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Guishan, Inc. v. Faith Ice

March 22, 2010

GUISHAN, INC. D/B/A MISTER SOFTEE, ET AL., PLAINTIFFS,
v.
FAITH ICE, INC. D/B/A MISTER SOFTEE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge

ORDER ADOPTING R&R IN PART, MODIFYING IN PART & REJECTING IN PART

Plaintiffs Guishan, Inc. and Mister Softee, Inc. ("plaintiffs") commenced this action against ten defendants alleging trademark infringement and unfair competition. After all ten defendants failed to appear or answer in this action, plaintiffs moved for a default judgment. The court referred the motions to the Hon. Robert M. Levy, U.S. Magistrate Judge. On August 28, 2009, Judge Levy issued a Report and Recommendation*fn1 ("R&R") wherein he recommended that the court grant plaintiffs' request for a permanent injunction against defendants Faith Ice, Inc. ("Faith"), Petes Ice Cream Truck Rental Corp. ("Petes"), Tommy Dalageorgos ("Dalageorgos"), Best Ice, Inc. ("Best"), and Piedad M. Arevalo ("Arevalo"), and deny plaintiffs' request for a permanent injunction with respect to defendants Demetrius Konstantakakos ("Konstantakakos"), Juan Jaramillo ("Jaramillo") and Shyne Rims Creamy, Inc ("Shyne"). Judge Levy also recommended that defendants Faith, Petes, Dalageorgos, Best, and Arevalo be held jointly and severally liable for: (1) attorney's fees to Einbinder & Dunn, LLC, in the amount of $1,876.25 and to Fischer Zucker, LLC ("Fischer") in the amount of $4,649.55, and (2) costs in the amount of $748.18 to Fischer. Lastly, Judge Levy recommended that defendants Konstantakakos, Jaramillo and Shyne each be held individually liable for $149.64 in costs to Fischer.

On September 17, 2009, plaintiffs filed objections to Judge Levy's recommendations. Specifically, plaintiffs object to Judge Levy's: (1) failure to recommend the entry of a permanent injunction against defendants Konstantakakos and Shyne; and (2) recommendations concerning attorney's fees and costs. In their objections, plaintiffs also request that the court award them the attorney's fees incurred in connection with their objections to Judge Levy's R&R.

For the following reasons, Judge Levy's R&R is hereby adopted in part, modified in part, and rejected in part.

BACKGROUND

The court adopts the background set forth in the R&R (Docket Entry No. 30), familiarity with which is assumed for purposes of this Order.

STANDARD OF REVIEW

When no objections*fn2 to an R&R are made, the court may adopt the R&R if "there is no clear error on the face of the record." Adee Motor Cars, LLC v. Amato, 388 F. Supp. 2d 250, 253 (S.D.N.Y. 2005) (citation omitted). When objections are made, a district judge must make a de novo determination with respect to those parts of the R&R to which any party objects. The district court may then "accept, reject, or modify the recommended decision, receive further evidence, or recommit the matter to the magistrate judge with instructions." FED. R. CIV. P. 72(b); 28 U.S.C. § 636(b); see also United States v. Raddatz, 447 U.S. 667, 673-76 (1980).

DISCUSSION

A default constitutes an admission of all well-pleaded factual allegations in the complaint pertaining to liability. See Greyhound Exhibitgroup, Inc. v. E.L. U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). A default also effectively constitutes an admission that the acts pleaded in the complaint violated the laws upon which the claim is based and caused injuries as alleged. See Cablevision Systems New York City Corp. v. Lokshin, 980 F. Supp. 107, 111 (E.D.N.Y. 1997) (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 69-70 (2d Cir. 1981)). In their complaint, plaintiffs alleged that defendants' use of the Mister Softee trademarks constitutes trademark and trade dress infringement under the Lanham Act and common law unfair competition.

While a party's default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages. Greyhound, 973 F.2d at 158. Here, plaintiffs seek no monetary compensation. Rather, they seek attorney's fees, costs and the entry of permanent injunctions against defendants, enjoining them from using Mister Softee's proprietary trademarks and trade dress or any colorable imitation thereof in any manner whatsoever.

I. Permanent Injunction

To obtain a permanent injunction in a trademark action, a party "must succeed on the merits and 'show the absence of an adequate remedy at law and irreparable harm if the relief is not granted.'" Roach v. Morse, 440 F.3d 53, 56 (2d Cir. 2006) (quoting N.Y. State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1362 (2d Cir. 1989)); see also Cartier, Inc. v. Four Star Jewelry Creations, Inc., 348 F. Supp. 2d 217, 240 (S.D.N.Y. 2004). To establish success on the merits on a claim for injunctive relief under the Lanham Act, plaintiffs must establish ownership of a valid trademark, and that defendant's use of its mark is likely to create confusion regarding the source of the product.*fn3 See U2 Home Entertainment, Inc. v. Fu Shun Wang, 482 F. Supp. 2d 314, 319-20 (E.D.N.Y. 2007) (granting permanent injunction for trademark infringement after defendant defaulted); Rolex Watch USA, Inc. v. Jones, 2000 WL 1528263, at *2 (S.D.N.Y. Oct. 13, 2000). This showing of likelihood of confusion will also establish the irreparable harm requirement for permanent injunctive relief. See Cartier, Inc., 348 F. Supp. 2d at 240.

To evaluate the likelihood of confusion, the court must consider the factors established in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961): (1) strength of the plaintiff's mark; (2) degree of similarity between the two marks; (3) proximity of the products in the marketplace; (4) likelihood that the plaintiff will enter a market related to that in which the defendant sells its product; (5) evidence of actual confusion; (6) defendant's bad faith; (7) quality of the defendant's product; and ...


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