TELEBRANDS CORP v. SHENZHEN YITAI TECHNOLOGY CO LTD (2023)

REPORT AND RECOMMENDATION

To The Honorable Lorna G. Schofield, United States District Judge:

In this trademark action brought by Telebrands Corp., a final default judgment and permanent injunction order were issued against Shenzen Yitai Technology Co., Ltd. The case was then referred to me to conduct an inquest into damages. For the reasons set forth below, I recommend awarding Telebrands $114,221.29 in damages, plus post-judgment interest.

I. BACKGROUND

A. Factual Background

The following facts, which are drawn from a review of Telebrands’ pleadings, motion papers, and submissions related to this inquest, are deemed established for the purpose of determining the damages to which it is entitled. See, e.g., City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ‘ancient common law axiom’ that a defendant who defaults thereby admits all ‘well-pleaded’ factual allegations contained in the complaint.”) (internal citation omitted); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (“In light of [defendant's] default, a court is required to accept all of [plaintiff's] factual allegations as true and draw all reasonable inferences in its favor[.]”) (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)).

Telebrands is a New Jersey corporation, with its principal place of business in Fairfield, New Jersey. Complaint (“Compl.”), Dkt. No. 1, ¶ 5. Telebrands develops, produces, markets, and distributes “As Seen On TV” products, promoting and selling them through retail outlets, its own and retail customers’ websites, and “a network of international distributors.” Compl. ¶ 7; Proposed Findings of Fact and Conclusions of Law (“Pl. Mem.”), Dkt. No. 39, ¶ 1. One of Telebrands’ most popular products is its Authentic Ruby Sliders (“Ruby Sliders”)—“a furniture leg cover” that “allows users to easily move furniture over floors [without] scratching”—which it advertises and sells through its own website, retail customers’ websites, and its merchant storefront on Amazon.com (“Amazon Storefront”). Compl. ¶¶ 9, 21. Telebrands is the exclusive licensee of pending trademark rights in the United States for the Ruby Sliders. Compl. ¶ 11; Pl. Mem. ¶ 4.

Shenzen Yitai Technology Co., Ltd. (“SYT”) is a Chinese company that conducts business in New York by marketing and selling goods through its Amazon Storefront. Compl. ¶¶ 3(a), 6. SYT is not authorized to advertise, distribute, or sell the Ruby Sliders or their trade dress. Compl. ¶ 38; Pl. Mem. ¶ 14. SYT advertises and sells products that are “confusingly similar” to the Ruby Sliders. Compl. ¶¶ 53, 61. SYT uses the Ruby Sliders trade dress on its infringing products “or in connection with the advertisement, marketing, promotion, ․ or sale thereof.” Compl. ¶ 29. SYT has profited from its infringement of the Ruby Sliders and caused damage to Telebrands. Compl. ¶¶ 34, 44.

B. Procedural Background

Telebrands brought this action on February 2, 2022, alleging claims against SYT for trade dress infringement and unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a). Compl. ¶ 1. On February 8, 2022, the Court granted Telebrands’ application for a temporary restraining order against SYT and issued an order requiring it to appear at a February 23, 2022 show cause hearing. Dkt. No. 16. Although SYT was properly served, it did not appear. Dkt. Nos. 17, 36. Accordingly, Telebrands requested a default judgment against SYT on March 17, 2022. Dkt. No. 22. In support of its application for a default judgment, Telebrands submitted a memorandum of law, Dkt. No. 27, and the affidavit of its counsel, Kerry B. Brownlee, dated April 5, 2022 (“Brownlee Aff.”). Dkt. No. 28.

On May 5, 2022, the Court granted a default judgment against SYT and referred this case to me to conduct an inquest into damages. Dkt. Nos. 35, 36. On May 16, 2022, the Court issued an amended final default judgment and permanent injunction order, concluding that the complaint sufficiently pleaded claims to establish liability against SYT as a matter of law. Dkt. No. 37, at 2. Pursuant to court order, Dkt. No. 38, Telebrands submitted Proposed Findings of Fact and Conclusions of Law (“Pl. Mem.”) on June 1, 2022. Dkt. No. 39. On November 16, 2022, after reviewing its inquest papers, I ordered Telebrands to submit certain admissible evidence to support its requested damages award. Order dated November 16, 2022 (“Order”), Dkt. No. 41 at 1. In response, on December 7, 2022, Telebrands submitted a declaration from Natalia Parker, a paralegal employed by Amazon.com (“Amazon”). Affidavit of Natalia Parker dated December 6, 2022 (“Parker Aff.”), Dkt. No. 44.

II. DISCUSSION

Once liability has been established, as is the case here, see Dkt. No. 37, the only remaining issue is “whether the plaintiff has provided adequate support for the [damages] it seeks.” Bleecker v. Zetian Sys., Inc., No. 12-CV-2151 (DLC), 2013 WL 5951162, at *6 (S.D.N.Y. Nov. 1, 2013) (citing Transatl. Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 111 (2d Cir. 1997)); see also Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) (“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.”).

A. Legal Standards

Establishing the appropriate amount of damages involves two steps: “(1) determining the proper rule for calculating damages on a claim; and (2) assessing plaintiff's evidence supporting the damages to be determined under this rule.” Begum v. Ariba Disc., Inc., No. 12-CV-6620 (DLC), 2015 WL 223780, at *4 (S.D.N.Y. Jan. 16, 2015) (cleaned up) (quoting Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)). The plaintiff has the burden of establishing its entitlement to “damages ․ based on admissible evidence.” House v. Kent Worldwide Mach. Works. Inc., 359 F. App'x 206, 207 (2d Cir. 2010). To establish damages upon default, the plaintiff must demonstrate that the “compensation sought relate[s] to the damages that naturally flow from the injuries pleaded.” Greyhound, 973 F.2d at 159.

The plaintiff must submit “sufficient evidence, in the form of detailed affidavits and other documentary materials to enable the district court to ‘establish damages with reasonable certainty.’ ” Nat'l Photo Grp., LLC v. Bigstar Entm't, Inc., No. 13-CV-5467 (VSB) (JLC), 2014 WL 1396543, at *2 (S.D.N.Y. Apr. 11, 2014) (quoting Transatl. Marine Claims Agency, 109 F.3d at 111) (internal citation omitted), adopted by 2014 WL 5051275 (Oct. 8, 2014); see also Fed. R. Civ. P. 55(b)(2). Although Rule 55 of the Federal Rules of Civil Procedure allows the Court to conduct hearings to determine damages, no such hearing is mandatory. See, e.g., Cement & Concrete Corkers Dist. Council Welfare Fund v. Metro Found. Contractors, Inc., 699 F.3d 230, 234 (2d Cir. 2012).¹

B. Damages

In the case of an established trademark violation, the plaintiff is entitled “to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” 15 U.S.C. § 1117(a). In the instant case, Telebrands only seeks recovery of SYT's profits. Pl. Mem. ¶ 45.

1. SYT's Revenue

A plaintiff seeking to recover a defendant's profits “shall be required to prove defendant's sales only.” Coty Inc. v. Excell Brands, LLC, 277 F. Supp. 3d 425, 465 (S.D.N.Y. 2017) (quoting 15 U.S.C. § 1117(a)). Once the plaintiff has proved the amount of defendant's infringing sales, it is “entitled to that amount unless the defendant adequately proved the amount of costs to be deducted from it.” Id. (quoting Am. Honda Motor Co. v. Two Wheel Corp., 918 F.2d 1060, 1063 (2d Cir. 1990)). In the case of a default, the “plaintiff is entitled to recover ․ defendant's proven gross revenue with no reduction for expenses.” Hilton v. Int'l Perfume Palace, Inc., No. 12-CV-5074 (JFB), 2013 WL 5676582, at *6 (E.D.N.Y. Oct. 17, 2013) (cleaned up) (citing Harris v. Fairweather, No. 11-CV-2152 (PKC) (AJP), 2012 WL 5199250, at *2 (S.D.N.Y. Oct. 19, 2012)). As SYT has defaulted in this case, Telebrands is entitled to recover its gross revenue.

Telebrands seeks $114,221.29 in SYT's gross revenue from the sale of its infringing products. Pl Mem. ¶ 63. To support the amount that it seeks, Telebrands submitted a Microsoft Excel workbook (“workbook”) provided by counsel for Amazon to counsel for Telebrands pertaining to SYT's Amazon Storefront, indicating that SYT earned $114,221.29 in sales of its infringing products. Brownlee Aff. ¶¶ 24–25, and Ex. E. Following an order from the Court, Telebrands subsequently submitted an affidavit from Parker, a paralegal employed by Amazon, certifying the authenticity of the workbook. Parker Aff., ¶¶ 2–4.² Since the veracity of the workbook has now been attested to by someone with personal knowledge who asserts it was created in the course of Amazon's regularly conducted business activity, the Court finds the workbook to be authentic and otherwise admissible, and to contain a reasonable estimation of SYT's sales and ill-gotten profits. Id.; see, e.g., Samsonite IP Holdings S.ar.l. v. Shenzhen Liangyiyou E-Com. Co., No. 19-CV-02564 (PGG) (DF), 2021 WL 9036273, at *12 (S.D.N.Y. Apr. 27, 2021) (declaration from Amazon counsel certifying accuracy of spreadsheet showing defaulting defendant's revenues sufficient to establish damages amount) (citing BeautyBank, Inc. v. Harvey Prince LLP, No. 10-CV-955 (DAB) (GWG), 2011 WL 671749, at *5 (S.D.N.Y. Feb. 24, 2011)).³ As such, Telebrands is entitled to recover from SYT the $114,221.29 in revenue from its infringing products. See, e.g., id.

2. Post-judgment Interest

Post-judgment “[i]nterest shall be allowed on any money judgment in a civil case recovered in a district court ․ [and] shall 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). Telebrands is consequently entitled to and should be awarded post-judgment interest on the money judgment entered in this action. See, e.g., Bumble & Bumble, LLC v. Pro's Choice Beauty Care, Inc., No. 14-CV-6911 (VEC) (JLC), 2016 WL 658310, at *12 (S.D.N.Y. Feb. 17, 2016), adopted by 2016 WL 1717215 (Apr. 27, 2016); see also Gucci America Inc. v. Tyrell-Miller, 678 F. Supp. 2d 117, 124 (S.D.N.Y. 2008) (awarding post-judgment interest pursuant to 28 U.S.C. § 1961(a) in Lanham Act action); Nat'l Ass'n for Specialty Food Trade, Inc. v. Construct Data Verlag AG, No. 04-CV-2983 (DLC) (KNF), 2006 WL 5804603, at *7 (S.D.N.Y. Dec. 11, 2006) (awarding post-judgment interest in Lanham Act case “based upon the express language” of 28 U.S.C. § 1961(a)), adopted by 2007 WL 656274 (Feb. 23, 2007).

III. CONCLUSION

For the reasons stated herein, I recommend that Telebrands be awarded $114,221.29 in damages, plus post-judgment interest pursuant to 28 U.S.C. § 1961(a).

PROCEDURE FOR FILING OBJECTIONS

Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See Fed. R. Civ. P. 6(a), (b), (d). A party may respond to any objections within fourteen (14) days after being served. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Lorna G. Schofield and the undersigned, United States Courthouse, 40 Foley Square, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Schofield.

FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).

FOOTNOTES

1.   The Second Circuit has long approved the process of conducting an inquest by affidavit, without an in-person court hearing, “as long as [the court has] ensured that there was a basis for the damages specified in the default judgment.” Transatl. Marine Claims Agency, 109 F.3d at 111 (quoting Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)). Here, “a hearing is not necessary, as documents submitted in this action provide a ‘sufficient basis from which to evaluate the fairness’ of the damages requested.” Am. Jewish Comm. v. Berman, No. 15-CV-5983 (LAK) (JLC), 2016 WL 3365313, at *4 (S.D.N.Y. June 15, 2016) (quoting Fustok, 873 F.2d at 40), adopted by 2016 WL 4532201 (Aug. 29, 2016).

2.   Telebrands’ initial submissions to the Court, which contained a workbook with figures allegedly showing SYT's revenue from the sale of its infringing products, did not include admissible evidence to support its claim for damages. See Order dated November 16, 2022, Dkt. No. 41 at 1–2 (“Without sworn testimony from someone with personal knowledge attesting to the veracity of the workbook, the figures are hearsay, and as such may not be relied upon by a court to calculate damages.”).

3.   Pursuant to Rule 803(6) of the Federal Rules of Evidence, business records are not hearsay, and therefore admissible, if, as relevant here, (1) they are made by a person with knowledge or made from information transmitted by a person with knowledge, (2) the record was kept in the course of a regularly conducted activity of a business, and (3) making the record was a regular practice of that activity. Parker's affidavit satisfies the first two required conditions but does not explicitly address the third—demonstrating that Amazon kept spreadsheets recording the sales of individual products for all sellers with an Amazon Storefront. See Parker Aff. ¶ 4. However, the fact that the records “were kept in the course of a regularly conducted business activity,” makes such records a regular practice of Amazon. Cont'l Indus. Grp., Inc. v. Altunkilic, No. 14-CV-790 (AT) (JLC), 2020 WL 3884312, at *7 (S.D.N.Y. July 1, 2020). Accordingly, Parker's statement that “[t]he [w]orkbook was created by Amazon through records Amazon generates and maintains in the ordinary course of business at or near the time of the acts, conditions or events reflected in the [w]orkbook,” Parker Aff. ¶ 4, sufficiently authenticates the workbook and satisfies the evidentiary gap that previously existed regarding Telebrands’ requested damages award.

JAMES L. COTT United States Magistrate Judge