k/a I.C.E. International Cosmetics Exchange Marketing, Michael Aini, Jacob Aini, Harry Aini, K.A.K. Group, Inc. a/k/a International Beauty Exchange Inc., I.B.E. Cosmetics, Inc., Homeboys Discount, Inc. and Homeboys International, Inc. (collectively, the "New York Defendants); (2) defendants Symcha Horowitz and International Beauty Exchange, Inc. (collectively, the "Florida Defendants"); and (3) plaintiff Martal Cosmetics, Ltd. (Martal), to a Report and Recommendation and Order of United States Magistrate Judge James Orenstein dated September 22, 2006*fn1 recommending, inter alia, that Martal's motion for summary judgment be granted in part and denied in part, that the New York Defendants' and Florida Defendants' cross motions for summary judgment be denied, and that various non-dispositive motions by the New York Defendants and Florida Defendants be denied. For the reasons stated herein, the Report and Recommendation and Order is modified to the extent set forth herein, and the Report and Recommendation and Order is otherwise accepted and affirmed in its entirety.

I. Report and Recommendation Regarding Dispositive Motions

A. Standard of Review

Rule 72 of the Federal Rules of Civil Procedure permits magistrate judges to conduct proceedings on dispositive pretrial matters without the consent of the parties. Fed.R.Civ.P. 72(b). Any portion of a report and recommendation on dispositive matters, to which a timely objection has been made, is reviewed de novo. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). The court, however, is not required to review the factual findings or legal conclusions of the magistrate judge as to which no proper objections are interposed. See, Thomas v. Arn, 474 U.S. 140, 150, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985). Whether or not proper objections have been filed, the district judge may, after review, accept, reject, or modify any of the magistrate judge's findings or recommendations. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b).

B. The New York Defendants' and Florida Defendants' Objections

The New York Defendants allege, inter alia, that Magistrate Judge Orenstein erred (1) in recommending that partial summary judgment be granted in favor of Martal and against them on its trademark infringement claim relating to the 091 Registration covering Symba Soap; and (2) in recommending that summary judgment be granted in favor of Martal dismissing the second, fourth, eighth, eleventh, fourteenth and fifteenth affirmative defenses and the counterclaims of Jacob Aini and Rachel Aini.

The Florida Defendants allege that Magistrate Judge Orenstein erred (1) in denying its cross motion for summary judgment; and (2) in finding that there was no issue of fact regarding the validity of the 091 Registration pertaining to Symba Soap.*fn2

1. Partial Summary Judgment in Favor of Martal and against the New York Defendants

The New York Defendants and Florida Defendants contend that Magistrate Judge Orenstein's finding that there was no evidence in the record suggesting that Martal made false statements to the Patent and Trademark Office (PTO) when it sought registration for the Symba Soap is clearly erroneous because, inter alia, there is evidence suggesting that Marcus Sarner (Sarner), the founder of Martal, may have lied regarding his compliance with the labeling requirements of the Federal Food, Drug & Cosmetics Act (21 U.S.C. § 362) and regarding the mercury content of the soap and, thus, there is a question of fact regarding the validity of the 091 Registration covering Symba Soap. The New York Defendants further contend that Magistrate Judge Orenstein erred by relying on the chemical analyses performed by Martal's manufacturers to determine that the products seized from them were counterfeit because such evidence constituted inadmissible hearsay. In addition, the New York Defendants contend that in determining that I.C.E. Marketing, Corp. a/k/a I.C.E. International Cosmetics Exchange Marketing (ICE) and Michael Aini distributed the counterfeit products, Magistrate Judge Orenstein determined disputed issues of fact, failed to view the evidence in the light most favorable to ICE and improperly weighed the evidence.

Upon de novo review of the R&R, and upon careful consideration of (1) the New York Defendants' objections pertaining to the recommendation that partial summary judgment be granted in favor of Martal and against them on the trademark infringement claims, (2) the Florida Defendants' objections to the finding of Magistrate Judge Orenstein regarding the validity of the 091 Registration covering Symba Soap, and (3) plaintiff's responses thereto, the objections are overruled and so much of the R&R as recommends granting partial summary judgment in favor of Martal and against the New York Defendants, except Jacob Aini, on the Lanham Act and state law claims is accepted. In addition, I find that there is no issue of fact regarding the validity of the 091 Registration covering Symba Soap. Accordingly, partial summary judgment is granted in favor of Martal and against the New York Defendants, except Jacob Aini, on the Lanham Act and state law claims with respect to the 091 Registration covering Symba Soap.

2. Summary Judgment Dismissing Affirmative Defenses and Counterclaims of Jacob Aini and Rachel Aini

The New York Defendants contend that Magistrate Judge Orenstein erred in dismissing the affirmative defenses and counterclaims of Jacob Aini and Rachel Aini, which asserted that they did not distribute counterfeit Symba products (second affirmative defense), that the Symba products they distributed, if any, were genuine (fourth and eighth affirmative defenses), that the trademark registration for Symba Soap is invalid due to Martal's fraud to the PTO (eleventh affirmative defense), and that Martal engaged in bad faith and abuse of process (fourteenth and fifteenth affirmative defenses and counterclaims), since he denied summary judgment to Martal with respect to Jacob Aini and there has been no finding of liability with respect to Rachel Aini.

Upon de novo review of the R&R, and upon careful consideration of the New York Defendants' objections pertaining to the grant of summary judgment in favor of Martal dismissing the above affirmative defenses and counterclaims of Jacob and Rachel Aini, and plaintiff's response thereto, the objections are overruled, this branch of the R&R is accepted and the second, fourth, eighth, eleventh, ...


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