UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

------------------------------------- x

BURBERRY LIMITED, a United Kingdom :

Corporation & BURBERRY LIMITED, a
New York Corporation, :
08 Civ. 5781 (CM) (AJP)
Plaintiffs, :
REPORT AND RECOMMENDATION
-against- :

EURO MODA, INC., MODA OGGI, INC. & :

JOHN FANNING,
:
Defendants.
:
------------------------------------- x

ANDREW J. PECK, United States Chief Magistrate Judge:

To the Honorable Colleen McMahon, United States District Judge:

Plaintiffs Burberry Limited (UK) and Burberry Limited (USA) (collectively,

"Burberry") commenced this action against defendants Euro Moda, Inc., Moda Oggi, Inc. and John

Fanning for selling scarves, hats, polo shirts and handbags bearing three counterfeit Burberry

registered trademarks: the Burberry name, the Burberry Check design and the Burberry "Equestrian

Knight" on horseback device. See Burberry Ltd. v. Euro Moda, Inc., 08 Civ. 5781, 2009 WL

1675080 at *1-3 (S.D.N.Y. June 10, 2009) (McMahon, D.J.). On June 10, 2009, Judge McMahon

granted Burberry's summary judgment motion and issued a permanent injunction against all

defendants. Id., 2009 WL 1675080 at *1, 20. Judge McMahon referred the matter to me for a

H:\OPIN\BURBERRY
 2

damages inquest. (Dkt. No. 16: 9/14/09 Referral; see also Dkt. No. 19: 10/5/09 Memo Endorsed

Order.) Burberry submitted papers on the inquest seeking $24 million in statutory damages. (Dkt.

No. 17: Burberry Br.) Defendants have not submitted any opposition papers, and the deadline for

doing so has long passed. (See Dkt. Nos. 18 & 20: 9/16/09 & 10/9/09 Scheduling Orders.) Indeed,

defense counsel informed the Court that defendants would not be filing any opposition papers. (Dkt.

No. 21: 10/14/09 John Smargiassi Letter to Court.)

For the reasons discussed below, the Court should award Burberry $4 million in

statutory trademark damages.

FACTS

Although familiarity with the facts recited in Judge McMahon's summary judgement

decision is assumed, the following facts are relevant to the issue of statutory damages.

"Burberry is a high-end fashion brand," which Business Week Magazine named one

of the "Top 100 Brands" in 2007, calculating its "brand value as over $3.2 billion dollars." Burberry

Ltd. v. Euro Moda, Inc., 08 Civ. 5781, 2009 WL 1675080 at *1-2 (S.D.N.Y. June 10, 2009). The

United States Patent and Trademark Office ("USPTO") "honored Burberry in 2008 by selecting it

to participate as one of only 14 well-known brands in the USPTO's 2008 National Trademark expo."

Id., 2009 WL 1675080 at *2. Burberry owns the following three trademarks registered with the

USPTO: the Burberry name, the Burberry Check pattern and the Burberry "Equestrian Knight" on

horseback device (collectively, the "Burberry Marks"). Id., 2009 WL 1675080 at *1-2. Burberry

H:\OPIN\BURBERRY
 3

has used all three Burberry Marks on their "products continuously since their registrations with the

USPTO." Id.

On June 30, 2005, Fanning and Euro Moda executed a settlement agreement with

Burberry concerning their sale of products that "'infringe[d] at least one of the Burberry Marks.'"

Burberry Ltd. v. Euro Moda, Inc., 2009 WL 1675080 at *2-3. Fanning and Euro Moda admitted in

the settlement agreement that they had "purchased and sold nearly 75,000 items - jackets, lambs wool

scarves, polo-style shirts and hats - bearing Burberry Marks" and "represented that they 'ceased all

purchases, offering for sale, and sale distribution' of products bearing the Burberry Marks no later

than September 2003." Id., 2009 WL 1675080 at *2. "Fanning and Euro Moda agreed that they

would not, 'in the future, infringe the Burberry Marks, nor shall they cause, enable or assist any other

party's infringement of the Burberry Marks.'" Id. Moda Oggi was not a party to the settlement

agreement. Id., 2009 WL 1675080 at *3.

A few months later, Burberry discovered that Cohoes Fashions retail stores were

selling merchandise bearing counterfeit Burberry marks.1/ Burberry Ltd. v. Euro Moda, Inc., 2009

WL 1675080 at *3. In June 2006, Burberry sued Cohoes Fashions and through discovery in that

litigation learned that, between 2004 and September 19, 2005, Moda Oggi and Euro Moda had

supplied Cohoes Fashions with 6,166 scarves, 556 bucket hats and 2,150 polo shirts bearing

1/
Burberry's investigators purchased and examined check cashmere scarves, polo shirts, check
bucket hat with pouch, and classic check "Regent" style handbag. Id., 2009 WL 1675080 at
*6 & n.2. Every item bore counterfeit versions of all three Burberry Marks. Id., 2009 WL
1675080 at *6-7. (See Silva Aff. ¶¶ 20, 25 & Exs. 7-17, 20: Pictures of Purchased &
Examined Counterfeit Scarves, Polo Shirts, Hat & Handbag.)

H:\OPIN\BURBERRY
 4

"unauthorized and unauthentic Burberry Marks." Id. Through an invoice attached to a 2006

Settlement Agreement between Burberry and the Tannery House, Burberry also discovered that Euro

Moda sold four counterfeit "Burberry Handbags" to the Tannery House. Id., 2009 WL 1675080 at

*3, 7.

On June 26, 2008, Burberry filed a complaint alleging, inter alia, that defendants

violated 15 U.S.C. § 1114(1)(a) (trademark counterfeiting and infringement), 15 U.S.C. § 1125(a)

(false designation of origin and unfair competition), and 15 U.S.C. § 1125(c) (trademark dilution).

Burberry Ltd. v. Euro Moda, Inc., 2009 WL 1675080 at *1, 4-15. (See Dkt. No. 1: Compl.)

As noted above, on June 10, 2009, Judge McMahon granted Burberry's unopposed

summary judgment motion, issued a permanent injunction against defendants and referred the matter

to me to determine damages. (See pages 1-2 above.) Burberry submitted a brief requesting

maximum statutory damages of $24 million. (Dkt. No. 17: Burberry Br.) Defendants chose not to

submit any opposition papers. (See Dkt. No. 17: Burberry Br.; Dkt. No. 21: 10/14/09 John

Smargiassi Letter to Court.)

ANALYSIS

Pursuant to 15 U.S.C. § 1117(c), Burberry seeks maximum statutory damages: $2

million for each of the three counterfeit marks on each of the four types of goods (scarves, hats, polo

shirts, and handbags), for a total of $24 million. (See Dkt. No. 17: Burberry Br. at 1, 8-9.)

Section 1117(c) provides:

(c) Statutory damages for use of counterfeit marks

H:\OPIN\BURBERRY
 5

In a case involving the use of a counterfeit mark (as defined in section 1116(d) of this
title) in connection with the sale, offering for sale, or distribution of goods or
services, the plaintiff may elect, at any time before final judgment is rendered by the
trial court, to recover, instead of actual damages and profits under subsection (a) of
this section, an award of statutory damages for any such use in connection with the
sale, offering for sale, or distribution of goods or services in the amount of--

(1) not less than $1,000 or more than $200,000 per counterfeit mark per type
of goods or services sold, offered for sale, or distributed, as the court
considers just; or

(2) if the court finds that the use of the counterfeit mark was willful, not more
than $2,000,000 per counterfeit mark per type of goods or services sold,
offered for sale, or distributed, as the court considers just.

15 U.S.C. § 1117(c)(1)-(2).2/

2/
Prior to October 13, 2008, the minimum for § 1117(c)(1) was $500 and the maximum was
$100,000, and the maximum for § 1117(c)(2) was $1,000,000. See Prioritizing Resources
and Organization for Intellectual Property Act of 2008, Title I, sec. 104, § 1117, 122 Stat
4256, 4259 (Oct. 13, 2008). Defendants' sales of the counterfeit Burberry goods occurred
prior to October 13, 2008. Burberry Ltd. v. Euro Moda, Inc., 08 Civ. 5781, 2009 WL
1675080 at *9 (S.D.N.Y. June 10, 2009). (See also Siva Aff. ¶¶ 20, 24-25 & Ex. 19; Allan
Aff. ¶ 11.) Accordingly, while Burberry seeks maximum statutory damages of $2 million
per mark per type of good, only the pre-amendment $1 million statutory amount is
appropriate. See, e.g., Century 21 Real Estate LLC v. Bercosa Corp., --- F. Supp. 2d ----,
2009 WL 3111759 at *12 n.9 (E.D.N.Y. Sept. 18, 2009) ("Because the violations at issue
here occurred before the [§ 1117(c)] amendment took effect, I assess statutory damages under
the earlier version of the law."); Symantec Corp. v. Waszkiewicz, No. 6:07-bk-03080, 2009
WL 856344 at *1 n.1 (Bankr. M.D. Fla. Mar. 16, 2009) ( "All of defendant[]'s infringing
actions occurred before the adoption of th[e § 1117(c)] amendment and thus [plaintiff]'s
statutory damages likely are subject to the former version of the statute. Statutes are
presumed to be prospective in their operation unless expressly made retrospective."); Lifted
Research Group, Inc. v. Behdad, Inc., 591 F. Supp. 2d 3, 8 n.2 (D.D.C. 2008) ("The Court
finds that it is appropriate to apply the pre-amendment [§ 1117(c)] range, as there is no
indication that the new statutory range applies retroactively.").

H:\OPIN\BURBERRY
 6

The rationale for § 1117(c) is the practical inability to determine profits or sales made

by counterfeiters. See, e.g., Business Trends Analysts, Inc. v. Freedonia Group, Inc., 887 F.2d 399,

406 (2d Cir. 1989) (Copyright infringement case. "Congress provided for statutory damages, an

automatic measure of recovery to plaintiffs regardless of injury or profits" "where 'proof of damages

or discovery of profits' is 'difficult or impossible.'"); Warner Bros. Inc. v. Dae Rim Trading, Inc., 877

F.2d 1120, 1126 (2d Cir. 1989) (Copyright infringement case. "Statutory damages are awarded when

no actual damages are proven or they are difficult to calculate."); Louis Vuitton Malletier, S.A. v.

LY USA, 06 Civ. 13463, 2008 WL 5637161 at *1 (S.D.N.Y. Oct. 3, 2008) ("In enacting the statutory

damages provision of the Lanham Act, Congress found, generally, that 'counterfeiters' records are

nonexistent, inadequate or deceptively kept in order to willfully deflate the level of counterfeiting

activity actually engaged in, making proving actual damages in these cases extremely difficult if not

impossible.'"); Kenneth Jay Lane, Inc. v. Heavenly Apparel, Inc., 03 Civ. 2132, 2006 WL 728407

at *6 (S.D.N.Y. Mar. 21, 2006) ("In crafting the statutory damages provision of the Lanham Act

noted above, Congress took into account that oftentimes, 'counterfeiters' records are nonexistent,

inadequate or deceptively kept in order to willfully deflate the level of counterfeiting activity actually

engaged in, making proving actual damages in these cases extremely difficult if not impossible.'");

Rodgers v. Anderson, 04 Civ. 1149, 2005 WL 950021 at *2 (S.D.N.Y. Apr. 26, 2005) (Peck, M.J.).3/

3/
See also, e.g., Nike, Inc. v. Top Brand Co., 00 Civ. 8179, 2006 WL 2946472 at *2 (S.D.N.Y.
Feb. 27, 2006), report & rec. adopted, 2006 WL 2884437 (S.D.N.Y. Oct. 6, 2006); Silhouette
Int'l Schmied AG v. Chakhbazian, 04 Civ. 3613, 2004 WL 2211660 at *2 (S.D.N.Y. Oct. 4,
2004) (Peck, M.J.); Gucci Am., Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d 511, 520
(continued...)

H:\OPIN\BURBERRY
 7

Burberry requests that the Court award maximum statutory damages pursuant to

§ 1117(c)(2) because defendants "willfully counterfeit[ed]" Burberry's marks. (Dkt. No. 17:

Burberry Br. at 1.) While defendants did not technically default, they did not respond to the

summary judgment motion or to the inquest on statutory damages. By virtue of their de facto

default, they are deemed to be willful infringers. See, e.g., Chloe v. Zarafshan, 06 Civ. 3140, 2009

WL 2956827 at *7 (S.D.N.Y. Sept. 15, 2009) ("Willfulness may be established by a party's default

because an innocent party would presumably have made an effort to defend itself."); Malletier v.

Carduci Leather Fashions, Inc., 04 Civ. 497, - F. Supp. 2d -, 2009 WL 2568428 at *3 (S.D.N.Y.

Aug. 19, 2009) ("Here, by virtue of its default, [defendant] has admitted [plaintiff]'s allegation that

it acted knowingly and intentionally or with reckless disregard or willful blindness to [plaintiff]'s

rights.").4/

3/
(...continued)
(S.D.N.Y.) ("Congress added the statutory damages provision of the Lanham Act in 1995
because 'counterfeiters' records are frequently nonexistent, inadequate, or deceptively
kept . . ., making proving actual damages in these cases extremely difficult if not
impossible.'") (quoting Senate report), amended in part, 328 F. Supp. 2d 439 (S.D.N.Y.
2004); Tiffany (NJ) Inc. v. Luban, 282 F. Supp. 2d 123, 124 (S.D.N.Y. 2003) (same); Polo
Ralph Lauren, L.P. v. 3M Trading Co., 97 Civ. 4824, 1999 WL 33740332 at *4 (S.D.N.Y.
Apr. 19, 1999) ("It is often the case that 'counterfeiters' records are nonexistent, inadequate
or deceptively kept in order to willfully deflate the level of counterfeiting activity actually
engaged in, making proving actual damages in these cases extremely difficult if not
impossible.'"); Sarah Lee Corp. v. Bags of N.Y., Inc., 36 F. Supp. 2d 161, 165 (S.D.N.Y.
1999) ("Statutory damages are most appropriate when infringer nondisclosure during fact
finding leaves damages uncertain.").
4/
See also, e.g., GAKM Res. LLC v. Jaylyn Sales Inc., 08 Civ. 6030, 2009 WL 2150891 at *6
(S.D.N.Y. July 20, 2009) (for purposes of § 1117(b), "where a defendant defaults, that may
(continued...)

H:\OPIN\BURBERRY
 8

In any event, there is ample evidence before the Court that defendants acted willfully.

"Infringement is willful when '"the defendant had knowledge that [his] conduct represented

infringement or perhaps recklessly disregarded the possibility."'" Hermes Int'l v. Kiernan, No. CV

06-3605, 2008 WL 4163208 at *3 (E.D.N.Y. Aug. 28, 2008) (quoting Kepner-Tregoe, Inc. v. Vroom,

186 F.3d 283, 288 (2d Cir. 1999) (copyright case)); accord, e.g., Island Software and Computer

Serv., Inc. v. Microsoft Corp., 413 F.3d 257, 263 (2d Cir. 2005) ("To prove 'willfulness' under the

Copyright Act, the plaintiff must show (1) that the defendant was actually aware of the infringing

activity, or (2) that the defendant's actions were the result of 'reckless disregard' for, or 'willful

blindness' to, the copyright holder's rights."); Bravado Int'l Group Merch. Servs., Inc. v. Ninna, Inc.,

--- F. Supp. 2d ----, 2009 WL 2707350 at *9 (E.D.N.Y. Aug. 27, 2009); Nike, Inc. v. Top Brand Co.,

00 Civ. 8179, 2005 WL 1654859 at *6 (S.D.N.Y. July 13, 2005). In light of the prior June 30, 2005

settlement agreement where defendants admitted to selling scarves, hats and polo shirts with

counterfeit Burberry marks, but stated it had ceased doing so in 2003 and promised not to do so in

the future (see page 3 above), defendants obviously knew that selling such items with counterfeit

4/
(...continued)
be taken as evidence of willful infringement"); AW Indus., Inc. v. Sleep Well Mattress, Inc.,
No. 07-CV-3969, 2009 WL 485186 at *4 (E.D.N.Y. Feb. 26, 2009) (Defendant "has
defaulted in this case, which deems it a willful infringer."); Gucci Am., Inc. v.
MyReplicaHandbag.com, 07 Civ. 2438, 2008 WL 512789 at *3 (S.D.N.Y. Feb. 26, 2008);
Rodgers v. Anderson, 2005 WL 950021 at *2 ("In this case, defendants have defaulted and
by virtue of their default, are deemed to be willful infringers."); Tiffany (NJ) Inc. v. Luban,
282 F. Supp. 2d at 124 ("By virtue of the default, the [defendant]s' infringement is deemed
willful, . . . ."); 3 Anne Gilson Lalonde & Jerome Gilson, Gilson on Trademarks
§ 14.03(9)(a)(ii)(G) (2009 ed.) ("The failure to appear may itself suggest willfulness or bad
faith.").

H:\OPIN\BURBERRY
 9

Burberry marks infringed Burberry's registered trademarks.5/ E.g., Kepner-Tregoe, Inc. v. Vroom,

186 F.3d at 288 (Copyright infringement was willful where defendant continued to use the "MPO

program" even though defendant knew that the courts in an earlier case had held that the MPO

program infringed plaintiff's copyrights.); Phillip Morris USA Inc. v. Marlboro Express, No.

CV-03-1161, 2005 WL 2076921 at *6 (E.D.N.Y. Aug. 26, 2005) (Defendant's conduct was willful

where it had pled guilty to knowingly and intentionally conspiring to traffic in counterfeit cigarettes

and operated a large counterfeiting operation.); Viacom Int'l Inc. v. Fanzine Int'l, Inc., 98 Civ. 7448,

2001 WL 930248 at *4 (S.D.N.Y. Aug. 16, 2001) (Defendant's conduct was willful where it engaged

in "strikingly similar conduct" after a prior judgment against it.).

Besides setting the cap at $2 million (previously, $1 million) per mark per type of

good and directing that courts award damages that are "just," section 1117(c)(2) does not provide

any guidance for determining the appropriate award in a case involving willful trademark violations.

Malletier v. Carduci Leather Fashions, Inc., 2009 WL 2568428 at *3; accord, e.g., Louis Vuitton

Malletier, S.A. v. LY USA, 2008 WL 5637161 at *1; Gucci Am., Inc. v. MyReplicaHandbag.com,

2008 WL 512789 at *25. "[C]ourts often have looked for guidance to the better developed case law

under the Copyright Act, 17 U.S.C. § 504(c), which permits an award of statutory damages for

willful copyright infringement." Malletier v. Carduci Leather Fashions, Inc., 2009 WL 2568428 at

5/
Although Modda Oggi was not a party to the Settlement Agreement, Moda Oggi was aware
of the Settlement Agreement because Fanning is "intimately involved" with "Moda Oggi's
business dealings," is a Moda Oggi "principal," and is "listed as the contact person for . . .
Moda Oggi . . . in numerous corporate documents." Burberry Ltd. v. Euro Moda, Inc., 2009
WL 1675080 at *18.

H:\OPIN\BURBERRY
 10

*3 (citing cases).6/ "As those cases indicate, where, as here, a defendant is shown to have acted

willfully, a statutory award should incorporate not only a compensatory, but also a punitive

component to discourage further wrongdoing by the defendants and others." Malletier v. Carduci

Leather Fashions, Inc., 2009 WL 2568428 at *3; accord, e.g., Gucci Am., Inc. v.

MyReplicaHandbag.com, 2008 WL 512789 at *3; Polo Ralph Lauren, L.P. v. 3M Trading Co., 1999

WL 33740332 at *5 ("Judged by [the Copyright Act's] standards, an award of statutory damages is

designed to serve both compensatory and punitive purposes."). Courts determining damages

pursuant to § 1117(c)(2) have considered the following factors:

"(1) the expenses saved and the profits reaped; (2) the revenues lost by the
plaintiff; (3) the value of the [trademark]; (4) the deterrent effect on others
besides the defendant; (5) whether the defendant's conduct was innocent or
willful; (6) whether a defendant has cooperated in providing particular
records from which to assess the value of the infringing material produced;
and (7) the potential for discouraging the defendant."

Kenneth Jay Lane, Inc. v. Heavenly Apparel, Inc., 2006 WL 728407 at *6; accord, e.g., Fitzgerald

Publ'g Co. v. Baylor Publ'g Co., 807 F.2d 1110, 1117 (2d Cir. 1986) (in copyright case, directing that

courts should consider the factors listed above in awarding statutory damages for willful copyright

6/
Accord, e.g., Louis Vuitton Malletier, S.A. v. LY USA, 2008 WL 5637161 at *1; Gucci Am.,
Inc. v. MyReplicaHandbag.com, 2008 WL 512789 at *2; Kenneth Jay Lane, Inc. v. Heavenly
Apparel, Inc., 2006 WL 728407 at *6; Rodgers v. Anderson, 2005 WL 950021 at *2;
Silhouette Int'l Schmied AG v. Chakhbazian, 2004 WL 2211660 at *2 & n.1; Gucci Am.,
Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d at 520; Tiffany (NJ) Inc. v. Luban, 282 F.
Supp. 2d at 124-25; Polo Ralph Lauren, L.P. v. 3M Trading Co., 1999 WL 33740332 at *5;
Sarah Lee Corp. v. Bags of N.Y., Inc., 36 F. Supp. 2d at 166-67; 5 J. Thomas McCarthy,
McCarthy on Trademarks & Unfair Competition § 30:95 (2009 ed.) ("The body of case law
developed to interpret the similar statutory damages provision in copyright law should prove
helpful in applying the [§ 1117(c)] counterfeit statutory damages option.").

H:\OPIN\BURBERRY
 11

infringement); Louis Vuitton Malletier, S.A. v. LY USA, 2008 WL 5637161 at *1-2; Gucci Am.,

Inc. v. MyReplicaHandbag.com, 2008 WL 512789 at *2-3; Hermes Int'l v. Kiernan, 2008 WL

4163208 at *4; Gucci Am., Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d at 520; Polo Ralph

Lauren, L.P. v. 3M Trading Co., 1999 WL 33740332 at *5; Tiffany (NJ) Inc. v. Luban, 282 F. Supp.

2d at 125.

Here, a significant award is necessary because the key factors heavily weigh in

Burberry's favor. As to the first two factors, there is nothing in the record about the revenue

defendants earned selling counterfeit Burberry merchandise or whether Burberry lost any revenue

from defendants' infringement. As to the third factor, Burberry's brand and trademarks are highly

valuable. (See page 2 above.) As to the fourth factor, "the goal of deterring similar conduct by other

enterprises requires a substantial award." Louis Vuitton Malletier, S.A. v. LY USA, 2008 WL

5637161 at *2; accord, e.g., Rolex Watch U .S.A., Inc. v. Jones, 99 Civ. 2359, 2002 WL 596354 at

*5 (S.D.N.Y. Apr. 17, 2002). As to the fifth factor, this Court has already found that defendants'

conduct was willful. (See pages 7-9 above.) As to the sixth factor, defendants did not submit any

responses to the summary judgment or statutory damages motions and have not provided records to

assess the value of the infringing material. (See pages 2, 4 above.) As to the seventh factor, a large

award is necessary because the June 2005 Settlement agreement clearly did not deter defendants.

(See page 3 above.)7/ Based particularly on the fifth and seventh factors – defendants' willfulness

7/
Euro Moda paid Burberry $25,000 pursuant to the prior settlement agreement. (Silva Aff.
Ex. 6: 6/05 Burberry-Euro Moda/Fanning Settlement Agmt. ¶ 4.)

H:\OPIN\BURBERRY
 12

and their continued counterfeiting after the prior settlement – I find that a substantial award is

necessary and justified. See, e.g., Louis Vuitton Malletier, S.A. v. LY USA, 2008 WL 5637161 at

*2-3; Gucci Am., Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d at 522 (Defendant "knew he was

under an injunction not to sell counterfeit merchandise" but "sold at least three more counterfeit

Gucci items within a month of the Court's injunction," justifying substantial statutory damage

award.); Polo Ralph Lauren, L.P. v. 3M Trading Co., 1999 WL 33740332 at *7 ("[T]he key

consideration is the persistence of defendants' defiance of the requirements of the Lanham Act and

of prior court orders enjoining further infringements."); Sara Lee Corp. v. Bags of NY, Inc., 36

F. Supp. 2d at 170 ("The failure of earlier, milder measures against the defendants highlight both the

need for stronger deterence and the need to redress the defendants' repeated efforts to defy and

mislead the court.").

Despite these factors heavily weighing in Burberry's favor, I do not believe it

appropriate to award maximum statutory damages on a per mark per type of good basis ($1 million

times three marks times four types of goods, for a total of $12 million, much less the $24 million that

Burberry requested). Very few courts in this Circuit have awarded maximum statutory damages on

a per mark per type of good basis. See, e.g., Gucci Am., Inc. v. MyReplicaHandbag.com, 2008 WL

512789 at *5 ("In determining statutory damages, one judge has awarded the maximum amount of

$1,000,000 per mark per type of merchandise. . . . However, most judges have issued awards well

H:\OPIN\BURBERRY
 13

below the maximums available on the basis of per-mark-per-type-of-goods.").8/ "In each of those

cases [awarding maximum statutory damages], there was reason to believe that the defendant's sales

were substantial. For example, in Nike there was evidence that the defendant's operations 'led to

the production of millions of infringing goods.'" Malletier v. Carduci Leather Fashions, Inc., 2009

WL 2568428 at *4.

Most judges have issued awards far below the statutory maximum, particularly where

the plaintiff does not have concrete information about the defendant's actual sales figures and profits

and the estimate of plaintiff's lost revenue and defendant's profits is not in the millions of dollars.

See, e.g. Ermenegildo Zenga Corp. v. 56th St. Menswear, Inc., 06 Civ. 7827, 2008 WL 4449533 at

*5-6 (S.D.N.Y. Oct. 2, 2008) ("[G]iven that defendant apparently ran a business substantial enough

to allow it to rent space in a highly-trafficked area of Manhattan, the request for $200,000 per

counterfeit mark per type of goods sold is appropriate. Courts have awarded similar damages in

other cases in which there was little information as to the scope or circumstances of a defendant's

8/
The Gucci court cited Nike, Inc. v. Top Brand Co., 2006 WL 2946472 at *2-3 (awarding $1
million per mark per type of good for a total of $12 million where defendant infringed four
Niketrademarks on three different types of goods, i.e., t-shirts, sweatshirts and polo shirts);
Gucci Am., Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d at 520-21 & n.8 (awarding $2
million for two infringed marks, but noting that "the maximum statutory damages" were
"arguably higher than $2 million" on a per mark per type of goods basis), and Phillip Morris
USA, Inc. v. Marlboro Express, 2005 WL 2076921 at *6 (awarding $4 million for four
infringed marks where defendant's counterfeiting operation earned approximately $4,773,790
from at least 200,000 cigarette cartons)); see also, e.g., Malletier v. Carduci Leather
Fashions, Inc., 2009 WL 2568428 at *4 ("As [plaintiff] correctly notes, there also are cases
in the Second Circuit in which courts have awarded $1 million for each trademark
infringed.") (citing same three cases).

H:\OPIN\BURBERRY
 14

infringement." Award of $1 million based on five marks.); Pitbull Prods., Inc. v. Universal

Netmedia, Inc., 07 Civ. 1784, 2007 WL 3287368 at *3-4 (S.D.N.Y. Nov. 7, 2007) (Where

defendants' conduct was willful and defendants' failure to respond to default judgment papers "left

the Court with no information as to any of the factors relating to the defendants' circumstances," the

Court declined to award maximum statutory damages because, unlike the cases awarding maximum

statutory damages that "included documentation addressing the volume or potential value of

infringing goods," plaintiff did not "provide[] any rationale for awarding the maximum of

$1,000,000 per mark. . . . [T]here is no record whatsoever regarding the nature of the defendants'

infringement, estimates of the defendants' earnings, or possible losses to [plaintiff] arising from the

defendants' conduct. . . . Taking into account the defendants' failure to submit to this Court any

documentation from which to determine damages, the willfulness of . . . their conduct, and the

deterrent effect a damages award would have on both the defendants and others, the Court believes

that $250,000 per mark [for two marks] is sufficient to compensate [plaintiff] for losses it suffered

and to deter both the defendants and others from infringing on those marks in the future. Courts have

awarded similar damages in other cases in which there was little information as to the defendants'

infringement."); Kenneth Jay Lane, Inc. v. Heavenly Apparel, Inc., 2006 WL 728407 at *6 (Where

plaintiff did not provide the Court with any information about defendant's "business," the "market

in which [defendant] sold . . . counterfeit products, or any estimate of the volume of products bearing

the plaintiff's marks sold by the defendant," the Court awarded $125,000 per infringed mark because

that amount would sufficiently "impress upon [defendant] that there are consequences for its

H:\OPIN\BURBERRY
 15

misconduct" and would "serve as a specific deterrent to [defendant] and as a general deterrent to

others who might contemplate engaging in infringing behavior in the future."); Rodgers v. Anderson,

2005 WL 950021 at *3 ("While [plaintiff] seeks $500,000, he has not provided any basis for that

figure nor any cases in analogous situations that would support such an amount. The Court believes

that $250,000 in statutory damages based on willful infringement is sufficient and appropriate to

deter defendants and others."); Polo Ralph Lauren, L.P. v. 3M Trading Co., 1999 WL 33740332 at

*7 ("For our purposes the key consideration is the persistence of defendants' defiance of the

requirements of the Lanham Act and of prior court orders enjoining further infringements. We also

take into account, however, those gaps in the record that plaintiffs might have filled, at least to some

degree, despite defendants' default, and the fact that defendants themselves apparently own only one

small storefront. Under the circumstances, we conclude that a statutory damage award of $25,000.00

for each trademark proven to have been counterfeited should provide sufficient deterrence by

denying defendants the fruits of their wrongful conduct while at the same time compensating

plaintiffs for whatever damage their marks may have suffered by virtue of the distribution of

counterfeit items through the premises in question."); see also, e.g., Louis Vuitton Malletier, S.A.

v. LY USA, 2008 WL 5637161 at *1, 3 (Where defendants willfully infringed Louis Vuitton's

trademarks by selling leather bags with five counterfeit marks and leather boxes with three

counterfeit marks, the court held that the "seven factors justify a substantial award of statutory

damages" and awarded $500,000 "for the four basic trademarks in issue" on the leather bags,

"$250,000 . . . for the remaining composite trademark" on the bags, and "$250,000 for each of the

three infringements on the second type of goods, leather boxes" for a total of $3 million.); Gucci

H:\OPIN\BURBERRY
 16

Am., Inc. v. MyReplicaHandbag.com, 2008 WL 512789 at *5 (awarding $100,000 per mark per type

of good for a total of $4.3 million); Tiffany v. Luban, 282 F. Supp. 2d at 125 (awarding a total sum

of $550,000 for 28 separate counterfeit items, each of which infringed at least four trademarks where

possible maximum award would have exceeded $100 million.); Rolex Watch U.S.A., Inc. v. Brown,

01 Civ. 9155, 2002 WL 1226863 at *2 (S.D.N.Y. June 5, 2002) (Peck, M.J.) (awarding the

maximum statutory damage of $1 million, but with no multiplication for multiple marks.).

Based on upon defendants' willfulness and the lack of information about defendants'

profits or Burberry's lost revenue, I believe that an award of $1 million times the four types of goods,

for a total of $4 million, is appropriate.

CONCLUSION

For the reasons set forth above, the Court should award Burberry statutory trademark

damages of $4 million.

FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION

Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil

Procedure, the parties shall have fourteen (14) days from service of this Report to file written

objections. See also Fed. R. Civ. P. 6.9/ Such objections (and any responses to objections) shall be

filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable

Colleen McMahon, 500 Pearl Street, Room 1350, and to my chambers, 500 Pearl Street, Room 1370.

9/
If the pro se defendant requires copies of any of the cases reported only in Westlaw, plaintiff
should request copies from defense counsel. See Lebron v. Sanders, 557 F.3d 76, 79 (2d Cir.
2009); SDNY-EDNY Local Civil Rule 7.1(c)

H:\OPIN\BURBERRY