have power to grant injunctions, according to the principles of equity and upon such terms as the
court may deem reasonable, to prevent the violation of any right of the registrant of a mark registered
in the [PTO].” 15 U.S.C. § 1116(a). The statute contemplates some showing by the plaintiff of a
threat of future infringing conduct by the defendant. V3 Solutions, Inc., 2003 WL 22038593 at *16.
Both corporate defendants are either defunct or dissolved (PI.’s Exs. 58, 59; Stip. 43), and Plaintiff
has not demonstrated how Defendants are likely to continue their infringing conduct in light of this
fact. Plaintiff has not demonstrated that there is a risk that defendant Kim will personally continue
to infringe Plaintiff's trademarks, Thus, Plaintiff's request for an injunction is denied. See V3
Solutions, Inc., 2003 WL 22038593 at *16-17 (denying injunctive relief where plaintiff failed to

establish a threat of future continued infringement by defendants).

Conclusion
For the foregoing reasons, judgment is granted in favor of Plaintiff Tony Jones Apparel, Inc.
and against Defendants Indigo USA LLC, Indigo USA Ltd., and Hae Kim in the sum of $50,000
jointly and severally against all Defendants. In addition, the court finds that Plaintiff is entitled to
its reasonable attorney’s fees and costs. Plaintiffs counsel shall file and serve submit a written
submission of her attorney’s fees by July 25, 2005. Any objection to Plaintiff's fee request must be
filed and served no later than August 8, 2005.

IT IS SO ORDERED AND ADJUDGED.

Geraldine Soat Brown
United States Magistrate Judge
July 11, 2005

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v. Future Chem. & Oil Corp., 753 F.2d 565, 569-70 (7th Cir. 1985)). To determine whether there
is sufficient “unity of interest and ownership,” Illinois courts have considered some of the following:
(1) the failure to maintain adequate corporate records or comply with corporate formalities, (2) the
commingling of funds or assets, (3) undercapitalization, and (4) one corporation treating the assets
of another as its own. Van Dorn Co., 753 F.2d at 570. As discussed above, Kim did not preserve
corporate formalities in managing the corporate defendants, and did not maintain separate books,
records and bank accounts from those of the corporate defendants. That evidence also supports the
conclusion that the corporations’ funds or assets were commingled, and that Kim used the
corporations’ assets as his own.

Once the first part of the test is established, as it is here, the second part of the test is satisfied
by demonstrating either the sanctioning of a fraud (intentional wrongdoing) or the promotion of
injustice. Jd. Although the “promote injustice” test requires less than fraud, it requries more than
the prospect of an unsatisfied judgment. Hystro Prods., 18 F.3d at 1390. It requires some element
of unfairness. /d. Illinois courts have pierced the corporate veil to avoid injustice when, for
example, failure to do so would unfairly enrich one of the parties, id. (citing B. Kreisman & Co. v.
First Arlington Natl. Bank, 415 N.E.2d 1070 (Ill. App. 1980)), or would allow a former partner to
ignore obligations, id. (citing Gromer, Wittenstrom & Meyer, P.C. v. Strom, 489 N.E.2d 370 (Ill.
App. 1986)).

In this case, the court finds that Plaintiff has demonstrated that failing to pierce the corporate
veil would promote injustice. Defendant Kim set up two corporations with virtually identical names
that were apparently just fronts for his own activities. One of the corporations never conducted any

activity. Kim used the corporate assets for his own purposes without accounting for that use. It

-14-


sale and selling Clench goods in interstate commerce to retailers and distributors at wholesale and
through in-person and catalog sales throughout the United States. (Stip. Jf 2, 7, 12, 15, 63.) Since
1996, Plaintiff has sold in excess of $45 million in Clench goods and spent over $1 million in
advertising and other marketing costs associated with Clench goods. (Stip. §§ 13, 14.) Eighty
percent of those sales and advertising/marketing costs involve goods bearing Plaintiff's Lion Head

Logo. (Stip. | 64.)

B. The Corporate Defendants and Individual Defendant Kim

Defendant Indigo USA Ltd. is an Illinois corporation with places of business in Chicago and
Buffalo Grove, Illinois, and was engaged in the business of selling wholesale merchandise including
men’s apparel beginning in December 2000. (Stip. §§ 4, 6, 31.) Indigo USA Ltd. is currently
dissolved. (P1.’s Ex. 58.) Defendant Indigo USA LLC has never engaged in business of any kind,
but had a place of business in Chicago. (Stip. § 29, 30.) Indigo USA LLC is presently defunct.
(Pl.’s Ex. 59; Stip. 3.) Individual defendant Kim resides in Buffalo Grove, Illinois and was the sole
shareholder/member, executive and officer of both corporate defendants at all times during their
existence. (Stip. J] 5, 35, 37-39.) Kim carried out all substantive actions by the corporate

defendants. (Stip. § 43.)

Cc. Defendants’ Acts in Connection with the Men’s Velour Track Suits
In September 2002, the corporate defendants purchased 2,040 sets of men’s velour hooded
tops and long pants (track suits) bearing marks virtually identical to or substantially indistinguishable

from Plaintiff's trademarks, including the CLENCH mark. (Stip. §f 16, 20; P1.’s Ex. 10 at Interrog.

5.


Under § 1117(b), the court “may in its discretion award prejudgment interest.” Although
Plaintiffs Complaint also requested prejudgment interest and the parties stipulated to the fact that
Plaintiff was seeking prejudgment interest (Compl., Prayer for Relief J; Stip. 78), Plaintiff made
no argument at trial or in any submissions as to why it should be awarded prejudgment interest.
Because Plaintiff has not made any argument in support of its request for prejudgment interest, the

request is denied.

2. Costs and Attorney’s Fees

In addition to its request for statutory damages, Plaintiff also asks the court to award it costs
and reasonable attorney’s fees. (Tr. 23-25; Stip. ] 79; Compl. 52; Prayer for Relief § G.) Under
the Lanham Act, a plaintiff whose trademark has been infringed “shall be entitled” to recover costs.
15 U.S.C. § 1117(a). Thus, Plaintiff is awarded its costs.

Regarding attorney’s fees, § 1117 provides that a plaintiff may be awarded attorney’s fees
in two circumstances: (1) if a defendant has sold counterfeit goods, attorney's fees may be awarded
in “exceptional cases” (§ 1117(a)); but (2) if the violation consists of “intentionally using a mark or
designation, knowing such mark or designation is a counterfeit mark,” attorney’s fees must be
awarded unless there are “extenuating circumstances” (§ 1117(b)). Thus, if a defendant is liable
because it was willfully blind or because it knew the products it was selling were counterfeit, an
award of attorney’s fees is mandatory under § 1117(b) absent extenuating circumstances. See Hard
Rock Café, 955 F.2d at 1151 (stating that “[w]illful blindness is sufficient to trigger the mandatory
provisions of subsection b”); Louis Vuitton S.A. v. Lee, 875 F.2d 584, 590 (7th Cir. 1989) (stating

that § 1117(b) requires a showing that the “defendant’s violation involved ‘knowing such mark . .

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indistinguishable from, a designation as to which the remedies of this chapter are made available.”
Jd. § 1116(d)(1)(B).

To prevail on a claim under this section, a plaintiff must establish that: (1) it holds a valid
trademark, and that the defendants (2) used a reproduction, counterfeit, copy, or colorable imitation
of a mark; (3) without the registrant’s consent; (4) in commerce; (5) in connection with the sale of
any goods; (6) where such use is likely to cause confusion, or to cause mistake, or to deceive.
Microsoft Corp. v. Logical Choice Computers, Inc., No. 99 C 1300, 2001 WL 58950 at *8 (N.D. Ill.
Jan, 22, 2001) (Pallmeyer, J.) (citation omitted).

Plaintiff has met its burden. First, Plaintiff has registered its CLENCH mark, and Defendants
admit that the existence of the trademark’s registration placed them on constructive notice of
Plaintiff's rights in the mark. (Stip. §§ 8, 9, 10, 42; Sept. 23, 2003 Mem. Op. & Order at 2, 5.) That
registration is “prima facie evidence of the validity of the registered mark .. . and of the registrant’s
exclusive right to use the registered mark.” CAE, Inc. v. Clean Air Engineering, Inc., 267 F.3d 660,
673 (7th Cir. 2001) (quoting 15 U.S.C. § 1115(a)). Thus, Plaintiff's mark is presumed valid and
protectable based on the undisputed evidence of registration. Moving on to the remaining elements,
Plaintiff has offered unrebutted evidence that Defendants used and/or distributed a counterfeit mark.
Specifically, the velour track suits that the corporate defendants purchased, imported into the U.S.,
and sold bore marks that were virtually identical to or substantially indistinguishable from Plaintiff's
marks. (Stip. ff 16, 17, 20; Pl.’s Ex. 10 at Interrog Nos. 11, 12; Pl.’s Exs. 3-8, 13, 14, 31.) Third,
Plaintiffhas demonstrated that Defendants obtained the track suits without Plaintiff's consent. (Stip.
4 18, 19, 22-23, 71.) Fourth, there is no dispute concerning the corporate defendants’ sale of the

counterfeit goods in commerce; the evidence shows that the corporate defendants sold the goods to

-10-


sent a “cease and desist” letter to the corporate defendants on December 16, 2002. (Stip. 23.) The
corporate defendants never responded to either of those communications. (Stip. 24.) Plaintiff filed
this lawsuit suit on January 14, 2003. (Stip. 4 25.)

On April 29, 2003, pursuant to a Request for Permission to Enter onto the Premises of the
corporate defendants, Plaintiff's attorney, Catherine Simmons-Gill, and Stanley Sneeringer, an
attorney working as an independent contractor for Ms. Simmons-Gill, visited the corporate
defendants’ business premises. (Stip. { 26; Tr. 9-10.) Mr. Sneeringer testified that at one of the
warehouses, he observed a large number of boxes bearing the Tony Jones Apparel name. (Tr. 9, 10-
11; Stip. | 55.) Mr. Sneeringer stated that when they opened one of the boxes (which they did in
defendant Kim’s presence), they found velour track suits containing the stylized version of the
CLENCH mark as well as a Lion Head Logo, although those goods had not been produced by or for
Plaintiff. (Tr. 7, 11-12; Stip. §§ 27, 56; Pl.’s Ex. 27, Photographs; Pl.’s Ex. 31, Track Suit &
Packaging.) Mr. Sneeringer photographed and videotaped the velour track suits, and Plaintiffs
counsel produced one of the suits at trial. (Stip. §§ 27, 55; Tr. 7; Track Suit & Packaging.) The
marks on the velour track suits were virtually identical to or substantially indistinguishable from
Plaintiff's trademarks. (Stip. {J 16, 20; Pl.’s Exs. 3-8, 13, 14, 31.) Further, the track suits were
packaged in plastic wrap containing the CLENCH mark and the Lion Head Logo, as well as the

name “Tony Jones Apparel, Inc.” (Tr. 7; Stip. 4 55; Photographs; Track Suit & Packaging.)"°

‘© Mr. Sneeringer testified that at the Chicago warehouse, they also observed several faux
leather jackets whose labels bore Lion Head Logos as well as the name “Indigo.” (Tr. 9, 13; Stip.
{1 66, 67.) Mr. Sneeringer estimated that there were about “40 or 50" boxes of those leather
jackets in that facility. (Tr. 13-14.) He testified that between the two facilities, there were
approximately 160 boxes bearing the name “Tony Jones Apparel.” (Tr. 11, 12.)

-7-


No. 11.) Those sets are referred to as the “counterfeit goods.” The corporate defendants purchased
the counterfeit goods from S & L Trading in Seoul, Korea and imported them into the United States.
(Stip. 17.) S & L Trading was not authorized by Plaintiff to sell any goods bearing Plaintiff's
trademarks to any U.S. individual or entity other than Plaintiff. (Stip. 4 18, 19.) Defendants had
not received consent from Plaintiff to purchase or resell those goods. (Stip. f 18-19, 22-23, 71.)

In December 2002, the corporate defendants resold approximately eleven dozen of the
counterfeit goods to three retailers for a combined total of $13,320. (PI.’s Ex. 10 at Interrog. No.
12.)° It appears that each dozen was sold for a minimum of $720.00, or $60.00 per track suit. (P1.’s
Ex. 10 at Interrog. No. 12.) Defendants knew at the time they purchased, imported, and sold the
counterfeit goods that those goods bore trademarks which were virtually indistinguishable from or
identical to Plaintiff's trademarks, and knew that the trademarks belonged to Plaintiff. (Stip. 44] 49-
52, 60, 61.) Defendants had not performed a trademark search or sought the advice of counsel with
respect to the trademarks on those goods. (Stip. J] 53, 54.) Defendants admit that the existence of
Plaintiff's federal registration placed them on constructive notice of Plaintiff's rights in the mark.
(Stip. J] 10, 42, 49-54.) Plaintiff first discovered Defendants’ use of its CLENCH mark and other
trademarks in or about December 2002 when a customer informed a representative of Plaintiff that
potentially counterfeiting Clench goods were in the marketplace. (Stip. § 21.) Plaintiff's executive
director contacted the corporate defendants around that time and demanded that they cease the illegal

distribution of the counterfeit goods. (Stip. ] 22.) After receiving no response, Plaintiffs counsel

° Specifically, seven dozen were sold to Fox Fashion (located in Danville, Georgia) for
$8,820.00, one dozen were sold to Deep Fashion (located in Bollingbrook, Illinois) for $720.00,
and three dozen were sold to Hamdies Fashion (location not provided) for $3,780.00. (Stip. 44
57-59; Tr. 8; Pl.’s Ex. 10 at Interrog. No. 12.)

-6-


. is counterfeit,” and that “willful blindness is knowledge enough”); Zelinski v. Columbia 300, Inc.,
335 F.3d 633, 642 (7th Cir. 2003). If, however, the defendant is liable “only because it had ‘reason
to know’ that [the products] were counterfeits, then the district court should award attorney’s fees
only if it finds that the circumstances were exceptional.” Hard Rock Café, 955 F.2d at 1151. An
“exceptional case” is one in which the acts of infringement are “malicious, fraudulent, deliberate or
willful.” BASF Corp. v. Old World Trading Co., 41 F.3d 1081, 1099 (7th Cir. 1994) (citation
omitted). See Lorillard, 2004 WL 2534378 at *8 (awarding attorney’s fees under § 1117(a) based
on determination of willful infringement by defendant); BASF Corp., 41 F.3d at 1099 (affirming
award of attorneys’ fees under § 1 117(a) based on district court’s conclusion that the acts complained
of were deliberate).

As discussed above, the court has already found that Defendants’ counterfeiting activity was
deliberate and willful. Thus, this is an “exceptional case” pursuant to § 1117(a), and the court finds
that Plaintiff is entitled to its reasonable attorney’s fees. In addition, the court finds that Plaintiff is
also entitled to its reasonable attorney’s fees under § 1117(b), as Defendants acted “willfully blind,”
and no extenuating circumstances exist which would preclude such an award.

At the trial, Plaintiffs counsel stated that she would submit a written submission of her
attorney’s fees if an award of fees was granted. (Tr. 24-25.) Plaintiff's counsel is required to do so

by July 25, 2005.

3. Injunctive Relief
Lastly, Plaintiff seeks a permanent injunction enjoining Defendants from further infringing

Plaintiff's products. (Compl. § 51, Prayer for Relief G.) The Lanham Act states that courts “shall

-19-


seeking: (1) damages and/or Defendants’ profits and prejudgment interest for the acts of
counterfeiting relating to the track suits, under 15 U.S.C. §1117 (Stip. {9 76, 78; Tr. 14-15, 17-18);
(2) costs and reasonable attorneys’ fees, under 15 U.S.C. §1117 (Stip. | 79; Tr. 23-24); and (3) an

injunction with respect to the counterfeit track suits, under 15 U.S.C. §1116 (Stip. § 75).

Conclusions of Law and Analysis

A. Jurisdiction

Federal jurisdiction exists under 28 U.S.C. § 1331 (federal question jurisdiction) and 28
U.S.C. § 1367 (supplemental jurisdiction for the state law claims). (Final Pretrial Order J 1.) The
parties have consented to the jurisdiction of a magistrate judge. [Dkt 43, 44.] Jurisdiction is not

disputed. (Final Pretrial Order 4 1.)

B. The Corporate Defendants’ Liability for Counterfeiting Activity

Plaintiff alleges that Defendants violated § 32 of the Lanham Act (Compl. § 49), which
provides, in relevant part:

Any person who shall, without the consent of the registrant — (a) use in commerce

any reproduction, counterfeit, copy, or colorable imitation of a registered mark in

connection with the sale, offering for sale, distribution, or advertising of any goods

or services on or in connection with which such use is likely to cause confusion, or

to cause mistake, or to deceive . . . shall be liable in a civil action by the registrant.
15 U.S.C. § 1114(1)(a). The term “counterfeit mark” is defined as “a counterfeit of a mark that is
registered on the principal register in the [PTO] for such goods or services sold, offered for sale or

distributed and that is in use, whether or not the person against whom relief is sought knew such

mark was so registered,” or “a spurious designation that is identical with, or substantially

9.


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
TONY JONES APPAREL, INC., )
Plaintiff, )
) Case No. 03 C 0280
v. )
) Magistrate Judge Geraldine Soat Brown
INDIGO USA LLC, INDIGO USALTD., _)
HAE KIM and JOHN DOES 1-5, )
Defendants. )

MEMORANDUM OPINION AND ORDER

In Count III of its Complaint, plaintiff Tony Jones Apparel, Inc. (“Plaintiff”) alleged that
corporate defendants Indigo USA LLC and Indigo USA Ltd. (“the corporate defendants”) and
individual defendant Hae Kim (“Kim”) engaged in trafficking in counterfeit goods with respect to
their distribution of certain apparel bearing Plaintiff's trademarks. (Compl. {§ 47-52.) [Dkt 1.]
(Defendant Kim and the corporate defendants are collectively referred to as “Defendants.”) Plaintiff
seeks judgment against the corporate defendants and Kim individually. (/d. § 7-11.) Plaintiff also
seeks injunctive relief, damages, and attorney’s fees. (/d. 4 1; Prayer for Relief §¥ E, F, G.)' The
parties consented to the jurisdiction of a magistrate judge on May 26, 2004. [Dkt 43, 44.] For the

reasons set forth below, judgment is entered for Plaintiff on its trafficking in counterfeit goods count

' Plaintiff's Complaint also alleged claims of federal and common law trademark
infringement (Counts I and IV), federal and common law unfair competition (Counts II and V),
and deceptive trade practices (Count VI). (Compl. §§ 37-46, 53-63.) Plaintiff previously filed a
motion for partial summary judgment on those counts, which was granted by the District Judge
with respect to the corporate defendants, but no findings of liability were made with respect to
the individual defendant. (Sept. 23, 2003 Mem. Op. & Order at 11.) [Dkt 32.] As will be
explained below, Plaintiff is no longer seeking relief with respect to any of those counts; thus, the
liability of the individual defendant regarding those counts is not at issue.


plaintiff's registered marks appear in their entirety.”). As noted above, Defendants did not appear
at trial to contest this evidence. Thus, the corporate defendants are liable for infringement of
Plaintiff's trademarks through their sale of goods bearing counterfeit CLENCH marks in violation

of the Lanham Act.

Cc. Individual Liability of Defendant Kim

Plaintiff asserts that defendant Kim is individually liable for infringing Plaintiff's
trademarks. (Tr. 21-22.) Again, Kim did not appear at trial to contest any of the evidence regarding
his personal liability. The court finds that Kim is individually liable under three separate theories:
vicarious liability, contributory liability, and piercing the corporate veil.

Courts have found that an individual may incur liability for a corporation’s infringement
under two theories: (1) vicarious liability; and (2) contributory liability. See Logical Choice
Computers, 2001 WL 58950 at *10 (citing Burdick v. Koerner, 988 F. Supp. 1206, 1209 (E.D. Wis.
1998)). “An individual may be held vicariously liable if he has the right and ability to supervise the
infringing activity and also has a direct financial interest in such activities.” /d. (citations omitted).
A party may be held contributorily liable “if he has knowledge of the infringing activity and directly
participates in the infringing activity or induces, causes, or materially contributes to the infringing
conduct of another.” Jd. (citations omitted). A contributory infringer is jointly and severally liable
for the infringement. /d. (citations omitted).

The undisputed evidence demonstrates that: (1) defendant Kim was the sole
shareholder/member, executive, and officer of both corporate defendants; (2) the corporate

defendants failed to observe corporate formalities or maintain separate books, records and bank

-12-


at least three different retailers in various states including Georgia and Illinois. (Stip. J 20, 57-59;
Pl.’s Ex, 10 at Interrog. No. 12.)

Finally, with respect to the last element, “likelihood of confusion,” seven factors are generally
considered: (1) the similarity between the marks in appearance and suggestion; (2) the similarity of
the products; (3) the area and manner of concurrent use; (4) the degree of care likely to be exercised
by consumers; (5) the strength of the complainant’s mark; (6) actual confusion; and (7) the intent
of the infringing party to “palm off” its product as that of the other party.'! Johnny Blastoff, Inc. v.
Los Angeles Rams Football Co., 188 F.3d 427, 436 (7th Cir. 1999) (citation omitted). In this case,
the marks appearing on the track suits are clearly similar in appearance and suggestion to Plaintiff's
marks (Stip. J{ 16, 20; Pl.’s Exs. 3-8, 13, 14, 31; Sept. 23, 2003 Mem. Op. & Order at 7); the
products sold by the parties are similar (PI.’s Exs. 3-5, 30, 31; Stip. ff 2, 6, 9, 16; Sept. 23, 2003
Mem. Op. & Order at 7-8); the area and manner of the parties’ usage is concurrent (Stip. {§ 12, 15,
20; Sept. 23, 2003 Mem. Op. & Order at 8); there is likely little care exercised by consumers in
purchasing the products (Sept. 23, 2003 Mem. Op. & Order at 8-9); the CLENCH mark is a strong
trademark (id. at 6-7); and it appears as though Defendants did intend to palm off its product as the
product of Plaintiff (id. at 9). Thus, Plaintiff has established the likelihood of confusion element,
as well. See Microsoft Corp. v. CMOS Tech, Inc., 872 F. Supp. 1329, 1335 (D.N.J. 1994) (“It would
be difficult to imagine a clearer case of consumer confusion than the instant case in which the

defendants, acting in direct competition with the plaintiff, sold counterfeit products on which

"' While intentional infringement may lead to enhanced statutory damages, it is not
required to prove a defendant’s liability. 15 U.S.C. § 1117(c); see also Hard Rock Café
Licensing Corp. v. Concession Servs., Inc., 955 F.2d 1143, 1152 n. 6 (7th Cir. 1992) (“We note
in passing that the district court did not have to find that [the defendant] was willfully blind to
establish its liability. Sellers bear strict liability for violations of the Lanham Act.”).

-ll-


D. Evidence Regarding the Maintenance of Corporate Formalities

Since at least 2001, one or more of the Defendants maintained a checking account at Foster
Bank in Chicago under the name, “Indigo U.S.A.” (Stip. 944, 45.) Kim was the only signatory on
that account. (Stip. | 46.) Kim personally obtained funds belonging to, and said that he loaned
money to, Indigo USA Ltd. without documenting or accounting for that activity. (P].’s Ex. 60, Hae
Kim Dep. at 71-72, 74-75, 64-65, 67.) Kim wrote numerous checks to the order of “cash” out of the
Foster Bank account. (Stip. § 47) Neither he nor Indigo USA Ltd. could account for the funds
received as a result of many of those checks. (Kim Dep. at 66-67, 71.) Kim wrote a check payable
to himself, explaining at his deposition that the check was reimbursement for expenses on behalf of
the corporation, but he did not provide any receipt or other documentation of the expenses. (/d. at
64.) Kim wrote at least one check for $1,500 on the account of Indigo USA Ltd. payable to his wife,
although she did not work for Indigo USA Ltd. and there is no claim that Indigo USA Ltd. owed her
money. (/d. at 70.) He testified that he took cash from Indigo USA to repay money he borrowed
personally, and thought there “might be a record that has Indigo[’s] name on it.” (/d. at 71-72.)
However, there was no documentation for those loans or any repayments. (/d.) Kim presented

nothing to the court to contest, rebut, or explain any of this evidence.

E, Relief Sought by Plaintiff

At trial, Plaintiff's counsel stated that Plaintiff is not seeking remedies for Defendants’
alleged infringement of Plaintiff's Lion Head Logo through Defendants’ sale of faux leather jackets
(discussed at footnote 10, supra), but instead, is only seeking remedies for Defendants’

counterfeiting activity as it relates to the men’s velour track suits. (Tr. 15, 26.) Thus, Plaintiff is

-8-


Mem. Op. & Order.) [Dkt 32.]* The following constitutes the court’s findings of fact and
conclusions of law pursuant to Fed. R. Civ. P. 52(a). To the extent certain findings may be deemed
conclusions of law, they shall also be considered conclusions. Similarly, to the extent matters
contained in the conclusions of law may be deemed findings of fact, they shall also be considered

findings. See Miller v. Fenton, 474 U.S. 104, 113-14 (1985).

Findings of Fact

A. Plaintiff's Business and Trademarks

Plaintiffis a New Jersey corporation with its principal place of business in New Jersey. (Stip.
4/1.) Plaintiff owns federal Registration No. 2,243,323 for the trademark CLENCH, which was
registered in the United States Patent and Trademark Office (“PTO”) on May 4, 1999 for men’s,
women’s and children’s apparel, bags, eyeglasses, and sunglasses (collectively referred to as the
“Clench goods”). (Stip. f¥ 8, 9.) In conjunction with the registered CLENCH mark, Plaintiff uses
a CLENCH mark, a stylized version of the CLENCH mark, a lion’s head logo (“Lion Head Logo”),
a hang tag bearing the Lion Head Logo, and a distinctive tan and brown grid design. (Stip. {| 11.)
All of those are referred to as “Plaintiff's trademarks.” Plaintiff's Lion Head Logo, which was
adopted in 1997, is distinctive as a trademark for Plaintiff's goods. (Stip. ]§ 62, 63, 65.) A
photograph of Plaintiff's hang tag bearing the Lion’s Head Logo is attached as Exhibit B to the
Complaint.

Since at least 1997, Plaintiff has been in the business of advertising, marketing, offering for

* The District Judge adopted this court’s recommendation that Kim be barred from
challenging or introducing any evidence inconsistent with or contrary to the findings in the
September 23, 2003 opinion. (Order, May 13, 2004.) [Dkt 42.]

-4.


would be unjust to allow defendant Kim to insulate himself from personal liability by means of a
corporate identity that he did not respect. In addition, Kim would be unfairly enriched (by the profits
from the counterfeiting activity) if he were allowed to avoid liability in this case. Thus, Kim is

individually liable through a piercing of the corporate veil, as well.

D. Remedies

Once counterfeiting activity has been established, a plaintiff is entitled, subject to certain
limitations, to recover the defendants’ profits, any damages sustained by the plaintiff, and the costs
of the action. 15 U.S.C. § 1117(a). A plaintiff may also be entitled to attorney’s fees, id. § 1117(a),

(b), prejudgment interest, id. § 1117(b), and injunctive relief, id. § 1116(a), as discussed below.

L Damages

Under the Lanham Act, a trademark owner may elect to recover an award of statutory
damages, rather than actual damages and profits, for any use of a counterfeit mark in connection with
the sale, offering for sale, or distribution of goods or services. See id. § 1117(c); Lorillard Tobacco
Co. v. S & M Central Serv. Corp., No. 03 C 4986, 2004 WL 2534378 at *3 (N.D. Ill. Nov. 8, 2004)
(Holderman, J.). At trial, Plaintiffs counsel stated that Plaintiff was seeking monetary relief in the
amount of $50,000, whether that figure be calculated as Defendants’ profits under § 1117(a) or
statutory damages under § 1117(c). (Tr. 4, 14-15, 17-18; Stip. { 76.) The court awards Plaintiff

statutory damages, based on Plaintiff's election under § 1117(c)."”

? With regard to the calculation of Defendants’ profits, Plaintiff's counsel stated that
Plaintiff estimated a profit of $25.00 per each of the 2,040 sets of velour track suits (which would
amount to an award of $51,000). (Tr. 4, 14-15, 17-18.) Plaintiff's counsel explained that the

-15-


(Stip. §§ 53, 54); and that the corporate defendants failed to respond to Plaintiffs requests that they
cease and desist their infringing activities (Stip. { 22-24). Based on those facts, the court concludes
that Defendants knowingly and willfully infringed Plaintiff's trademarks by selling goods bearing
the counterfeit CLENCH marks. See V3 Solutions, Inc., 2003 WL 22038593 at *15, 16 (finding
willfulness based on defendants’ reckless disregard for and willful blindness to plaintiffs trademark
rights); Logical Choice Computers, 2001 WL 58950 at * 10 (finding “willful blindness” even though
plaintiff sent only one cease and desist letter to defendant before filing suit) (citing Microsoft Corp.
vy. Compusource Distrib., Inc., 115 F. Supp. 2d 800, 809 (E.D. Mich. 2000)). As such, Plaintiff is
entitled to a statutory damages award of up to $1,000,000. 15 U.S.C. § 1117(c).

As mentioned above, however, Plaintiff requests damages in the amount of only $50,000,
regardless of how that amount is calculated (i.e., whether it is calculated as actual damages and/or
profits, or statutory damages).'* Defendants have not challenged Plaintiff's request for statutory
damages of $50,000. Because the counterfeiting activity was committed knowingly and willfully,
and the amount requested by Plaintiff is less than Plaintiff's reasonable estimate of Defendants’
profits (see footnote 12, supra), the court awards Plaintiff the amount of $50,000 in statutory

damages.

‘Plaintiff's counsel subsequently stated at trial that the court “could grant up to a
million dollars if [it] finds that [the infringement] was willful,*(Tr. 19), and that it may be
directed under § 1117(b) to order treble damages. (Tr. 24.) However, Plaintiff’s counsel did not
request such an amount. In fact, on the issue of treble damages, Plaintiff's counsel stated: “[W]e
would not turn away from them if your Honor ordered them . .. . However, we are not trying to
be overreaching in this with an individual defendant; we are simply trying to get something
reasonable.” (Tr. 24.) In addition, in both the parties’ stipulations and Plaintiff's Proposed
Findings of Fact and Conclusions of Law, Plaintiff requested statutory damages of up to
$100,000, not $1,000,000. (Stip. 76; Pl.’s Prop’d § 93.) Thus, the court concludes that
Plaintiff has requested an award of statutory damages of not more than $100,000 and, more
specifically, $50,000.

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Judge had been stipulated by the parties, and accepted the stipulated facts as proof in this case. [Dkt
51.]' At Plaintiff's request, the court scheduled a rule to show cause hearing as to why default
judgment should not be entered against the corporate defendants on all claims. [ld]

At the time scheduled for the trial, Plaintiff’s counsel appeared for the rule to show cause
hearing and trial but, again, no one appeared on behalf of Defendants, including defendant Kim. (Tr.
3; dkt 53.)° Plaintiff's oral motion for default against all Defendants on all claims pursuant to Fed.
R. Civ. P. 55(b)(2) was granted, and a bench trial proceeded. (Tr. 4, 5; dkt 53.) Even though a
default order was entered, Plaintiff through its counsel presented evidence on the issues of liability
as well as damages.®

The court has carefully considered the stipulations of uncontested fact in the parties’ final
pretrial order, the exhibits admitted into evidence, and the testimony of the sole witness, Stanley
Sneeringer. (Final Pretrial Order; Tr. 8-14; Pl.’s Exs. 1-60.)’ The court has also considered the

District Judge’s findings in his opinion granting partial summary judgment. (September 23, 2003

* Those facts are cited herein as “Stip. |__.” Prior to the trial, Plaintiff filed a revised
Pretrial Order on November 1, 2004, which also contained a statement of uncontested facts. [Dtk
52.] However, because that Pretrial Order was not signed by anyone on behalf of the Defendants,
the court has looked to the parties’ original stipulations.

* Citations to the transcript of the trial on November 15, 2004 are cited herein as (“Tr.

—)

® See Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and
Procedure, vol. 10A, § 2682, 18 (3d ed., West 1998) (stating that “if the trial proceeds in the
absence of the defendant, the court should require plaintiff to present evidence supporting
liability, as well as damages, and a judgment should be entered in plaintiff's favor only if the
evidence supports it”),

7 At the trial, Plaintiff's Exhibits 1 through 60 were admitted into evidence. (Dkt 53; Tr.
5-6, 19, 25.] They will be cited herein as “Pl.’s Ex. __.”

3.


against the corporate defendants and against individual defendant Kim. Individual defendant Kim’s
liability is based on three separate theories, namely, vicarious liability, contributory liability, and
piercing the corporate veil. Plaintiff is awarded statutory damages in the amount of $50,000 and its

reasonable attorney’s fees and costs jointly and severally against all Defendants,”

Background

Prior to the reassignment of the case to this court, the parties submitted a draft final pretrial
order to the District Judge. See dkt 36, 51. That draft order, which contained certain Stipulations
of Uncontested Fact at Tab A, was signed by both Plaintiffs counsel and counsel then representing
Defendants. (Final Pretrial Order.)’ Subsequently, Defendants’ counsel was granted leave to
withdraw as counsel. [Dkt 50.] Defendants were given time to obtain new counsel [id], but no new
attorney ever filed an appearance on their behalf.

Following reassignment, a pretrial conference was held on November 8, 2004, and a bench
trial was held on November 15, 2004. [Dkt 48, 51, 53.] At the pretrial conference, no one appeared
on behalf of Defendants, including individual defendant Kim. [Dkt 51.] The court found at the

pretrial conference that the facts contained in the draft final pretrial order submitted to the District

> The Complaint filed on January 14, 2003 also referred to John Doe defendants 1
through 5. (Compl. § 12.) However, the John Doe defendants apparently were never identified
or served. Any attempt to name or serve them now would be untimely. See Fed. R. Civ. P. 4(m).
Therefore, the failure of those John Doe defendants, who were never actual parties to the case, to
consent does not defeat the jurisdiction of the magistrate judge. See Williams v. General Elec.
Capital Auto Lease, Inc., 159 F.3d 266, 269 (7th Cir. 1998) (stating that “the lack of consent of
someone who is not a party to an action does not deprive the magistrate judge of jurisdiction”).

> The draft final pretrial order was filed in open court on February 18, 2004 [dkt 36], but
was never entered on the court docket. Thus, that document is being entered on the docket
concurrently with this opinion.

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accounts from those of defendant Kim; and (3) all of the substantive actions of the corporate
defendants were carried out by defendant Kim. Under the legal standards discussed above, Kim is
both vicariously and contributorily liable. As the sole shareholder/member, executive, and officer
of both corporate defendants at all times during their existence, Kim had the right and ability to
supervise the sale of the counterfeit goods, and would have had a direct financial interest in any
profits resulting from the counterfeiting activity. In addition, Kim had knowledge of the
counterfeiting activity and directly participated in it. Moreover, as will be discussed further below,
the corporate defendants’, and thus Kim’s, actions amounted to willful infringement. Those facts
meet the standards of vicarious and contributory liability. See Logical Choice Computers, 2001 WL
58950 at *10-11.

In addition, Kim is individually liable though a piercing of the corporate veil. The general
rule is that a shareholder is not liable for a corporation’s debts. Browning-Ferris Ind. of Illinois, Inc.
v. Ter Maat, 195 F.3d 953, 959 (7th Cir, 1999), “However, a court may disregard a corporate entity
and pierce the veil of limited liability where the corporation is merely the alter ego or business
conduit of another person or entity.” Fieldturf Intl, Inc. v. Triexe Mgmt. Group Inc., No. 03 C 3512,
2004 WL 866494 at *4 (N.D. Ill. April 16, 2004) (Nolan, M.J.) (quoting Peetoom v. Swanson, 778
N.E.2d 291, 295-96 (II. App. 1992)). To pierce a corporate veil under Illinois law, two requirements
must be met:

First, there must be such unity of interest and ownership that the separate

personalities of the corporation and the individual [or other corporation] no longer

exist; and second, circumstances must be such that adherence to the fiction of

separate corporate existence would sanction a fraud or promote injustice.

Hystro Prods., Inc. v. MNP Corp., 18 F.3d 1384, 1388-89 (7th Cir. 1994) (quoting Van Dorn Co.

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Under the Lanham Act, the present statutory minimum and maximum are $500 and $100,000
per counterfeit mark per type of goods or services sold for non-willful infringement, 15 U.S.C. §
1117(c)(1), and a court may award up to $1,000,000 per counterfeit mark if the plaintiff proves that
the infringement was committed willfully. 15 U.S.C. § 1117(c)(2); see also Microsofi Corp. v. V3
Solutions, Inc., No, 01 C 4693, 2003 WL 22038593 at *14 (N.D. Ill. Aug. 28, 2003) (Grady, J.). In
setting an appropriate statutory damages amount, courts are not required to follow any “rigid
formula,” V3 Solutions, Inc., 2003 WL 22038593 at *16, and have wide discretion. Logical Choice
Computers, 2001 WL 58950 at *11 (citation omitted)."? In the present case, Plaintiff asserts that
Defendants’ infringement was knowing and willful. (Tr. 19-21; Pl.’s Prop’d {J 69, 70 [dkt 52].)
“Willful infringement may be attributed to the defendant’s actions where he had knowledge that his
conduct constituted infringement or where he showed a reckless disregard for the owner’s rights.”
Logical Choice Computers, 2001 WL 58950 at *11 (citing Wildlife Express Corp. v. Carol Wright
Sales, Inc., 18 F.3d 502, 511 (7th Cir. 1994)). See also Hard Rock Café, 955 F.2d at 1149 (stating
that “willful blindness” is equivalent to actual knowledge). The unrebutted evidence demonstrates
that Defendants knew that the goods bore trademarks belonging to Plaintiff at the time of purchase,
importation, and sale of the goods (Stip. J] 51, 52, 61); that Defendants never performed a trademark

search and did not seek the advice of counsel with respect to the marks on the counterfeit goods

track suits were sold by Defendants for $60.00 per garment, and the $25.00 per garment figure
was “a modest request because usually the markup is 100 percent, and in the case of these items
we believe it’s 200 percent.” (Tr. 14.) The court finds that calculation to be reasonable.

' Courts may consider factors such as “the difficulty or impossibility of proving actual
damages, the circumstances of the infringement, and the efficacy of the damages as a deterrent to
future copyright infringement.” Chi-Boy Music v. Charlie Club, Inc., 930 F.2d 1224, 1229 (7th
Cir. 1991) (citations omitted).

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