## Facts

- Coach, Inc. and Coach Services, Inc. (collectively, “Coach”) sell luxury fashion accessories and own registered Coach trademarks, protectable trade dress, and copyrights in certain Coach designs.
- Ocean Point Gifts (OPG) operated a retail store on the Atlantic City, New Jersey Boardwalk (1631 Boardwalk) and was not authorized to use Coach’s marks or designs.
- Coach obtained evidence through a private investigator (Investigator Smith) that OPG was selling counterfeit Coach merchandise.
- Investigator Smith purchased a “Coach” wallet for $12.99 that appeared to imitate a genuine Coach wallet that retailed for about $200 and included a paper insert stating “The Coach Signature Collection” with Coach customer-service contact information.
- Investigator Smith observed additional Coach-branded items displayed for sale, including 25 counterfeit bags priced at $24.99 each, about 60 handbags priced from $39.00 to $59.00 each, and five matching scarf-and-hat sets (price not stated).
- Coach served OPG with the complaint on August 23, 2009; nearly three months later, on November 20, 2009, the investigator returned and observed that OPG was still selling counterfeit Coach items.
- Coach filed a multi-count complaint asserting claims under the Lanham Act for trademark counterfeiting and infringement, trade dress infringement, false designation of origin, and dilution; copyright infringement under the Copyright Act; and related New Jersey claims.
- OPG did not appear or answer. The Clerk entered default, and Coach moved for default judgment, requesting injunctive relief and $2 million in statutory damages, as well as fees and costs.

## Issues

1. Whether default judgment under Federal Rule of Civil Procedure 55(b)(2) was appropriate given OPG’s failure to plead or otherwise defend.
2. Whether the well-pleaded allegations and supporting submissions established liability for trademark counterfeiting and infringement, trade dress infringement and false designation of origin, dilution, copyright infringement, and related New Jersey claims.
3. Whether Coach was entitled to a permanent injunction to prevent continued counterfeiting and consumer confusion.
4. What statutory damages and fee/cost awards were appropriate in light of willfulness, the apparent scale of sales, and deterrence.

## Decision

- The court granted Coach’s motion for default judgment against Ocean Point Gifts.
- The court accepted the complaint’s well-pleaded factual allegations as true (except as to damages) and concluded that Coach established liability for its federal intellectual property claims and overlapping state-law claims based on the admitted allegations and the investigator evidence.
- The court entered a permanent injunction barring OPG from using Coach’s marks and trade dress, and from manufacturing, distributing, advertising, or selling counterfeit Coach merchandise, with related compliance requirements directed at stopping further infringement.
- The court awarded statutory damages that were substantially less than the $2 million Coach requested.
- The court also awarded monetary relief for litigation expenses, including attorney’s fees, investigator fees, and costs.

## Legal Principles

- On a motion for default judgment, courts accept well-pleaded allegations as true as to liability (not damages) and determine whether the unchallenged pleadings and submissions state claims for relief.
- Default judgment is discretionary; courts consider factors such as prejudice to the plaintiff if judgment is denied, whether the defendant appears to have a litigable defense, and the defendant’s culpability in failing to respond.
- Trademark counterfeiting and infringement under 15 U.S.C. § 1114 require ownership of valid marks and unauthorized use in commerce of identical or substantially indistinguishable marks on the same or similar goods in a manner likely to cause consumer confusion; evidence of low prices, point-of-sale presentation, and continued sales after notice supports an inference of knowing conduct.
- Trade dress infringement and false designation of origin under 15 U.S.C. § 1125(a) may be shown where the defendant’s overall packaging or product presentation imitates a source-identifying look and is likely to cause confusion about origin or sponsorship.
- Dilution under 15 U.S.C. § 1125(c) can be established where a famous mark is used in a way that impairs distinctiveness (blurring) or harms reputation (tarnishment), including through sales of cheap counterfeit goods associated with the famous mark.
- Copyright infringement requires ownership of valid copyrights and unauthorized reproduction, distribution, or display of protectable elements; unopposed allegations and investigative proof of near-exact copying can satisfy these elements at the default stage.
- Permanent injunctive relief is appropriate where ongoing infringement threatens loss of control over brand reputation and consumer confusion, monetary relief alone is insufficient, the defendant lacks a legitimate interest in continuing the conduct, and the public interest favors accurate source identification.
- Statutory damages for willful counterfeiting (15 U.S.C. § 1117(c)) and statutory damages for copyright infringement (17 U.S.C. § 504(c)) are set in the court’s discretion to reflect the nature and scale of infringement and to deter similar conduct, including by sellers operating in retail tourist markets.

## Conclusion

Coach obtained default judgment after showing, through investigator evidence, that a Boardwalk retailer sold counterfeit Coach merchandise at prices far below genuine goods and continued doing so after service of the complaint; the court issued a permanent injunction and awarded statutory damages and litigation-related fees and costs in an amount well below the $2 million sought.


Coach, Inc. v. Ocean Point Gifts, 2010 WL 2521444 (2010)