United States District Court, E.D. New York
SPRINT SOLUTIONS, INC., and SPRINT COMMUNICATIONS COMPANY L.P., Plaintiffs,
iCELL GURU, INC., and DANIEL YUSUPOV, Defendants.
For the Plaintiffs RUSSELL S. JONES, JR.
For the Defendants KEVIN K. TUNG Kevin
Kerveng Tung P.C.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
FREDERIC BLOCK Senior United States District Judge
Solutions, Inc. and Spring Communications Company L.P.
(“Sprint”) bring this trademark infringement case
against iCell Guru, Inc. and its owner, Daniel Yusupov
(together, “iCell Guru”), under the Lanham Act,
15 U.S.C. §§ 1051-1141n and New York unfair
competition law. The case was tried before the Court without
a jury November 7-9, 2016. In accordance with Federal Rule of
Civil Procedure 52(a), the following are the Court's
combined findings of fact and conclusions of law.
accused iCell Guru of trademark infringement under the Lanham
Act when it sold iPhones programmed to be used exclusively on
the Sprint network. On June 7, 2016, the Court issued a
memorandum and order granting partial summary judgment in
favor of Sprint. It found that, as a matter of law, it was a
trademark infringement for iCell Guru to sell iPhones to be
used on the Sprint network with “bad” electronic
serial numbers. However, it determined that “damages
flowing from that conduct necessarily depend on the number of
such phones sold, and Sprint has not established that number
with any precision.” SJ Order at 7.
to recover on their Lanham Act claim at trial, Sprint needed
to establish the number of Sprint phones with bad ESNs that
iCell Guru sold. To do so, they introduced Plaintiffs'
Exhibit 2, a chart listing ninety-seven iPhones sold by iCell
Guru; Sprint claimed that these ninety-seven phones had bad
ESNs for one of three reasons: “never activated,
” “upgrade fraud, ” and
Activated. Seventy-one of the ninety-seven phones listed
on Plaintiffs' Exhibit 2 were marked as “never
activated.” Sprint's witness Clint Breithaupt
(“Breithaupt”), a certified fraud examiner at
Sprint, testified that these phones were flagged as having
bad ESNs because he “saw that [they were] not activated
on Sprint's network.” Tr. 153:5-6. After additional
analysis, Breithaupt discovered that those seventy-one phones
were supposed to be in Sprint's warehouse. Therefore, he
assumed that those phones were “stolen from the
warehouse, because otherwise [he] would have seen some kind
of shipping documentation from them.” Tr. 153:10-12.
Breithaupt conducted this examination during discovery in
this litigation: during discovery, iCell Guru disclosed the
ESN numbers of certain phones it sold, including these
seventy-one phones, at which time Breithaupt checked those
ESNs and found that they were supposed to still be in
Sprint's warehouse. Only then did Breithaupt flag those
phones as having bad ESNs. At the time iCell Guru sold the
seventy-one “never activated” phones, then, they
did not have bad ESNs; therefore, the sale of these phones
does not constitute trademark infringement.
Fraud. Twenty-two of the ninety-seven phones listed on
Plaintiffs' Exhibit 2 were marked as “upgrade
fraud.” Breithaupt testified that “upgrade
fraud” meant “that those phones were purchased
and resold and they were not activated on the Sprint network
for thirty days.” Tr. 167:2-3. Five of these twenty-two
phones were initially sold to iCell Guru by Stuart Drobney
(“Drobney”), Sprint's private investigator.
Tr. 170:15-25. This was clearly not upgrade fraud: Sprint
gave Drobney those phones for the purpose of selling them to
defendants to further their investigation in preparation for
litigation. This calls into question the accuracy of labeling
the other seventeen phones as “upgrade fraud.”
Breithaupt does not recall contacting the individuals who
allegedly sold their upgraded Sprint phones to iCell Guru; it
is possible that any one of those individuals was entitled to
sell his or her upgraded phone because, by the terms of his
or her contract with Sprint, he or she had title to that
phone immediately after upgrading. The Court therefore finds
that Sprint has not established that the twenty-two phones
marked “upgrade fraud” were actually bad ESN
phones at the time that iCell Guru sold them.
The remaining four phones on Plaintiffs' Exhibit 2 are
marked “lost/stolen.” Breithaupt testified that
these phones are so marked because they were “reported
lost or stolen by customers.” Tr. 193:9-10. However,
one of the four phones was marked “lost/stolen”
six months after iCell Guru sold that phone; this
phone did not have a bad ESN at the time iCell Guru sold it.
See Tr. 194:21-23. The other three
“lost/stolen” phones were not discussed at trial,
but in light of the fact that Sprint failed to prove the
other ninety-four phones on Plaintiffs' Exhibit 2
actually had bad ESNs at the time iCell Guru sold
them-despite labeling them otherwise-the Court is not
persuaded that the remaining three phones had bad ESNs when
iCell Guru sold them.
respect to Sprint's unfair competition claim under New
York state law, it must show that iCell Guru, in bad faith,
infringed upon its trademark by selling Sprint iPhones with
bad ESNs. Because Sprint did not prove that defendants
actually sold any ...