## Facts

- Coach, Inc. and Coach Services, Inc. (Coach) manufactured and sold luxury fashion accessories through retail stores and other channels in the United States.
- Coach owned federally registered trademarks used on its products, including the “Coach,” “Signature C,” and “Coach Op Art” marks.
- Fashion Paradise, LLC (Fashion) operated a retail store in Atlantic City, New Jersey, and Naman Rafi was Fashion’s registered owner.
- Coach received information from a private investigator that Fashion and Rafi were selling counterfeit Coach-branded items, including handbags, wallets, scarves, belts, and shoes.
- As an example of the alleged counterfeiting, the investigator reported that Fashion and Rafi sold a $16.04 imitation of a $98 Coach belt bearing multiple Coach marks.
- Coach alleged defendants duplicated Coach’s marks to benefit from Coach’s reputation and goodwill, and that defendants lacked authorization to use any Coach trademarks.
- Coach sued Fashion and Rafi asserting ten causes of action, including Lanham Act trademark counterfeiting and infringement, trade dress infringement, false designation of origin/false advertising, dilution, copyright infringement, and parallel New Jersey and common-law claims, plus unjust enrichment.
- Defendants were properly served with the amended complaint but did not answer or otherwise appear.
- The Clerk entered default under Rule 55(a), and Coach moved for default judgment under Rule 55(b)(2), seeking injunctive relief, statutory damages, and attorney’s fees, investigator fees, and costs.

## Issues

1. Whether the court should enter default judgment under Fed. R. Civ. P. 55(b)(2) against Fashion and Rafi after they failed to plead or otherwise defend following proper service.
2. Whether the well-pleaded allegations, taken as admitted on default, established liability for Coach’s federal trademark counterfeiting and infringement claims and the other pleaded federal and state claims.
3. What remedies were appropriate on default, including a permanent injunction, statutory damages (trademark and copyright), and an award of attorney’s fees, investigator fees, and costs.

## Decision

- The court granted Coach’s motion for default judgment against Fashion Paradise, LLC and Naman Rafi.
- The court concluded the admitted allegations established liability for trademark counterfeiting and related Lanham Act claims, as well as Coach’s other pleaded claims, including copyright infringement and New Jersey and common-law claims.
- The court entered a permanent injunction barring defendants from manufacturing, importing, exporting, advertising, marketing, distributing, or selling counterfeit goods bearing Coach’s marks (and from other acts that would infringe Coach’s trademark and copyright rights).
- The court awarded statutory damages under the Lanham Act’s counterfeiting provision and statutory damages for copyright infringement, and it awarded attorney’s fees, investigator fees, and costs (finding the case warranted a fee award under the Lanham Act).

## Legal Principles

- Entry of default judgment under Rule 55(b)(2) is committed to the district court’s discretion; it is not automatic.
- After default, well-pleaded factual allegations (other than damages) are treated as admitted, but the court must still confirm that those facts state viable claims for relief.
- In deciding whether default judgment is appropriate, courts in the Third Circuit commonly consider: (1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether the defendant’s delay is due to culpable conduct.
- Lanham Act trademark counterfeiting requires infringement of a registered mark and intentional use of a counterfeit mark (or willful blindness) in connection with goods or services.
- Statutory damages for trademark counterfeiting under 15 U.S.C. § 1117(c) may be awarded when actual damages and profits are hard to measure; the amount may reflect deterrence and the defendant’s willfulness.
- Statutory damages for copyright infringement may be awarded under 17 U.S.C. § 504(c) based on the nature of the infringement, including willfulness, and may be set without proof of actual damages.
- Permanent injunctive relief may issue when legal remedies are insufficient and future infringement is likely; in trademark cases, consumer confusion and harm to goodwill support injunctive relief.
- Attorney’s fees may be awarded in “exceptional” Lanham Act cases, including willful counterfeiting and litigation conduct such as failure to appear after service; reasonable investigator fees and costs may also be awarded where supported and connected to proving infringement.

## Conclusion

The district court entered default judgment because defendants were properly served yet failed to respond, the admitted allegations stated claims for trademark counterfeiting and other violations, and effective relief required a permanent injunction along with statutory damages and a fee-and-cost award.


Coach, Inc. v. Fashion Paradise, LLC, 2012 U.S. Dist. LEXIS 7429 (2012)