HUDSON FURNITURE INC BARLAS BAYLAR v. ALAN MIZRAHI ALAN MIZRAHI LIGHTING LIGHTING DESIGN WHOLESALERS INC (2024)

REPORT AND RECOMMENDATION TO HON. PAUL A. CROTTY: DAMAGES AND INJUNCTION

Plaintiffs Hudson Furniture, Inc. (“Hudson”) and Hudson's Chief Executive Officer and Creative Director, Barlas Baylar (“Baylar”), (collectively, “Plaintiffs”) filed this action to recover damages and stop Defendants Alan Mizrahi and Lighting Design Wholesalers, Inc. (collectively, “Defendants”) from infringing Plaintiffs’ copyrights, trademarks, and other intellectual property, violating Baylar's right of publicity, and transgressing other related state law, all in connection with Defendants’ offering and sale of “knock-off” chandelier lighting. On September 1, 2020, District Judge Paul A. Crotty issued a preliminary injunction enjoining Defendants’ use of Plaintiff's copyrights and trademarks (the “Preliminary Injunction”). (Dkt. 54 (see also Hudson Furniture, Inc. v. Mizrahi, 20-CV-4891, 2020 WL 5202118 (S.D.N.Y. Sept. 1, 2020).)

Following protracted discovery and motion practice, on September 25, 2023, Judge Crotty, granted summary judgment on liability in Plaintiffs’ favor against Defendants for trademark infringement under Section 32 of the Lanham Act, 15 U.S.C. § 1114(1)(a) and unfair competition and false designation of origin under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (Count VII); trademark infringement, unfair competition, and misappropriation in violation of New York common law (Count VIII); use of name with intent to deceive in violation of New York General Business Law § 133 (Count IX); injury to business reputation and dilution in violation of New York General Business Law § 360-1 (Count X); copyright infringement under 17 U.S.C. § 101 (Count XI); and unauthorized use of name and image in violation of §§ 50 and 51 of the New York Civil Rights Law (Count XII) (the “Summary Judgment Decision”). (Dkt. 160 (see also Hudson Furniture, Inc. v. Mizrahi, 20-CV-4891, 2023 WL 6214908 (S.D.N.Y. Sept. 25, 20203).)

Among other things, Judge Crotty found that Defendants willfully infringed Plaintiffs’ registered HUDSON FURNITURE and BARLAS BAYLAR trademarks (Dkt. 160 at 6-20), willfully infringed Plaintiffs’ unregistered trademarks (id.), willfully violated Plaintiffs’ copyrights in their lighting product catalogs (Dkt. 160 at 24-30), and willfully violated Baylar's right of publicity by using his name and image to market Defendants’ unauthorized reproductions (Dkt. 160 at 23-24). Judge Crotty also found that Defendants repeatedly and willfully violated their discovery obligations, thus meriting payment of Plaintiff's attorney's fees as discovery sanctions (Dkt. 160 at 30-32), and willfully violated the Preliminary Injunction, thus meriting payment of Plaintiff's attorney's fees as contempt sanctions (Dkt. 160 at 33-34). The Court awarded maximum statutory damages of $150,000 for each of three copyright registrations (Dkt. 160 at 35-40), punitive damages for Defendants’ violation of Baylar's right of publicity (Dkt. 160 at 40-41), and attorney's fees and costs for the entire action (Dkt. 160 at 41-42). The matter is now before me for an inquest on compensatory damages for Plaintiffs’ federal trademark and state law claims, restitution, punitive damages, pre-judgment and post-judgment interest, and attorney's fees and costs, as well as the terms of permanent injunctive relief. (Dkt. 160 at 42-43.) The Court assumes the parties’ familiarity with the facts and legal conclusions set forth in the Summary Judgment Decision.

For the instant inquest, Plaintiffs filed proposed findings of fact and conclusions of law on October 23, 2023 (Dkt. 162) (“Pl. FFCL.”), along with a Declaration of Patrick J. Hines in support of attorney's fees (Dkt. 162-1) (“Hines Decl.”), and a proposed Permanent Injunction And Final Judgment (Dkt. 162-3). As monetary relief, Plaintiffs seek $2,000,000 in statutory damages under the Lanham Act, in addition to the $450,000 in statutory damages already awarded under the Copyright Act; pre-judgment interest at 9% per annum ($717,078.57, as of September 25, 2020); post-judgment interest at the federal statutory rate; $50,000 in punitive damages to Baylar; $244,870 in attorney's fees; and $7,919.48 in costs. Defendants filed opposing papers on November 30, 2023, including a response to Plaintiffs’ proposed findings of fact and conclusions of law (Dkt. 170) (“Def. FFCL”), a memorandum of law in opposition to Plaintiffs’ requested attorney's fees (Dkt. 168) (“Def. Fees Mem.”), and a memorandum of law in opposition to Plaintiffs’ requested statutory damages (Dkt. 169) (“Def. Damages Mem.”).¹

After thorough consideration, the Court recommends awarding relief as set forth below.

Legal Standards 2

The plaintiff bears the burden of establishing an amount of damages with reasonable certainty. RGI Brands LLC v. Cognac Brisset-Aurige, S.A.R.L., No. 12-CV-1369, 2013 WL 1668206, at *6 (S.D.N.Y. April 18, 2013) (collecting cases), R. & R. adopted, 2013 WL 4505255 (S.D.N.Y. Aug. 23, 2013); see also Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997). In conducting an inquest, the court is charged with “ ‘determining the proper rule for calculating damages on such a claim’ ” and applying that rule to the evidence. Tiffany (NJ) Inc. v. Luban, 282 F. Supp.2d 123, 124 (S.D.N.Y. 2003) (quoting Credit Lyonnais Securities (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). The Court has determined that no hearing is necessary to determine damages (no party has requested one), and that determination of damages can be resolved on the submissions and prior proceedings. See Tamarin v. Adam Caterers, Inc., 13 F.3d 51, 53-54 (2d Cir. 1993); Fustok v. ContiCommodity Services, Inc., 873 F.2d 38, 40 (2d Cir. 1989).

Discussion

I. Damages For Trademark Infringement

Plaintiff Hudson seeks statutory damages in the amount of $2,000,000 for Defendants’ trademark violations. Alternatively, in the event the Court deems statutory damages unavailable, Hudson seeks $15,101.10 in compensatory damages. (Pl. FFCL at 17-19.) Hudson is not entitled to statutory damages but is entitled to the compensatory damages it seeks.

A. Damages Under The Lanham Act

Under the Lanham Act, multiple monetary remedies are available. They include damages sustained by the plaintiff, disgorgement of the defendant's profits, potential trebling of those amounts, and, alternatively, statutory damages in cases involving the defendant's use of a “counterfeit mark.” See 15 U.S.C. §§ 1117(a), (b), (c).

1. Sustained Damages And Disgorgement Of Profits

“Section 1117(a) of the Lanham Act governs the award of actual damages and provides that a successful plaintiff under the Act shall be entitled, subject to the principles of equity, to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) costs of the action.” Samsonite IP Holdings S.àr.l. v. Shenzhen Liangyiyou E-Commerce Co., Ltd., No. 19-02564, 2021 WL 9036273, at *6 (S.D.N.Y. Apr. 27, 2021) (internal quotation marks and brackets omitted), R. & R. adopted, 2023 WL 8805645 (S.D.N.Y. Dec. 20, 2023); see also 15 U.S.C. § 1117(a). The purpose of either form of award – disgorgement of profits or plaintiff's sustained damages – is to provide compensation only, “not a penalty.” 15 U.S.C. § 1117(a).

To establish “defendant's profits,” the plaintiff has the burden to “prove defendant's sales only; defendant must prove all elements of cost or deduction claimed.” 15 U.S.C. § 1117(a); Samsonite IP Holdings, 2021 WL 9036273, at *6. If the court finds that the amount of the recovery based on profits is “either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case.” Samsonite IP Holdings, 2021 WL 9036273, at *6 (internal quotation marks and brackets omitted).

“To establish its sustained damages, a plaintiff typically must show that it has lost profits on its own sales.” Id. (citing Malletier v. Artex Creative International Corp., 687 F. Supp.2d 347, 356 (S.D.N.Y. 2010) (noting that, in order for a plaintiff “to recover [its own] ‘lost profits,’ [the plaintiff] must prove lost sales with specificity”)). “In assessing damages, the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount.” 15 U.S.C. § 1117(a).

2. Damages For Use Of A Counterfeit Mark

In cases where a defendant has used a “counterfeit mark,” the plaintiff may elect either treble actual damages or statutory damages. See 15 U.S.C. §§ 1117 (b), (c). Section 1117(b) affirmatively requires an award of reasonable attorney's fees and treble profits or damages, whichever is greater, if the use of a counterfeit mark was “intentional[ ]” “unless the court finds extenuating circumstances.” 15 U.S.C. § 1117 (b); see Koon Chun Hing Kee Soy & Sauce Factory, Ltd. v. Star Mark Management, Inc., 409 F. App'x. 389, 390 (2010) (“The plain language of Section 1117(b) mandates the imposition of treble damages and attorneys’ fees for the “intentional[ ]” and “knowing” use of a counterfeit mark”). Thus, “unlike Section 1117(a), which merely permits trebling of a plaintiff's sustained damages at the court's discretion, Section 1117(b) requires trebling of any damages awarded under Section 1117(a) – including the defendant's profits – upon a finding of willfulness, and absent extenuating circumstances.” Samsonite IP Holdings, 2021 WL 9036273, at *6 (emphasis omitted) (internal quotation marks and brackets omitted) (quoting Sara Lee Corp. v. Bags of New York, Inc., 36 F. Supp.2d 161, 165 (S.D.N.Y. 1999)).

As an alternative to treble actual damages for the defendant's use of counterfeit marks, a plaintiff may elect an award of statutory damages. 15 U.S.C. § 1117(c). Congress provided statutory damages as a remedy for use of counterfeit marks “because ‘counterfeiters’ records are frequently nonexistent, inadequate, or deceptively kept ․, making proving actual damages in these cases extremely difficult if not impossible.’ ” Gucci America, Inc. v. Duty Free Apparel, Ltd., 315 F. Supp.2d 511, 520 (S.D.N.Y. 2004) (alteration in original) (quoting S. Rep. No. 104-177, at 10 (1995)), amended by 328 F. Supp.2d 439 (S.D.N.Y. 2004).

The range of available statutory damages available for trademark counterfeiting is determined by whether or not the defendant's conduct was willful. Thus, statutory damages may be awarded in the amount of: “(1) not less than $1,000 or more than $200,000 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 $2,000,000 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). Statutory damages against a defendant who acted willfully are intended to serve the dual role of compensating a plaintiff for injuries and deterring wrongful conduct by the defendant and others. Malletier v. Carducci Leather Fashions, Inc., 648 F. Supp.2d 501, 504 (S.D.N.Y. 2009) (“where ․ a defendant is shown to have acted willfully, a statutory award should incorporate not only a compensatory, but also a punitive component to discourage further wrongdoing by the defendants and others”).

Section 1117(c) does not specify criteria for determining the amount of statutory damages that may be awarded. Instead, it authorizes awards “as the court considers just,” thereby “affording courts ‘broad discretion’ to determine the amount of damages appropriate to achieve the Lanham Act's dual goals of compensation and deterrence.” Samsonite IP Holdings, 2021 WL 9036273, at *7 (citing Sara Lee, 36 F. Supp.2d at 166).

B. Statutory Damages Under The Lanham Act Are Not Warranted Here

Defendants acted willfully, and their discovery failures have made it “impossible for Plaintiffs to accurately represent their damages.” (Dkt. 160 at 40.) Even so, Hudson may not recover statutory damages under the Lanham Act because there is no proof that Defendants employed a counterfeit mark as defined under the Lanham Act. The statutory damages section, 15 U.S.C. § 1117(c), expressly incorporates the definition of “counterfeit mark” under § 1116(d), which means “a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered.” 15 U.S.C. § 1116(d)(1)(B)(i).³ In its definitions section, the Lanham Act defines a “counterfeit” as “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” 15 U.S.C. § 1127; see Louis Vuitton Malletier S.A. v. Sunny Merchandise Corp., 97 F. Supp.3d 485, 499 (S.D.N.Y. 2015) (“To be substantially indistinguishable, two marks must be nearly identical ․ with only minor differences which would not be apparent to an unwary observer”) (internal quotation marks omitted).

Pursuant to that definition, trademark use typically will be deemed trademark counterfeiting when the defendant uses plaintiff's registered trademark in connection with the same goods or services for which the trademark is registered, thereby passing off the defendant's products as the plaintiff's authentic products. See Fujifilm North America Corp. v. PLR IP Holdings, LLC, No. 17-CV-8796, 2019 WL 274967, at *3 (S.D.N.Y. Jan. 7, 2019) (“the counterfeit must be used to pass off the infringer's product as the original, rather than merely presented in a manner likely to confuse some consumers as to the origin or sponsorship of the infringer's product”) (emphasis omitted) (internal quotation marks and brackets omitted); Coty Inc. v. Excell Brands, LLC, 277 F. Supp.3d 425, 468 (2017) (“In determining whether one mark is a counterfeit of another, a court must not view them in the abstract. Rather, the alleged counterfeit mark must be compared with the registered mark as it appears on actual merchandise to an average purchaser”) (internal quotation marks omitted); Gucci America, Inc. v. Guess?, Inc., 868 F. Supp.2d 207, 242 (S.D.N.Y. 2012) (the essence of counterfeiting is that the use of the infringing mark “seeks to trick the consumer into believing he or she is getting the genuine article, rather than a ‘colorable imitation’ ”).

Yet that is the exact opposite of what Plaintiffs have proven. Rather than showing that Defendants passed off their own chandeliers as authentic HUDSON FURNITURE or BAYLAS BAYLAR products, they sold the chandeliers under their own Alan Mizrahi branding. That is evident in the images of the various chandeliers marketed on Defendants’ websites and social media. (See, e.g., Hines SJ Decl. Exs. 13-20.⁴ ) As Judge Crotty noted on summary judgment, Defendants admitted “to superimposing Mizrahi's branding on copyrighted images of Hudson's products,” and “represent[ed] themselves as both a designer and manufacturer” thereby having “deliberately created confusion as to the origin and sponsorship of the goods.” (Dkt. 160 at 14.)

For Hudson's other trademarks, those associated with its designs, the statutory damages analysis follows a different path but leads to the same place. Statutory damages are available only for counterfeiting of registered marks. Unlike the HUDSON FURNITURE and BAYLAR marks, the design marks are not registered. Those unregistered marks include MOTHER, PANGEA, LA CAGE, BRITANICA, VALIANT, PANTHEON, TUSK, and LOTUS. (Dkt. 160 at 2.) As Plaintiffs alleged, argued, and proved, Defendants marketed chandeliers of the same design using the same design names as Hudson's unregistered marks and using Hudson's copyrighted photographs to depict those chandeliers. (See Hines SJ Decl. Exs. 13-20; Dkt. 160 at 11 (finding that the parties offer identical lighting fixtures), 14 (finding that Defendants “copied Hudson's Marks and copyright photographs to sell their own lighting products”).) In effect, Defendants did employ counterfeits of the design marks, but because those marks are unregistered, they do not qualify as counterfeit marks for statutory damages. See 15 U.S.C. §§ 1116(d)(1)(B)(i) (defining “counterfeit mark” as “a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office”), 1117(c) (incorporating § 1116(d)’s definition of counterfeit mark).

To be sure, Judge Crotty found that Defendants used and infringed Hudson's registered and unregistered trademarks, which he collectively referred to as “Hudson's Marks.” But the Summary Judgment Decision never once refers to Defendants being liable for trademark counterfeiting; indeed, the decision does not mention the term “counterfeit” at all. That is understandable. As explained above, Defendants’ scheme was based on using Hudson's copyrighted photos and descriptions along with Hudson's unregistered trademarks.

But the proof submitted by Plaintiffs with respect to Defendants’ use of Hudson's registered, as distinct from unregistered, marks is thin. None of the photographs or website descriptions or social media postings Plaintiffs submitted on summary judgment mention HUDSON FURNITURE. One page from the alanmizrahilighting.net website described one chandelier design as “Valiant by Hudson.” (Baylar SJ Decl. ¶ 27.⁵ ) “Hudson” no doubt refers to Plaintiff Hudson Furniture, but “Hudson” is not identical to or indistinguishable from the registered two-word mark HUDSON FURNITURE. The same website page states that the Valiant chandelier is “[d]esigned by Barlas Baylar” and displays a picture of Baylar. (Id.) The use of Baylar's name on the website is a nominative use, not a trademark use. It does violate Baylar's right of publicity (as found on summary judgment) and may constitute false designation of origin or a false description under Section 43(a) of the Lanham Act. But statutory damages are not available for those causes of action.

Even apart from whether Defendants employed “counterfeit” marks as required to obtain statutory damages, there is another impediment to awarding statutory damages under the Lanham Act. “As a general rule, a plaintiff seeking compensation for the same injury under different legal theories is only entitled to one recovery.” Viacom International Inc. v. Fanzine International, Inc., No. 98-CV-7448, 2001 WL 930248, at *5 (S.D.N.Y. Aug. 16, 2001) (citing Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 497 (2d Cir. 1995)); see also Lyons Partnership, L.P. v. AAA Entertainment Inc., No. 98-CV-9475, 1999 WL 1095608, at *4 (S.D.N.Y. Dec. 3, 1999) (“[T]he Second Circuit has repeatedly held that even if a plaintiff prevails on separate legal claims, each of which may be said to protect different if related interests, he may not obtain full compensation twice for the same economic injury”). Courts have, however, found permissible recovery of statutory damages under one intellectual property regime in addition to disgorgement of profits or recovery of actual damages under another. E.g., Lyons Partnership, 1999 WL 1095608, at *10 (awarding statutory damages under the Copyright Act and infringer's profits under the Lanham Act). That is precisely what Judge Crotty's inquest reference suggested be done: award statutory damages under the Copyright Act and determine compensatory damages or disgorgement of profits for Defendants’ trademark violations. (Dkt. 160 at 42 (“The Court further orders an inquest on damages regarding Plaintiffs’ damages on its federal trademark and state law claims, including an award of compensatory damages, restitution, including disgorgement of profits, punitive damages, and ․ interest, and attorneys’ fees and costs, as permitted by law”).)

By comparison, courts typically do not permit recovery of statutory damages under both the Lanham Act and the Copyright Act where, as here, there ultimately is only one injury or economic loss. E.g., AllStar Marketing Group, LLC v. Ali Dropshipping Support Store, No. 21-CV-333, 2023 WL 4348386, at *3 (S.D.N.Y. July 5, 2023) (declining to award statutory damages under both Copyright Act and Lanham Act and adopting reasoning that one award of statutory damages was sufficient to compensate intellectual property holders and “the broad range of statutory damages available under either the Copyright Act or Lanham Act is sufficient to put potential infringers ‘on notice that it costs less to obey [intellectual property] laws than to violate them’ ”); Cengage Learning, Inc. v. Shi, No. 13-CV-7772, 2015 WL 5167775, at *4 (S.D.N.Y. Sept. 2015) (“a plaintiff should not be awarded statutory damages under both the Copyright Act and the Lanham Act”); Tu v. Tad System Technology Inc., No. 08-CV-3822, 2009 WL 2905780, at *4 (E.D.N.Y. Sept. 10, 2009) (denying dual recovery of statutory damages under both Copyright Act and Lanham Act where defendant used plaintiff's trademarks on advertising and packaging in support of sale of software infringing plaintiff's copyrights); Microsoft Corp. v. Computer Care Center, Inc., No. 06-CV-1429, 2008 WL 4179653, at *9 (E.D.N.Y. Sept. 10, 2008) (denying statutory damages under both Copyright Act and Lanham Act “for the same injury – i.e., harm caused by defendants’ unauthorized copying of the same software”); but see Innovation Ventures, LLC v. Ultimate One Distribution Corp., 176 F. Supp.3d. 137, 175 (E.D.N.Y. 2016) (awarding statutory damages under both Copyright Act and Lanham Act where defendants sold millions of counterfeit energy shots that posed public health and safety risk, and the packaging bore both plaintiff's copyrighted label and plaintiff's trademarks).

Recognizing that concern, and although contending that the Court has discretion to award statutory damages pursuant to both the Copyright Act and the Lanham Act, Plaintiffs request that, in the event the Court does not award statutory damages under both statutes, Hudson be awarded statutory damages under the Lanham Act, not the Copyright Act – but “only ․ if that election results in a greater statutory damages award.” (Pl. FFCL at 16 nn.4-5.) As there has been no finding that Defendants employed counterfeit marks as defined by the Lanham Act's statutory damages provision, the statutory damages already awarded under the Copyright Act necessarily are the greater amount. That award of $450,000 should remain undisturbed.

In addition to that award, however, Hudson is entitled to recover whatever compensatory damages they can prove from Defendants’ trademark infringement.

C. Plaintiff Hudson's Compensatory Damages

As noted above, Hudson requests, only in the alternative, $15,101.10 in compensatory damages. That amount is treble the amount of money Defendants received for the one proven wrongful sale of a chandelier. (Pl. FFCL at 17-19; see also Dkt. 160 at 19 (describing proof of sale to customer Jennifer Welch and rejecting Defendants’ contention that proof of sale was lacking).) Hudson is entitled to the full amount requested.

Defendants sold the one chandelier for $5,033.73. (Dkt. 160 at 19.) Plaintiffs contend that Defendants should disgorge that amount as wrongfully obtained profits. Defendants have not presented the Court with any information about its costs that would provide a basis for reducing the amount received for the sale. Because the burden falls on Defendants to do so, the full amount should be paid to Hudson. See 15 U.S.C. § 1117(a) (plaintiff has the burden to “prove defendant's sales only; defendant must prove all elements of cost or deduction claimed”).

Additionally, the Court finds that the sale amount should be trebled to $15,101.10 as permitted under § 1117(a) and warranted by the circumstances in this case. Trebling is equitable and just for multiple reasons. Most significantly, the Court has found that Defendants acted in bad faith in infringing Hudson's trademarks (Dkt. 160 at 14, 17), and Defendants’ obstreperous discovery tactics have made “it impossible for Plaintiffs to accurately represent their damages.” (Dkt. 160 at 40.) See Merck Eprova AG v. Gnosis S.p.A., 760 F.3d 247, 263 (2014) (affirming district court's award of treble defendant's profits under Lanham Act due to defendant's willfulness and impossibility of gauging plaintiff's losses, and explaining that while Section 1117(a)’s “enhancement provision ․ was included to enable courts to redress fully plaintiffs whose actual damages were difficult to prove, ․, we [also] have ․ reasoned that enhanced damages may also be awarded under Section 35 where deterrence of willful infringement is needed”) (internal quotation marks and citation omitted).

Defendants’ opposition does not address the amount of Hudson's compensatory damages under the Lanham Act. Plaintiffs should be awarded $15,101.10 as compensatory damages pursuant to 15 U.S.C. § 1117(a).

II. Punitive Damages

Judge Crotty previously found that Plaintiff Baylar is entitled to punitive damages for Defendants’ willful violation of Baylar's right of publicity under the New York Civil Rights Law. (Dkt. 160 at 40-41.) Baylar requests an award of $50,000 in punitive damages. (Pl. FFCL at 19-20.) The Court recommends awarding that amount.

“Under New York law, there is no formula by which the finder of fact must determine punitive damages. ․ The only requirement is that the punitive damages should bear a reasonable relationship to the wrong committed.” Wright v. Musanti, 887 F.3d 577, 588 (2d Cir. 2018) (internal quotation marks and citation omitted). Federal law, however, provides certain “guideposts” established by the Supreme Court in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), namely “(1) the degree of reprehensibility of the tortious conduct; (2) the ratio of punitive damages to compensatory damages; and (3) the difference between this remedy and the civil penalties authorized or imposed in comparable cases.” Lee v. Edwards, 101 F.3d 805, 809 (2d Cir. 1996) (citing Gore, 517 U.S. at 575). As stated in Gore, “[p]erhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct.” 517 U.S. at 575.

The three “guideposts” are non-exhaustive, and “[i]n reviewing punitive damages awards, courts in this Circuit often compare the award to rulings on awards in other cases.” Jennings v. Yurkiw, 18 F.4th 383, 390 (2d Cir. 2021). In determining whether a punitive damages award is excessive, a court must “keep in mind the purpose of punitive damages: to punish the defendant and to deter him and others from similar conduct in the future.” Lee, 101 F.3d at 809 (internal quotation marks omitted); accord Bouveng v. NYG Capital LLC, 175 F. Supp.3d 280, 344 (S.D.N.Y. 2016) (due process requires that “the magnitude of punitive damage awards ․ be reasonable in their amount and rational in light of their purpose to punish what has occurred and to deter its repetition”) (internal quotation marks omitted). And “ ‘[e]ven when the ‘punitive award is not beyond the outer constitutional limit marked out ․ by the three Gore guideposts,’ a court must separately determine whether the award is “ ‘so high as to shock the judicial conscience and constitute a denial of justice.’ ”” Bouveng, 175 F. Supp.3d at 345 (quoting Mathie v. Fries, 121 F.3d 808, 816-17 (2d Cir. 1997) (quoting Zarcone v. Perry, 572 F.2d 52, 56 (2d Cir. 1978)).

The first guidepost weighs in favor of a substantial punitive damages award. Defendants knowingly used Baylar's photograph and name for commercial purposes, without authorization. (Dkt. 160 at 41.) Indeed, Defendants did so in aid of their willful marketing and sale of infringing chandelier designs.

As for the second guidepost – the ratio of punitive damages to compensatory damages – “[s]ingle digit multipliers are more likely to comport with due process” than awards of far greater ratios, although even ratios exceeding 4:1 may go too far. State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408, 419, 425 (2003). Here, there is little proof of the extent of compensatory damages that can be determined beyond the sale of one chandelier for $5,033.70. (See Dkt. 160 at 19.) But as Judge Crotty determined on summary judgment, Defendants’ blatant and willful violation of discovery obligations and orders deprived Plaintiffs of meaningful discovery of the extent of Defendants’ sales and corresponding compensatory damages. (Dkt. 160 at 32 (reciting Defendants’ failure to produce emails of known sale and other transaction records), 40 (“Defendants have deliberately and repeatedly flouted their discovery obligations, making it impossible for Plaintiffs to accurately represent their damages”).) That is significant because the Supreme Court has acknowledged that a high ratio of punitive damages to compensatory damages is not dispositive in cases, like this one, where conduct is particularly egregious and compensatory damages are difficult to determine:

[L]ow awards of compensatory damages may properly support a higher ratio than high compensatory awards, if, for example, a particularly egregious act has resulted in only a small amount of economic damages. A higher ratio may also be justified in cases in which the injury is hard to detect or the monetary value of noneconomic harm might have been difficult to determine.

Gore, 517 U.S. at 582.

As for the third guidepost, comparable cases, the Court has found only a handful of relevant New York cases, in which punitive damages of $15,000 to $120,000 were awarded over three to four decades ago. If awarded today, those amounts obviously would be considerably higher due to inflation. See Beverley v. Choices Women's Medical Center, Inc., 78 N.Y.2d 745 (1991) (affirming awards of $50,000 in compensatory damages and $25,000 in punitive damages against defendant who used plaintiff doctor's image in advertising calendar without permission); Welch v. Mr. Christmas Inc., 57 N.Y.2d 143 (1982) (affirming judgment in favor of plaintiff actor of $1,000 in compensatory damages and $15,000 in exemplary damages for unauthorized continued airing of commercial); Felice v. Delporte, 136 A.D.2d 913, 524 N.Y.S.2d 919 (4th Dep't 1988) (upholding jury verdict of $150,000 compensatory damages against two defendants and ordering remittur of punitive damages from $500,000 to $120,000 against one defendant and $80,000 against the other defendant for use of plaintiff's image on billboard advertising).

As an additional consideration, the Court takes into account the Defendants’ wherewithal to pay punitive damages. See Vasbinder v. Ambach, 926 F.2d 1333, 1344 (2d Cir. 1991) (“Punitive damages are to be tailored to the defendant's ability to pay”); Tyco International Ltd. v. Walsh, No. 02-CV-4633, 2010 WL 3000179, at *1 (S.D.N.Y. July 30, 2010) (“A defendant's net worth is only relevant if there is a finding that punitive damages should be awarded”); Sabatelli v. Allied Interstate, Inc., No. 05-CV-3205, 2006 WL 2620385, at *1 (E.D.N.Y. Sept. 13, 2006) (the “court may take a defendant's financial circumstances, wealth, or net worth into consideration when determining the exemplary damages to be awarded against that defendant”) (internal quotation marks omitted). The Second Circuit has cautioned that punitive damages “should not be so high as to result in the financial ruin of the defendant” nor “constitute a disproportionately large percentage of a defendant's net worth.” Vasbinder v. Scott, 976 F.2d 118, 121 (2d Cir. 1992). In their submission on damages, however, Defendants did not argue or submit any evidence indicating any limitation on their ability to pay punitive damages.

Considering the three guideposts together and the circumstances of the case as a whole, I recommend that the Court exercise its discretion to award punitive damages in the amount of $50,000 for Defendants’ violation of Baylar's right of publicity. That amount will adequately serve the purposes of punitive damages, particularly when considered in the context of the other substantial financial awards to be imposed on Defendants, including statutory damages and attorney's fees. Anything more would be an unwarranted windfall to Baylar. See Vasbinder, 976 F.2d at 121 (“because neither compensation nor enrichment is a valid purpose of punitive damages, an award should not be so large as to constitute a windfall to the individual litigant”) (internal quotation marks omitted).

III. Attorney's Fees And Costs

Judge Crotty awarded Plaintiffs their reasonable attorney's fees and costs in three respects: (1) fees and costs caused by Defendants failure to comply with the Court's orders to produce all responsive documents (Dkt. 160 at 32); (2) fees and costs incurred in seeking compliance with the Preliminary Injunction as a contempt sanction (id. at 35); and (3) fees and costs for the entirety of the action due to Defendants’ willful violations of Plaintiffs’ rights and the unreasonable manner in which Defendants litigated the case by “flouting their discovery obligations and this Court's orders” (id. at 42). The first two of those awards are merely subsets of the third. That is, Plaintiffs are entitled to their reasonable fees and costs in prosecuting this case, including with respect to enforcing their rights to discovery and Defendants’ compliance with the Preliminary Injunction, as well as the remainder of the case. In other words, the first two components are not cumulative to the third but rather are subsumed within it. Plaintiffs do not contend otherwise. They seek a total of $244,870 in fees.

A. Standard For Determining Reasonable Fees

The traditional approach to determining a fee award is the “lodestar” calculation, which is the number of hours expended multiplied by a reasonable hourly rate. See Healey v. Leavitt, 485 F.3d 63, 71 (2d Cir. 2007). The Second Circuit has held that “the lodestar ․ creates a ‘presumptively reasonable fee.’ ” Millea v. Metro-North Railroad Co., 658 F.3d 154, 166 (2d Cir. 2011) (quoting Arbor Hill Concerned Citizens Neighborhood Association v. County Of Albany, 522 F.3d 182, 183 (2d Cir. 2008), and then citing Perdue v. Kenny A. Ex Rel. Winn, 559 U.S. 542, 552 (2010)); see also Stanczyk v. City Of New York, 752 F.3d 273, 284-85 (2d Cir. 2014) (reaffirming Millea). To arrive at a lodestar calculation, “[t]he party seeking an award of fees should submit evidence supporting the hours worked and rates claimed.” Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). Plaintiff has submitted such evidence here, including a declaration from counsel and copies of contemporaneous records of time expended by specific attorneys and paralegals. (Hines Decl. ¶¶ 3-40 and Ex. 1.)

B. Hourly Rates

Courts assess the reasonableness of a proposed hourly rate by considering the prevailing market rate for lawyers in the district in which the ruling court sits. Polk v. New York State Department Of Correctional Services, 722 F.2d 23, 25 (2d Cir. 1983). “The rates used by the court should be current rather than historic hourly rates.” Reiter v. Metropolitan Transportation Authority Of New York, 457 F.3d 224, 232 (2d Cir. 2006) (internal quotation marks omitted). “[C]ourts may conduct an empirical inquiry based on the parties’ evidence or may rely on the court's own familiarity with the rates if no such evidence is submitted.” Wong v. Hunda Glass Corp., No. 09-CV-4402, 2010 WL 3452417, at *2 (S.D.N.Y. Sept. 1, 2010) (internal quotation marks omitted). Additionally, “the range of rates that plaintiff's counsel actually charge their clients ․ is obviously strong evidence of what the market will bear.” Rozell v. Ross-Holst, 576 F. Supp.2d 527, 544 (S.D.N.Y. 2008); see also Lilly v. County Of Orange, 910 F. Supp. 945, 949 (S.D.N.Y. 1996) (“The actual rate that counsel can command in the market place is evidence of the prevailing market rate”).

Plaintiffs are represented in this action by Hodgson Russ LLP and seek reimbursement of fees for work performed by two partners, an associate, other attorneys with very limited roles, as well as paralegals and electronic discovery managers. (Hines Decl. ¶¶ 18-33.) Mr. Hines is a partner and experienced litigator, including with respect to copyright and trademark infringement and other intellectual property litigation. He had principal responsibility for all phases of the case and was lead counsel for courtroom proceedings. He billed 533.9 hours in connection with the case at a rate of $355 per hour. (Id. ¶¶ 19-22.)

Neil Friedman is a partner with extensive experience in intellectual property law and litigation, having practiced law for more than two decades. He is the head of the firm's trademark practice group and concentrates on trademark counterfeiting cases, including for companies such as Nike and Tommy Hilfiger. Mr. Friedman was personally involved and responsible for all matters of strategy and client interactions in the case; he also assisted with discovery matters and participated in drafting all written submissions. He billed a total of 102.5 hours for the case. His hourly rates increased on a yearly basis, being $410 for 2020; $440 for 2021; $450 for 2022; and $475 for 2023. (Id. ¶¶ 23-26.)

Associate Caitlin Canahai assisted with research and briefing for summary judgment. She worked a total of 24.5 hours on the case at a rate of $325 per hour. (Id. ¶¶ 27-28.) Four other attorneys provided combined work for 6.9 hours, at an average hourly rate of $368. Those attorneys included partner Charles S. Rauch, who consulted concerning patent issues; partner Ryan Cummings, who consulted concerning the impact of prior judgments; and associates David Short and Julia Mikolajczak, who provided research assistance. (Id. ¶¶ 29-30.) Various paralegals and electronic discovery managers provided assistance with investigation, collecting evidence, collection and production of electronically stored information, management and initial review of document productions, and preparation of materials submitted in support Plaintiffs’ motions for preliminary injunction and for summary judgment. In total, the paralegals and other timekeepers billed 27.9 hours in connection with the case at an average hourly rate of $260. (Id. 31-32.)

While providing ample information on partner Friedman's experience, the Hines Declaration provides considerably less information for the other attorneys, including for Mr. Hines himself. That said, the information is sufficient to support the rates requested here as they are extremely reasonable for the New York City market for attorneys, whether partner or associate, who work on intellectual property litigation matters like the instant case. See BMaddox Enterprises LLC v. Oskouie, No. 17-CV-1889, 2023 WL 1418049, at *4 (S.D.N.Y. Jan. 6, 2023) (stating “Courts awarding attorneys’ fees in copyright cases have regularly found rates in the range of $400 to $750 an hour for partners to be reasonable,” and collecting cases), R. & R. adopted, 2023 WL 1390275 (S.D.N.Y. Jan. 30, 2023); Aquavit Pharmaceuticals, Inc. v. U-Bio Med, Inc., No. 19-CV-3351, 2021 WL 4312579, at *28 (S.D.N.Y. July 16, 2021) (finding hourly rates of $575 and $600 for partners “reasonable in this District for work on complex intellectual properties”), R. & R. adopted as modified, 2021 WL 3862054 (S.D.N.Y. Aug. 30, 2021); Beastie Boys v. Monster Energy Co., 112 F. Supp.3d 31, 56 (S.D.N.Y. 2015) (approving junior associate rates between $461 and $505 per hour”); Pyatt v. Raymond, 10-CV-8764, 2012 WL 1668248, at *6 (S.D.N.Y. May 10, 2012) (over a decade ago, collecting cases approving rates ranging from $400 to $650 for partners in copyright and trademark cases). Indeed, Defendants’ inquest submission does not challenge the rates put forth by the Hodgson firm.⁶ (See generally Def. Fees Mem.) The rates are all the more reasonable in this instance given the efficiency of work discussed next.

C. Hours Worked

To determine the compensable hours, “the court must examine the hours expended by counsel and the value of the work product of the particular expenditures to the client's case.” Tlacoapa v. Carregal, 386 F. Supp.2d 362, 371 (S.D.N.Y. 2005) (citing Gierlinger v. Gleason, 160 F.3d 858, 876 (2d Cir. 1998)). “In making this examination, the district court does not play the role of an uninformed arbiter but may look to its own familiarity with the case and its experience generally as well as to the evidentiary submissions and arguments of the parties.” Gierlinger, 160 F.3d at 876 (internal quotation marks omitted). “The relevant issue ․ is not whether hindsight vindicates an attorney's time expenditures, but whether, at the time the work was performed, a reasonable attorney would have engaged in similar time expenditures.” Grant v. Martinez, 973 F.2d 96, 99 (2d Cir. 1992); see also Mugavero v. Arms Acres, Inc., No. 03-CV-5724, 2010 WL 451045, at *6 (S.D.N.Y. Feb. 9, 2010) (same). A court thus should exclude from the lodestar calculation “excessive, redundant or otherwise unnecessary hours.” Quaratino v. Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1999); see also Luciano v. Olsten Corp., 109 F.3d 111, 116 (2d Cir. 1997) (“If the district court concludes that any expenditure of time was unreasonable, it should exclude these hours from the lodestar calculation”).

Together, Plaintiffs’ attorneys and other timekeepers expended 695.7 hours over the course of the more than three years this case has been pending. The Court has reviewed the records and finds the time spent to be reasonable. The work performed included, inter alia: investigation, commencement of the case, alternative service on Defendants, moving for and successfully obtaining the Preliminary Injunction, responding to Defendants’ appeal of alternative service and the Preliminary Injunction, production and review of discovery, repeated motions to compel Defendants to comply with their discovery obligations and to comply with the Preliminary Injunction, moving for summary judgment and sanctions, as well as all the research, drafting, strategizing, and preparation for court appearances that went into those endeavors. The hours spent, broken down by each individual and supported by contemporaneous documentation, were all reasonably necessary for the litigation of Plaintiffs’ claims and response to Defendants’ dilatory tactics. While the vast majority of work was performed at the partner level, the records demonstrate considerable efficiency as a result. Moreover, the billing rate charged by partner Hines – who performed approximately 77 percent of the hours incurred – was only $355 per hour, meaning that Plaintiffs obtained partner-level work at the rates normally charged for mid-level or even junior associates in the New York metropolitan area for litigation of the type at issue here.

D. Defendants’ Challenges To Hours Worked

Defendants raise a number of issues with the reasonableness of the time devoted by Plaintiffs’ counsel. Those criticisms fall flat and do not warrant reduction in the fees sought.

First, Defendants contend that Plaintiffs’ attorneys engaged in “substantial overbilling.” (Def. Fees Mem. at 4.) Defendants complain about the fees incurred at the outset of the case and on summary judgment, as well as for efforts to “get and review” all of Defendants’ emails. (Id.) Those complaints are conclusory and untethered to any specific entries. Defendants also take issue with the amount spent ($3,725 or about ten hours) to work with a third-party witness in preparing a declaration for the preliminary injunction motion because the declaration was not used in the application for the injunction. (Id. at 5.) But as Defendants acknowledge, Plaintiffs submitted a declaration from the witness in connection with the summary judgment motion. Nothing suggests that the information and work product resulting from the time spent with the witness earlier in the case was not just as useful later in the case. The Court has reviewed the records in their entirety and finds the time incurred to be reasonable and not more than reasonably called for. That is all the more so given Defendants’ repeated recalcitrance and flouting of discovery obligations and court orders.

Second, Defendants accuse the attorneys of “duplicative billing for multiple attorneys ․ doing the same work.” (Id. at 5.) As an example, Defendants point to the deposition of Defendant Mizrahi, which Plaintiffs took remotely by video from their offices. Defendants complain that both attorneys Hines and Friedman billed for the deposition (one for ten hours, the other for nine, respectively). It is often the case that charging the time of multiple attorneys to attend the same deposition is unnecessarily duplicative. At the same time, it can be more efficient for two attorneys to attend the same deposition where they both are substantially involved in the litigation and will need to call upon material from the deposition in future evidentiary submissions and strategic decisions. Here, the Court does not fault Mr. Hines and Mr. Friedman for both attending or working together to prepare for Mr. Mizrahi's deposition given the principal roles they each played in prosecuting the case and given that Mizrahi was the key deponent and defendant.

Third, Defendants fault the billing records for consisting of “block billing” entries in which tasks are aggregated into one billing entry thus making it difficult to evaluate the time spent for any one task. (Id. at 6.) Block-billing generally is a disfavored practice. Congregation Rabbinical College of Tartikov, Inc. v. Village of Pomona, 188 F. Supp.3d 333, 340 (S.D.N.Y. 2016) (“courts look unfavorably on block billing and vagueness in billing because imprecise entries limit their ability to decipher whether the time expended has been reasonable”) (internal quotation marks and brackets omitted). However, block-billing will be overlooked where the Court can otherwise assess the reasonableness of the work and fees. E.g., Webber v. Dash, No. 19-CV-610, 2022 WL 2751874, at *11 (S.D.N.Y. July 14, 2022) (approving fees despite block billing where “the total time expended by Mr. Brown alone is quite reasonable, again reflecting counsel's efficiency and experience”); U.S., ex rel. Fox Rx, Inc. v. Omnicare, Inc., No. 12-CV-275, 2015 WL 1726474, at *3 (S.D.N.Y. Apr. 15, 2015) (finding “[t]he use of ‘block billing’ ․ perfectly reasonable” where “the specific tasks in each ‘block’ are described with sufficient detail and clarity to confirm the reasonableness of the work performed”) (some internal quotation marks omitted); Aurora Commercial Corp. v. Approved Funding Corp., No. 13-CV-230, 2014 WL 3866090, at *6 (S.D.N.Y. Aug. 6, 2014) (declining to reduce fees based on block billing where the “entries [were] sufficiently detailed to convey to the reader the tasks for which [the attorneys] billed”). That is the case here. Despite there being some instances of block billing, they are sufficiently detailed for the Court to readily conclude that the tasks performed, the time spent, and the fees charged all are reasonable as explained above.

Finally, Defendants assert that work performed for Plaintiffs’ allegations of patent infringement costing “a minimum of $2[,]500” should not be included in a fee award because no proof of patent infringement was presented, and Plaintiffs’ summary judgment motion did not seek damages for patent infringement. (Def. Fees Mem. at 6.) Defendants assert that Plaintiffs “waived” their patent infringement claims but does not cite anything from the record in that respect. (Id.) The court has the discretion to disallow fees for unsuccessful claims, particularly when they are distinct and not entwined with other claims. See, e.g., Branch v. Ogilvy Mather, Inc., 772 F. Supp. 1359, 1365-67 (S.D.N.Y.1991) (awarding attorneys’ fees in the amount that reflected work done on plaintiff's successful copyright claim, and not work corresponding to plaintiff's unsuccessful non-copyright claims). Here, however, Plaintiffs’ patent infringement claims have not proven unsuccessful. Rather, Plaintiffs did not move for summary judgment on those claims; that does not mean they are waived or without merit. Moreover, given the identity of design between Defendants’ and Plaintiffs’ lighting, and Plaintiffs’ ownership of six design patents in its lighting designs (see Compl. ¶¶ 30-49 and Exs. C-H), it was perfectly reasonable for them to investigate and analyze whether colorable patent claims could be asserted. The Court finds no reason to deduct the minor fees incurred in connection with asserting Plaintiffs’ patent claims along with its trademark and copyright claims.

E. The Amount Of Fees Awarded

Having determined that the fees sought are reasonable, the Court recommends that Plaintiff should be awarded the full amount sought of $244,870.00.

IV. Costs

Plaintiffs seek $7,919.48 in disbursements and expenses. Those costs, broken down by category, include copying and electronic case access costs totaling $112; postage totaling $46.76; process server fees totaling $436.70; court filing fees totaling $400; appellate printer fees totaling $1,721.39; eDiscovery management fees totaling $659.49; transcripts from court appearances totaling $82.80; deposition services and transcripts totaling $3,523.57; and travel and lodging totaling $936.77. (Hines Decl. ¶ 39.) Such expenses are routinely recoverable. GAKM Resources LLC v. Jaylyn Sales Inc., No. 08-CV-6030, 2009 WL 2150891, at *10 (S.D.N.Y. July 20, 2009) (“Plaintiffs have submitted a copy of their ‘Bill of Costs’ which includes a list of the types and amount of costs incurred, including $350.00 in filing fees; $374.98 in fees for service of the summons and complaint and a subpoena; $1,687.50 in fees for court reporters and transcripts; $577.09 in copying fees; $1,550.00 in fees for interpreters and costs of special interpretation; $2,047.02 in legal research fees; $1,129.62 in travel expenses; $5.00 for a certificate of good standing; $25.00 for pro hac vice admission; and $5.38 in postage. These are the types of routine costs awarded to prevailing parties in trademark and copyright infringement actions”). The Court finds that the amounts spent on the costs set forth are reasonable in the context of the instant litigation.

To be awarded, costs must be properly substantiated through invoices or receipts, or “a sworn statement or declaration under penalty of perjury that certain amounts were expended on particular items.” Rosales v. Gerasimos Enterprises Inc., No. 16-CV-2278, 2018 WL 286105, at *2 (S.D.N.Y. Jan. 3, 2018) (awarding costs based on sworn statement by attorney under penalty of perjury); see also Mordant v. Citinsider LLC, No. 18-CV-9054, 2019 WL 3288391, at *3 (S.D.N.Y. July 22, 2019) (same); Dominguez v. 322 Restaurant Corp., 2019 WL 2053995, at *4 (S.D.N.Y. May 9, 2019) (same). Here, attorney Hines has sworn under penalty of perjury in his declaration that the costs were incurred in the amounts set forth. (Hines Decl. ¶ 39.) Accordingly, Plaintiffs should be awarded $7,919.48 in costs.

V. Pre-Judgment Interest

Absent a statutory requirement to award, or prohibition against awarding, pre-judgment interest, the decision whether to do so is a matter within the Court's discretion. District courts thus have the discretion to award or not award pre-judgment interest in both copyright infringement cases and trademark cases. Samsonite IP Holdings S.àr.l. v. Shenzhen Liangyiyou E-Commerce Co., Ltd., No. 19-CV-2564, 2023 WL 8805645, at *7 (S.D.N.Y. Dec. 20, 2023); compare Capitol Records, Inc. v. MP3tunes, LLC, No. 07-CV-9931, 2015 WL 13684546, at *4 (S.D.N.Y. Apr. 3, 2015) (declining to award pre-judgment interest in light of sizeable award “far exceed[ing] actual damages” and because plaintiff prolonged the case) with Broadcast Music, Inc. v. R Bar of Manhattan, Inc., 919 F. Supp. 656, 661 (S.D.N.Y. 1996) (“Although an award of prejudgment interest in cases under the Copyright Act is discretionary with the court, ․ this is a case where it would be appropriate to further the goals of the Act”).

“The essential rationale for awarding prejudgment interest is to ensure that an injured party is fully compensated for its loss.” City of Milwaukee v. Cement Division, National Gypsum Co., 515 U.S. 189, 195 (1995). “By compensating for the loss of use of money due as damages from the time the claim accrues until judgment is entered, an award of pre-judgment interest helps achieve the goal of restoring a party to the condition it enjoyed before the injury occurred.” Id. at 196 (internal quotation marks and citation omitted). Some courts also consider deterrence as a factor in deciding whether to award pre-judgment interest. As the Capitol Records court explained, “[s]ome courts have declined to award pre-judgment interest for willful copyright infringement, finding that pre-judgment interest should be reserved for ‘exceptional’ circumstances, and concluding that damages for willfulness have already been factored into an award of maximum statutory damages. ․ Other courts have determined that pre-judgment interest is appropriate to help deter willful copyright infringement.” 2015 WL 13684546 at *4 (internal citations omitted).

In the circumstances of this case, the Court recommends that pre-judgment interest be awarded on Hudson's compensatory damages award for trademark infringement and on the copyright statutory damages award. Pre-judgment interest is warranted on the compensatory damages award, even as tripled, because the award reflects only one sale even though it is highly likely based on the evidence that there were additional sales for which Defendants failed to produce records.

Pre-judgment interest also should be awarded on the statutory damages award for copyright infringement. See Business Casual Holdings, LLC v. TV-Novosti, No. 21-CV-2007, 2023 WL 1809707, at *13 (S.D.N.Y. Feb. 8, 2023) (awarding pre-judgment interest on statutory damages for copyright infringement), R. & R. adopted, 2023 WL 4267590 (S.D.N.Y. June 28, 2023); EMI April Music Inc. v. 4 MM Games, LLC, No. 12-CV-2080, 2014 WL 325933, at *9 (S.D.N.Y. Jan. 13, 2014) (same), R. & R. adopted, 2014 WL 1383468, S.D.N.Y. (Apr. 7, 2014); Dweck v. Amadi, No. 10-CV-2577, 2011 WL 3809907, at *6 (S.D.N.Y. July 26, 2011) (same), R. & R. adopted, 2011 WL 3809891 (S.D.N.Y. Aug. 29, 2011). Defendants have not been easily deterred. To the contrary, they violated the Preliminary Injunction in this case. And, even a previous judgment of $1.3 million in statutory damages against Defendants for similar acts of copyright infringement apparently did not deter them from implementing the same scheme with respect to Plaintiffs. See Restoration Hardware, Inc. v. Lighting Design Wholesalers, Inc., No. 17-CV-5553, 2018 WL 11220835, at *5 (S.D.N.Y. Apr. 18, 2018).

As Judge Crotty found on summary judgment, “Defendants have demonstrated that a harsh penalty is needed to deter infringement.” (Dkt. 160 at 40.) Awarding pre-judgment interest on the statutory damages well serves that purpose and is necessary.

“[T]he rate of interest used in awarding prejudgment interest rests firmly within the sound discretion of the trial court.” Ingersoll Milling Machine Co. v. M/V Bodena, 829 F.2d 293, 311 (2d Cir. 1987) (emphasis omitted); see also Business Casual Holdings, 2023 WL 1809707, at *13. While not uniformly so, many courts assessing pre-judgment interest in copyright and other intellectual property cases under federal law have applied the federal post-judgment interest rate set forth in 28 U.S.C. § 1961(a). See, e.g., Business Casual Holdings, 2023 WL 1809707, at *13 (awarding pre-judgment interest in copyright case at federal post-judgment rate); Cengage Learning, Inc. v. Shi, No. 13-CV-7772, 2017 WL 1063463, at *5 (S.D.N.Y. March 21, 2017) (awarding prejudgment interest in a copyright and trademark case “in accordance with the rate set forth in 28 U.S.C. § 1961”); Dweck, 2011 WL 3809907, at *6 (“although there is no federal statutory rate for prejudgment interest, several courts have chosen to adopt the rate contained in 28 U.S.C. § 1961”) (internal quotation marks and citations omitted).

Accordingly, the Court recommends that Plaintiff Hudson receive pre-judgment interest on its statutory copyright damages pursuant to the rate set forth in 28 U.S.C. § 1961 from the date its complaint was filed in the instant case through the date of judgment.

VI. Post-Judgment Interest

Federal law provides that a plaintiff “shall” receive post-judgment interest “on any money judgment in a civil case recovered in a district court ․ [to] be calculated from the date of the entry of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of the judgment.” 28 U.S.C. § 1961(a). Accordingly, Plaintiffs should be awarded post-judgment interest on the money judgment entered in this action. See, e.g., WowWee Group Limited v. Haoqin, No. 17-CV-9893, 2019 WL 1316106, at *4 (S.D.N.Y. Mar. 22, 2019) (granting post-judgment interest on inquest following default by defendants who counterfeited plaintiff's marks and products); Bumble & Bumble, LLC v. Pro's Choice Beauty Care, Inc., No. 14-CV-6911, 2016 WL 658310, at *12 (S.D.N.Y. Feb. 17, 2016) (granting post-judgment interest after plaintiff's success on the merits of trademark infringement claim), R. & R. adopted, 2016 WL 1717215 (S.D.N.Y. Apr. 27, 2016).

VII. Injunctive Relief

Plaintiffs ask for permanent injunctive relief prohibiting Defendants from further infringing Plaintiffs’ copyrights and trademarks, engaging in false designation of origin or making false or misleading statements and other conduct likely to cause confusion, and making use of Baylar's name or image. Plaintiffs have submitted proposed terms of injunctive relief. (Dkt. 162-3.) In their inquest opposition papers, Defendants have not contested those terms. The Court agrees that permanent injunctive relief is warranted.

A. Need For The Injunction

Permanent injunctions are a common form of relief in cases such as this involving infringement of intellectual property. See Gogo Apparel, Inc. v. Daruk Imports, Inc., No. 19-CV-5701, 2020 WL 4274793, at *7 (S.D.N.Y. June 11, 2020) (“Courts routinely ․ award injunctive relief ․ where liability is established and there is a threat of continuing infringement”) (internal brackets omitted) (quoting Conan Properties International LLC v. Sanchez, No. 17-CV-0162, 2018 WL 3869894, at *6 (E.D.N.Y. Aug. 15, 2018)), R. & R. adopted, 2020 WL 4271694 (S.D.N.Y. July 23, 2020); Complex Systems, Inc. v. ABN AMRO Bank N.V., No. 08-CV-7497, 2014 WL 1883474, at *11 (S.D.N.Y. May 9, 2014) (“Permanent injunctions are generally granted where liability has been established and there is a threat of continuing infringement”) (internal quotation marks and brackets omitted). Indeed, both the Copyright Act and Lanham Act make injunctive relief available to prevent future infringement. Under the Copyright Act, a court may grant “final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C. § 502(a). Similarly, the Lanham Act authorizes the grant of an injunction to prevent, inter alia, the trademark infringement, false designation of origin, and false statements of fact likely to cause confusion or mistake. 15 U.S.C. § 1116(a).

Ultimately, “ ‘[a]n injunction is a matter of equitable discretion.’ ” E.E.O.C. v. KarenKim, Inc., 698 F.3d 92, 100 (2d Cir. 2012) (quoting Winter v. Natural Resources Defense Council Inc., 555 U.S. 7, 32 (2008)). Once success on the merits is established, “[a] plaintiff seeking a permanent injunction ․ must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.” Salinger v. Colting, 607 F.3d 68, 77 (2d Cir. 2010) (quoting eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006)).

Here, the Court's grant of summary judgment to Plaintiffs finding Defendants liable for trademark infringement, copyright infringement, false designation of origin, violation of the right of publicity, and more satisfies “the threshold inquiry of actual success on the merits.” Gogo Apparel, 2020 WL 4274793 at *8. Additionally, all four equitable factors weigh in favor of issuing a permanent injunction. First, because they have established success on the merits of their trademark infringement claims, Plaintiffs are entitled to a rebuttable presumption of irreparable harm pursuant to the Trademark Modernization Act of 2020. 15 U.S.C. § 1116(a) (“A plaintiff seeking [a permanent injunction] shall be entitled to a rebuttable presumption of irreparable harm upon a finding of a violation identified in this subsection in the case of a motion for a permanent injunction”). Defendants’ showing on summary judgment did nothing to rebut or dispel that presumption.

Second, the Court's willfulness finding, as well as Defendants’ failure to abide by the Preliminary Injunction and to cooperate with discovery, demonstrate that Defendants’ transgressions will continue and that Plaintiffs are likely to suffer injury in the absence of an injunction. See John Wiley & Sons, Inc. v. Book Dog Books, LLC, 327 F. Supp.3d 606, 637 (S.D.N.Y. 2018) (“The jury's willful infringement determination and Defendants’ continuing infringement post-verdict demonstrate that Plaintiffs are likely to suffer injury in the absence of an injunction and that money damages alone are insufficient”). The harm is irreparable and not sufficiently compensated by damages; both because of the difficulty in determining the full extent of Defendants’ sales and profits, and due to the reputational concerns posed by unauthorized use of Hudson's intellectual property and Baylar's name and likeness. See Sadowski v. Yeshiva World News, LLC, No. 21-CV-7207, 2023 WL 2707096, at *8 (E.D.N.Y. March 16, 2023) (“courts issue injunctions in copyright cases because it is notoriously difficult to prove the loss of sales due to infringement and the threat of continuing violations establishes the necessary irreparable harm”) (internal quotation marks omitted), R. & R. adopted, 2023 WL 2742157 (E.D.N.Y. March 31, 2023); Stern's Miracle-Gro v. Shark Products, 823 F. Supp. 1077, 1094 (S.D.N.Y. 1993) (“The existence of a likelihood of confusion in a trademark case is strong evidence of irreparable harm because damage to reputation is difficult to prove or quantify”).

Third, “[t]he balance of hardships favors Plaintiff since it is the aggrieved party whose [intellectual property] is being infringed,” Gogo Apparel, 2020 WL 4274793 at *8. Defendants cannot claim as a hardship the “loss of ability to offer its infringing product.” WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 287 (2d Cir. 2012). Defendants sell a variety of products and would suffer no more than minimal hardship in removing the material at issue. Finally, “the public has an interest in not being deceived,” New York City Triathlon, LLC v. NYC Triathlon Club, Inc., 704 F. Supp.2d 305, 344 (S.D.N.Y. 2010), and “a compelling interest in protecting copyright owners’ marketable rights to their work so as to encourage the production of creative work.” Sadowski, 2023 WL 2707096, at *8 (internal quotation marks omitted); accord Gogo Apparel, 2020 WL 4274793, at *8 (“the public interest will be served by enjoining the infringement of a design protected by copyright”).

All four factors required for injunctive relief are satisfied. Accordingly, the Court recommends entry of a permanent injunction enjoining Defendants from continuing to infringe Plaintiffs’ copyrights, trademarks, and right of publicity, and the other misconduct for which Defendants has been found liable. That is not the inquiry, however, as the Court must also determine the proper scope and terms of the injunction.

B. Terms Of The Injunction

“A permanent injunction must be narrowly tailored to fit specific legal violations and should not impose unnecessary burdens on lawful activity. But a party who has once infringed a trademark may be required to suffer a position less advantageous than that of an innocent party ․ and a court can frame an injunction which will keep a proven infringer safely away from the perimeter of future infringement.” Lexington Furniture Industries, Inc. v. Lexington Company, AB, No. 19-CV-6239, 2022 WL 13848274, at *12 (S.D.N.Y. Oct. 24, 2022) (internal quotation marks and citations omitted).

The Court has reviewed the proposed terms of the permanent injunctive provisions appearing at Paragraphs 1 and 2 of Plaintiffs’ proposed Permanent Injunction And Final Judgment at Dkt. 162-3. For the most part, the terms are sufficiently narrowly tailored and particularly warranted given Defendants’ willful conduct and violations of the Preliminary Injunction. And, as noted above, Defendants have not presented any argument in opposition to the scope of the terms proposed. Paragraph 2, however is overbroad and vague. As proposed, the paragraph reads:

Defendants shall remove all internet postings, websites, email addresses, advertisements, online business listings, YouTube accounts, Twitter or X accounts or posts, Instagram accounts or posts, Pinterest accounts or posts, keywords, adwords, metadata, user names, links, social media, and any other online material associated with Plaintiffs and/or the Hudson Properties.

(Dkt. 162-3 ¶ 2.) Taken literally, the provision would require removing, for example, an entire website even if only one page of the website makes infringing or other improper use in respect of the Hudson Properties or Baylar's name or image. Similarly, it would require removing an entire social media account even if only one posting on the account made infringing or other improper use of the Hudson Properties or Baylar's name or image. Further, the phrase “any other online material associated with Plaintiffs and/or the Hudson Properties” is vague insofar as it uses the term “associated with.” Third, although likely unintended, the provision as written could be read to require Defendants to remove such postings even if they have no ownership, custody, or control of the accounts on which the postings appear. Fourth, the provision does not specify the time within which the affirmative acts described must be completed. Accordingly, I recommend that Paragraph 2 of the proposed terms be revised to read as follows:

Within 14 days of entry of this Permanent Injunction, Defendants shall remove from all internet postings, websites, email addresses, advertisements, online business listings, YouTube accounts, Twitter or X accounts or posts, Instagram accounts or posts, Pinterest accounts or posts, keywords, adwords metadata, user names, links, social media, and any other online material that Defendants own or possess or over which they exercise custody or control, any part thereof that displays, copies, or otherwise uses any of the Hudson Properties or Baylar's name or likeness or any other material that otherwise would be in violation of Paragraph 1 of this Permanent Injunction if not removed.

C. Asset Freeze

Paragraph 5 of the Plaintiffs’ proposed Permanent Injunction And Final Judgment directs Defendants, as well as banks and other financial institutions that receive notice of the Permanent Injunction, to locate and restrain any accounts in which Defendants have an interest. (Dkt. 162-3 ¶ 5.) The purpose is to prevent Defendants’ dissipation of assets that could be used to satisfy the substantial monetary award they are and will be obligated to pay to Plaintiffs. Notably, the Preliminary Injunction contains no asset freeze provisions. If Defendants were inclined to dissipate assets, they already could have done so for some time.

In any event, the Court should not impose an asset freeze in this context; Plaintiffs should instead pursue procedures provided by state law. See Pearson Education, Inc. v. Labos, No. 19-CV-487, 2021 WL 4507530, at *6 (S.D.N.Y. Sept. 30, 2021) (denying request to include asset restraints and turnover requirements in injunction issued on default judgment but explaining that such measures can and should be pursued under Fed. R. Civ. P. 69 and state law procedural mechanisms); Allstar Marketing Group, LLC v. 158, No. 19-CV-4101, 2019 WL 3936879, at *2-4 (S.D.N.Y. Aug. 20, 2019) (same); WowWee Group Ltd. v. Meirly, No. 18-CV-706, 2019 WL 1375470, at *11 (S.D.N.Y. March 27, 2019) (“To the extent Plaintiffs are concerned about the risk that Defaulting Defendants will dispose of, transfer, or hide their assets, it should turn to the remedies ordinarily applicable to enforcement of judgments at law under Rule 69 and N.Y. C.P.L.R. § 5222”); Tiffany (NJ) LLC v. QI Andrew, No. 10-CV-9471, 2015 WL 3701602, at *11-12 (S.D.N.Y. June 15, 2015) (providing multiple reasons for why asset freeze provision had to be stricken from proposed final judgment and permanent injunction); but see Trebco Specialty Products Inc. v. Individuals, Corporations, Limited Liability Companies, Partnerships, and Unincorporated Associations Identified on Schedule A Hereto, No. 21-CV-9238, 2023 WL 9016478, at *3 (S.D.N.Y. Dec. 29, 2023) (granting assert freeze in copyright infringement case, and invoking Fed. R. Civ. P. 69(a) and N.Y. C.P.L.R. § 5222).

Pursuant to Fed. R. Civ. P. 69(a), “postjudgment efforts to execute on a money judgment [must] comply with the procedural law of the forum state – unless a federal statute dictates to the contrary. The Lanham Act contains no such instruction. Accordingly, the applicable statute is [the N.Y. C.P.L.R.].” Tiffany (NJ) LLC v. Dong, No. 11-CV-2183, 2013 WL 4046380, at *10 (S.D.N.Y. Aug. 9, 2013); see also Blue v. Cablevision Systems, New York City Corp., No. 00-CV-3836, 2007 WL 1989258, at *2 n.1 (E.D.N.Y. July 5, 2007) (finding that judgment creditor's employment of judgment-enforcement procedures authorized by New York law, including N.Y. C.P.L.R. § 5222, and as incorporated by Fed. R. Civ. P. 69, was proper).

Under New York's statute governing enforcement of judgments, once a money judgment is rendered against a defendant, a federal district court in New York has the power to, among other things, restrain the defendant's assets until the judgment is satisfied. N.Y. C.P.L.R. § 5222; see Cruz v. TD Bank, N.A., 711 F.3d 261, 264 (2d Cir. 2013); Interpool Ltd. v. Patterson, No. 89-CV-8501, 1995 WL 105284, at *1 (S.D.N.Y. March 13, 1995) (“A New York judgment creditor is entitled to a restraining notice on the debtor as a matter of right”). A restraining notice may be served on both the judgment debtor and third parties who hold assets of the judgment debtor. N.Y. C.P.L.R. §§ 5222(a) (restraining notice “may be served upon any person ․”); 5222(b) (addressing restraining notices served both on judgment debtor and on “a person other than the judgment debtor”).

Based on the foregoing, pursuant to Fed. R. Civ. P. 69(a), Plaintiff may serve restraining notices on both Defendants and their financial entities who hold Defendants’ assets. Under the Federal Rules, “execution on a judgment and proceedings to enforce it are stayed for 30 days after its entry, unless the court orders otherwise.” Fed. R. Civ. P. 62(a). However, a plaintiff may request that the automatic 30-day stay be dissolved to prevent defaulting defendants from potentially hiding their assets during that period. See Allstar Marketing Group, LLC v. 158, 2019 WL 3936879 at *4 n.6 (“if a plaintiff is concerned that defendants might attempt to conceal assets during the pendency of the automatic stay, it should include a dissolution of that stay as part of the relief requested in its proposed judgment”). Plaintiffs have not explicitly requested dissolution of the stay here, but implicitly have done so by including asset freeze provisions in their proposed Permanent Injunction And Final Judgment. Accordingly, I recommend that the 30-day stay be dissolved upon issuance of final judgment.

In short, I recommend that the final judgment issued by the Court not include the asset freeze provision set forth in Paragraph 5, and that, instead, Plaintiffs be permitted immediately upon judgment to follow the procedures for enforcing judgments provided by Fed. R. Civ. P. 62(a) and 69(a), and the New York Civil Practice Law and Rules.

Conclusion

For the foregoing reasons, I recommend that the Court enter judgment in favor of Plaintiffs awarding:

1. Plaintiff Hudson Furniture $15,101.10 in compensatory damages under the Lanham Act, and pre-judgment interest on that amount at the federal rate provided in 28 U.S.C. § 1961(a) from the date the complaint was filed to the date of judgment;

2. Plaintiff Hudson Furniture $450,000.00 in statutory damages under the Copyright Act, and pre-judgment interest on that amount at the federal rate provided in 28 U.S.C. § 1961(a) from the date the complaint was filed to the date of judgment;

3. Plaintiff Baylar $50,000 in punitive damages;

4. Plaintiff Hudson Furniture $244,870.00 in reasonable attorney's fees;

5. Plaintiff Hudson Furniture $7,919.48 in costs;

6. Plaintiffs post-judgment interest at the statutory rate under 28 U.S.C. § 1961(a);

7. Plaintiffs permanent injunctive relief as set forth in Plaintiffs’ proposed Permanent Injunction And Final Judgment at Dkt. 162-3, except for modification of Paragraph 2 and omission of Paragraph 5 as described above;

And, further that the automatic 30-day stay of enforcement of judgment be dissolved.

Procedure For Filing Objections

Pursuant to 28 U.S.C. § 636(b)(1) and Rules 72, 6(a), and 6(d) of the Federal Rules of Civil Procedure, the parties shall have fourteen (14) days to file written objections to this Report and Recommendation. Any party shall have fourteen (14) days to file a written response to the other party's objections. Any such objections and responses shall be filed with the Clerk of Court, with courtesy copies delivered to the Chambers of the Honorable Paul A. Crotty, United States Courthouse, 500 Pearl Street, New York, New York 10007, and to the Chambers of the undersigned, United States Courthouse, 500 Pearl Street, New York, New York 10007. Any request for an extension of time for filing objections must be addressed to Judge Crotty. Failure to file timely objections will result in a waiver of the right to object and will preclude appellate review.

Plaintiff shall serve Defendants with this Report and Recommendation by any method previously approved by the Court, within two days of entry and shall file proof of service within three days thereafter.

Copies transmitted this date to all counsel of record.

FOOTNOTES

1.   In their response to Plaintiffs’ proposed findings of fact and conclusions of law on damages, Defendants purport to dispute many of Plaintiffs’ asserted facts. (Def. FFCL at 3-14.) The Court need not resolve those disputes, because the facts material to the instant inquest already have been determined by the Court on summary judgment as cited herein. In the few instances where this report and recommendation cites to the record apart from the Summary Judgment Decision, the Court has done so to provide certain details that cannot be genuinely disputed based on the record.

3.   A counterfeit mark under § 1116(d) also includes a spurious designation that is identical or substantially indistinguishable from the separately protected “Olympic” mark. 15 U.S.C. § 1116(d)(1)(B)(ii) (referencing 36 U.S.C. § 220506).

4.   “Hines SJ Decl.” refers to the Declaration of Patrick J. Hines submitted in support of Plaintiffs’ motion for summary judgment filed on October 31, 2022 at Dkt. 133.

5.   “Baylar SJ Decl.” refers to the Declaration of Barlas Baylar in support of Plaintiff's motion for summary judgment, filed on October 31, 2022 at Dkt. 134.

6.   Defendants do take issue with the attorney's rates insofar as “the billing shows an effective rate and not an actual rate for each of the various lawyers and support staff.” (Def. Fees Mem. at 6.) That is not correct. The Hines Declaration specifies the hourly rate for the three attorneys who principally worked on the case. Although the declaration gives an average rate for other attorneys and for paralegals, individual rates can be derived directly from the billing records, which, for any given entry, denotes the hours worked and amount billed. (See Hines Decl. Ex. 1.) In any event, the four attorneys for whom the Hines Declaration provides an average effective rate put in merely a combined total 6.9 hours. (Hines Decl. ¶ 30.) Nothing about the average suggests that any of the rates for those four attorneys is unreasonable. The same is true for the average effective rate for the paralegals.

ROBERT W. LEHRBURGER UNITED STATES MAGISTRATE JUDGE