Decision Burberry Statutory Damages

H:\OPIN\BURBERRY

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -BURBERRY LIMITED, a United KingdomCorporation & BURBERRY LIMITED, a New York Corporation,Plaintiffs,-against-EURO MODA, INC., MODA OGGI, INC. &JOHN FANNING,Defendants.- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x:::::::x08 Civ. 5781 (CM) (AJP)

REPORT AND RECOMMENDATIONANDREW 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 JohnFanning for selling scarves, hats, polo shirts and handbags bearing three counterfeit Burberryregistered trademarks: the Burberry name, the Burberry Check design and the Burberry "EquestrianKnight" on horseback device. SeeBurberry Ltd. v. Euro Moda, Inc., 08 Civ. 5781, 2009 WL1675080 at *1-3 (S.D.N.Y. June 10, 2009) (McMahon, D.J.). On June 10, 2009, Judge McMahongranted Burberry's summary judgment motion and issued a permanent injunction against alldefendants. Id., 2009 WL 1675080 at *1, 20. Judge McMahon referred the matter to me for a

2

H:\OPIN\BURBERRY

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

FACTS

Although familiarity with the facts recited in Judge McMahon's summary judgementdecision 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 oneof the "Top 100 Brands" in 2007, calculating its "brand value as over $3.2 billion dollars." BurberryLtd. v. Euro Moda, Inc., 08 Civ. 5781, 2009 WL 1675080 at *1-2 (S.D.N.Y. June 10, 2009). TheUnited States Patent and Trademark Office ("USPTO") "honored Burberry in 2008 by selecting itto 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 theUSPTO: the Burberry name, the Burberry Check pattern and the Burberry "Equestrian Knight" onhorseback device (collectively, the "Burberry Marks"). Id., 2009 WL 1675080 at *1-2. Burberry

3

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 WL1675080 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

has used all three Burberry Marks on their "products continuously since their registrations with theUSPTO." Id.On June 30, 2005, Fanning and Euro Moda executed a settlement agreement withBurberry 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 inthe settlement agreement that they had "purchased and sold nearly 75,000 items - jackets, lambs woolscarves, 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 theywould 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 settlementagreement. Id., 2009 WL 1675080 at *3.A few months later, Burberry discovered that Cohoes Fashions retail stores wereselling merchandise bearing counterfeit Burberry marks.

1/

Burberry Ltd. v. Euro Moda, Inc., 2009WL 1675080 at *3. In June 2006, Burberry sued Cohoes Fashions and through discovery in thatlitigation learned that, between 2004 and September 19, 2005, Moda Oggi and Euro Moda hadsupplied Cohoes Fashions with 6,166 scarves, 556 bucket hats and 2,150 polo shirts bearing