Study Logic LLC v. Clear Net Plus Inc. et al, No. 1:2011cv04343 - Document 32 (E.D.N.Y. 2012)

Court Description: MEMORANDUM AND ORDER granting 13 Motion for Default Judgment. The Court respectfully recommends that the plaintiff be awarded: $60,000 in enhanced damages ($20,000 in statutory damages trebled); $50 for New York State law violatio ns; $4,500 for breach of contract; $9,780.00 in attorneys fees; and $605.64 in costs, for a total judgment against the defendants of $74,935.64. Further, the Court respectfully recommends that plaintiffs request for a permanent injunction ordering defendants to transfer the domain and desist from using the Study Logic mark be granted. So Ordered by Magistrate Judge Cheryl L. Pollak on 9/21/2012. (Klein, Jennifer)

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Study Logic LLC v. Clear Net Plus Inc. et al Doc. 32 UNITED STATES DlSTRlCT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------)( STUDY LOGIC, LLC, Plaintiff, - against- MEMORANDUM AND ORDER 11 CV 4343 (CLP) CLEAR NET PLUS, INC., SAFETY SHIELD, INC., and ISAAC FROMER, aka YITZCHOK FROMER aka YEVGEN FROMER aka YITZCHOK ISAAC FROMER, Defendants. ----------------------------------------------------------------)( On September 9, 2011, plaintiff Study Logic LLC ("Study I-Ogic") commenced this action against defendants Clear Net Plus Inc. ('"Clear Net"), Safety Shield, Inc. ("Safety Shield") (collectively, "corporate defendants"), and Isaac Fromer ("Fromer" or "individual defendant") (collectively, '"defendants"), alleging claims for unfair competition and false designation of origin in violation of IS U.S.c. § 1125(a), trademark dilution in violation of IS U.S.c. § 112S(c), lrademark cyberpiraey in violation of 15 U.S.C. § I 125(d), common law claims ofunfair competition, violations of New York General Business Law §§ 349 and 360-1, breach of contract, and breacb of fiduciary duty. Plaintiff also claims that the court should pierce the corporate veil by allowing plaintiff to collect damages from defendant Fromer in his personal capacity. Despite proper service. defendants failed to answer or otherwise move in response to the Complain!. On 13, 2011, the Clerk of Court entered a default as 10 each oflhc defendants and thereafter, plainlift"movcd for a default judgment. On January 4, 2012, the district court issued an Order directing the parties to notifY the court if they objected to the case Dockets.Justia.com being reassigned to the undersigned to decide damages. On January 4, 2012, plaintiff consented to the reassignment, and when no objections were received from defendants, the case Wa.'S reassigned to the undersigned Magistrate Judge. This Court then issued an Order, dated January 24, 2012, requiring the submission of any additional papers relating to damages by February 24, 2012. An inquest hearing was held on April 18, 2012, at which defendants failed to appear. Having received no submissions Irom defendants, the Court proceeds to consider plaintiff's request for damages and injunctive relief based on the papers filed and the evidence presented at the hearing. For the reasons set forth below, the Court respectfully recommends that default judgment be granted and that plaintifi'be awarded $74,935.64. The Court also Orders defendants to desist from using the studylogic mark and to transfer the ","",w,studylogicdata.com domain to plaintifi·. FACTUAL BACKGROUND Plaintiff Study Logic is a New York corporati(m, with its principal place of business in Cedarhurst, N.Y. (Comp!.'" 6). Study Logic is a market research finn, specializing in data research for the food and beverage industries. (.!J.1. 11; Nahmias Oed.' 4). According to the Complaint, Study Logic uses the trademark "studylogic" in its business and on all of its advertising, and it has done so since the finn's inception. (Comp!. 14). Plaintiff alleges that it 'Citations to '·Comp!." refer to plaintiff's Complaint tiled on September 9, 2011. 'Citations to "Nahmias Oed." refer to the Declaration ofSamud Nahmias, Executive Vice President and Chief Executive Officer for Study Logic, in Support of Plaintiffs Motion fur Default Judgment and Permanent Injunction, dated November 30, 2011. 2 has nwnerous domestic and foreign clients in the food and beverage industries who recogni7.e the name "Study Logic" (id. 12), that the mark "studylogic" has gained national and international renown in the industries <.i.d.c" 16; Nahmias Decl. 4), and that it has become inherently distinctive through plaintiff's efforts. (Comp!. 17). Plaintiff alleges that through the exclusive use of the "studylogic" mark. plaintiff has built up its narne and reputation <.i.d.c 18), and indeed, has been quoted in multiple business outlets due to its brand narne and expertise. (til 13; Nahmias Dec!. 6). Plaintiff alleges that the mark has been in its exclusive and continuous usc for more than five years (Compl. 17), and that there is currently an application pending before the United States Patent and Trademark Office ("USPTO") for federal registration of the mark. ilil 15; Nahmias Dec!. 5). Plaintiff claims that defendants Clear Net and Satcty Shield' are New York corporations, each listing a principal place of business at 29 Church Avenue, Brooklyn, N.Y. (Compl. 7, 8). Defendant Fromer is alleged to be the director, ol1ieer, andlor controlling shareholder of both corporate entities during the relevant time period. ([d. 9). Plaintiff alleges that dclcndant Fromer has been managing the affairs of Clear Net and Safety Shield without regard to corporate structure and that he has used the assets of the corporations to further his own personal interests and to avoid personal liability for his infringing activities. (ld. 10). Plaintiff alleges that in or around March 2006, it engaged defendant Fromer to build and register a website for Study I.ogie under the domain narne www.studylogicdata.com (the "domain") for onc of Study Logic's clients in the coffee and tea industry (the "Project'"). (til 'According to the Complaint. defendant Safety Shield's corporate status is currently inactive; a Dissolution by Proclamation/Anullment was filed on or about April 27, 2011. (CampI. 8). 3 19; Nahmias Decl. 9, Ex, F), According to the Complaint, Fromer insisted that thc work contract and the nondisclosure agreemcnt for thc Projc<:t be madc bctwcen plaintiff and Safety Shield, (Compl. 20; Nahmias Decl, 10; see Nahmias Decl., Ex. 0). Plaintiff asserts that Fromer originally agreed to complete the Project for $1 ,500 (Nahmias Decl. II), but he was eventually paid a total ofapproximatcly $4,500 for the work. (Id. 13,' Ex. J). Unbeknownst to plaintiff, Safety Shield was not in the business of building corporate websites; instead, it manufactured, imported, or marketed persnnal health and safety products. (Compl. 21; Nahmias Decl. 11). Plaintiff alleges that despite the fact that Safety Shield was named as a party to the contract and nondisclosure agreement, defendant Fromer never used Safety Shield's letterhead, email, or any other indicia of the company with respc<:t to the Project; all communications were through Fromer's personal email address and cell phone. (Compl. 22,23; Nahmias Dc<:l. 11). Although Fromer was to register the domain in Study Logic's name, Fromer told plaintiff that he would register it in his own name and then transfer the domain to plaintiff once the Project was complete. (Compl. 24, 25; Nahmias Dec!. 10). On or around April 2, 2006, Fromer is alleged to have registered the domain under the name of Safety Shield, with Fromer as the Registrant and Administrator. (Compl. 26). Fromer also listed a Post Offiee Box as the registration address, instead of Safety Shield's address. (!l;!.) Plaintiff alleges that, once Fromer completed the Project, he failed to transfer the domain to plaintiff and instead kept it in Safety Shield's name. (Id. 27). Plaintiff alleges that in Or around April 2006, plaintiff discovered that defendant Fromer 'The Complaint alleges that Fromer was paid approximately $6,000. (Compl. 4 19). was using the domain to advertise f(lr Nadin Tea and Coffee ("Nadin"), a Russian tea and cnffee brand that plaintitTbelieves t(l have been associated with defendant Fromer. (Comp!. 1[ 63). When plaintiffs corporate elient saw the advertisements fnr Nadin nn the website that they had contracted with plaintiff to build for them, plaintiff contacted defendant Fromer. ([d. 1[ 65). Plaintiff claims that Fromer ignored their communication but removed the advertisements for Nadin soon after. (lit. 66). Plaintiff alleges that, in the summer (lf200S, during the course of updating its technology, it learned that it could not change the DNS settings for the website because the domain was still registered under the defendant Safety Shield's name, (Compl. 28-31; Nahmias Oed. '" 15). Mr. Nahmias claims that it was not until August 2008 that plaintiff discovered that Fromer had failed to transfer the domain. (Nahmias DecL 1[ 14). On August 8, 2008, after plaintiff received no response to phone calls and an email t(l Fromer requesting that he transfer the domain name as previously agreed, plaintiff proceeded to register the d(lmain www.smdylogicdata.net(the .. new domain"). (Compl."[ 33; Nahmias Decl. 1[ 15, Ex. K). Plaintiffthereaf'ter used hath the new and original until the original site stopped working in or around October 2009.' (Compl. 33,34; Nahmias Oed." 16). Plaimiffalleges that unbeknownst to it, Fromer re-registered the original domain with a new registrar, Enom, Inc. ("Enom"), under Safety Shield's name and cut off all functionality to the site in or around October 2009." (Compl. 1[ 36; Nahmias Decl.1[ 17). Also at that time, 'The C(lmplaint alleges that the original website stopped working in or around November 2009. (Compl. 34). "The Complaint alleges that defendant Fromer re-registered the website with Enom in or around November 2009. (C(lmp!. 0: 36). 5 Safety Shield began advertising its registration services in the WI lOIS database enlry for www.studylogicdata.com.listingFromer·semailaddressas its contact information. (Compl. 37). Continuing until February 2011, the WHOIS database entry for the domaio at times advertised Safety Shield's registration services and advised viewers to visit Safety Shield's website. ([2-.; Nahmias Dec!. 17). Plaintiff alleges that on or around March 2, 2011, defendant Fromer transferred the ""'-"W,studylogicdata.com domain from defendant Safety Shield to defendant Clear Net, which then placed the domain up for salc on ""'-"W,sedo.co.uk ("Sedo"), a website that serves as a marketplace for buying and selling domains and websites. (Comp!. 38-40; Nahmias Decl. 18, Ex. L). Defendants allegedly continued to advertise for therrn;elves io the WIIOIS dalabasc entry for the domain, but they altered the advertisement to direct viewers to Clear Nct's website instead of Safety Shield's site. (Compl. 42). On or around July 27, 2011, after plaintiff learned that Fromer was attempting to sell the domain, plaintiffs counsel contacted Fromer and informed him that he was in violation of state and federal intellectual property laws and in breach orhis fiduciary duties as plaintiffs agent. (lll.. 43; Nahmias Ded. 19, Ex, M). On Augusl4, 2011, Fromercontactcd plaintiff via telephone to respond to plaintiffs demand that he transfer the domain; during this conversation, Fromer indicatcd that he would transfer the name if plaintiff would reimburse him for renewal and transfer fees. (Compl. 'Ii 44; Nahmias Decl. 19, Ex. M). Plaintiff alleges that it was nevcr informed by Fromer ofthc expiration and renewals of the site,' but plaintiff nevertheless agreed 'According to plaintiff, Fromer originally purchased only one year of domain registration, which was renewed on April 2, 2007 and April 2, 2008. (lll.. 45). When the site was transferred to Enom on April 2, 2009, defendant purchased two years of domain registration, 6 to reimburse Fromer, subject to prooftbat tbe renewal fees were actually paid. (CampI. 46, 47; Nahmias Dccl. 19, Ex. M). On August 16, 2011, plaintiff's counsel re<:eived an email from a Clear Net email account stating that it would be "willing to transfer the domain upon payment of$750 representing the 4 year plus renewal fee and transfer fcc." (Comp!. 50; Nahmias Decl. 19, Ex. M). Plaintiff claims that it never received proof of actual payment, and that, based on the charges listed on the internet for the varinus domain registrars, defendants spent at mnst $41.47 in renewal fees and $11.50 in transfer fees. (Compl. mI 51-54; Nahmias Decl. "119, 20)_ Fromer thereafter cut off communications with plaintiff's CO\lllse!. On September 9, 2011, plaintilfcommenced this action, asserting three claims under the Lanham Act and five claims for violations of New York statutory and common law relating to unfair trade practices, \IIlfair competition, and breach of contract and fiduciary duty. Plaintifr duly served defendants Clear Net and Fromer on September 14, 20 II (see Neuman Oed.' 7, Ex. B), and service was effe<:ted as to defendant Safety Shield on September 20, 2011. ili!J When none oftbe defendants responded to the Complaint, the Clerk of Court entered a default against all three defendants. (Neuman Decl. 8, Ex. C). Plaintiff now seeks a default judgment awarding plaintiff statutory damages, punitive damages, compensatory damages, costs, and attorneys' fees, as well as entry of a permanent injunction nrdering defendants to desist from using plainlifrs marks and to transfer the www.studylogicdata.comdomainnamcto plaintiff Study Logic. which was then renewed once on April 2, 2011. ili!J 'Citations to "Newnan Dec!." refer In the Declaration of Jonathan E. Neuman, Esq., dated November 30, 2011, filed in connection with plainliff's Notice of Motion for Default Judgment and Order Granting Injunctive Relief Against Defendants. 7 DISCUSSION I. Default Judgment A. Legal Standard Rule 55(a) of the Federal Rules of Civil Procedure provides that "[w]hen a party against whom ajudgment for affinnative relief is sought has failed to plead or otherwise defend. and that failure is shown by affidavil or otherwise, the clerk must enter the pany's default." Fed. R. Civ. 55(a). Rule 55 sets forth a two-step process for an entry of default judgment. Enron Oil Com. v. Diakuhara, 10 F.3d 90, 95-96 (2d Cir. 1993). First, the Clerk of Court enters the default pursuant to Rule 55(a) by notation of the party's default on the Clerk's record of the ease. See id. Second, after the Clerk of Court enters a default against a party, if that party fails lO appear or otherwise move to set aside the default pursuant to Rule 55(c}, the court may enter a default judgment. Fed. R. Civ. P. 55(b}. Providing guidance as to when a defaultjudgmem is appropriate, the Second Circuit has cautioned that since a default judgment is an extreme remedy, it should only be entered as a last resort. See Meehan v. Snow, 652 F.2d 274, 277 (2d CiT. 1981). Whilc the Second Cireuit has recognized the "push on a trial court to dispose of cases that, in disregard of the rules, are not processed expeditiously [and] ... delay and clog its calendar," it has held that the district court must balance that interest with its responsibility to a reasonable chance to be heard." Enron Ojl Com. v. Diakuhara, 10 FJd at 95-96. Thus, in light of the "oft-stated preference lor resolving disputes on the merits," default judgments are "generally disfavored," and doubts should be resolved in favor of the defaulting party. Id. Accordingly, plaintiff is not entitled to a default judgment as a matter of right simply because a party is in default. 8 Erwin DeMarino Truckjng Co. v.lackson, 838 F. Supp. 160, 162 (S.D.N. Y. 1993) (noting that courts must "supervise default judgments with extreme care to avoid miscarriages of justice"). The Court has significant discretion to consider a number of factors in deciding whether 10 grant a default judgment, including (I) whether the grounds for detilllit are clearly established; (2) whether the claims were pleaded in the complaint thereby placing the defendant on notice, Fed. R. Civ. P. 54(c) (stating "[a) default judgment must not differ in kind from, Or exceed in amount, what is demanded in the pleadings"); King v. STL Consulting LLC, No. 05 CY 2719, 2006 WL 3335115, at *4-5 (E.D.N.Y. Oct. 3, 2006) (holding that Rule 54(c) i, not violated in awarding damages that accrued during the pendency of a litigation, so long as the complaint put the defendant on notice that the plaintiff may seek such damages); and (J) the amount of money potentially involved - the more money involved, the less justification for entering the default judgment. Hirsch y Innovation In!'l. Inc., No. 91 CV 4130, 1992 WL 316143, at *2 (S.D.N. Y. Oct. 19, 1992). AdditionaHy, the Court may consider whether material issues of fact remain, whether the facts alleged in the complaint state a valid cause of action, whether plaintiff has been substantially prejudiced by the delay involved, and whether the default judgment might have a harsh effect on the defendant. See Au Bon Pain Com. v. Arteet Inc" 653 F.2d 61, 62 (2d CiT. 1981). The burden is on the plaintiff to establish its entitlement to recovery. See Clague v. Bednarski, 105 F.RD. 552, 553 (E.D.N.Y. 1985). When a defauJtjudgment is entered, tbe defendant is deemed to have admitted all well-pleaded allegations in the complaint pertaining to liability. Greyhound ExhibitGroup, Inc. v. E.L.U.L. Realty Com., 973 F.2d 155, 158 (2d Cir. 1992), ccrt. denied, 506 U.s. 1080 (1993). For the purposes of an inquest, a court accepts as true 9 all factual allegations in the complaint, except those claims relating to damages. Au Bon pain Corp, v. Artee!. Inc., 653 F.2d at 65. Here, it is beyond dispute that defendants are in default. Defendants have not responded to the Complaint, nor have defendants even appeared in this action by counsel. The failure by the corporate defendants to obtain counsel in this case constitutes a failure to defend because the corporate defendants, as corporations, cannot procced in federal court IUQ ll!<. Shapiro. Bernstein & Co, v. Cont'l Rccord Cg., 386 F.2d 426, 427 (2d Cir. 1967) (per curiam) (stating that "it is settlcd law that a corporation Cannot appear other than by its attorney"); see also Jones v. Niagara Frontier Transp. Aulh., 722 F.2d 20, 22 (2d Cir. 1983) (discussing the rationale for requiring corporations, as "artificial" entities, to appear through counsel only). Moreover, despite proper service, defendants have not only failed 10 file an Answer or otherwise move with respect to the Complaint, but defendants have also failed to respond either 10 plaintiffs Motion for a Default Judgment or the Order from this Court relating to the calculation of damages, see Hirsch v, Innovation Inri, Inc., 1992 WL 316143, at *2 (holding that "[the defendant's] default is crystal clear - it does not even oppose this motion"), and thus, plaintiff's evidence on damages is undisputed. Here, defendants' failure to appear in this action or respond to the Complaint and Motion for a Default Judgment warrant the entry of default judgment. B. Federal Law Claims Plaintiff alleges claims of unfair competition and false designation of origin under Scction 43(a) of the Lanham Act, 15 U.S.c. § I 125(a); oftradcmark dilution under Section 43(c) 10 of the Lanham Act, 15 U,S,c' § 1125(1.'); and offederal trademark cyberpiracy under Section 43(d) oflhe Lanham Act, 15 U,S,C. § 112S(d). In explaining the objectives of the Lanham Act, lhe Supreme Court noted that the Act '''does not exist to reward manufacturers for their innovation in creating a particular device;' but rather, by preventing competitors from copying 'a source-identifying mark,' 'reduce[s]lhe customer's costs of shopping and making purchasing decisions,' and 'helps assure a producer that it. .. will reap the financial, reputation-related rewards associated with a dcsirable product.'" Dastar Corn. v. Twentieth Century Fox Film Corn., 539 U.S. 23, 42 (2003) (quoling Tratflix Devices, Inc. v. Marketing Displays. Inc., 532 U.S. 23, 34 (2001) and Quali!ex Co, Vo Jacobson Products Co., 514 U.S. 159, 163-64 (1995)). I. Unfair Competition Plaintiff sceks damages based on defendants' use of plaintiffs mark in commeree, thereby misappropriating the good "ill associated ".,.jth plaintiffs mark. Based on the allegations in the Complaint, plaintiff has established liability for unfair competition against the defendants under federal trademark law. Section 43(a) of the I.anham Act prohibits a person Ii-om using "any word, term, name, s)'1llbol, or device, or any combination thereof," 15 U.S.c. § 1125(aXl), "which ... is likely to cause confusion ... or to deceive as to the ... origin, sponsorship, or approval of his or her goods .. . :' 15 U.S.c. § 112S{a){I){A). See Louis Vuitton Malletier v. Dooney& Bourke. Inc., 454 F.3d 108, 114-16 (2d Cir. 2006). To establish a claim of unfair competition under Section 43(a), plaintiff must demonstrate: I) defendants' use in commerce, 2) in connection with any sale or offering for sale or distribution of any goods, 3) ofany word, term, name or symbol or false II designation of origin, 4) which is likely to deceive as to the affiliation, connection, or association of defendants with plaintiff; or as 10 Ihe origin, sponsorship, or approval of defendants' goods by plaintiff. 15 US.c. 9 1125{aXI)(A). Before Ihe Court can determine whether a plaintiffhus established a claim for unfair competition undeTlhe Lanham Act, "[aJ plaintitT must demonstrate its own right to use the mark or dress in question.·' ITC Limited v. Punehgini, Inc., 482 F.3d at 154. Plaintiff must show priority of right over defendants in order 10 be entitled to relief. &.!; P. Daussa Corp. v Sulton Cosmetics (P. R.l. Inc., 462 F.2d 134, 136 (2d Cir. 1972). In Gruner + Jahr USA Publ'g v. Meredith Com., 991 F.2d 1072 (2d Cir. 1993), the Second Circuil held that, in order to a cause of action for trademark infringement under Section 43(a) of the l.anham Act. the plaintifTmust establish two elements: I) that "the mark or dress is distinctive as to the source of the good or service at issue," and 2) "that there is the likelihood of confusion between the plaintiff's good or service and that of the defendant.'· ITI:; Limited v. Punchgini. Inc., 482 F.3d 135. 154 (2d Cir.) (describing the "Gruner test"). denied, 552 U.S. 827 (2007); see also Louis Yuillon Malletier v, Dooney & Bourke, Inc., 454 F.3d at 115 (rc..:iting the two-prong Gruner te\.'t). Under the second prong of the Gruner test, the Court must determine whether there is a "likelihood of confusion." Louis Yuitton Malletier v. Dooney & Bourke. Inc., 454 F.3d at 115. "Likelihood of confusion is the keystonc of trademark infringement." Louis Vuitlon Malletjer v. Dooney & Bourke. Inc., 340 F. Supp. 2d 415, 430 (S.D.N.Y. 2004), aff'd in part, vacated in part, and remanded, 454 F.3d 108 (2d Cir. 2006). In Polaroid Corn. v. PQlarad Electronics Corn .. 287 F.2d492. 495 (2d Cir.). cert. denied, 368 U.S. 820 (1961), the Second Circuit setout a non- 12 exclusive, multi,factor test that considers, among other things: "(1) the strength of the mark, (2) the similarity of the two marks, (3) the proximity of the products, (4) actual confusion, (5) the likelihood of plaintiff's bridging the gap, (6) defendant's good faith in adopting ils mark, (7) the quality of defendant's products, and (8) Ihe sophistication of the consumers." Louis Vuitton Malletier v. Dooney & Bourke, Inc, 454 F.3d at 116. Plaintilfherc has alleged that it has the exclusive right to use the mark al issue, thai such mark is inherently distinctive as 10 the source of its goods, and that it is in fact a "famous" mark. (Comp!. 11-18, 82,84, 91,93, 127,28). Plaintiff alleges that it has operated its business under the mark "studylogic" and identilied its product under that mark for more than five years, since the inception of the company. (Id. 14, 17). PlaintilT elaims that the mark is not only exclusive and distinctive, but allows consumers to identifY the mark with plaintiff and its products. @. 16,17). Further, plaintiffhas alleged that defendants used the mark in connection with the offering of their own goods by directing viewers of the domain to defendants' own websites and by advertising for a competitor of plaintiff's corporate client on the domain. (Id. 37, 42, 65). In addition, plaintiff elaims that there is a likelihood of confusion between the plaintiff's goods and those of the defendants. (ll!. 68). Plaintiff alleges that defendants deceived consumers and misappropriated the good will associated with plaintiff's common,law marks to anract consumers into believing that plaintiff is somehow related to or endorses defendants' products. (ll!. n 61. 63). This constitutes unfair competition under 15 U.S.c. § I I 25(a). Murphy Door Bed Co .. Inc. v. Interior Sleep Systems, Inc .. 874 F.2d 95, 102 (2d Cir. 1989). "One cannot sell his product by misappropriating the goodwill of another through misleading the public inlo \3 thinking that it is sponsored by or derived from something else," American Footwcar Corn. v. General Footwear Co. Ltd., 609 F.2d 655, 662 (2d Cir. 1979). 2. Trademark Dilution Plaintifl' seeks damages based on defendants' usc ofpJaintiff's mark in commerce, thereby impairing tbe distinctiveness of or tarnishing plaintiff's mark. Bmoed on the allegations in the Complaint, plaintiff has established liability for trademark dilution against the defendants under Section 1125(c)(I) of the Lanham Act. Section 43(c)(I) of the Lanham Act provides that "the owner ofa famous mark that is distinctive ... be entitled to an injunction against another person who ...commences use of a mark in cotrunerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, of the prcsence or absence of actual or likely confusion, of competition, or ofactual injury." 15 U,S.c. § 1125(c)(I). Scc Tiffany CN]) Inc. v. eBay Inc" 600 F.3d 93, 110-1 I (2d Cir .), cert, denied, 131 S. Ct. 647 (2010),' '''Dilution by blurring' is association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark." 15 U.s.c. § 1125(cX2)(B). Dilution by blurring refers to "the whittling away of [the1 established trademark's 'The Lanham Act also allows the owner of the famous mark to be awarded monetary damages, attorneys' fees, and costs under 15 U.S.C. § 1117(a), subject to the discretion of the court, 15 lJ .S.c. § 112S(c )(5), if I) the mark that is likely to cause dilution by blurring Of tamishment was first used in commerce by the person against whom the injunction is sought after October 6, 2006, 15 U.S.c. § 1125(c)(S)(A); and 2) the person against whom the injunction is sought willfully intended to tradc on the recogrutioo of the famous mark or willfully intended to harm the reputation oflhc famous mark. 15 U.S.c. § I 125(c)(5)(B). Sincc plaintiff has alleged that defendants tirst used plaintiff's mark in commerce in April 2006, before the date sct out in tbe statute as the earliest date for which monetary damages are allowed undcr Section 43(0), the Court does not address monetary damages under plaintiffs trademark dilution claims. 14 selling power and value through its unauthorized use by others." Tiffany CNJ) Inc. v. eBay Inc .. 600 FJd at III (quoting Starbucks Coro. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97, 105 (2d Cir. 2009». "In contrilSt to dilution by blurring, 'dilution by tamishment', . .'generally arises when the plaintiffs tradcmark is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context likely to evoke unflattering thoughts about the owner's product.''' Id. (quoting Deere & Co. v. MTD Prods .. Inc., 41 F.3d 39, 43 (2d Cir. 1994». With respect to its trademark dilution claim, plaintiff must establish I) defendants' use in commerce, 2) after the owner's mark has become famous, 3) that is likcly to causc dilution by blurring or dilution by tarnislunent of the famous mark. 15 U.S.c. § 112S(cXl). Sce Estate of Ellington ex reI. Rlling\on v. Harbrew Imports ltd., 812 F. Supp. 2d 186 (ED.N.Y. 2011); ili.n.. Inc. v. GAP. Advenlures Inc., No. 07 CV 9614, 2011 WL 2946384, at ·16 (S.D.N.Y. Jun. 24, 2011). "Whether a mark or trade name is likely to cause dilution by blurring depends on factors including the similarity between thc mark and the famous mark, the distinctiveness and degree of recognition of the famous mark, and whether the user of the mark or trade name intended to create an association with the famous mark." Estate ofElIingtgn ex reI. Ellington v. Barbrew Imports Ltd., 812 F. Supp. 2d at 194 (citing 15 U.S.C. § 112S(e)(2)(B)). Plaintiff has alleged that it owned the "studylogic" mark, that defendants used the mark in commerce to market their services, after the mark became famous within the food and beverage industries. Plaintiflfurther alleges that defendants' conduct was willful in that defendants registered the domain, plaintiffs mark, in defendants' own name with the bad faith intent to trade on consumers' recognition of the mark, resulting in injury to plaintiff. Plaintiff claims that defendant Fromer used plaintiff's domain to advertise for Nadin Tea and Coffee ("Nadin 15 Tea"), a Russian tea and coffee brand affiliated with Fromer, who is a former citizen of the Soviet Union. (Nahmias Dec!. ": 23). Plaintiff claims that it never authorized the use of its site to advertise these products and that a client of plaintiff's who sells coffee and tca contacted plaintiff to inquire as to why this compctitor, Nadin Tea, was being advertised on plaintiff's site. (Jd. 24). PlaintitT alleges that not only did this cause great embarrassment to plaintitT, but it diluted the mark and harmed plaintitl's reputation. QdJ Accordingly, the Court finds that plaintiff has adequately alleged its claim for trademark dilution. 3. Trademark Cyberniracy The Court also finds that plaintiffs allegations adequately state a claim under the cyberpiracy provisions of the Lanham Act. Under the relevant provisions, "a person shall be liable in a civil action by the owncr of a mark .. .if, without regard to the goods or services of the parties, that person" l)"has a bad faith intent to profit from that mark," 15 U.S.c. § 1125(d)( 1)(A)(i); and 2) "registers, traffics in, or uses a domain oame that .. .is identical or confusingly similar to that mark." 15 U, S.C. § 1125(d)( I )(A Xii), Section 4 3(d) of the Lanham Act was enacted "to prevent cybersquaUing, an expression that has come to mean the bad faith and abusive registration and use of the distintive trademarks of others as internet domain names, with the intent to profit from the goodwill associated with those trademarks." New York City Triathlon, J.!.C v NYC Triathlon Club, Inc., 704 F. Supp. 2d 305, 323-24 (S,O,N.Y.201O). With respect to its claim of cyberpiracy by the defendants, plaintitT must establish that I) the mark was distinctive or famous at the time the domain name was registered, 2) the infringing 16 domain name complained of is identical to or confusingly similar to plaintifrs mark or dilutive in the case of a famous mark, and 3) defendant had a bad faith intent to profit from that mark. IS U.S.C. § 1125(d)(I). Mamiya America Coro. v. HuaYi Brothers. Inc., No. 09 CV 5501, 2011 WL 1322383, at *4 (E.D.N.Y. Mar. 11,2011); New York City Triathlon. LLC v. NYC Triathlon Club. Inc., 704 F. Supp. 2d at 324. Plaintiffs allegations adequately state a claim under the cyberpiracy provisions of the Lanham Act in that plaintiff has alleged that the mark was distinctive at the time the domain name was registered. (Compl. 17). Moreover, there is no question that the name registered by defendants was identical to plaintifrs mark; defendants were hired to register plaintiffs name. <lQ.,": 19). Finally, plaintifThas alleged that defendants acted in bad faith with the intent to profit from their wrongdoing, thus stating a claim under 15 U.S.C. § 1125(d)(I). <lQ., 67). PlaintiIT alleges that defendant Fromer transferred the domain name to Clear Net and then tried to sell it in order to insulate Safety Shield from liability. (CampI. 55). According to plaintiff: Fromer currently has 72 domains and 103 historical names registered in his name, and there was no legitimate reason for registering the "studylogic" domain in Safety Shield's name, nor was there any rem;on not to transfer it to plaintiff. (l4., 56-58). Indeed, in his Declaration, Mr. Nahmias asserts that Study Logic has discovered other instances where dct'endant Fromer failed \0 deliver goods and services, including problems with his Own partner, and in connection "ith another website, Alibaba.com. (Nahmias Decl. 11 22). Accordingly, plaintill"has established its claim of cyberpiracy against the defendants. 17 C. New York Slate Law Claims I. New York Common [.aw and General Business Law Plaintiff also seeks damages based on the defendants' violation of New York State's common law prohibition on unfair competition and violations of New York General Business Law §§ 349 and 360-1. To prove its claim of unfair competition under New York common law, plaintifl'must demonstrate the same elements needed to prove liability for unfrur competition under the l..anham Act, coupled with evidence that deCendants acted in bad faith. See Phillip Morris USA Inc. v. Cruz, No. II CV 3220, 2012 WL 1744992, at"2 (E.D.N.Y. Apr. 16,2012); Fendi Adele S.R.L v. Filene's Basement IIX, 696 F. SuW 2d 368, 389 (S.D.N.Y. 2010); Phillip Morris USA Inc. v. Feli7.a,rdo, No. 03 CV 5891,2004 WL 1375277, at *6 (S.D.N.Y. June 18,2004) (citing Saratoga Vichy Spring Co .. Inc. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980». Given the allegations in p\aintitYs Complaint relating to defendants' conduct and the intent of defendant Fromer, the Court finds that plaintiff has adequately stated a claim under New York common law. Under Section 349 of New York General Business Law, plaintiITmust establish that I) defendants' deceptive acts were directed al consumers; 2) the acts were materially misleading, and 3) plaintifTwas injUred as a result of this deception. Maurizio v. Goldsmith, 230 F.3d 518,521 (2d Cir. 2000); Gristede's Foods, InC. v. Unkechaugc Nation, 532 F. Supp. 2d 439, 450 (E.D.N.Y. 2007): [mig, Inc. v. Electroiux Home Care Products. Ltd., No. 05 CV 529, 2007 WI.. 900310, at *15 (E.D.N.Y. Mar. 22. 2007). Under Section 360-1, plaintiff must establish that 1) its mark is inherently distinctive or has acquired secondary meaning; and 2) there is a likelihood 18 ofdilution. Sec N.Y. Stock Exch .. Inc. v. N.Y. Hotel. LLC, 293 F.3d 550, 557 (2d CiT. 2002); New Sensor Corp. v. CF Distribution LLC, 303 F. Supp. 2d 304, 317 (E.D.N.Y. 2004); Pfizer. Inc. v. Y2K Shipping & ["rading. Inc, No. 00 CV 5304, 2004 WL 896952, at '8 (E.D.N.Y. Mar. 26,2004). Based on thc allegations in the Complaint. it appears that plaintiff has stated valid claims under Sections 349 and 360-1 of New York General Business Law. 2. Breach of Contract Turning to plaintiffs breach of contract claim, it is well·established under New York law that a party alleging an action for breach of contract must prove the following: "(I) a contract; (2) perfonnancc; (3) breach by the other party; and (4) damages." First Investors Corp. v. Liberty Mut. Ins. Co., 152 F.3d 162, 168 (2d CiT. 1998) {quoting Rexnord Holdings Inc. v. Bidennann, 21 F.3d 522, 525 (2d Cir. 1994)). !Iere, with respect to the /lrst clement - the existence ofa contract - the Court finds that plaintiff has sufliciently alleged that the parties entered into a contract in which it was agreed that defendants'O would register the '"studylogic" domain in exchange for an agreed-upon price. Plaintiff alleges that despite payment in full, defendants never transferred the site to plaintiff as agreed and indeed, tried to sell the site without plaintiff's authorization. Thus, the Court finds that plaintitfhas adequately alleged the clements necessary to statc a breach of contract claim: that plaintiff duly perfonned its contractual ohligations; that the defendants materially breached the contract; and that plaintiff has suffered damages. Having alleged each element of the cause IOAlthough only Safety Shield was explicitly made party to the contract y.ith Study Logic, the Court finds that Clear Net and Fromer are jointly and severally liable for plaintiffs breach of contract claim, as wcll as its claims under tederallaw. (Sec discussion, Part I D. jnfra). 19 of action, plaintiff has adequately alleged its stale law claim for breach of contract. 3) Breach ofFidudary Duty Plaintiff has alleged that, by virtue of its contract witb defendants, defendants owed plaintiff a fiduciary duty of loyalty and good faith and that defendants breached this duty by advancing their own interests to the detriment of plaintiff Study Logic. (Compl. ml145, 146). Where a breach of fiduciary duty claim "arise[s] from the same alleged conduct that fonn[s] the basis of raj breach of contract claim." thc claims are duplicative. Clarendon Nat. Ins. Co. v. Health Plan Administrators, No. 08 CV 6279, 2009 WL 3053736, al *4 (S.D.N.Y. Sept. 24, 2009); see also Elliogtpn Credit Fund, Ltd. v. Select Portfolio Servicing Inc" 837 F. Supp. 2d 162, 196 (S.D.N.Y. 2011) (holding that "In New York, a cause of action for breach of fiduciary duty which is merely duplicativc of a breach of contract claim cannot stand"); Balta v. Ayco Co .. LP, 626 F. Supp. 2d 347, 361 (W.D.N.Y. 2009) (finding that, whcre the "fiduciary duties allegedly breached ... arose, or impliedly, under the contract, and the parties had no relationship of trust apart from their contractual relationship," plaintiff's fiduciary duty claims were duplicative of its contract claims). Here, plaintiff has not alleged "a relationship of trust apart from their contractual relationship." Balta v. Ayco Co., L?, 626 F. Supp. 2d at 36 t. Instead, plaintiff alleges that defendants owed plainlifrStudy Logic a fiduciary duty "by virtue of the contract" and "the services to be perlonncd under the contract." (Compl. 144, 145). According to plaintiff, defendants hreachcd this duty by failing to perfonn under the contract and using the domain to advance their O"'TI imcrcsts. (Comp\. ml147-1S0). Accordingly, plaintiff's breach of fiduciary duty claim is duplicative of its breach of 20 contract claim. D. Individual Liability Plaintiff alleges that defendant Fromer should bear personal liability for two rea:.ons: first, he completely dominated the two corporate entities, condocting his own blL,iness using the corporations and failing to [o!low corporate lonnalities (Comp!. 160-65); second, plaintiff claims that defendant Fromer used this domain to commit a fraud against plaintiff. (h!.) With respect to plaintiff's federal law claims, individuals who are "moving, active, conscious force[s]" behind a corporation's infringement ofa plaintilrs rights can be held personally liable under the Lanham Act. Bambu Sales. Inc. v. Sulli!M Crackers Inc., 683 F. Supp. 899,913·14 (L.D.N.Y 1988). Demonstrating that a corporate officer "authorized and approved the acts of unfair competition which are the basis of the corporation's liability is sufficient to subject the officer to personal liability." ld. at 913. Plaintiff has alleged that the individual defendant is the controlling officer of the corporate defendants and was a direct participant in the aforementioned unfair competitive practices. Accordingly, the Court respectfully recommends that Fromer be held personally liable for plaintiffs federal law claims for unfair competition, trademark dilution, and cybcrpiracy. With respect to plainti!l's state law claims, to pierce the corporate veil of Safety Shield and Clear Nct under New York law, plaintiff must set forth facts showing: first, that Fromer "abused the corporate form by exerting such domination over the corporation or utilizing it for such personal gain that the corporation was a mere alter-ego," Plains Mktg" L.P. v. Kuhn, No. 10 CV 2520, 2011 WL 4916687, at *4 (E,O,N.Y. Oct. 17,2011) (citing Morris v. N.Y. State Oep't ofTaxation & Fin., 82 N. Y.2d 135, 141, 623 N,E.2d 1157, 603 N. Y.S.2d 807 (1993)); and 21 second, that "maintaining the corporate fonn would sanction a fraud, illegality, Or injustice against the plaintiff." Id. Plaintiff all eges that defendant Fromer "completel y controlled the policies and business practices of [djefcndants Safety Shield and Clear Net" in order to "'[perpetratej a fraud ... upon [p jlaintiff." (Comp!. 164, 165). Further, plaintiff alleges that all communications with regard to the Project were made through defendant Fromer's personal email address and cell phone number (ld. 160), and that Fromer only executed the contract with plaintiff through Safety Shield in order to inSlllate himself fmm personal liahility. (Id. 162). The Court tinds that plaintiffhas sufficiently alleged that Fromer abused the corporate fonn such that for the Court to maintain the corporate fonn in this case would sanction a fraud against the plaiotiff. AccordinglY, the Court recommends that defendant Fromer be held personally liable for plaintiffs state law claims. FinaJly, in light of plaintiffs allegation that Safety Shield's corporate status is currently inactive (Compl, 8), the Court feels compelled to consider whether detendant Clear Net should be held jointly and severally liable for damages av.'lUded in this action. Plaintiff aUege8 that defendant Fromer completely controlled both Safety Shield and Clear Net (Compl. 164, 165) to the extent that the corporate defendants are the "alter-egos" or "'instrumentalities" of defendant Fromer. (ld, 165). Plaintiff further claims that defendants transferred the domain trom Safety Shield to Clear Net in order to continue their intHnging activities and insulate themselves from liability (Id. 39. 42, 55). Based on these undisputed allegations, the Court respectfully recommends that all of the named defendants be held jointly and severally liable tor any damages awarded to plaintiffSlUdy Logic. 22 II. Damages A. Legal Standard It is well-seliled that the burden is on the plaintiff to establish its entitlement 10 re<:overy. See Clague v. Bednarski, 105 F.RD. 552 (E.D.N.Y. 1985). When a default judgment is entered, the defendant is deemed to have admitted all well-pleaded allegations in the complaint pertaining to liability. See Greyhound Exhibit Group, loc. v, E L.U.L. Realty Com., 973 F.2d 155, 158 (2d Cir. 1992), Cert. denied, 506 U.S. 1080 (1993); Montcalm PuWg Com. v. Ryan, 807 F. Supp. 975,977 (S.D. N.Y. 1992) {citing United States v. Di Mucci, 879 F.2d 1488, 1497 (7th Cir. 1989)); AI! Bon Pain Corn. v. Artecl.lnc., 653 F.2d at 65; Deshmukh v. Cook, 630 F. Supp. 956, 959-60 (S.D.N. Y. 1986); 6 Moore's Federal Practice 55.03[2] at 55-16 (2d ed. 1988). However, the plaintiff must still prove damages in an evidentiary proceeding at which the defendant has the opportunity to comest the claimed damages. See Greyhouod Exhibitproup. Inc. v. E.L.U.L. Realty Com., '173 F.2d at 158. "'While a default judgment coostitoles an admission of liability, the quantum of damages remains to be established by proof on less the amouot is liquidated or susceptible of mathematical computation.'" Levesque v. Kelly Communications, Ins:., No. 91 CV 7045. 1993 WL 22113, at *4 (S.D.N.Y. Jan. 25, 1993) (quoting Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974)). B. Monetary Damages for Federal Claim of Unfair Competition As discussed above, plaintiffhas established liability for unfair competition, trademark dilution. and cyberpiracy against both the corporate and the individual defendants. Section 35 of the Lanham Act governs the types of monetary relief available in cases of trademark 23 infringement, unfair competition, and cyberpiracy. 15 U,S.C. § 1117. See Polo Fashions. Inc. v. Rabanne, 661 F. Supp. 89, 95 (S.D. Fla. 1986). The statute authorizes the plaintiff"to recover (I) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action" where plaintiff can establish a violation of his rights as a registered trademark holder. 15 U.s.C. § 1117(a). Recognizing the difficulty in isolating the causation of diverted sales and measuring reputational harm, an a"'ard of defendant's profits is often used a:; a proxy for plaintifi's actual damages. AW Indus. Inc. v. Sleepingwell Mattress Inc" No. 10 CV 04439, 2011 WL 4404029, at "5 (E.D.N.Y. Aug. 31 2011) (quoting George Basch Co" Inc. v. Blue Coral, Inc., 968 F.2d 1532, 1539 (2d Cir, 1992)). To determine an appropriate award, the Court has broad discretion to use either defendant's profits or plaintiff's actual damages. See A W Indus. Inc, v. Sleepingwell Mattress Inc., 2011 WL 4404029, at *5. Thus, plaintiffs in a Lanham Act action are not limited to recovery oftheir actual damages but "may recover profits reaped by the defendants from their infringing activity." Wuis Vuitton S.A. v. Spencer Handbags Corn., 765 F.2d 966, 973 (2d Cir. 1985) (citing Monsanto Chern, Co. v Perfect Fit Prod. Mfg. Co., 349 F.2d 389,396-97 (2d Cir, 1965), cert. denied, 383 U.S. 942 (1966)). It is clear that in determining what the proper compensation would be in a case of trademark infringement, the court has "broad equitable discretion," Taylor Made Golf Co. v, Carsten Sports, Ltd., 175 F.R-D. 658, 661 (S.D. Cal. 1997), and courts have considered a defendant's "willful and deliberate behavior" in fashioning an award that will act as an appropriate dClcrrent. Polo Fashions. Inc. v. Rabanne, 661 F. Supp. at 96; see also W,E. BMsett Co. v. Revlon, Inc" 435 F.2d 656, 662 (2d Cir. 1970) (finding "bad faith and wrongful intent" 24 and awarding profil, where defendant's actions "are surrounded by an aura of indifference to plaintiff's rights and a smug willingness to determine unilaterally that the good will plaintiffhad sought to foster could sately be treated as a nullity"), In assessing defendants' profits, plaintiff need only prove the amount of defendants' sales; defendants bear the burden of proving the amount of costs and other deductions to determine profit. AW Indus, Inc. v. Mattress Inc., 2011 WL 4404029, at *6. Where, as here, a defendant's refusal to participate in discovery prevents the plaintiff from providing precise proof of de fendant's sales and profits, courts have relied on information to estimate profits and award damages that are "reasonable, even if imprecise." Taylor Made Golf Co, v. Carsten Sports, Ltd., 175 F.R.D. al663 (using United States Commerce Departmenl figures to estimate profits where defendant failed to participate in discovery); see also Louis Vuinon S.A. v. Spencer Handbags Cow., 765 F.2d at 972-73 (noting that court may have to rely on "indirect and circumstantial evidence" if defendant fails to produce evidence on damages); Polo Fashions. Inc. v. Rabanne, 661 F. Supp, 89 (collecting cases). As the court in Taylor Made Golf Co. v. Carsten Sports. Ltd, noted: "[p]roof of actual damages or profits is not necessary, as it will be enough if the evidence shows the extent of tile damages as a mattcr of just and reasonable inference, although the result be only approximate. Thus. the court may rely on circumstantial evidence of the extent of the defendant's wrongdoing to assess damages," 175 F.R.D. at 663 (internal citations omined). Any '''doubts about the actual assessment of damages will be resolved against the party who frustrates proof of such, and thc fact findcr may calculatc damages at the highest reasonable ascertainable value. ,,, Id. (quoting Nintendo v. Ketchum, 830 F. Supp. 1443, 1445-46 (M.D. Fla. 1993)); see also l.&o.!i.s. 25 Vuittoo. S.A v. Soencer Handbags Com., 765 F.2d at 972 (noting that where defendants had refused to produce any ",wrds. "defendants must bear the burden ofuncertainty"l· Here. defendants have been given numerous opportunities to provide plaintiff and this Court with accurate figures, but they have declined to participate in any of these proceedings. While plaintiff need only prove the gross amount of defendants' sales, Century 21 Real Estate LLC v. Paramount Home Sales, Jnc., No 06 CV 2861 2007 WL 2403397 at *4 (E,[),N.Y. Aug 20. 2007) (allowing plaintiff to usc reasonable estimates of profits1, plaintiff here is unable to present any evidence relating to defendant" protits and has thus elected 10 seck statutory damages. See Sara Isc Com v Bas ofN.X" Inc., 36 F. Supp, 2d 161, 165 (S.D,N,Y. 1999) (awarding statu!Ory damages in a case where defendants failed to appear). Courts are given broad discrellon within the statutory limits to impose an amount neeessary to discourage further violations and to vindicate the policy behind the Act. See Phillip Morris USA Inc. v, Marlboro Express, No. 03 CV ! 161, 2005 WL 2076921, at *6 (E.D,N,Y, Aug, 26, 2005), L StatuIOD'Damage:s Under the statute, plaintilfis entitled to recover statutory damages of not Icss than $1,000 and not more than $1 00,000 for each pirated narne. See 15 U.S.C, § 1117(d). "The Court has considerable discretion in determining an appropriate award of statutory damages and .. .the Lanham Act provides lillie guidance on how to proceed in any given case," Mamiva America Com, v. HuaYi Inc" 2011 WL 1322383. at -7, Despite the lack of guidance provided by the Lanham AcL "courts have found some guidance in the case law of an analogous provision of the Copyright Act. , .. Under the Copyright Act, courts look to factors such as: (I) the expenses saved and the profits reaped; (2) the revenues lost by the plaintiff; (3) the value of the 26 copyright; (4) the deterrent effect on others besides the defendant; (5) whether the defendan(s conduct was irmocent or willful; (6) whether a defendant has cooperated in providing panicular records from which to the value of the infringing material produced; and (7) the potential for discouraging the defendant" Martal Cosmetics. Ltd. v. Int'I Beauty Exch. Inc., 01 CV 7595, 2011 WL 3687633, at +23 (F..D,N. Y. Aug. 23, 2011) (internal citations and quotations "The statutory minimum award .. .is presumptively sufficient for purposes of deteITenee and compensation where there is no reason to believe the violation was MUful or that it resulted in any harm." MamiyaAmerica Com. v. HuaYi Brothers, Inc" 2011 WL 1322383, at ·8. Plaintiflhcrc argues that the Court should considcr not only the defeodants' multiple acts of misconduct but thcir willfulness as well. fu;j; 15 U.S.C. § 1117(a). See Marniya America Com. v. HuaYi Brothers. Inc, 2011 WL 1322383. at *8 (a",arding statutory damages above the statutory minimum because the dctcndam's violation was ",illful). The Court in Marniya reasoned that "Ithe defendant's] willfulness" justitlcs "a ten-fold increase in the minimum award." Mamiya America Com. v. HuaYi Brothers. [nc., 2011 WL 1322383, at +8. Plaintiff's allegations a' well as defendants' failure to participate in this action establish willfulness_ fu;s: Kcnncth Jay Lane v. Heavenly Apparel. Inc. No. 03 CV 2132, 2006 WI. 728407 at ·7 (S.D.N.Y. Mar. 21,2006). Accordingly, the Court rewmmends at least a ten-fold increase in the minimum statutory award. Further, the allegations in plaintiffs Complaint and the Declaration of Mr. Nahmias set forth instances in which plailltifrs customers were actoally confused and complained about the use ofthe domain to competing products. J'he Court finds that, based on the actual damage suffered by plainlifldue to defendants' infringement, a further doobling of statutory 27 damages is justilkd, Accordingly, the Court awards plaintiff statutory damages in the amount of$20,000. 2. Enhanced Damages Plaintiff seeks treble damages, as an enhancement of actual damages up to lhe maximum allowed by slatute. (Pl. '5 Mem." at 17). The Lanham Act pennils lhe court to award "any sum above lhe amount as found as actual damages, not exceeding three times the amount." 17 U.S.C. 1117(a)(3); see!!JE! A W Indus. 11K v. Sleeviru!well Mattress Inc., 2011 WL 4404029, at -7. Courts have held that treble damages may be appropriate where, as here, the infringer has engaged in willful behavior. Tanning Research Labs., Inc. v. Worldwide Import & Export Corp .• 803 F. Supp. 606, 61 0 (E.D.N.Y. 1992); Polo Fashions, Inc. v. Rabanne, 661 F. Supp. at 98 (holding thaI where there is a case of "intentional and knowing counterfeiting .profits are to be trebled in the absence of extenuating circumstances"). The purpose of awarding treble damages is to provide "an economic deterrence to those who contemplate the otherwise lucrnti vc profession of counterfeiting." Id. (citing Playboy Enterorises. In«. v. Baccaral Clothing Co., 692 1'.2d 1272, 1274-75 (9th Gr. 1982)). However, the Court should bear in mind that the purpose of damages awarded under the Lanham Act is remedial, not punitive. See 17 U,S.C. § 1117(a). Since defendants have presented no evidence of extenuating circumstances, and this Court finds nOnC to exist in the record, there appears to be ample justifi«alion for awarding treble damages in this case ",here defendants have 110 apparent justification for their conduct and have to "PI:s Mem." refer to the Memorandum of Law in Support of Plaintiff Study Logic LLC's ."'otion for Delimlt Judgment and Order Granting Injunctive Relief, filed on November 30. 2011. clearly protited from their willful and intentional infringement. Therefore, because the Court finds that the requested enhancement of actual damages is appropriate, and will serve to adequately compensate plaintiff, rather than to penalize the defendants, the Court respectfully recommends that plaintiff be awarded treble damages in the amount ofMO,OOO.OO. C. Monetary Damages for State Law Claims I. Statutory Damages Plaintiff also secks statutory damages of$50.00 pursuant to New York General Business Law § 349(h). Section J49(h) provides that "any person who has bcen injured by reason of any violation of this section may bring an action ... to recover his actual damages or fifty dollars, whichever is greater. .The court may, in its discretion, increase the award of damages to an amount not to exceed three times the actual damages up to one thousand dollars, if the court finds the defendant willfully or knoVlfingly violated this section." N.Y. Gen. Bus. Law § J49(h). Plaintiff contends that had defendants participated in this action. plaintiff could potentially have recovered up to $1,000 by showing actual damages. Id. Accordingly, the Court awards plaintilf $50.00 in statutory damages based on defendants' violation of New York law. 2. Compensatorv Damages for State Law Plaintiff argues that it is entitled to recover the $4,500 it paid to defendants as damages for the breach of contract ami confidentiality agreement. (PI. 's Mem. at 17). The Court has already recommended that plaintiffbe awarded $60,000 in treble damages under the Lanham Act. However. the Court's rationale for IInding tbat plaintilThas established its Lanham Act claims is not dependent on the existence of the underlying contract 29 Part! B., supra), nor did the Court's detennination of statutory damages factor in the value of the underlying contract Accordingly. the Court finds that thc damage to plaintiff caused by defendants' breach is sutTIcicntly distinct from its federal law claims to justify awarding compensatory damages for breach of contract in addition to statutory damages under the Langham Act. Based on plaintiffs sworn statement that it paid defendants $4,500 to prepare and register its domain, the Court awards plaintiff$4,SOO for defendants' failure to perfonn thcir obligations under the contract. O. Attorney's Fees I. Standards Under the Lanham Act Plaintiffrcquests $9,780.00 in attorncys' fees. (PI. 's Mem., Ex. Pl. "Under the Lanham Act, courts are empowered to award reasonable attorneys' fees, however, only in exceptional cascs." AW Indus. Inc. v. Sleepingwell Inc., 2011 WL 4404029, at '7. Attorneys' fees may be awarded in cases of"willful infringement." Patsy's Brand Inc. v. lOB Realty Inc., 317 F.3d 209, 221 (2d Cir. 2003), and willful infringement may be established by virtue ofa defendant's default. Sec Kenneth Jay Lane v. Heavenly Apparel. Inc. No. 03 CV 2132, 2006 WL 728407 at ·7 (S.D.N. Y. Mar. 21, 2006) (deeming defendant's infringement willful based upon default, but denying request for attorneys' fees because requisite data concerning fees not provided to the court); TitTany(NJI Inc. v Luban, 282 f. Supp. 2d 123, 124 (SD.N.Y. 2003) (holding that: "By virtue of the dcfilUlt, [the defendants'] infringement is deemed willful"). In this case. where defendants have failed to respond to the Complaint and where plaintiff's evidence dearl\' demonstrates willful infringement, the Court respectfully recommends that 30 pla.intitTbe awarded attorneys' fees. 2. Rates Requested To detennine whether plaintiff's request for attorneys' fees is reasonable, the Second Cireuit uses the "presumptively reasonable fee." This standard "boils down to what a reasonable, paying client would be willing to pay, given that such a party wishes to spend the minimum necessary to litigate the case eftectively," Simmons v. Transit Auth., 575 F. 3d 170, 174 (2d Cir. 2009) (internal omitted), bearing "in mind all of the case-specific variables that .. courts have identified as relevant to the reasonableness of attorney's fees in setting a reasonable hourly rate." Arbor lIill Concerned CitiLens Ass'n v. Cnry of Albany & Albany Cnrv. Bd. OfElectjQD'j, 522 F.3d 182, 190 (2d Cir. 2008). Courts have broad discretion in detennining the reasonable rate, but they should consider the prevailing hourly rates of the district whcre they sit, and may consider other case specific variables such as the complexity of the case and the attorney's level of expertise. Simmons v. Transit Auth., 575 F.3d at 174-75; Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnry of Albany & Albany Cnty_ Rd. Of Elections. 522 F.3d at 186-87, 190. In Arbor Hill Concerned Citizens Neighborhood Association v. County of Alban}, 522 F.3d at 183_84, the Second Circuit '''abandon[edJ' the 'lodestar' approach to awarding attorney's fees,'" which was "the product of the attorney's usual hourly Tate and the number of hours worked, which could then be adjusted by the Court to set 'the reasonable fee,'" Simmons v. New York City Tr"msil Auth .. 575 F.3d 170, 170, 175 (2d Cir. 2009) (citing in part Arbor Hill Concerned Citizens Neighborhood Ass'n v. Countv of Albany, 522 F.3d at 187»). However, the United States Supreme Court has since spoken in favor oflhe lodestar method as the prcterred 31 approach for detennining attorney's fees in the context of a federal fee-shifting provision. See Perdue v Kenny A., - U.S. -,130 S. CI. 1662, 1671-72 (2010). In explaining its preference for the lodestar approach, the Court noted both that the lodestar approach has "achieved dominance in the federal courts" and that it has ··become the guiding light of our fee-shifting jurisprudence."' Perdue v. Kenny A., 130 S. Ct. 1662 at 1672 (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 801 (2002». It also explained that the lodestar method is preferable because it results in more accurate attorney· s fee awards and because it "cabins the discretinn of trial judges, pennits meaningful judicial review, and produces reasonably predictable results." Id. Nonetheless, the Supreme Court did oot explicitly reject the Second Circuit's approach, and Arbor Hill has not yet been revisited by the Circuit in light of Perdue. Thus, the vast majority of courts in this Circuit still cite the approach articulated in Arbor Hill." Accordingly, this Court applics thc Arbor Hill factors in detennining the ··preswnptively reasonable fee," which in thi, casco produccs the same recnmmended fee as under a traditional lodestar analysis. The Second Circuit 'should held that in calculating the preswnptively reasnnable fcc, ··courts use the hourly rates employed in the di5trict in which the reviewing court sits.'·· Simmons v. New York (il} Transit Auth., 575 F.3d at 174 (holding that when awarding "This Court conducted a broad search nf decisions in New York's district courts, and found that the vast majority of decisions issued since upon Arbor Hill. See. e.g., ·9 (S.D.N. Y. Sept. 7, G No. 11 CV 7845, 1 ; 1238,2012WL3929889,at'"4 Archbold v. Tristate ATM, Inc., Nn. 11 CV 5796, 2012 WI, .7,2012). But sec Harris v. Fairweather, No. 11 CV 2152, 2012 WI. 3956801, at ·7, n.21 (S.D.N.Y. Sept. 10,2012) (analyzing the request for attorneys· fees under the lodestar approach, noting that ··[tlhe Supreme Court's Perdue opinion appears to cast doubt nn the viability of the Second Cir<;uit's 2008 opinion in Arbor Hill, which relied on the Johnson 32 attorney's fees, there is a presumption in favor of relying on the rates where the case is litigated, not where the anomeys are located) (citations omincd). However, this Court most proceed with "limited guidance," because, "[sJubsequent to Arbor Hill and Simmons, this district has considered the reasonable hourly rate issue in an intellectual property setting where a del/lUlt has occurred in... fewcases." Blue Moon Media Group, Inc. v. Field, No. 08 CV 1000,2011 WL 4056068, at * 12 (LD.N.Y. Apr. II, 2011) (recommending redocing rates requested in an intellectual property dcfault case to S400 per hour for a scnior associate/partner and $210 to $325 per hour for associates). In this case, plaintilT employed Jonathan E. Neuman, Esq., who appears to be a sole practitioner with an office in Queens. According to plaintiff's papers, Study Logic is being charged $300 per hour for the services performed by Mr. Neuman in this case. (Pl.'s Mem., Ex. Pl. According to the firm's website, Mr. Neuman has a general practice engaged in real estate, trusts and estates. landlord-tenant, dcbt harassment, and intellectual property practice and litigation." According to the contemporaneous time records submitted by Mr. Newnan in accordance with New York Association ofRelarded Children v. Carey, 711 F.2d 1136, 1148 (2d Cir. 1983), Mr. Neuman billed 32.6 hoors in cotulection with this maner. Having reviewed the fee applications of counsel and considered the rates being requtsted, the Court finds lhatthe rate o!'$300 per hour is in line with fees generally considered rea<;onabJe in the Eastern District of New York for this type of work. Following the decision in Simmons, rates of approximately $300 to $400 per hour for partners and $150 to $300 for associates have "The fim"s website entry for Mr, Neuman does not indicate Mr. Neuman's level of experience, and he has failed to submit any information regarding his experience or educational background. been considered reasonable in the Eastern District. Gutman v. Klein, No. 03 CV 1570, 2009 WL 3296072. at '3 (LO.N.Y. OCL 13,2009) (awarding anorney's fees due to spoliation of evidence). See also HBY Solutions, Inc. v. Schwartz, No. 11 CV 0947, 2011 WL 6986937, at +7 (E.D.N.Y. Nov. 17. 2011) (limiting rate of partners tn $400 and approving rates of associates ranging from $150 to $31 0 per hour, based on years of experience); Melnick v. Press, No. 06 CV 6686,2009 WL 2824586. ut·9 (E.D.N.Y. Aug. 28, 2009) (holding that rates in the Eastern District vary Ii-om S200 to $375 pcr hour for partners and $100 to $295 per hour for associates); Moran v. Sasso, No. 05 CV 4716, 2009 WL 1940785, at +4 (ED.N.Y. July 2, 2009) (stating that in the Eastern District orNew York, reasonable hourly rates have ranged from $200 to $350 for partners and $200 to $250 for senior associates); Duyerger y C & C Duplicators. Inc., No. 08 CV 0721, 2009 WL 1813229. at +2 (LO.N.Y. June 25, 2009) (stating that rates from $200 to $350 for partners and $200 to $250 for senior associates are reasonable); Rndriguez v Pressler & Pressler, LLP, 06 CV 5103, 2009 WL 689056, at *1 (E,D.N.Y. Mar. 29, 2009) (holding that hourly rates 01'$450 and $300 were reasonable for a Fair Debt Collection Practices Act case). Although this case involves trademark matters which may be more complicated than some Galjes and require a certain amount of specialized expertise, the work that was perfonned in this Galje was relatively straightforward. Much of the time in this case was spent in drafting the Complaint and the papers in connection with the default. (See PI:s Mem., Ex. P). Under thcse circumstances, the Court finds that the ratc requested is reasonable and will apply the rate of $JOO per hour for Mr. Neuman's work. 3. Hill''''' Billed Twning to the number of hours billed for this matter, plaintiff seeks a total award of fees, 34 representing 32,6 hours of'Work by Mr. Newnan. (Pl.'s Mem., Ex, Pl. [n accordance With the requirements 711 F.2d at 1148. submitted a computer-generated printout of its attorney's contemporaneous time records, showing the dates worked and the amount of time spent on ca,e, aloog with a precise description of the tasks perfonned, According to the invoices submitted, Mr. Neuman spent \3.5 hours researching. drafting and editing the Complaint, and another \3.8 hours researching and preparing the papers in support of the default motion. The m<\iority of the remaining hours were spent prior to the Iiling oftbe action, discussing the with plaintiff and attempting to discuss the case with defendant Fromer. For example, Mr. Neuman spent 2.8 hours traveling to meetings with plaintiff and in telephone conference, and email exchanges with plaintiff, reviewing the evidence and history orthe case. Counsel also spent 2.5 hours preparing emails and correspondence to Mr. Fromer warning him of the violations. Having reviewed the plaintiff's submissions, the Court finds the number of hours requested by plaintill"1O be reasonable and plaintiff$9,780.00 in attorneys' fees. E. Costs Plainti!T aI,,, seeks an award of disbursements and costs in the amount of$605.64 in costs. (Neuman Oed ... 10). Under the Lanham Act, the prevailiog party is entitled to recover its reasonable costs in pursuing the action. 15 U.S.c. § 1117; Fed. R. Civ. P. 54(d). The plaintiff may recover only those costs "necessary to cure the effects of the harm caused by the violation." Eu Yan Sang Intern, Ltd. v. S&M enters, <U.S.A) Enterprise Com., No. 09 CV 4235, 2010 WL 3824129 at *5 (F. D."I.Y. Sept. 8, 2010). "[S]ubject to the principles of equity," costs arc 35 awarded in default, see Sara Lee Corp. v. Bags of New York. Inc,. 36 F. Supp, 2d at 170-71 (citing 15 U.S.c. *1117(a)). bUllhe "plaintitlbears the burden ofjustirying the requested costs." Eu Yan Sang Intern, Ltd. v, S&M enters. (U.S.A) Enterprise Com., 2010 Wl3824129 at *5, Plaintifr ,eeks reimbursement, for filing fees and service of process fees." These costs are those nonnally subsumed by the client during litigation, and so are appropriate to cure the effects of the ml"ringing activity. Plaintillhas satisfied his burden by providing a contemporaneous and itemized accounting of each cost associated with this case. (pI.'s Mem., Ex. Pl. Accordingly. the Court recommeods that plaintiff be awarded a total of$605.64 in costs. F. Inj\lncti\'e Relief Plaintiff also asks the Court to issue a pennanent injunction enjoiniog defendants from using the Study Logic mark and the www.studylogicdata.comdomain.(Compl.at 25). Courts may issue an injunction on a motion for default judgment provided that the moving party shows that (1) it is entitled to injunctive relief under the applicable statute and (2) it meets the prerequisites for the issuance of an injunction.'" Dunkin' Donuts Inc v Peter Romanofsky. Inc" No. 05 CV 3200. 2006 WI. 2433127, ut *6 (E.D.N.Y. Aug. 8, 2006); Garis v. Uncut RawTV. l!:!&., No. 06 CV 5031. 2011 WL 4404035, at *3 (E.D.N.Y. Jut 5, 2011). Section 43 of the I.anham Act provides lor sueh relief: wrhe owner of a mark that is distincti\c. ."hall he entitled to an injunction against another person who .. ,commences usc of a mark in commerce that is likely to cause dilution by blurring or dilution by tarnishmcnt "Specifically, plaintiff requests $350 in filing fees; $90.00 for service on the Secretary of State, and $t64.65 for service on Fromer and Clear Net. (PI's Mem., Ex. Pl. 36 of the famous mark, regardless of the presence or absence of actual or likely confusion, uf competition, or of actual injuf}." 15 Li,S,C, § 1125(c)(l), Sec Tiffany eN}) Inc v. cSay Inc., 600 F. 3d at I I (}..I I. The Ac t further provides that '""in any civi I action invo Iving the registration, trafficking, or usc of a domain name under this paragraph, a Court may order the forfeiturc or cancellation oflbe domain name or the transfer of the domain name to the owner of the mark." 15 U.S.c' § 1125(d)(I)(C). Sec Sporty's farm '--L.C. v. Sportsman's Market. Inc., 202 F.3d 489,500 (2d CiL). cer!. denied, 530 \).S. 1262 (2000). The Second Cin:uit has held that ··a permanent injunction is warranted Where a party has succeeded on merits.·· Mamiya Am. Coro. v. Huayi Bros.. Inc., 2011 WL 1322383, at +8 (citing RQach v. Morse, 440 F.3d 53, 56 (2d Cir. 2006)), and establishes "(I) that is has suffered an irreparable injury: (2) that remedies ayailahle at law, such as monetary damages, are inadequate to compensate tilT that injury; (3) that, considering the balance of hardships between the plaintiff ami the defendant. a remedy in equity is warranted; and (4) that the public interest would not be by a permanent injunction" Id. at +9 (citing Salinger y. Colting, 607 F.3d 68, 77 (2d Cir. 2010)). Accordingly, sinee plaintiff Study wgic has established its Lanham Act claims by yi rtue of delendan . de 1i\U1t, and there l:o/ succeeded on the merits, it is entitled to an injunction if it establishes the remaining factors. See id. ·'Irreparahle injury in trademark cases is established where 'there is any likelihood that an appreciable numher of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as 10 the source· of the goods or services in question." Id. (quoting Lobo Enters., v. Tunnel.. Inc., 822 F.2d 331, 333 (2d Cir. 1987)). A requisite for the Court to grant permanent injunctive that purchaser:s of the product may be misled in the future. Brundy Com. v. 37 Teledyne Indus" Complaint and 748 F.2d 767, 772 (2d Cir. 1984). The Court's review of plaintiffs Declaration of Me. Nachmias cstablisll tllat defendants will likely continue to infringe the Study Logic mark and domain and that such use is likely to misleadeonsumers. Defendants have repeatedly ignored plaintiffs communications and they have failed to transfer the domain to plaintiff even after mldtiple requests. (Comp!. 27, 32, 33, 36, 43-48, 50). Plaintiff has alleged that defendants' i[lfringement has already caused confusion for one of its clients (Compl .• 63, 65, 67-(9), and il is likely tllat other customers intending to find Study Logic's website could be dlverted to the domain. Next, an adequate remedy at law exists if an injured party ean be compensated by a monetary damageS award. Borey v. Nat'l Union Fire Ins. Co., 934 F,2d 30, 34 (2d Cir. 1991). However, "in eases where about the origin of goods or services leads to damage to reputation or los, of a potential relationship ",ith a client tllat 'would producc an indeterminate amount of business in years 10 come, monetary damages are dinicult to establish and are unlikely to present an adequate remedy at law:' Mamiya Am Com. v. Huayi Bros.. inc., 2011 WI, 1322383, at *9 (citing Register.com, Inc. v Veno.inc., 356 F.3d 393, 404 (2d Cir. 2004». If defendants do IlOtlransfer the www.,tudylogicda!aeomdomain, it may harm Study Logic's "reputation and husiness in ways that may be difficult to quantify and that will not lend themselves ea'il} 10 monetary compensation:' lQ. The balance of hardships also ",eighs in Study Logic's favor. Study Logic "faces the threat of irreparable hann to [its] reputation and good will," id. at * 10, wherell5 an injunction would not prevent defendants from continuing Iheir business or cause any other harm that would outweigh the likely harm to Stud} Logic if the Court does not granlan injunclion. Finally, the 38 public interest will not be disserved by the issuance of a permanent injunction in this case. "The public has an intcrest in not bcing dcceivcd - in being assured that the mark it associates with a product is not attached to goods of unknown origin and quality." New York City Triathlon. LLC v. NYC Triathlon Club, Inc, 704 F. Supp. 2d at 344. Study Logic has established that defendants' actions are likely to cause consumers to be deceived; thus, it is in the public interest to issue a permancnt mjunction in this case. Accordingly, the Court respectfully recommends that defendants be enjoined from using the Study Logic mark und Ordered tn transfer the www.studylogicdata.com domain to plaintiff. CONCLUSION The Court respectfully recommends that the plainliffbe awarded: $60,000 in enhanced damages ($20.000 in statutory damages trebled); $50 for New York State law violations; $4,500 for breach of contract; $9,780.00 in attorneys' fees; and $605.64 in costs, for a total judgment against the defendants of $74,935.64. Further, the Court respectfully recommends that plaintiff's request for a permanent injunction ordering defendants to transfer the domain and desist from using the Study I.ogie murk be granted. Any objections to this Report and Recommendation must be filed with the Clerk of the Court, with a copy to the undersigned, within fourteen (14) days ofreceipt of this Report. Failure to file within the specified time waives the right to appeal the District Court's order. See 28 U.S.C. § 636(b)(I); Fed. R. Civ. P. 6(a), 6(e). 72(b); Small v. Secretary of Health & Human Serv,. 892 F.2d 15, 16 (2d Cir. 1989). 39 The Clerk is direcled to send copics of this Report and Rccommendation 10 the panies either electronically through the Electronic Case Filing (RCF) system or by mail. SO ORDERED. Dated: Brooklyn, New York September21,20l2 --. Chcryl L P Ilak United St s Magistrate Judge 40

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