676 F.3d 83 (2nd Cir. 2012), 08-4483-cv, Louis Vuitton Malletier S.A. v. LY USA, Inc.

Docket Nº:08-4483-cv, 08-4525-cv, 08-4528-cv, 08-5108-cv, 08-5273-cv, 08-5290-cv.
Citation:676 F.3d 83
Opinion Judge:SACK, Circuit Judge:
Party Name:LOUIS VUITTON MALLETIER S.A., Plaintiff-Appellee, v. LY USA, INC., Coco USA Inc., Chong Lam, Marco Leather Goods, Ltd., Joyce Chan, Defendants-Cross Claimants-Cross Defendants-Appellants.
Attorney:Angelo Rios (Mark N. Antar, on the brief), Cheven, Keely & Hatzis, New York, NY, for Defendants-Cross Claimants-Cross Defendants-Appellants CoCo USA Inc. and Joyce Chan. John K. Zwerling (Michael G. Dowd, Law Offices of Michael G. Dowd, New York, NY; Kathleen C. Waterman, Thomas Torto, Law Office...
Judge Panel:Before: SACK, LIVINGSTON, and LYNCH, Circuit Judges.
Case Date:March 29, 2012
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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676 F.3d 83 (2nd Cir. 2012)

LOUIS VUITTON MALLETIER S.A., Plaintiff-Appellee,

v.

LY USA, INC., Coco USA Inc., Chong Lam, Marco Leather Goods, Ltd., Joyce Chan, Defendants-Cross Claimants-Cross Defendants-Appellants.

Nos. 08-4483-cv, 08-4525-cv, 08-4528-cv, 08-5108-cv, 08-5273-cv, 08-5290-cv.

United States Court of Appeals, Second Circuit.

March 29, 2012

Argued: May 27, 2011.

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Angelo Rios (Mark N. Antar, on the brief), Cheven, Keely & Hatzis, New York, NY, for Defendants-Cross Claimants-Cross Defendants-Appellants CoCo USA Inc. and Joyce Chan.

John K. Zwerling (Michael G. Dowd, Law Offices of Michael G. Dowd, New York, NY; Kathleen C. Waterman, Thomas Torto, Law Offices of Kathleen C.

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Waterman, New York, NY, on the brief) Zwerling, Leibig & Moseley, P.C., Alexandria, VA, for Defendants-Cross Claimants-Cross Appellants Chong Lam, LY USA Inc., and Marco Leather Goods, Ltd.

Michael J. Allan (William G. Pecau, on the brief), Steptoe & Johnson LLP, Washington, DC, for Plaintiff-Appellee Louis Vuitton Malletier.

Before: SACK, LIVINGSTON, and LYNCH, Circuit Judges.

SACK, Circuit Judge:

The defendants— LY USA, Inc., CoCo USA Inc., Marco Leather Goods, Ltd., Chong Lam, and Joyce Chan— appeal from judgments entered September 2, 2008, and October 15, 2008, in the United States District Court for the Southern District of New York (Alvin K. Hellerstein, Judge ) granting summary judgment to the plaintiff Louis Vuitton Malletier S.A. (" Louis Vuitton" or " Vuitton" ) on its claims of trademark counterfeiting and infringement, and awarding Vuitton statutory damages in the amount of $3 million, and more than $500,000 in attorney's fees 1 and costs.

The defendants appeal from five separate decisions of the district court: (1) the grant of summary judgment on the trademark counterfeiting and infringement claims; (2) the award of statutory damages; (3) the denial of the defendants' motion to adjourn oral argument to permit the defendants to examine purportedly new evidence; (4) the denial of the defendants' motion to stay the proceeding pending the outcome of a related criminal proceeding; and (5) the grant of attorney's fees in addition to statutory damages. We affirm the judgment of the district court on the first three of these issues by a summary order filed today. This opinion addresses only the denial of the motion for a stay and the award of attorney's fees.

The defendants argue that the district court erred in denying the requested stay because the court did not give sufficient weight to the consequent impairment of the indicted defendants' Fifth Amendment privilege against self-incrimination, and because it failed to consider the practical difficulties attendant on defending simultaneous criminal and civil proceedings. The defendants also contend that the district court lacked a statutory basis for awarding attorney's fees because Louis Vuitton had elected to recover statutory damages, rather than actual damages, under the Lanham Act, and that in any event the attorney's fees were excessive.

We disagree with the contentions of the defendants. We conclude that the district court did not abuse its discretion in denying the stay. We also conclude that a plaintiff electing statutory damages pursuant to 15 U.S.C. § 1117(c) may recover attorney's fees pursuant to 15 U.S.C. § 1117(a), and that the district court did not abuse its discretion either in awarding attorney's fees and costs in this case or in determining their amount.

BACKGROUND

This case is about an alleged large-scale trademark counterfeiting operation conducted by the defendants Lam and Chan and several companies that they either

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controlled or were otherwise associated with. It involved the importation and sale of counterfeit luxury goods bearing trademarks owned by Louis Vuitton and others. After the conclusion of this civil case, the defendants were convicted in the United States District Court for the Eastern District of Virginia for their importation into the United States and sale of more than 300,000 handbags, wallets, and other products that resembled goods produced by Louis Vuitton, Burberry, Coach, and other luxury goods manufacturers.2 Lam and Chan used a variety of companies, including defendants-appellants LY USA. Inc., CoCo USA Inc., and Marco Leather Goods, Ltd., to facilitate their operation. " Whenever [Customs and Border Patrol (" CBP" ) ] agents would identify one corporation as an importer of counterfeit goods, Defendants would continue to import goods into the same port, but under a different corporate name. If Defendants believed CBP agents could identify them as responsible for importing counterfeit goods into a port, they would ship the goods to a different port." United States v. Lam, No. 3:07-CR-374, 2010 WL 5178839, at *1, 2010 U.S. Dist. LEXIS 132126, at *3 (E.D.Va. Dec. 14, 2010). Goods allegedly imported by the defendants were seized between August 2002 and January 2008 in Houston, Los Angeles, Newark, New York, Norfolk, and elsewhere.

This civil case comprises claims by Louis Vuitton against the defendants for the related counterfeiting and infringement of their trademarks. The district court determined that three of the defendants' collections infringed or were counterfeit copies of five separate Louis Vuitton trademarks. The court based its conclusion on testimony, adverse inferences drawn from the failure of the corporate defendants to offer testimony, records of numerous customs seizures, and visual evidence. Tr. of Oral Arg. on Summ. J. Mot. at 53, Louis Vuitton Malletier S.A. v. LY USA Inc., et al., No. 06-cv-13463 (S.D.N.Y. August 7, 2008)(" Summ. J. Hr'g Tr." ).

The Parties

Louis Vuitton is a French fashion house founded in 1854. It began selling its products in the United States in 1893. Since 1987, it has been a part of LVMH Moë t Hennessy, a publicly traded corporation. Louis Vuitton manufactures and distributes luxury consumer goods, including leather goods, designer luggage, purses, handbags, leather travel accessories, jewelry, shoes, and other high-end fashion apparel. Vuitton has registered with the U.S. Patent and Trademark Office many trademarks, including its well-known monogram logo, which consists of a stylized, overlapping " L" and " V" (the " LV Logo Mark" ). The company spends millions of dollars each year to advertise and market its trademarked goods in magazines, newspapers, catalogs, targeted mailings, and on the Internet. See Louis Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108, 112 (2d Cir.2006) (describing Louis Vuitton's business model, trademarks, and marketing expenditures); Louis Vuitton Malletier v. Burlington Coat Factory Warehouse Corp., 426 F.3d 532, 534-35 (2d Cir.2005) (same); see also Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 257-58 (4th Cir.2007) (same); Steven Greenhouse, The Champagne of Mergers, NEW YORK TIMES D1 (June 4,

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1987) (describing the merger of Moë t-Hennessy and Louis Vuitton).

The defendants are LY USA, Inc., (" LY Inc." ) a New York corporation formed in 2003, which primarily produces and markets " LY" — branded handbags and wallets; Marco Leather Goods, Ltd., (" Marco Ltd." ) a New York corporation formed in 1999, which imports " Marco" — branded handbags and wallets and sells them to wholesale customers throughout the United States; and CoCo USA Inc., (" CoCo Inc." ) a New York corporation formed in 2003, which is a wholesaler and distributor of handbags and leather goods. LY Inc., Marco Ltd., and CoCo Inc. all operate out of the same business address at 135 West 30th Street in Manhattan. The defendant Lam is the president and owner of Marco Ltd.; the defendant Chan is a manager and director of that company. Lam and Chan are not married, but have two children together. CoCo principally distributes goods imported by Marco, and sells them through venues including a storefront location at 135 West 30th Street. CoCo is owned by a member of Lam's family, and both Lam and Chan are associated with the company. Lam is also a shareholder, officer, and director of LY Inc. The goods imported and sold by the defendants were manufactured at a factory in China owned by Lam's family.

Louis Vuitton's Trademarks

Louis Vuitton owns many trademarks, some of which are widely recognized. Five are at issue in this litigation: the LV Logo Mark, three different geometric floral motifs (the " Flower Design Marks" ), and a composite pattern consisting of repetitions of the LV Logo Mark centered inside the three Flower Design Marks. Louis Vuitton has registered each of these marks with the U.S. Patent and Trademark Office on the principal register, and each has become " incontestable" as a result of its continuous use in commerce for more than five years. See 15 U.S.C. § 1065 (governing incontestability); Dooney & Bourke, 454 F.3d at 112 (noting that these marks are incontestable).

The Civil Lawsuit

On November 22, 2006, Louis Vuitton filed this lawsuit in the United States District Court for the Southern District of New York alleging that the defendants sold counterfeit handbags and travel apparel bearing infringing versions of Louis Vuitton's marks to retail kiosks and specialty stores, and on the Internet to both wholesale and retail customers. In its complaint, Vuitton asserted claims for trademark counterfeiting, trademark and service mark infringement, trademark dilution, and false designation of origin forbidden by Sections 32 and 43 of the Lanham Act, 15 U.S.C. §§ 1114, 1125(a), 1125(c); 3 trademark infringement and unfair competition in violation of New York State common law; and...

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