United States District Court, E.D. Michigan, Southern Division
COACH, INC. and COACH SERVICES, INC., Plaintiffs,
SOURCE II, INC. and CERHUE ANDRE WALKER, individually and d/b/a SOURCE II, INC., Defendants.
OPINION AND ORDER AWARDING STATUTORY DAMAGES
H. CLELAND UNITED STATES DISTRICT JUDGE
a counterfeit product case. Already proven is the gross and
intentional theft-by-infringement of the intellectual
property rights of the owners of world-famous trademarks. All
that remains for the court is to calculate the money damages
due the lawful owners of the property in question.
Coach, Inc. and Coach Services, Inc. (collectively,
“Coach”) brought this trademark infringement
action to recover damages from Defendants Source II, Inc. and
Cerhue Andre Walker, alleging that the Defendants offered for
sale counterfeit Coach products. On September 13, 2016, the
court granted in part Plaintiffs' Motion for Partial
Summary Judgment as to Defendants' liability and denied
Defendants' Motion for Summary Judgment. (Dkt. # 37.) In
a subsequent informal status conference, Plaintiffs indicated
to the court that they would be electing to recover statutory
damages instead of actual damages as allowed under the Lanham
Act, 15 U.S.C. § 1117(c), which provides:
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), an award
of statutory damages for any such use in connection with the
sale, offering for sale, or distribution of goods or services
. . . .
light of Plaintiffs' election, the court directed
Plaintiffs to provide supplemental briefing addressing the
statutory damages to which they believed they were entitled.
(Dkt. # 39, Pg. ID 647.) In their brief, Plaintiffs request a
finding that Defendants willfully infringed their marks, an
award of $2, 000, 000, and a permanent injunction. (Dkt. #
40.) Defendants filed a response, (Dkt. # 43), to which
Plaintiffs replied, (Dkt. # 45), and the court allowed
Defendants a sur-reply (Dkt. # 47). The court has reviewed
all the relevant briefing, and finds a hearing unnecessary.
See E.D. Mich. LR 7.1(f)(2). For the following
reasons, the court will determine that no additional
fact-finding is necessary and will award Plaintiffs $300,
otherwise noted, the following facts are undisputed. Coach is
a venerable American business that manufactures and sells
fine leather products and other accessories. (Dkt. # 24, Pg.
ID 184). Coach owns an extensive portfolio of well-known,
easily recognized, and federally registered trademarks.
(Id.) Coach has expended substantial resources
developing, advertising, and otherwise promoting these marks.
(Id.) As a result, consumers readily identify
merchandise bearing Coach marks as being of high quality and
originating with Coach. (Id.)
Cerhue Andre Walker is the sole member and owner of Defendant
Source II, Inc., which operates the clothing and accessory
store, The Source Apparel. (Dkt. # 24, Pg. ID 192.)
Defendants are not licensed or otherwise authorized to use
Coach's marks. (Dkt. # 8, Pg. ID 55.)
showroom, while simulating a legitimate business, was in fact
a “front” for a hidden backroom where counterfeit
apparel and accessories were displayed and offered for sale.
(Dkt. #31-5, Pg. ID 544.) On December 4, 2014, law
enforcement officials executed a search warrant at The Source
Apparel and seized thousands of counterfeit handbags,
wallets, and accessories worth approximately $1, 671, 040.
(Dkt. # 23, Pg. ID 140; Dkt. # 24, Pg. ID 192-93.) Four
counterfeit Coach purses were among the products seized.
(Dkt. # 23-5, Pg. ID 164). James Schoenherr, a Coach
investigator working with law enforcement examined the purses
and concluded they were counterfeit. (Dkt. #23-1, Pg. ID
such as that proved in this case is a problem of apparently
massive proportion. “In 2002, American copyright based
industries sustained more than $9 billion in losses”
from counterfeiting and piracy. See International
Anticounterfeiting Coalition, White Paper: The Negative
Consequences of Intellectual Property Theft: Economic Harm,
Threats to the Public Health and Safety, and Links to
Organized Crime and Terrorist Organizations (January
2005), at 4. The Act authorizes the court to award
statutory damages of “not less than $1, 000 or more
than $200, 000 per counterfeit mark per type of good . . .
offered for sale . . . as the court considers just[, ]”
which increases to “not more than $2, 000, 000 per
counterfeit mark per type of good” if the use of the
counterfeit mark was “willful.” Id. The
language of the provision places the amount of the award
squarely within the discretion of the court. Id.
Defendants request a finding of willfulness, an award of $2,
000, 000, and a permanent injunction. (Dkt. # 40.)
The marks at issue
unusual record in this case presents a threshold issue. The
court has already found that Defendants are liable for
trademark infringement. (Dkt. # 37.) Defendant Source II, by
failing to respond to Plaintiffs' requests for admission,
has been deemed to admit that it offered for sale products,
including “handbags and a wallet, ” bearing
counterfeits of registered Coach trademarks. (Dkt. # 27-6.)
Defendant Walker, however, did respond to the requests, and
has provided a sworn affidavit stating that “no Coach
wallets were on display and/or for sale” at the time of
the raid. (Dkt. # 23-7, Pg. ID 178.) The court has not yet
addressed the wallet issue-the purses alone were sufficient
to find that Defendants were liable and “the degree of
Defendants' liability is a damages question that remains
unresolved.” (Dkt. # 39, Pg. ID 647.) However, the
record lacks any evidence to show which and how many
registered marks were on the purses.
second affidavit, attached to Defendants' sur-reply on
statutory damages, Defendant Walker states that he believes
the wallet “was found at Source II well prior to the
December 4, 2014 seizure by the confidential informant when
Source II re-located from its previous location at Snyder
Sales and was part of an accumulation of old goods stored in
a bin and which was moved to the Source II location.”
(Dkt. # 47, Pg. ID 744.) Indeed, according to the warrant
affidavit, a confidential informant purchased twenty-eight
items from Source II's prior location, including a Coach
wallet, on February 21, 2014. (Dkt. # 27-2, Pg. ID 265.) Per
the warrant ...