Victoria Cruises v. Changjiang Cruise Overseas

• Decision Date: 31 December 2008
• Docket Number: Case No. 03-CV-3146(FB)(MDG).
• Citation: 630 F.Supp.2d 255
• Parties: VICTORIA CRUISES, INC., Plaintiff, v. CHANGJIANG CRUISE OVERSEAS TRAVEL CO.; Yangtze Cruises, Inc.; and John Does 1-10, Defendants.
• Court: U.S. District Court — Eastern District of New York

630 F.Supp.2d 255

VICTORIA CRUISES, INC., Plaintiff, v. CHANGJIANG CRUISE OVERSEAS TRAVEL CO.; Yangtze Cruises, Inc.; and John Does 1-10, Defendants.

Case No. 03-CV-3146(FB)(MDG).

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

December 31, 2008.

COPYRIGHT MATERIAL OMITTED

Ann Seelig, Esq., Wu & Kao, New York, NY, for the Plaintiff.

MEMORANDUM AND ORDER

BLOCK, Senior District Judge:

Following the failure of defendant Yangtze Cruises, Inc. ("Yangtze") to appear through counsel, the Court granted plaintiff's motion for default judgment on its trademark infringement claim against Yangtze and referred the matter to the assigned magistrate judge for a determination of the relief to be awarded.¹ On August 20, 2008, Magistrate Judge Go issued a report and recommendation ("R & R") recommending that plaintiff be awarded a total of $7,371,329.25 in damages and that its request for injunctive relief be denied.

The R & R recited that "[o]bjections to the Report and Recommendation must be filed ... by September 8, 2008," and that "[f]ailure to file objections within the time specified waives the right to appeal." R & R at 265. A copy of the R & R was sent electronically to plaintiff's counsel and by overnight mail to Yangtze's last known address. See id. To date, no objections have been filed.

If clear notice has been given of the consequences of failure to object, and there are no objections, the Court may adopt the R & R without de novo review. See Thomas v. Arn, 474 U.S. 140, 149-50, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Mario v. P&C Food Mkts., Inc., 313 F.3d 758, 766 (2d Cir.2002) ("Where parties receive clear notice of the consequences, failure timely to object to a magistrate's report and recommendation operates as a waiver of further judicial review of the magistrate's decision."). The Court will excuse the failure to object, however, and conduct de novo review if it appears that the magistrate judge may have committed plain error. See Spence v. Superintendent, Great Meadow Corr. Facility, 219 F.3d 162, 174 (2d Cir.2000).

Since there is nothing in Magistrate Judge Go's thorough R & R that suggests plain error, the Court adopts it without de novo review.

SO ORDERED.

REPORT & RECOMMENDATION

GO, United States Magistrate Judge:

Plaintiff Victoria Cruises, Inc. ("Victoria") brings this action against defendants Changjiang Cruise Overseas Travel Co. ("Changjiang"), Yangtze Cruises, Inc. ("Yangtze"), and John Does 1-10 (collectively "defendants"), alleging trademark infringement, trademark dilution and unfair competition under federal and state law. The Honorable Frederic Block dismissed Victoria's claims against Changjiang and John Does 1-10 pursuant to Victoria's stipulation to withdraw its complaint against those defendants for lack of service. See ct. doc. 51. Judge Block subsequently granted plaintiff's motion for default judgment against Yangtze and referred to me for report and recommendation the relief to be awarded. See ct. doc. 59.

PROCEDURAL BACKGROUND

On June 26, 2003, plaintiff commenced this action seeking injunctive relief and damages against Yangtze, Changjiang and John Does 1-10 for trademark infringement, trademark dilution and unfair competition under federal and state law. See ct. doc. 1.

Plaintiff later moved for a preliminary injunction. At a hearing held before the Honorable A. Simon Chrein on September 22, 2003, the parties entered into a stipulation that Yangtze "agree[d] to cease use and ... never again use the name, the full name, Victoria Cruises or the dragon logo used by ... Victoria Cruises." Transcript of Hearing held on September 22, 2003 (ct. doc. 21) at 18.

On January 27, 2005, Judge Block denied plaintiffs motion for summary judgment because plaintiff had not met its burden of proving that there was no genuine issue of fact "with respect to whether Yangtze's use of the ship names `Victoria' and `Victoria 1' through `Victoria 7' is likely to cause confusion with plaintiffs mark." Ct. doc. 51 at 1-2. Judge Block also noted that plaintiff had stipulated to withdrawing its complaint against Changjiang and John Does 1-10 for lack of service. See ct. docs. 50, 51. In addition, Judge Block warned that Yangtze must obtain counsel by February 28, 2005 or risk default judgment. See ct. doc. 51 at 2. On October 12, 2005, Judge Block granted plaintiffs motion for default and referred to me to report and recommend on damages. See ct. doc. 58.

FACTUAL BACKGROUND

The pertinent facts are undisputed and are set forth in the Verified Complaint ("Compl.") (ct. doc. 1), the Declaration of Anne Seelig dated December 21, 2005 ("Seelig Decl.") (ct. doc. 64), the Affidavit of James Pi, the President of Victoria, dated June 18, 2007 ("Pi Aff.") (ct. doc. 71) and the evidence and testimony received at a hearing held on July 16, 2007.

Victoria is a New York corporation and has been operating travel tours and cruises on the Yangtze River, China since 1994. Compl. at ¶ 8; Pi Aff. at ¶ 2; Transcript of Hearing held on July 16, 2007 ("H. Tr.") at 8, 41-42. Victoria is the owner of a trademark, "Victoria Cruises," U.S. Trademark Registration No. 1,904,671, for cruise line services featuring cruises in the Orient. See Compl. at ¶ 7, Exh. A. However, that registration was cancelled on July 20, 2002. See Pi Aff. at ¶ 8; http://tess2.uspto.gov/ bin/_showfield?f=doc&state=sos7d.2.4.

Victoria then filed an application for registration of the identical mark on March 11, 2003 and was issued a certificate of registration for U.S. Trademark Registration No. 3,128,637 on August 15, 2006. See Pi Aff. at ¶ 9, Exh. D.

Victoria has advertised and used its mark throughout the United States since January 1994. See Compl. at ¶ 9. Through widespread public acceptance and recognition, plaintiffs mark has developed secondary meaning and significance in the minds of the purchasing public. Id. Victoria is the largest cruise line operating in the Yangtze River, China. Pi Aff. at ¶ 2.

Yangtze is a New York corporation with its principal place of business at 566 7th Avenue, Suite 506, New York, New York 10018. Compl. at ¶ 5. Beginning in 2003, Yangtze advertised, promoted, marketed and sold cruise line tickets in the United States under the name "Victoria Cruises." H. Tr. at 9, 11; Compl. at ¶ 11. The label and trade dress used by plaintiff and Yangtze contain virtually the same dragon logo, colors, background and layout. Compl. at ¶ 13.

In 2002, prior to commencement of the infringing sales by Yangtze, Victoria reported gross sales of $27,827,296 for its tours. H. Tr. at 11; Pl.'s Ex. 2. Victoria's gross sales dropped beginning 2003—to $4,613,846 in 2003, $10,716,177 in 2004, $13,992,711 in 2005 and $26,734,827 in 2006. H. Tr. at 17, 21, 22, 23; Pl.'s Ex. 2, 3, 4 and 6. According to Mr. Pi, some of the decline in revenues in 2003 was attributable to a general drop in the number of tourists visiting China due to SARS. H. Tr. at 24. Sales increased somewhat in 2004, but plaintiff had to reduce ticket prices that year in order to remain competitive with the lower priced cruises offered by defendant. Id. at 25, 32.

The cruises that Victoria offers are overseen by an American cruise service department on board and covered by international insurance. Id. at 42. Mr. Pi testified that Victoria received complaints from many returning American tourists who believed they had purchased tickets for Victoria cruises that did not offer these services. Id. at 42, 43. He believes through word of mouth that Victoria was able to persuade customers that Victoria's cruises were different from those offered by Yangtze, resulting in increased sales in 2005. Id. at 43.

DISCUSSION

A default constitutes an admission of all well-pleaded factual allegations in the complaint, except for those relating to damages. Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.1992); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). A default also effectively constitutes an admission that damages were proximately caused by the defaulting party's conduct: that is, the acts pleaded in a complaint violated the laws upon which a claim is based and caused injuries as alleged. Au Bon Pain, 653 F.2d at 65-66. The movant need prove "only that the compensation sought relate to the damages that naturally flow from the injuries pleaded." Greyhound, 973 F.2d at 159.

The court must ensure that there is a reasonable basis for the damages specified in a default judgment. Actual damages or statutory damages may be assessed. In determining damages not susceptible to simple mathematical calculation, Fed. R.Civ.P. 55(b)(2) gives a court the discretion to determine whether an evidentiary hearing is necessary or whether to rely on detailed affidavits or documentary evidence. Action S.A. v. Marc Rich and Co., Inc., 951 F.2d 504, 508 (2d Cir.1991). The moving party is entitled to all reasonable inferences from the evidence it offers. Au Bon Pain, 653 F.2d at 65.

Liability of Defendant

The Lanham Act prohibits the use in commerce, without consent, of any "registered mark in connection with the sale, distribution or advertising of any goods," in a way that "is likely to cause confusion." 15 U.S.C. § 1114(1)(a). The statute also forbids the infringement of unregistered common law trademarks. See Time, Inc. v. Petersen Publishing Co. LLC, 173 F.3d 113, 117 (2d Cir.1999); Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 142 (2d Cir.1997); Banff, Ltd. v. Federated Dep't Stores, Inc., 841 F.2d 486, 489 (2d Cir.1988); 15 U.S.C. § 1125(a)(1). To prevail on a trademark infringement claim under either provision, plaintiff must demonstrate that "it has a valid mark entitled to protection and that the defendant's use of it is likely to cause confusion." Time, 173 F.3d at 117; Genesee Brewing, 124 F.3d at 142.

A mark is automatically entitled to protection under the Lanham Act when it is an "inherently distinctive" mark, as opposed to a ...