Chanel, Inc. v. Gordashevsky

Decision Date07 April 2008
Docket NumberCivil No. 05-5270 (RBK).
Citation558 F.Supp.2d 532
PartiesCHANEL, INC., Plaintiff, v. Alina GORDASHEVSKY, et al., Defendants.
CourtU.S. District Court — District of New Jersey

Gabriel H. Halpern, Pinilis Halbern, LLP, Morristown, NJ, for Plaintiff.

OPINION

KUGLER, District Judge.

THIS MATTER comes before the Court on the motion of Plaintiff Chanel, Inc. ("Plaintiff or "Chanel") for entry of default judgment pursuant to Federal Rule of Civil Procedure 55 against Defendant Evan Coheann, a/k/a/ Ethan Cohen ("Defendant Coheann"). Plaintiff requests (1) injunctive relief against future infringement of intellectual property rights; (2) statutory damages for trademark counterfeiting; (3) attorney's fees; and (4) costs of suit. Because Defendant Coheann has failed to defend in this matter, and the Court is satisfied that the complaint establishes a legitimate cause of action, the Court grants Plaintiffs motion.

I. BACKGROUND

Chanel is engaged in the business of manufacturing and distributing throughout the world various goods including handbags, wallets, travel bags, luggage, change purses, sunglasses, scarves, necklaces, and numerous other products under the federally registered trademarks "Chanel" and "CC Monogram" (collectively "Chanel Marks"). Chanel expends substantial time, money, and other resources developing, advertising, and otherwise promoting the Chanel Marks in the United States in association with the sale of handbags, wallets, jewelry, sunglasses and other goods. Chanel contends that as a result of these efforts, consumers readily identify `merchandise bearing Chanel Marks as being high quality merchandise sponsored and approved by Plaintiff.

Chanel registered various forms of its trademarks in the United States Patent and Trademark Office. At present, Chanel's U.S. trademark registrations include CC MONOGRAM (Reg. No. 1,734,822), CC MONOGRAM (Reg. No. 1,314,511), CC MONOGRAM (Reg. No. 2,880,780), CHANEL (Reg. No. 0,626,035), CHANEL (Reg. No. 1,347,677), CHANEL (Reg. No. 1,733,051), CC CHANEL (Reg. No. 1,329,750), CHANEL (Reg. No. 1,214,265), CHANEL (Reg. No. 0,906,262), CC MONOGRAM (Reg. No. 1,654,252), CHANEL (Reg. No. 1,510,757), CHANEL (Reg. No. 0,612,169), CHANEL (Reg. No. 0,902,190), and CC MONOGRAM (Reg. No. 1,501,898). (Compl. at 7.) Chanel's trademarks were never assigned or licensed to any of the defendants in this matter.

Chanel filed a complaint against various defendants, including Defendant Coheann, on November 4, 2005. (Docket Entry No. 1.) According to Chanel, the defendants directly and personally engaged in the sale of products bearing counterfeit versions of its registered trademarks with knowledge of Chanel's ownership of these marks, including the exclusive right to use and license the trademarks and the goodwill associated with the Chanel name.

Chanel alleges that the defendants manufactured, promoted, and otherwise advertised, distributed, sold, and/or offered for sale counterfeit products, including handbags, wallets, sunglasses, jewelry, and scarves bearing trademarks that were exact copies of the Chanel marks (the "counterfeit goods"). Chanel specifically alleges that the defendants used the Chanel marks in the same stylized fashion for a different quality of goods.

Chanel claims that the counterfeit goods are of a quality substantially different from Plaintiffs genuine goods and that the defendants were actively distributing and advertising substantial quantities of the counterfeit goods with knowledge that purchasers will mistake such goods for the high quality products offered for sale by Chanel. Chanel contends that Defendants engaged in these counterfeiting activities knowingly and intentionally or with reckless disregard or willful blindness to Chanel's rights for the purpose of trading on the goodwill and reputation associated with the Chanel name and caused Chanel injury.

Default judgment has previously been granted against all defendants except Defendant Coheann. Chanel v. Gordachevsky, Civ. No. 05-5270, 2007 WL 316433 (Jan. 29, 2007). Chanel asserts that Defendant Coheann is the owner and operator of various web addresses through which he sells counterfeit Chanel products. These websites include EDesignerHandbags.net, WorldBagsExpress.com, AccessoriesPlusl.com, Spicybags.com, BolsosAccessorios.com, RodeoDriveReplicas.com, Replicamoda.com, StyeDiva.net, X-Bags. net, Fashionzone.info, and OnlineFashionTrends.com. Defendant Coheann was served with the Summons and Complaint on November 17, 2005. (Docket Entry No. 5.) Chanel filed an Amended Complaint, and Defendant Coheann answered this Amended Complaint on January 11, 2006. (Docket Entry No. 2, 6.)

On July 31, 2006, Chanel moved to strike Defendant Coheann's answer and enter default against him. This motion was based on Defendant Coheann's failure to appear for his scheduled deposition; he informed his counsel several days before the deposition was to take place that he had left the United States for Israel and did not intend to return for his deposition. Magistrate Judge Ann Marie Donio denied the motion on October 11, 2006. (Docket Entry No. 21.) Judge Donio noted that striking an answer and entering default would be an extreme sanction, and rather than do so, she imposed on Defendant Coheann the costs to Chanel based on his failure to appear at his deposition and gave him another chance to comply with discovery and be deposed. (Order of Oct. 11, 2006 at 7, 10.)

Chanel moved again for entry of default against Defendant Coheann on November 14, 2006. (Docket Entry No. 22.) Defendant Coheann's counsel, Thomas Doerr, also moved to withdraw from the representation. (Docket Entry No. 23.) According to Mr. Doerr's certification, Defendant Coheann advised Mr. Doerr that he was living in Israel, had no intention of returning to the United States, and had no intention of contesting the allegations of the Complaint in this case or defending this case in any way. On April 24, 2007, Judge Donio issued an order permitting Defendant's counsel to withdraw, entering default against Defendant, and striking Defendant's answer and any defenses. (Docket Entry No. 28.) Chanel moved for entry of default judgment on September 26, 2007.

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 55(b)(2) authorizes courts to enter a default judgment against a properly served defendant who fails to file a timely responsive pleading. Anchorage Assoc. v. Virgin Is. Bd. of Tax Rev., 922 F.2d 168, 177 n. 9 (3d Cir.1990) ("When a defendant fails to appear .. ., the district court or its clerk is authorized to enter a default judgment based solely on the fact that the default has occurred."). The entry of a default judgment is largely a matter of judicial discretion, although the Third Circuit has emphasized that such "discretion is not without limits, however, and we repeatedly state our preference that cases be disposed of on the merits whenever practicable." Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir.1984) (citations omitted).

Although the Court should accept as true the well-pleaded factual allegations of the Complaint, the Court need not accept the moving party's legal conclusions or allegations relating to the amount of damages. Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir.1990); Directv, Inc. v. Asher, No. 03-1969, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006) (citing Charles A. Wright, Arthur R. Miller & Mary Kay Kane, 10A Federal Practice and Procedure § 2688, at 58-59, 63 (3d ed.1998)). Consequently, before granting a default judgment, the Court must first ascertain whether "the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law." Asher, 2006 WL 680533, at *1 (citing Wright, et al., § 2688, at 63); DirecTV, Inc. v. Croce, 332 F.Supp.2d 715, 717 (D.N.J.2004).

III. DISCUSSION
A. Trademark Infringement, Counterfeiting, and False Designation of Origin

Federal trademark infringement, 15 U.S.C. § 1114(1)(a)1, and a false designation of origin claim, 15 U.S.C. § 1125(a)(1)(A), are measured by identical standards pursuant to the Lanham Act. A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000). To establish either Lanham Act claim, the record must demonstrate that plaintiff (1) has a valid and legally protectable mark; (2) owns the mark; and (3) the defendant's use of the mark to identify goods or services causes a likelihood of confusion. Id. The first two requirements are satisfied when a federally registered mark has become incontestable, meaning the owner has filed affidavits stating that the mark has been registered, that it has been in continuous use for five consecutive years, and that there has been no adverse decision concerning the registrant's ownership or right to registration. Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466 (3d Cir.1994).

To establish federal trademark counterfeiting, the record must establish that (1) defendants infringed a registered trademark in violation of the Lanham Act, 15 U.S.C. § 1114(1)(a), and (2) intentionally used the trademark knowing that it was counterfeit2 or was willfully blind to such use. Playboy Enter., Inc. v. Universal Telr-A-Talk, Inc., No. CV. 96-6961, 1998 WL 767440, *7 (E.D.Pa. Nov.3,1998). The only distinction between the standard for federal trademark counterfeiting and the standard for establishing infringement is that to obtain treble or statutory damages for a counterfeiting claim, a plaintiff must show that the defendant intentionally used the plaintiffs trademark, knowing that it was a counterfeit. Id. at *2; see also 15 U.S.C. § 1117.

B. Cause of Action

Before awarding a default judgement, the Court must determine whether the moving party's complaint establishes a legitimate cause of action. Croce, 332 F.Supp.2d at 717. The Court has previously decided in granting default judgment against the other defendants...

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