Halo Creative & Design Ltd. v. Comptoir Des Indes Inc., Case No. 14 C 8196

• Decision Date: 02 October 2018
• Docket Number: Case No. 14 C 8196
• Court: U.S. District Court — Northern District of Illinois
• Parties: HALO CREATIVE & DESIGN LIMITED, a Hong Kong Company; HALO TRADEMARKS LIMITED, a Hong Kong Company; and HALO AMERICAS LIMITED, a Hong Kong Company, Plaintiffs, v. COMPTOIR DES INDES INC., a Quebec Corporation; CDI INTERNATIONAL; and CDI FURNITURE, Defendants.

HALO CREATIVE & DESIGN LIMITED, a Hong Kong Company;HALO TRADEMARKS LIMITED, a Hong Kong Company; and HALOAMERICAS LIMITED, a Hong Kong Company, Plaintiffs, v. COMPTOIR DES INDES INC., a Quebec Corporation; CDIINTERNATIONAL; and CDI FURNITURE, Defendants.

Case No. 14 C 8196

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

October 2, 2018

Judge Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

After a jury verdict in Halo's favor, the parties filed the following four Motions: (1) Defendant CDI's Petition for Recognition and Motion to Stay Proceedings Pending Bankruptcy, along with its corresponding Motion to Supplement [Dkt. Nos. 249, 261]; (2) Defendant CDI's Motion for a New Trial or, in the alternative, for this Court to amend the judgment [Dkt. No. 231]; (3) Plaintiff Halo's Motion to declare this case an exceptional case and grant enhanced damages [Dkt. Nos. 222, 223]; and (4) Halo's Bill of Costs [Dkt. No. 237]. For the reasons stated herein, CDI's Motions are denied, Halo's Motion for Enhanced Damages is granted, and Halo's Bill of Costs is granted in part and denied in part.

I. BACKGROUND

Halo Creative & Design Ltd., Halo Trademarks, Ltd., and Halo Americas Ltd. (collectively, "Halo") is in the business of designing and distributing high-end furniture and lighting products. Comptoir Des Indes, Inc., CDI International, and CDI Furniture (collectively "CDI") competes in the same industry. Halo brought an intellectual property action against CDI claiming that several of CDI's furniture and lighting products infringed Halo's copyright, patent, and trademark rights. The parties went to trial and the jury found in favor of Halo, finding that CDI willfully infringed two of Halo's design patents, Halo's ODEON trademark, and nine of Halo's copyrights. For these injuries, the jury awarded Halo damages of $15,775.00 for patent infringement, $1,043,509.00 for trademark infringement, and $2,500,000.00 for copyright infringement, totaling $3,559,284.00 in damages. (See Judgment, Dkt. No. 217.)

Before the Court are the parties' post-judgment motions. The Court addresses each below. Citations to the trial transcripts are to draft transcripts and might not correspond exactly to any final transcript prepared in response to any party's request. See United States v. Barta, No. 12 CR 00487, 2013 WL 4854355, at *1 n.2 (N.D. Ill. Sept. 11, 2013), aff'd sub nom. United States v. Buenrostro, 781 F.3d 864 (7th Cir. 2015).

II. ANALYSIS

A. CDI'S Motion to Stay Proceedings

CDI moves to stay proceedings based on CDI's now-pending bankruptcy proceeding in Canada. Chapter 15 of the U.S. Bankruptcy Code governs this motion. In 2005, Congress enacted the Bankruptcy Abuse Preventionand Consumer Protection Act of 2005, Pub. L. No. 109-8, 119 Stat. 22 (2005), adding a new chapter to the Bankruptcy Code designed "to provide effective mechanisms for dealing with cases of cross-border insolvency . . ." 11 U.S.C. § 1501(a). "The new chapter 15 [was] intended to encourage cooperation between the United States and foreign countries with respect to transnational insolvency cases and to provide for the fair and efficient administration of cross-border insolvencies." United States v. J.A. Jones Const. Grp., LLC, 333 B.R. 637, 638 (E.D.N.Y. 2005). The provisions of Chapter 15 apply to cases where "assistance is sought in the United States by a foreign court or a foreign representative in connection with a foreign proceeding." 11 U.S.C. § 1501(b)(1).

To recognize a foreign bankruptcy proceeding as requested by CDI's Motion, Chapter 15 requires a petitioner to file an application for recognition with the U.S. bankruptcy court pursuant to Subchapter III, Recognition of Foreign Proceeding and Relief, 11 U.S.C. §§ 1515-1524. See J.A. Jones, 333 B.R. at 638. Upon receiving an application for recognition, the bankruptcy court will enter an order recognizing the foreign proceeding if: (1) such foreign proceeding is pending in a country where the debtor has the "center of its main interests" or the debtor has "an establishment," 11 U.S.C. § 1502; (2) the foreign representative applying for recognition is a person or body; (3) the petition is accompanied by all required documents under 11 U.S.C. § 1515; and (4) such recognition would not be manifestly contrary to the public policy of the United States, 11 U.S.C. § 1506. See 11 U.S.C. § 1517. Once the foreign proceeding is recognized, the statute authorizes a court to grant various forms of relief to the debtor, including the type ofrelief CDI requests in this motion. See 11 U.S.C. § 1509(b)(3) ("If the court grants recognition . . . a court in the United States shall grant comity or cooperation to the foreign representative."); 11 U.S.C. § 1521(a)(1) ("Upon recognition of a foreign proceeding . . . the court may . . . grant any appropriate relief, including . . . staying the commencement or continuation of an individual action or proceeding concerning the debtor's assets, rights, obligations or liabilities."). Furthermore, the statute requires that any "request for comity or cooperation by a foreign representative in a court in the United States" "shall be accompanied by a certified copy of an order granting recognition under section 1517." 11 U.S.C. § 1509(c). The trouble here is that CDI did not accompany its Motion with such a certified order, nor is it clear that CDI complied with the procedures of the U.S. Bankruptcy Code laid out above.

"There is little case law addressing the issue of whether a 'foreign representative' may request a stay of U.S. court proceedings involving the entity subject to liquidation in the foreign proceeding. What case law there is, however, makes clear that foreign representatives must be recognized under Chapter 15 to seek a stay from a federal court." Reserve Int'l Liquidity Fund, Ltd. v. Caxton Int'l Ltd., No. 09 CIV. 9021, 2010 WL 1779282, at *5 (S.D.N.Y. Apr. 29, 2010) (denying stay absent compliance with Chapter 15). All the exhibits attached to CDI's Motion are documents from the Canadian bankruptcy proceedings. What is noticeably absent is any order granting recognition from a U.S. Bankruptcy Court. "In the absence of recognition under chapter 15, thisCourt has no authority to consider [CDI]'s request for a stay." J.A. Jones, 333 B.R. at 639.

CDI must comply with Chapter 15 of the U.S. Bankruptcy Code to receive recognition of its foreign bankruptcy and the corresponding relief it seeks. Compare Orchard Enter. NY, Inc. v. Megabop Records Ltd., No. 09 CV 9607, 2011 WL 832881, at *3 (S.D.N.Y. Mar. 4, 2011) (denying motion to stay based on foreign bankruptcy where debtor had not complied with Chapter 15); Andrus v. Digital Fairway Corp., No. 3:08 CV 119O, 2009 WL 1849981, at *3 (N.D. Tex. June 26, 2009) (same); Econ. Premier Assurance Co. v. CPI Plastics Grp., Ltd., No. CV 09-2008, 2010 WL 11561369, at *3 (W.D. Ark. June 7, 2010) (finding no basis to stay where debtor had not complied with Chapter 15), with Giant Screen Sports LLC v. Sky High Entm't, No. 05 C 7184, 2007 WL 627607, at *3 (N.D. Ill. Feb. 27, 2007) (granting stay where debtor received recognition of foreign bankruptcy proceeding through Chapter 15). The cases CDI cites in support of its Motion were all decided prior to Congress's enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act and thus do not control here. As the current record fails to show that CDI has received recognition in accordance with Chapter 15 of the U.S. Bankruptcy Code, the Court denies CDI's Motion to Stay.

The Court now turns to the merits of the remaining motions.

B. CDI's Motion for a New Trial Pursuant to Rule 59(a)

1. Rule 59(a) Standard

CDI moves this Court for a new trial pursuant to Rule 59(a) of the Federal Rules of Civil Procedure. In ruling on a motion for a new trial, the Court must "determine whether the verdict is against the weight ofthe evidence, the damages are excessive, or if for other reasons the trial was not fair to the moving party." Winger v. Winger, 82 F.3d 140, 143 (7th Cir. 1996). The Court "will not set aside a jury verdict if a reasonable basis exists in the record to support the verdict, viewing the evidence in the light most favorable to the prevailing party, and leaving issues of credibility and weight of evidence to the jury." Kapelanski v. Johnson, 390 F.3d 525, 530 (7th Cir. 2004).

2. Substantial Similarity

CDI argues that a new trial is warranted for three reasons: First, the jury was not provided with the proper legal framework to consider substantial similarity in light of protected elements; second, certain facts were impermissibly excluded; and third, testimony was admitted that confused the jury regarding substantial similarity.

CDI waived its objection to the jury instruction on substantial similarity because CDI agreed to that instruction at trial. (See Jury Instructions, Dkt. 209 (indicating Jury Instruction No. 27 was agreed); Emmel v. Coca-Cola Bottling Co., 904 F. Supp. 723, 743 (N.D. Ill. 1995), aff'd, 95 F.3d 627 (7th Cir. 1996).) Furthermore, even if the objection had not been waived, it is unlikely CDI could prevail on this ground. Jury Instruction No. 27 specifically instructed the jury that "[the] substantial similarity inquiry must take into account that the copyright laws preclude appropriation of only those elements of the work that are protected by the copyright," which undercuts CDI's argument that the jury did not understand that it could only find infringement based on the protected parts of Halo's works. ([Final] Jury Instructions, Dkt. 209 at 27 (emphasis added).)

The Court did not err in instructing the jury according to the pattern instruction and adding additional language from the Seventh Circuit's Roulo opinion regarding substantial similarity. See Seventh Circuit Pattern Jury Instructions 12.4.1 (2017 rev); Roulo v. Russ Berrie & Co., 886 F.2d 931, 939 (7th Cir. 1989). Further, the substance of CDI's requested...