C=holdings B.V. v. Asiarim Corp.

• Decision Date: 16 December 2013
• Docket Number: No. 12 Civ. 928(RJS).,12 Civ. 928(RJS).
• Citation: 992 F.Supp.2d 223
• Parties: C=HOLDINGS B.V., Plaintiff, v. ASIARIM CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

992 F.Supp.2d 223

C=HOLDINGS B.V., Plaintiff,

v.ASIARIM CORPORATION, Defendant.

No. 12 Civ. 928(RJS).

United States District Court, S.D. New York.

Dec. 16, 2013.

Martin Frederik Gusy and Matthew Jason Weldon of Gusy Van Der Zandt LLP, New York, NY, for Plaintiff.

Fredric Harlan Aaron, Roslyn Heights, NY; and David E. Price, Rockville, MD, for Defendants.

memorandum and order

RICHARD J. SULLIVAN, District Judge.

Plaintiff C=Holdings B.V. (“C=Holdings”) brings this action against Defendant Asiarim Corporation (“Asiarim”) for claims relating to Asiarim's alleged infringement of C=Holdings's rights in the trademarks of Commodore, a brand long associated with the 8–bit gaming computer popular in the early 1980s. Having presided over a bench trial in this action, the Court issues the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a). For the reasons set forth below, the Court finds Asiarim liable for: (1) trademark infringement, false advertising, and unfair competition in violation of the Lanham Act; (2) common law trademark infringement and unfair competition; and (3) tortious interference with prospective business advantage. The Court also grants C=Holdings declaratory relief. However, the Court finds that C=Holdings failed to meet its burden of proof with respect to its claims for libel, tortious interference with contract, deceptive trade practices, and unjust enrichment under New York state law. Accordingly, the Court enters judgment for C=Holdings and awards it damages in the amount of $1,000,000, as well as declaratory relief, injunctive relief, and attorneys' fees.

I. Procedural History

C=Holdings filed its Complaint on February 6, 2012, asserting eight causes of action ¹: (1) trademark infringement under Section 32 of the Lanham Act, 15 U.S.C. § 1114; (2) false advertising and unfair competition under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) trademark infringement under the common law; (4) unfair competition under the common law; (5) libel; (6) tortious interference with contract and tortious interference with prospective business advantage; (7) deceptive trade practices under Section 349 of the New York General Business Law; and (8) unjust enrichment. C=Holdings also sought a declaratory judgment that it is the owner of the Commodore trademarks.²

After denying C=Holdings's motion for a preliminary injunction and temporary restraining order (Doc. No. 35), the Court directed the parties to proceed with discovery. The ensuing discovery process proved to be contentious and, at times, exasperating. Asiarim seized upon every opportunity to avoid its discovery obligations, providing increasingly dubious explanations for its conduct as this action proceeded. ( See Doc. Nos. 46, 53, 56, 59, 60, 75, 76.) C=Holdings, for its part, requested unduly draconian sanctions at Asiarim's slightest delay, including requests that the Court close discovery prematurely and order summary judgment in its favor. ( See, e.g., Doc. No. 48, 53, 59.) Though the Court will not revisit these events in detail, it will note that Asiarim was ordered to pay $2,575.76 in expenses that C=Holdings had incurred for cancelled depositions. (Doc. No. 75.) Asiarim was also precluded from presenting the testimony of four witnesses whom it failed to produce for these depositions. (Doc. No. 76.)

Neither party filed dispositive motions with respect to C=Holdings's claims. However, at a status conference held on May 1, 2012, the Court granted C=Holdings's motion to dismiss Asiarim's counterclaims for breach of fiduciary duty, unjust enrichment, and tortious interference. (Doc. No. 46.) The Court granted Asiarim leave to amend the Answer, but Asiarim declined to do so. ( Id.)

The case proceeded to trial on May 6, 2013, and was conducted without objection in accordance with the Court's Individual Rules for non-jury proceedings. The parties submitted affidavits containing the direct testimony of their respective witnesses, as well as copies of all exhibits and deposition testimony that they intended to offer as evidence at trial. The parties were then invited to call those witnesses whom they wished to cross-examine at trial. In all, five witnesses submitted affidavits and testified before the Court, with C=Holdings calling Jan Hovers, Eugene van Os, and Albert Ebben, and Asiarim calling Ben van Wijhe and Donald Ruan. The Court ruled on objections made with regard to statements in various witness affidavits and various exhibits. Trial concluded on May 7, 2013. Each party submitted a post-trial memorandum (“Post–Trial Mem.”) on June 5, 2013. (Doc. Nos. 92, 93.) Asiarim submitted a reply to C=Holdings's memorandum (“Rep. Mem.”) on June 7, 2013. (Doc. No. 94.)

II. Legal Standard

To prevail on its claims, C=Holdings has the burden of proof to present evidence in support of the allegations set forth in the Complaint and to prove those allegations by a preponderance of the evidence. McNeil–P.C.C., Inc. v. Bristol–Myers Squibb Co., 938 F.2d 1544, 1548–49 (2d Cir.1991). “ ‘The burden of showing something by a preponderance of the evidence ... simply requires the trier of fact to believe that the existence of a fact is more probable than its nonexistence.’ ” Metro. Stevedore Co. v. Rambo, 521 U.S. 121, 137 n. 9, 117 S.Ct. 1953, 138 L.Ed.2d 327 (1997) (quoting Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal., 508 U.S. 602, 622, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993)). As the finder of fact, the Court is entitled to make credibility findings of the witnesses and testimony.

III. Findings of Fact³

C=Holdings, formerly known as Commodore International B.V., is a limited liability company organized under the laws of the Netherlands, with its principal place of business in that country. (Stip. Facts ¶ 1.) Asiarim is a corporation organized under the laws of Nevada, with its principal place of business in that state. ( Id. ¶ 14.) It “regularly conducts business in New York.” ( Id.) ⁴

There is no dispute that C=Holdings was a subsidiary of Asiarim through at least September 30, 2011. (Stip. Facts ¶¶ 9, 41.) There is also no dispute that C=Holdings is the current registered holder of the Commodore trademarks with the United States Patent and Trademark Office (“PTO”) and with the trademark registers of over fifty other countries. ( Id. ¶ 3.) Incident to its ownership of the trademarks, C=Holdings regularly entered into licensing agreements with third parties, including one such agreement with Commodore Licensing B.V., a subsidiary of Asiarim, that granted Commodore Licensing B.V. the right to use and sublicense the trademarks. ( Id. ¶ 30.)

What the parties do dispute is the ownership of C=Holdings and, by extension, the trademarks. C=Holdings contends that, pursuant to a share transfer executed by a Dutch notary on November 7, 2011, it emerged independent of Asiarim with sole ownership of the trademarks. (Pl. Post–Trial Mem. 6–7.) Asiarim argues that this transfer was invalid because the notary lacked authority to transfer the shares. (Def. Post–Trial Mem. 1–2.) Asiarim further contends that, regardless, it executed a sales agreement on November 2, 2011 transferring the trademarks from C=Holdings to another of Asiarim's subsidiaries, and it therefore owns the trademarks through that subsidiary. ( Id.) C=Holdings counters that the November 2 transaction is a fraudulent, post hoc fabrication crafted by Asiarim to usurp the trademarks. (Pl. Post–Trial Mem. 3–4.) As set forth below, the Court finds that the evidence unequivocally favors C=Holdings and that Asiarim's assertions of fact border on the preposterous.

A. C=Holdings's Defection from Asiarim with the Commodore Trademarks

From 2009 to 2010, Albert Ebben (“Ebben”) and Jan Hoogstrate (“Hoogstrate”) made a number of loans to Asiarim and a related entity for the purpose of funding Asiarim's acquisition of C =Holdings and covering Asiarim's product development costs. ( See, e.g., Stip. Facts ¶¶ 27–28, 34.) In exchange for this funding, as well as repeated agreements to delay repayment, Asiarim granted Ebben and Hoogstrate the right to acquire C=Holdings in the event that Asiarim failed to repay the loans by July 31, 2011. ( Id. ¶¶ 36, 37.)

At the time of Ebben and Hoogstrate's loans, Ben van Wijhe (“van Wijhe”) served as chairman, president, and chief executive officer of Asiarim; Te Hwai (Cecil) Ho (“Ho”) served as treasurer, secretary, and chief financial officer; Xu Xiong (“Xiong”) served as vice-president of marketing and sales; and Donald Ruan (“Ruan”) served as executive director. (Stip. Facts. ¶¶ 19–22.) However, in May 2011, Asiarim attempted to enter into a financing agreement with a corporation called Euro American, S.A. (“Euro American”), which, among other things, would provide Asiarim with the liquidity to pay down the debt owed to Ebben and Hoogstrate. ( Id. ¶ 38; Tr. 55:5–15.) Attendant to this agreement, Asiarim's board and officers, including van Wijhe, Ho, Xiong, and Ruan, resigned on July 22, 2011. ( Id. ¶ 40.) In their place, Jan Hovers (“Hovers”) was appointed chairman, president, and chief executive officer of the company, and Eugene van Os (“van Os”) was appointed as treasurer, secretary, and chief financial officer. ( Id. ¶¶ 24–25, 40.)

During Hovers's and van Os's tenures, Asiarim failed to timely satisfy Ebben and Hoogstrate's loans. (Stip. Facts ¶ 36.) Accordingly, on September 20, 2011, Ebben and Hoogstrate executed a sale agreement with Asiarim providing that they would receive all the shares of C=Holdings if Asiarim were unable to close the Euro American deal by September 30, 2011. (PX 21.) Hovers signed the agreement on behalf of Asiarim. ( Id.) That same day, Asiarim issued a power of attorney to a Dutch notary permitting the notary to transfer the shares of C=Holdings to Ebben and Hoogstrate in the event that the Euro American deal failed to close in time. (PX 22.) As it...