08-4483-cv(L)

Louis Vuitton Malletier S.A. v. LY USA, Inc.

1 UNITED STATES COURT OF APPEALS

2 FOR THE SECOND CIRCUIT

3 August Term, 2010

4 (Argued: May 27, 2011 Decided: March 29, 2012)

5

6 Docket Nos. 08-4483-cv, 08-4525-cv, 08-4528-cv, 08-5108-cv, 08-

7 5273-cv, 08-5290-cv

8 -------------------------------------

9 LOUIS VUITTON MALLETIER S.A.,

10 Plaintiff-Appellee,

11 - v -

12 LY USA, INC., COCO USA INC., CHONG LAM, MARCO LEATHER GOODS,

13 LTD., JOYCE CHAN,

14 Defendants-Cross Claimants-Cross Defendants-Appellants.

15 -------------------------------------

16 Before: SACK, LIVINGSTON, and LYNCH, Circuit Judges.

17 Appeal from a judgment of the United States District

18 Court for the Southern District of New York, Alvin K.

19 Hellerstein, Judge, granting summary judgment to the plaintiff on

20 its claims of trademark counterfeiting and infringement, and

21 awarding the plaintiff statutory damages in the amount of

22 $3 million, and more than $500,000 in attorney's fees and costs. 

23 The defendants base their appeal of the judgment on the

24 counterfeiting and infringement claims primarily on the district

25 court's denial of a stay of the action pending the resolution of

26 a related criminal proceeding. They also appeal from the award

27 of attorney's fees to the plaintiff under 15 U.S.C. § 1117. We
2

1 conclude that the district court did not abuse its discretion in

2 declining to stay the proceedings; that, as the district court

3 concluded, an award of attorney's fees under 15 U.S.C. § 1117(a)

4 may accompany an award of statutory damages pursuant to 15 U.S.C.

5 § 1117(c); and that the district court did not abuse its

6 discretion in awarding such fees or in setting their amount.

7 The judgment of the district court is affirmed. 

8

9 ANGELO RIOS (Mark N. Antar, on the

10 brief), Cheven, Keely & Hatzis, New

11 York, NY, for Defendants-Cross

12 Claimants-Cross Defendants-Appellants

13 CoCo USA Inc. and Joyce Chan.

14 JOHN K. ZWERLING (Michael G. Dowd, Law

15 Offices of Michael G. Dowd, New York,

16 NY; Kathleen C. Waterman, Thomas Torto,

17 Law Offices of Kathleen C. Waterman, New

18 York, NY, on the brief) Zwerling, Leibig

19 & Moseley, P.C., Alexandria, VA, for

20 Defendants-Cross Claimants-Cross

21 Appellants Chong Lam, LY USA Inc., and

22 Marco Leather Goods, Ltd.

23 MICHAEL J. ALLAN (William G. Pecau, on

24 the brief), Steptoe & Johnson LLP,

25 Washington, DC, for Plaintiff-Appellee

26 Louis Vuitton Malletier.

27

28 SACK, Circuit Judge:

29 The defendants -- LY USA, Inc., CoCo USA Inc., Marco

30 Leather Goods, Ltd., Chong Lam, and Joyce Chan -- appeal from

31 judgments entered September 2, 2008, and October 15, 2008, in the

32 United States District Court for the Southern District of New

33 York (Alvin K. Hellerstein, Judge) granting summary judgment to

34 the plaintiff Louis Vuitton Malletier S.A. ("Louis Vuitton" or

35 "Vuitton") on its claims of trademark counterfeiting and
1

 We refer to such fees throughout this opinion as

"attorney's fees," the term used in 15 U.S.C. § 1117(b), rather

than the less commonly used "attorney fees," the term used in 15

U.S.C. § 1117(a), or the likely more accurate "attorneys' fees,"

see NAACP v. Town of E. Haven, 259 F.3d 113, 115 n.1 (2d Cir.

2001) ("Although the fees sought in this case are for multiple

attorneys, we refer to them in the singular possessive,

'attorney's fees,' because that is the term used by [the statute

in that case] for such awards.").

3

1 infringement, and awarding Vuitton statutory damages in the

amount of $3 million, and more than $500,000 in attorney's fees1 2

3 and costs.

4 The defendants appeal from five separate decisions of

5 the district court: (1) the grant of summary judgment on the

6 trademark counterfeiting and infringement claims; (2) the award

7 of statutory damages; (3) the denial of the defendants' motion to

8 adjourn oral argument to permit the defendants to examine

9 purportedly new evidence; (4) the denial of the defendants'

10 motion to stay the proceeding pending the outcome of a related

11 criminal proceeding; and (5) the grant of attorney's fees in

12 addition to statutory damages. We affirm the judgment of the

13 district court on the first three of these issues by a summary

14 order filed today. This opinion addresses only the denial of the

15 motion for a stay and the award of attorney's fees.

16 The defendants argue that the district court erred in

17 denying the requested stay because the court did not give

18 sufficient weight to the consequent impairment of the indicted

19 defendants' Fifth Amendment privilege against self-incrimination,

20 and because it failed to consider the practical difficulties
4

1 attendant on defending simultaneous criminal and civil

2 proceedings. The defendants also contend that the district court

3 lacked a statutory basis for awarding attorney's fees because

4 Louis Vuitton had elected to recover statutory damages, rather

5 than actual damages, under the Lanham Act, and that in any event

6 the attorney's fees were excessive. 

7 We disagree with the contentions of the defendants. We

8 conclude that the district court did not abuse its discretion in

9 denying the stay. We also conclude that a plaintiff electing

10 statutory damages pursuant to 15 U.S.C. § 1117(c) may recover

11 attorney's fees pursuant to 15 U.S.C. § 1117(a), and that the

12 district court did not abuse its discretion either in awarding

13 attorney's fees and costs in this case or in determining their

14 amount.

15 BACKGROUND

16 This case is about an alleged large-scale trademark

17 counterfeiting operation conducted by the defendants Lam and Chan

18 and several companies that they either controlled or were

19 otherwise associated with. It involved the importation and sale

20 of counterfeit luxury goods bearing trademarks owned by Louis

21 Vuitton and others. After the conclusion of this civil case, the

22 defendants were convicted in the United States District Court for

23 the Eastern District of Virginia for their importation into the

24 United States and sale of more than 300,000 handbags, wallets,

25 and other products that resembled goods produced by Louis
2

 The details of the related criminal proceeding are

rehearsed here for background purposes only. This Court may take

judicial notice of any fact that "can be accurately and readily

determined from sources whose accuracy cannot reasonably be

questioned." Fed. R. Evid. 201(b)(2).

5

Vuitton, Burberry, Coach, and other luxury goods manufacturers.2 1

2 Lam and Chan used a variety of companies, including defendants3 appellants LY USA. Inc., CoCo USA Inc., and Marco Leather Goods,

4 Ltd., to facilitate their operation. "Whenever [Customs and

5 Border Patrol ("CBP")] agents would identify one corporation as

6 an importer of counterfeit goods, Defendants would continue to

7 import goods into the same port, but under a different corporate

8 name. If Defendants believed CBP agents could identify them as

9 responsible for importing counterfeit goods into a port, they

10 would ship the goods to a different port." United States v. Lam,

11 No. 3:07-CR-374, 2010 WL 5178839, at *1, 2010 U.S. Dist. LEXIS

12 132126, at *3 (E.D. Va. Dec. 14, 2010). Goods allegedly imported

13 by the defendants were seized between August 2002 and January

14 2008 in Houston, Los Angeles, Newark, New York, Norfolk, and

15 elsewhere. 

16 This civil case comprises claims by Louis Vuitton

17 against the defendants for the related counterfeiting and

18 infringement of their trademarks. The district court determined

19 that three of the defendants' collections infringed or were

20 counterfeit copies of five separate Louis Vuitton trademarks. 

21 The court based its conclusion on testimony, adverse inferences

22 drawn from the failure of the corporate defendants to offer
6

1 testimony, records of numerous customs seizures, and visual

2 evidence. Tr. of Oral Arg. on Summ. J. Mot. at 53, Louis Vuitton

3 Malletier S.A. v. LY USA Inc., et al., No. 06-cv-13463 (S.D.N.Y.

4 August 7, 2008)("Summ. J. Hr'g Tr."). 

5 The Parties

6 Louis Vuitton is a French fashion house founded in

7 1854. It began selling its products in the United States in 1893. 

8 Since 1987, it has been a part of LVMH Moët Hennessy, a publicly

9 traded corporation. Louis Vuitton manufactures and distributes

10 luxury consumer goods, including leather goods, designer luggage,

11 purses, handbags, leather travel accessories, jewelry, shoes, and

12 other high-end fashion apparel. Vuitton has registered with the

13 U.S. Patent and Trademark Office many trademarks, including its

14 well-known monogram logo, which consists of a stylized,

15 overlapping "L" and "V" (the "LV Logo Mark"). The company spends

16 millions of dollars each year to advertise and market its

17 trademarked goods in magazines, newspapers, catalogs, targeted

18 mailings, and on the Internet. See Louis Vuitton Malletier v.

19 Dooney & Bourke, Inc., 454 F.3d 108, 112 (2d Cir. 2006)

20 (describing Louis Vuitton's business model, trademarks, and

21 marketing expenditures); Louis Vuitton Malletier v. Burlington

22 Coat Factory Warehouse Corp., 426 F.3d 532, 534-35 (2d Cir. 2005)

23 (same); see also Louis Vuitton Malletier S.A. v. Haute Diggity

24 Dog, LLC, 507 F.3d 252, 257-58 (4th Cir. 2007) (same); Steven

25 Greenhouse, The Champagne of Mergers, NEW YORK TIMES D1 (June 4,

26 1987) (describing the merger of Moët-Hennessy and Louis Vuitton). 
7

1 The defendants are LY USA, Inc., ("LY Inc.") a New York

2 corporation formed in 2003, which primarily produces and markets

3 "LY"-branded handbags and wallets; Marco Leather Goods, Ltd.,

4 ("Marco Ltd.") a New York corporation formed in 1999, which

5 imports "Marco"-branded handbags and wallets and sells them to

6 wholesale customers throughout the United States; and CoCo USA

7 Inc., ("CoCo Inc.") a New York corporation formed in 2003, which

8 is a wholesaler and distributor of handbags and leather goods. 

9 LY Inc., Marco Ltd., and CoCo Inc. all operate out of the same

10 business address at 135 West 30th Street in Manhattan. The

11 defendant Lam is the president and owner of Marco Ltd.; the

12 defendant Chan is a manager and director of that company. Lam

13 and Chan are not married, but have two children together. CoCo

14 principally distributes goods imported by Marco, and sells them

15 through venues including a storefront location at 135 West 30th

16 Street. CoCo is owned by a member of Lam's family, and both Lam

17 and Chan are associated with the company. Lam is also a

18 shareholder, officer, and director of LY Inc. The goods imported

19 and sold by the defendants were manufactured at a factory in

20 China owned by Lam's family. 
3

 15 U.S.C. § 1114(1)(a) makes civilly liable any person who

uses a "reproduction, counterfeit, copy, or colorable imitation

of a registered mark" without the consent of the registrant if

"such use is likely to cause confusion, or to cause mistake, or

to deceive." 15 U.S.C. § 1125(a) authorizes a civil action

8

1 Louis Vuitton's Trademarks

2 Louis Vuitton owns many trademarks, some of which are

3 widely recognized. Five are at issue in this litigation: the LV

4 Logo Mark, three different geometric floral motifs (the "Flower

5 Design Marks"), and a composite pattern consisting of repetitions

6 of the LV Logo Mark centered inside the three Flower Design

7 Marks. Louis Vuitton has registered each of these marks with the

8 U.S. Patent and Trademark Office on the principal register, and

9 each has become "incontestable" as a result of its continuous use

10 in commerce for more than five years. See 15 U.S.C. § 1065

11 (governing incontestability); Dooney & Bourke, 454 F.3d at 112

12 (noting that these marks are incontestable). 

13 The Civil Lawsuit

14 On November 22, 2006, Louis Vuitton filed this lawsuit

15 in the United States District Court for the Southern District of

16 New York alleging that the defendants sold counterfeit handbags

17 and travel apparel bearing infringing versions of Louis Vuitton's

18 marks to retail kiosks and specialty stores, and on the Internet

19 to both wholesale and retail customers. In its complaint,

20 Vuitton asserted claims for trademark counterfeiting, trademark

21 and service mark infringement, trademark dilution, and false

22 designation of origin forbidden by Sections 32 and 43 of the

Lanham Act, 15 U.S.C. §§ 1114, 1125(a), 1125(c);3 23 trademark
against any person who uses "any word, term, name, symbol, or

device" in a manner likely to deceive as to the origin of the

product or the affiliation of the supplier. And 15 U.S.C. §

1125(c) permits the owner of a "famous mark" to seek injunctive

relief against another person whose of use of a mark "is likely

to cause dilution by blurring or dilution by tarnishment of the

famous mark."

4 Section 349 generally provides that deceptive acts or

practices in the conduct of business are unlawful. N.Y. Gen.

Bus. Law § 349 (McKinney 2011). Section 360-l provides for

injunctive relief where injury to business reputation or dilution

of a registered mark is likely. Id. § 360-l.

9

1 infringement and unfair competition in violation of New York

2 State common law; and violations of New York General Business Law

§§ 349, 360-l.4 3

4 Louis Vuitton alleged that the defendants had supplied

5 tens of thousands of items bearing counterfeits and infringements

6 of the Louis Vuitton trademarks to wholesalers and retail kiosks

7 throughout the United States. Vuitton alleged that U.S. Customs

8 officials had seized tens of thousands of counterfeit handbags,

9 tote bags, cosmetic bags, and wallets imported by LY Inc. and

10 Marco Ltd. because those products infringed Louis Vuitton's

11 marks. Each of the defendants answered the plaintiff's complaint

12 and interposed cross-claims against one another for

13 indemnification and contribution. 

14 After fruitless settlement discussions, discovery was

15 begun. Louis Vuitton's efforts were aimed at ascertaining the

16 scope of the defendants' counterfeiting and infringement in order

17 to determine the appropriate amount of damages to seek. The
10

1 first document production by the defendants in August 2007

2 resulted in the production of fewer than 40 pages. On September

3 25, 2007, Vuitton sent letters to all of the defendants outlining

4 what it said were deficiencies with their production and also

5 with contemporaneous interrogatory answers. Vuitton also asked

6 the district court to order the defendants to produce additional

7 documents and to complete and verify interrogatory answers no

8 later than the time of a status conference scheduled for

9 January 3, 2008. 

10 On October 23, 2007, the parties sent a joint letter to

11 the district court noting that Louis Vuitton had noticed six

12 depositions, and had notified the defendants "of deficiencies

13 with their written discovery." Letter from Michael J. Allan,

14 Esq. et al., to Hon. Alvin K. Hellerstein at 1, Louis Vuitton

15 Malletier S.A. v. LY USA Inc., et al., No. 06-cv-13463 (S.D.N.Y.

16 Oct. 23, 2007), ECF No. 25. The parties requested a stay of

17 discovery pending a mediation before a magistrate judge. The

18 letter read, in part:

19 [T]he defendants have agreed to provide Louis

20 Vuitton with certain information sufficiently

21 in advance of mediation to help facilitate an

22 efficient and useful mediation. 

23 Specifically, defendants will provide Louis

24 Vuitton with complete sales, inventory and

25 supplier information for all merchandise

26 Louis Vuitton contends is counterfeit and/or

27 infringing of its trademarks as well as any

28 other merchandise defendants may have

29 manufactured, imported or sold that bear

30 marks similar to or substantially

31 indistinguishable from Louis Vuitton's

32 trademarks.

33 Id. at 1.
11

1 On December 7, 2007, Louis Vuitton's counsel reported

2 to the court that the mediation had not been successful, and that

3 the defendants had not produced "complete 'sales, inventory and

4 supplier' information" in advance of the mediation as promised. 

5 Letter from Michael J. Allan, Esq. to Hon. Alvin K. Hellerstein

6 at 1, Louis Vuitton Malletier S.A. v. LY USA Inc., et al., No.

7 06-cv-13463 (S.D.N.Y. Dec. 7, 2007), ECF No. 28 ("December 7

8 Discovery Letter"). Counsel requested an order compelling

9 discovery or a conference to address the outstanding discovery

10 issues. Id. at 2. 

11 A status conference was then held on January 3 or 4,

12 2008, to address these disputes. No transcript or other record

13 of this proceeding was created.

14 On February 13, 2008, Lam and Chan jointly wrote to the

15 District Court notifying it that they had been arrested

16 elsewhere. They requested a stay of this lawsuit pending

17 resolution of the federal criminal proceedings because, counsel

18 said, in executing the search warrant at their business

19 headquarters on January 16 in connection with the criminal

20 proceedings, federal law enforcement officials had "remove[d]

21 computers, documents and other records as a well as a significant

22 amount of defendants' merchandise from the premises." Letter

23 from Angelo Rios, Esq., et al. to Hon. Alvin K. Hellerstein at 2,

24 Louis Vuitton Malletier S.A. v. LY USA Inc., et al., No. 06-cv25 13463 (S.D.N.Y. Feb. 13, 2008), ECF No. 30 ("February 13 Letter

26 Requesting Stay"). Counsel asserted that as a result, they "no
12

1 longer ha[d] access to the information, documents and other

2 things necessary to conduct meaningful discovery." Id. Counsel

3 also advised the court that "access to our clients will be

4 severely limited both by the constraints placed upon them by

5 their criminal defense attorneys as well as conditions imposed by

6 the Court with respect to their release from custody." Id. For

7 those reasons, the defendants argued, "it will be impossible . .

8 . to proceed with pretrial discovery in the instant action while

9 the criminal action is pending," and they therefore "request[ed]

10 that all proceedings . . . be stayed until conclusion of the

11 criminal action." Id. 

12 Louis Vuitton responded with a letter opposing the

13 stay, arguing that the defendants "are using the criminal case

14 inappropriately as a shield against the civil case." Letter from

15 Michael J. Allan, Esq. to Hon. Alvin K. Hellerstein at 1, Louis

16 Vuitton Malletier S.A. v. LY USA Inc., et al., No. 06-cv-13463

17 (S.D.N.Y. Feb. 22, 2008) ("February 22 Letter Opposing Stay

18 Request"). Vuitton explained that at the early January

19 conference, the defendants had represented that they had "no

20 additional responsive documentation" and they had fully answered

21 the interrogatories. Id. at 3.

22 On March 3, 2008, in a one-page order, the district

23 court denied the defendants' motion for a stay. The court

24 considered the defendants' argument that the parallel criminal

25 proceeding -- as well as the seizure of the defendants'

26 documents, goods, and computers by law enforcement officials --
13

1 would "impede[] their ability to mount a defense to the civil

2 action, or to engage in meaningful pre-trial discovery." Order

3 Den. Mot. for Stay at 1, Louis Vuitton Malletier S.A. v. LY USA

4 Inc., et al., No. 06-cv-13463 (S.D.N.Y. March 8, 2008), ECF No.

5 31 ("Order Denying Motion for Stay"). The court noted Vuitton's

6 opposition to the stay on the grounds that the civil case had

7 been pending for more than a year; that any delay would hinder

8 the plaintiff's "need for prompt redress"; and that

9 "[c]onsiderable discovery already has been had." Id. The

10 district court then ruled:

11 Defendants' motion is denied. Plaintiff has

12 an interest in the prompt prosecution of its

13 case. Its trademark is valuable, and

14 counterfeit goods threaten the value of its

15 trademark and cut into sales. If there is

16 imposition involved, the court can deal with

17 such matters as and when there is threat of

18 imposition.

19 Id. at 1.

20 On March 25, 2008, defendants Lam and Marco Ltd. filed

21 a motion for reconsideration of their request for a stay. They

22 then argued for the first time that they and the other defendants

23 intended to assert their Fifth Amendment rights in the course of

24 their depositions.

25 [P]laintiff insists on going forward with

26 defendants' depositions in an attempt . . .

27 to take advantage of defendants' situation so

28 that plaintiff can then move for summary

29 judgment relying on the absence of testimony

30 from defendants as well as the adverse

31 inference which might be raised by

32 defendants' asserting their constitution[al]

33 right not to incriminate themselves.

34 
5 Corporations do not have a Fifth Amendment right against

self-incrimination. See, e.g., Braswell v. United States, 487

U.S. 99, 105 (1988) (noting that prior cases had "settled that a

corporation has no Fifth Amendment privilege"); In re Grand Jury

Subpoena Issued June 18, 2009, 593 F.3d 155, 157-58 (2d Cir.

2010) (per curiam) ("[C]orporations cannot avail themselves of

the Fifth Amendment privilege."). In this Circuit, at least,

this rule includes small or solely owned corporations. See In re

Grand Jury Subpoena, 593 F.3d at 158-59. Accordingly, a

14

1 Not. Of Cross-Motion to Rearg. ¶ 7, Louis Vuitton Malletier S.A.

2 v. LY USA Inc., et al., No. 06-cv-13463 (S.D.N.Y. March 26,

3 2008), ECF No. 54.

4 The district court, noting that it had "previously

5 considered the arguments presented in this motion, evaluated the

6 balance of convenience and prejudices, and came to [its]

7 rulings," denied the motion. Den. of Mot. for Recons., Louis

8 Vuitton Malletier S.A. v. LY USA Inc., et al, No. 06-cv-13463

9 (S.D.N.Y. March 26, 2008), ECF No. 54.

10 Discovery continued. Louis Vuitton gave notices of

11 deposition of the defendants Lam and Chan. They refused to

12 appear, citing their intent to exercise their Fifth Amendment

13 right against self-incrimination. Vuitton then moved to compel

14 their depositions. The district court granted the motion, and

15 Chan and Lam appeared for depositions on April 15 and April 16,

16 respectively. But both asserted their Fifth Amendment privileges

17 and refused to answer nearly every question asked of them. 

18 On June 5, 2008, Louis Vuitton moved for summary

19 judgment on all of its federal and state-law claims. The same

20 day, Vuitton also moved pursuant to Rule 37(d) to preclude the

three corporate defendants5 21 –- LY Inc., Marco Ltd., and CoCo Inc.
corporation may not refuse to submit to a Rule 30(b)(6)

deposition, or to turn over corporate records, on the grounds

that such acts may tend to incriminate it. Id. at 157-58. The

defendant corporations were, of course, free to designate

individuals other than Chan and Lam as 30(b)(6) witnesses. See

Fed. R. Civ. P. 30(b)(6). 

6 Rule 30(b)(6) provides:

Notice or Subpoena Directed to an Organization.

In its notice or subpoena, a party may name

as the deponent a public or private

corporation, a partnership, an association, a

governmental agency, or other entity and must

describe with reasonable particularity the

matters for examination. The named

organization must then designate one or more

officers, directors, or managing agents, or

designate other persons who consent to

testify on its behalf; and it may set out the

matters on which each person designated will

testify. A subpoena must advise a nonparty

organization of its duty to make this

designation. The persons designated must

testify about information known or reasonably

available to the organization. This paragraph

(6) does not preclude a deposition by any

other procedure allowed by these rules.

15

1 -- from submitting further evidence as a sanction for their

2 failure to respond to the plaintiff's demand for Rule 30(b)(6)

depositions.6 3

4 In responding to that motion, one of the defendants'

5 attorneys declared that "Marco and Lam have . . . responded to

6 plaintiff's requests for admissions, interrogatories, and other

7 discovery requests. Notably, plaintiff does not point to any

8 specific written discovery requests to which defendants Marco and

9 Lam did not fully respond." Decl. of Thomas Torto in Opp'n to

10 Mot. to Preclude Introduction of New Evidence ¶ 3, Louis Vuitton
16

1 Malletier S.A. v. LY USA Inc., et al, No. 06-cv-13463 (S.D.N.Y.

2 June 20, 2008), ECF No. 74. 

3 The parties briefed both the summary judgment motion

4 and the motion to preclude. At oral argument on August 7, 2008,

5 after hearing from all of the parties, the district court granted

6 summary judgment to Louis Vuitton on the trademark counterfeiting

7 and infringement claims, and granted Louis Vuitton a permanent

8 injunction. The court did not appear explicitly to draw any

9 adverse inference from Lam's and Chan's invocation of the Fifth

10 Amendment. However, it did draw an adverse inference from the

11 corporate defendants' refusal to submit Rule 30(b)(6) witnesses

12 for depositions. See Summ. J. Hr'g Tr. at 46, 53. The district

13 court granted summary judgment on the counterfeiting claims based

14 on the testimony of a person who had been involved in the

15 operation, and "the absence of any opposition testimony by the

16 defendants, and their indifference . . . to the notices of

17 deposition served on them, the goods found among the counterfeit

18 goods seized by [U.S. Government Immigration and Customs

19 Enforcement, or "ICE"], the catalog photographs of the

20 defendants' goods and so much else." Summ. J. Hr'g Tr. at 53. 

21 The court also granted summary judgment on the infringement

22 claims, based on three separate product lines designed by the

23 defendants to resemble various handbags produced by Louis
7

 Those product lines are known as the M9 collection, the LY

collection, and the Cherry Blossom collection. The district

court explained that the "M9 collection . . . bears substantial

similarity to the [LV Logo Mark, floral motifs, and composite

mark] except that a cursive M replaces the LV logo, and that the

flower design is somewhat modified." Summ. J. Hr'g Tr. at 7. 

The Cherry Blossom collection "features bags with a brown canvas

base similar to the canvas of the Louis Vuitton bags, and the LY

logo is in contrasting colors in pink and red cherry blossom

flowers superimposed with pink and red cherry blossoms and

flowers superimposed over the logos." Id. at 7-8. The LY

Collection "replicates all of the Louis Vuitton marks except that

they've replaced an overlapping LV with a LY." Id. at 15.

17

Vuitton,7 1 after an analysis of the factors laid out in Polaroid

2 Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d Cir. 1961). 

3 The district court noted that "when the manufacturer of

4 knockoff goods offers a consumer a cheap knockoff copy of the

5 original manufacturer's more expensive product, allowing the

6 buyer to acquire the prestige of owning what appears to be the

7 more expensive product, there is infringement." Summ. J. Hr'g

8 Tr. at 55. The court reserved decision on the precise amount of

9 damages that would be awarded: 

10 I'll give the defendants an opportunity to

11 come forward with proof of their sales and

12 their customers for the accused merchandise. 

13 If they refuse, I will take the proper

14 inference and consider the application of the

15 plaintiffs. If they cooperate, and

16 plaintiffs are able to get an idea of where

17 their merchandise is, and thereby able to

18 mitigate their damage, and how much money the

19 defendants made, I will take that into

20 consideration in fixing the appropriate sum. 

21 Id. at 58.

22 One of the defendants' attorneys again protested that

23 he would not be able to produce the sales records because they

24 had been seized in connection with the criminal case. The
8 It is unclear to us whether the plaintiff was able to

secure any additional records by consulting with the U.S.

Attorney's office prosecuting the defendants' criminal case, or

whether the defendants were able to do so themselves. The record

does not reflect any additional attempts by the defendants to

secure the records the unavailability of which they initially

argued supported their application for the stay, nor did they

make any specific objections to the civil proceedings on the

basis of their inability to introduce specific documents.

18

1 district court instructed Louis Vuitton's attorney to assist the

2 defendants in responding by contacting the United States Attorney

3 to try to secure the seized records, and noted that "if any

4 orders or interventions from me would be helpful, I'll be glad

5 to." Id. at 60.

6 The district court entered a summary order formalizing

7 its ruling on August 11, 2008, and entered a permanent injunction

8 barring the defendants from infringing Louis Vuitton's trademarks

9 on September 2, 2008.

10 The district court proceeded to determine the amount of

11 damages and attorney's fees. Louis Vuitton confirmed in a letter

12 to the district court that it was seeking the maximum statutory

13 damages award of eight million dollars, plus attorney's fees,

14 costs, and investigative fees. The parties briefed these issues. 

15 Vuitton detailed its efforts to settle the case and

16 avoid litigation, as well as its efforts to secure records

17 detailing the scope of the defendants' copyright infringement. 

18 Louis Vuitton argued for "maximum damages" because the defendants

19 had "hid from discovery the documents and other information that

20 would reveal the full nature and extent of their counterfeiting

enterprise and activities."8 21 Mem. in Supp. of Appl. for
19

1 Statutory Damages, Attorney's Fees, Investigative Fees and Costs

2 at 8, Louis Vuitton Malletier S.A. v. LY USA Inc., et al., No.

3 06-cv-13463 (S.D.N.Y. Sept. 8, 2008), ECF No. 114.

4 The defendants argued that Louis Vuitton was precluded

5 by statute from recovering attorney's fees, that the attorney's

6 fees requested were excessive, and that the $8 million in

7 statutory damages Louis Vuitton sought "is not fair compensation

8 but punitive and draconian, grossly in excess of any actual

9 harm." Mem. in Opp. to Appl. for Statutory Damages, Attorney's

10 Fees, Investigative Fees and Costs at 14, Louis Vuitton Malletier

11 S.A. v. LY USA Inc., et al., No. 06-cv-13463 (S.D.N.Y. Sept. 19,

12 2008), ECF No. 128. 

13 On October 3, 2008, the district court awarded Louis

14 Vuitton $3 million in statutory damages and $556,934.22 in

15 attorney's fees and costs. The court noted that the

16 "[d]efendants, despite their protestations to the contrary, have

17 produced limited records, accountings, and sales invoices

18 regarding the merchandise at issue. Their failure to do so

19 invites an inference of a massive counterfeiting enterprise." 

20 Order Awarding Statutory Damages, Attorney's Fees, and Expenses

21 at 3, Louis Vuitton Malletier S.A. v. LY USA Inc., et al., No.

22 06-cv-13463 (S.D.N.Y. Oct. 3, 2008), ECF No. 133 ("Order Awarding

23 Statutory Damages"). The court concluded that an award of half

24 the $1,000,000 maximum statutory damages -- $500,000 -- was

25 appropriate for each of the LV Logo Mark and the three floral

26 motifs (4 x $500,000 = $2,000,0000); plus $250,000 for the
20

1 composite mark, and $250,000 each for the three infringements of

2 other types of goods (4 x $250,000 = $1,000,0000), for a total of

3 $3 million. Id. at 4-5. 

4 Each of the defendants filed timely appeals from these

5 judgments, which appeals were, however, withdrawn almost

6 immediately by stipulation of the parties. It was agreed among

7 them that the appeals would be subject to reactivation within 30

8 days after the jury returned a verdict in the criminal

9 prosecutions of Lam and Chan, or by August 2009, whichever came

10 first. Subsequent stipulations extended the alternate deadline

11 date to July 15, 2010.

12 The Criminal Proceedings

13 On October 2, 2007, a sealed indictment of Lam and

14 Chan, and Eric Yuen, one of their employees, was filed in the

15 Eastern District of Virginia. See Sealed Indictment, United

16 States v. Lam, No. 07-cr-374 (E.D. Va.), ECF No. 3. A

17 superseding indictment, filed March 26, 2009, charged the three

18 defendants with one count of conspiracy to traffic in counterfeit

19 goods, in violation of 18 U.S.C. § 371; two counts of smuggling

20 goods into the United States, in violation of 18 U.S.C. § 545;

21 and four counts of trafficking in counterfeit goods, in violation

22 of 18 U.S.C. § 2320(a). The charges arose out of Lam and Chan's

23 alleged conspiracy to import and smuggle counterfeit merchandise

24 into the United States between August 2002 and January 2008. See

25 Superseding Indictment, United States v. Lam, No. 07-cr-374 (E.D.

26 Va. March 26, 2009), ECF No. 60. The defendants allegedly
9 The jury was apparently unable to decide whether

counterfeit bags were actually seized in Norfolk, Virginia. 

Counts Two through Seven of the Superseding Indictment related

only to seizures in Norfolk. 

21

1 counterfeited luxury goods produced and distributed by Louis

2 Vuitton and by others under various other trademarks. The

3 indictment alleged that Lam, Chan, and Yuen acted in concert with

4 seven unindicted corporate coconspirators, including LY Inc.,

5 CoCo Inc., and Marco Ltd., to import counterfeit and infringing

6 goods. The defendants allegedly imported these goods through

7 different American ports, including, as noted above, Houston,

8 Newark, New York, Los Angeles, and Norfolk, and used different

9 corporate identities in an attempt to thwart seizures of their

10 goods by customs officials. Despite their attempts to evade

11 Customs, officials seized more than 300,000 items imported by the

12 Lam and Chan. United States v. Lam, 2010 WL 5178839, at *1, 2010

13 U.S. Dist. LEXIS 132126, at *3.

14 On January 16, 2008, Immigration and Customs

15 Enforcement agents arrested defendants Lam and Chan at their home

16 in Queens, New York. In addition, search warrants were executed

17 at the defendants' business headquarters in midtown Manhattan. 

18 Lam and Chan were arraigned in federal court in Richmond,

19 Virginia, on February 12, 2008.

20 On January 10, 2010, the defendants' criminal trial

21 began. When the jury deadlocked, a mistrial was declared on

January 25, 2010.9 22 
10 Allegations related to the importation of counterfeit

Louis Vuitton merchandise were included in Count One of the

Superseding Indictment, conspiracy to traffic in counterfeit

goods, of which Lam and Chan were found guilty. No allegations

relating to Louis Vuitton merchandise were included in the

remaining six counts of the Superseding Indictment.

22

1 After a subsequent retrial, on June 10, 2010,

2 defendants Lam and Chan were convicted of one count of conspiracy

3 to traffic in counterfeit goods, 18 U.S.C. § 371, two counts of

4 trafficking in counterfeit goods, 18 U.S.C. § 2320(a), and two

5 counts of smuggling goods into the United States, 18 U.S.C.

6 § 545. Lam and Chan were convicted principally of charges

7 related to a mark registered by Burberry Limited, not Louis

Vuitton.10 8 The jury acquitted Yuen of all charges. See United

9 States v. Lam, 2010 WL 5178839, at *1, 2010 U.S. Dist. LEXIS

10 132126, at *3-*4. 

11 On January 7, 2011, [the court] sentenced Lam

12 to eleven months and twenty-five days on

13 [three of the] counts . . . and eighteen

14 months [on two of the counts], all to be

15 served concurrently. The Court sentenced

16 Chan on the same day to five months

17 imprisonment to be followed by five months of

18 home confinement with electronic monitoring

19 on each of [the five counts of her

20 conviction], all to be served concurrently.

21 United States v. Lam, No. 3:07-CR-374, 2011 WL 1167208, at *2,

22 2011 U.S. Dist. LEXIS 33351, at *4-*5 (E.D. Va. Mar. 28, 2011).

23 Lam and Chan subsequently appealed their criminal

24 convictions; the government cross-appealed as to the sentences. 

25 Those appeals remain pending. See United States v. Lam, Nos. 11-

26 4056, 11-4081 (4th Cir.). 
23

1 Meanwhile, on June 30, 2010, all defendants jointly

2 moved to reactivate these appeals. They were reinstated by order

3 of this Court dated July 12, 2010. 

4 DISCUSSION

5 I. Jurisdiction

6 The district court had subject-matter jurisdiction over

7 the plaintiff's claims pursuant to 28 U.S.C. §§ 1331, 1338(a)-

8 (b), and 1367(a). We have subject-matter jurisdiction over the

9 appeal pursuant to 28 U.S.C. § 1291. 

10 II. The Defendants' Motion to Stay Proceedings

11 The defendants argue that the district court abused its

12 discretion in denying their request to stay the civil action

13 pending the resolution of the criminal prosecutions of Lam and

14 Chan in the Eastern District of Virginia. They assert that the

15 weight of authority in this Circuit favors a stay where, as here,

16 an indictment has issued against a civil defendant in a

17 substantially related criminal matter. Moreover, they argue that

18 "[t]he prejudice to defendants was severe and clearly outweighed

19 any inconvenience to plaintiff caused by the delay in prosecuting

20 this matter. . . . [Therefore,] Lam and Chan's Fifth Amendment

21 privilege should not have been made subordinate to the commercial

22 interests of Vuitton." Br. of Def.'s-Cross-Cl.'s-Cross-Def.'s23 Appellants at 18-19, Louis Vuitton Malletier S.A. v. LY USA,

24 Inc., et al., No. 08-4483 (2d Cir. Nov. 9. 2010).

25 The defendants further contend that when Lam and Chan

26 invoked their Fifth Amendment rights against self incrimination

27 at their depositions, the district court drew adverse inferences
24

1 against them -- inferences that supported the grant of summary

2 judgment in Louis Vuitton's favor. The defendants also assert

3 that by denying the stay, the district court deprived the

4 corporate defendants of the opportunity to offer testimony by Lam

5 and Chan in their defense. The district court's denial of the

6 stay, they argue, thereby "effectively doom[ed]" both the

7 individual and corporate defendants' efforts to defend the

8 action. Id. at 11.

9 A. Standard of Review

10 "A district court's decisions regarding the timetable

11 for trial will not be reversed absent an abuse of discretion. To

12 demonstrate an abuse of this discretion, a defendant must

13 demonstrate arbitrary action that substantially impaired the

14 defense." United States v. Beverly, 5 F.3d 633, 641 (2d Cir.

15 1993) (citation omitted) (concluding that refusal of district

16 court to grant continuance to permit two of criminal defendant's

17 witnesses to appear at trial was within court's discretion);

18 accord Microfinancial, Inc. v. Premier Holidays Int'l, Inc., 385

19 F.3d 72, 77-79 (1st Cir. 2004) (deciding district court's refusal

20 to stay civil case in light of criminal investigation not abuse

21 of discretion).

22 B. Governing Law

23 "[T]he power to stay proceedings is incidental to the

24 power inherent in every court to control the disposition of the

25 causes on its docket with economy of time and effort for itself,

26 for counsel, and for litigants." Landis v. N. Am. Co., 299 U.S.

27 248, 254 (1936); accord Clinton v. Jones, 520 U.S. 681, 706-08
25

1 (1997); see also United States v. Kordel, 397 U.S. 1, 12 n.27

2 (1970) (noting that courts may "defer[] civil proceedings pending

3 the completion of parallel criminal prosecutions when the

4 interests of justice seem[] to require such action"); Kashi v.

5 Gratsos, 790 F.2d 1050, 1057 (2d Cir. 1986) ("'[A] court may

6 decide in its discretion to stay civil proceedings when the

7 interests of justice seem to require such action.'" (quoting SEC

8 v. Dresser Indus., 628 F.2d 1368, 1372 (D.C. Cir. 1980) (en

9 banc)) (ellipses and internal quotation marks omitted; emphasis

10 added)); Nosik v. Singe, 40 F.3d 592, 596 (2d Cir. 1994)

11 ("Although civil and criminal proceedings covering the same

12 ground may sometimes justify deferring civil proceedings until

13 the criminal proceedings are completed, a court may instead enter

14 an appropriate protective order."). "How this can best be done

15 calls for the exercise of judgment, which must weigh competing

16 interests and maintain an even balance." Landis, 299 U.S. at

17 254-55; see also Ofosu v. McElroy, 98 F.3d 694, 699 (2d Cir.

18 1996) ("A request for a stay is an appeal to equity.").

19 The person seeking a stay "bears the burden of

20 establishing its need." Clinton, 520 U.S. at 708. "[A]bsent a

21 showing of undue prejudice upon defendant or interference with

22 his constitutional rights, there is no reason why plaintiff

23 should be delayed in its efforts to diligently proceed to sustain

24 its claim." Hicks v. City of N.Y., 268 F. Supp. 2d 238, 241

25 (E.D.N.Y. 2003) (internal quotation marks omitted). 
11 There are other possible justifications for a stay. For

example, a district court may issue one in a civil proceeding in

deference to a parallel criminal proceeding in order to "prevent

either party from taking advantage of broader civil discovery

rights" or to "prevent the exposure of the criminal defense

strategy to the prosecution." Kreisler, 563 F.3d at 1080.

26

1 In evaluating whether the "interests of justice" favor

2 such a stay, courts have generally been concerned about the

3 extent to which continuing the civil proceeding would unduly

4 burden a defendant's exercise of his rights under the Fifth

5 Amendment, which provides that "[n]o person . . . shall be

6 compelled in any criminal case to be a witness against himself,"

U.S. Const. amend. V.11 7 Creative Consumer Concepts, Inc. v.

8 Kreisler, 563 F.3d 1070, 1080 (10th Cir. 2009); see also United

9 States v. All Assets of Statewide Auto Parts, Inc., 971 F.2d 896,

10 905 (2d Cir. 1992) (same when considering stay of civil

11 forfeiture proceeding). A stay can protect a civil defendant

12 from facing the difficult choice between being prejudiced in the

13 civil litigation, if the defendant asserts his or her Fifth

14 Amendment privilege, or from being prejudiced in the criminal

15 litigation if he or she waives that privilege in the civil

16 litigation. See United States v. 4003-4005 5th Ave., 55 F.3d 78,

17 83 (2d Cir. 1995) (discussing the "dilemma" faced by criminal

18 defendants forced to testify in a parallel civil forfeiture

19 proceeding). As Judge Hellerstein, who presided in the district

20 court in this case, has observed in his extrajudicial writing,

21 "[t]he greatest risk posed by parallel [civil and criminal

22 proceedings] . . . is that parallel proceedings may place
27

1 significant burdens upon the Fifth Amendment privilege against

2 self-incrimination." Alvin Hellerstein & Gary Naftalis, Private

3 Civil Actions and Concurrent or Subsequent Regulatory or Criminal

4 Proceedings, SG046 ALI-ABA 903, 905 (2001). 

5 A defendant in a civil proceeding who invokes the Fifth

6 Amendment as a result of an overlapping criminal investigation or

7 proceeding "risk[s] the adverse inference arising from [his or

8 her] assertion of the privilege." Id. at 951. The Supreme Court

9 has explained "that the Fifth Amendment does not forbid adverse

10 inferences against parties to civil actions when they refuse to

11 testify in response to probative evidence offered against them." 

12 Baxter v. Palmigiano, 425 U.S. 308, 318 (1976); see also Keating

13 v. Office of Thrift Supervision, 45 F.3d 322, 326 (9th Cir. 1995)

14 (observing that it is "permissible" for the trier of fact to draw

15 such adverse inferences). "[A] party who asserts the privilege

16 against self-incrimination must bear the consequence of lack of

17 evidence, and the claim of privilege will not prevent an adverse

18 finding or even summary judgment if the litigant does not present

19 sufficient evidence to satisfy the usual evidentiary burdens in

20 the litigation." 4003-4005 5th Ave., 55 F.3d at 83 (citation and

21 internal quotation marks omitted); see also LiButti v. United

22 States, 178 F.3d 114, 120 (2d Cir. 1999) (noting that it is

23 permissible to give an adverse inference "significant weight," as

24 "silence when one would be expected to speak is a powerful

25 persuader"). 
12 Fed. R. Evid. Rule 404 reads in pertinent part:

Character Evidence; Crimes or Other Acts

***

(b) Crimes, Wrongs, or Other Acts.

 (1) Prohibited Uses. Evidence of a crime,

wrong, or other act is not admissible to

prove a person's character in order to show

that on a particular occasion the person

acted in accordance with the character.

 (2) Permitted Uses; Notice in a Criminal

Case. This evidence may be admissible for

another purpose, such as proving motive,

opportunity, intent, preparation, plan,

knowledge, identity, absence of mistake, or

lack of accident. 

28

1 But if civil defendants do not elect to assert their

2 Fifth Amendment privilege, and instead fully cooperate with

3 discovery, their "testimony . . . in their defense in the civil

4 action is likely to constitute admissions of criminal conduct in

5 their criminal prosecution." SEC v. Boock, No. 09 Civ. 8261

6 (DLC), 2010 WL 2398918, at *2, 2010 U.S. Dist. LEXIS 59498, at *5

7 (S.D.N.Y. June 15, 2010). Indeed, "[e]ven where it would not be

8 direct evidence of wrongdoing with respect to the scheme charged

9 in the criminal case, such testimony may be admissible as Fed. R.

Evid. 404(b)[12 10 ] evidence in any criminal trial." Id.; see also

11 Milton Pollack, Parallel Civil and Criminal Proceedings, 129

12 F.R.D. 201, 205-06 (1990) (hereinafter "Pollack, Parallel

13 Proceedings") (explaining how a party's participation in civil

14 proceedings may prejudice his defense in parallel criminal

15 proceedings).
29

1 Despite these factors, such "[a] stay of [a] civil

2 case" to permit conclusion of a related criminal prosecution has

3 been characterized as "an extraordinary remedy." Trs. of

4 Plumbers & Pipefitters Nat'l Pension Fund v. Transworld Mech.,

5 Inc., 886 F. Supp. 1134, 1139 (S.D.N.Y. 1995). A district court

6 may stay civil proceedings when related criminal proceedings are

7 imminent or pending, and it will sometimes be prudential to do

8 so. Id. at 1138 n.4 ("Even if a court may constitutionally deny

9 a request for a stay, . . . a stay of a civil action may still be

10 warranted in some instances."). But the Constitution rarely, if

11 ever, requires such a stay. Kashi, 790 F.2d at 1057 ("'[T]he

12 Constitution does not ordinarily require a stay of civil

13 proceedings pending the outcome of criminal proceedings.'"

14 (quoting Dresser Indus., 628 F.2d at 1372)) (ellipses omitted));

15 accord United States v. Int'l Bhd. of Teamsters, 247 F.3d 370,

16 388 (2d Cir. 2001); Nosik, 40 F.3d at 596. "A defendant has no

17 absolute right not to be forced to choose between testifying in a

18 civil matter and asserting his Fifth Amendment privilege." 

19 Keating, 45 F.3d at 326. The existence of a civil defendant's

20 Fifth Amendment right arising out of a related criminal

21 proceeding thus does not strip the court in the civil action of

22 its broad discretion to manage its docket. 

23 District courts have formulated multi-factor tests to

24 apply in deciding whether, in light of these hazards to the

25 defendants in the civil proceedings against them, to grant a stay

26 of those proceedings. The district courts of this Circuit, for
13 For cases applying substantially this standard, see

also, e.g., Hicks, 268 F. Supp. 2d at 241; Boock, 2010 WL

2398918, at *1-*2, 2010 U.S. Dist. LEXIS 59481, at *4-*5 (quoting

Trs. of Plumbers & Pipefitters Nat'l Pension Fund, 886 F. Supp.

at 1139); Motorola, Inc. v. Abeckaser, No. 07-CV-3963 (CPS)(SMG),

2009 WL 816343, at *1-*2, 2009 U.S. Dist. LEXIS 24855, at *4

(E.D.N.Y. Mar. 26, 2009); Parker v. Dawson, Nos. 06-CV-6191

(JFB)(WDW), 06-CV-6627 (JFB)(WDW), 07-CV-1268 (JFB)(WDW), 2007 WL

2462677, at *3, 2007 U.S. Dist. LEXIS 63068, at * 10 (E.D.N.Y.

Aug. 27, 2007); JHW Greentree Capital, L.P. v. Whittier Trust

Co., No. 05 Civ. 2985(HB), 2005 WL 1705244, at *1, 2005 U.S.

Dist. LEXIS 14687, at *2 (S.D.N.Y. July 22, 2005). Some district

courts have instead applied a similar five-factor test under

which the court considers:

(1) the private interests of the plaintiffs

in proceeding expeditiously with the civil

litigation as balanced against the prejudice

to the plaintiffs if delayed; (2) the private

interests of and burden on the defendants;

(3) the interests of the courts; (4) the

interests of persons not parties to the civil

litigation; and (5) the public interest. 

 

Catskill Mountains Chapter of Trout Unlimited, Inc. v. EPA, 630

F. Supp. 2d 295, 304 (S.D.N.Y. 2009)(listing five-factor test and

collecting cases); see also Golden Quality Ice Cream Co., Inc. v.

Deerfield Specialty Papers, Inc., 87 F.R.D. 53, 56-58 (E.D. Pa.

1980) (Pollak, J.) (originally setting out this test). 

30

1 example, have often utilized a six-factor balancing test first

2 set forth by then-district court judge Chin:

3 1) the extent to which the issues in the

4 criminal case overlap with those presented in

5 the civil case; 2) the status of the case,

6 including whether the defendants have been

7 indicted; 3) the private interests of the

8 plaintiffs in proceeding expeditiously

9 weighed against the prejudice to plaintiffs

10 caused by the delay; 4) the private interests

11 of and burden on the defendants; 5) the

12 interests of the courts; and 6) the public

13 interest. 

14 Trs. of Plumbers & Pipefitters Nat'l Pension Fund, 886 F. Supp.

at 1139 (footnotes omitted).13 15 And several of our sister

16 circuits have adopted similar multi-factor tests. See, e.g.,
31

1 Microfinancial, 385 F.3d at 78 (1st Cir. 2004) (applying a five2 factor test but also considering "the status of the cases" and

3 "the good faith of the litigants (or the absence of it)");

4 Keating, 45 F.3d at 324-25 (9th Cir. 1995) (applying a five5 factor test). 

6 These tests, however, no matter how carefully refined,

7 can do no more than act as a rough guide for the district court

8 as it exercises its discretion. They are not mechanical devices

9 for churning out correct results in overlapping civil and federal

10 proceedings, replacing the district court's studied judgment as

11 to whether the civil action should be stayed based on the

12 particular facts before it and the extent to which such a stay

13 would work a hardship, inequity, or injustice to a party, the

14 public or the court. 

15 We think the tests do little more than serve as

16 something of a check list of factors we ought to consider as we

17 review the district court's action for abuse of its discretion. 

18 Even if we were to choose or formulate a test and apply it, we

19 would not be able to reverse the district court solely because we

20 disagreed with its application of the test. The district court's

21 decision ultimately requires and must rest upon "a particularized

22 inquiry into the circumstances of, and the competing interests

23 in, the case." Banks v. Yokemick, 144 F. Supp. 2d 272, 275

24 (S.D.N.Y. 2001) (citing Keating, 45 F.3d at 325); see also 4003-

25 4005 5th Ave., 55 F.3d at 85 ("[H]ow a trial court should . . .
14 Were we forced to choose between the two tests, we would

likely prefer Judge Chin's six-part formulation because it

explicitly considers the degree to which the issues in the civil

and criminal proceedings overlap. See Trs. of Plumbers &

Pipefitters Nat'l Pension Fund, 886 F. Supp. at 1139 ("If there

is no overlap, there would be no danger of self-incrimination and

accordingly no need for a stay."). The six-factor test also has

the advantage of taking into account the status of the criminal

proceeding, including whether the civil defendant has been

indicted, a factor that speaks to whether a prosecution is likely

and imminent as opposed to a remote or purely hypothetical

possibility. But in reviewing district court judgments on appeal,

the question for us is whether at the end of the day the trial

court abused its discretion, not whether the court employed a

superior check list in arriving at its decision.

32

1 react to any motion precipitated by a litigant's assertion of the

2 Fifth Amendment in a civil proceeding . . . necessarily depends

3 on the precise facts and circumstances of each case."); Volmar

4 Dist., Inc. v. New York Post Co., 152 F.R.D. 36, 39 (S.D.N.Y.

5 1993) ("Balancing these factors is a case-by-case determination,

with the basic goal being to avoid prejudice.").14 6 And our role

7 is only to assure that the district court's exercise of

8 discretion was reasonable and in accordance with the law. A

9 decision so firmly within the discretion of the district court

10 will not be disturbed by us absent demonstrated prejudice so

11 great that, as a matter of law, it vitiates a defendant's

12 constitutional rights or otherwise gravely and unnecessarily

13 prejudices the defendant’s ability to defend his or her rights. 

14 There may well be cases where the Constitution requires a stay. 

15 But a plausible constitutional argument would be presented only

16 if, at a minimum, denying a stay would cause "substantial

17 prejudice" to the defendant. Keating, 45 F.3d at 325 (internal
15 Because the denial of a stay here plainly does not

violate Lam's and Chan's constitutional rights, we need not

speculate further about the circumstances under which a more

compelling constitutional argument would be presented. Cases

where courts have found a stay constitutionally required are few

and far between –- likely because district courts stay

proceedings out of an abundance of caution when there is a

serious question as to whether a denial would violate the Fifth

Amendment. The Eleventh Circuit appears to be the only Circuit

that has outlined a specific test for determining whether a stay

is constitutionally required. See United States v. Premises

Located at Route 13, 946 F.2d 749, 756 (11th Cir. 1991) (stay

required when "the invocation of the [Fifth Amendment] privilege

must result in an adverse judgment, not merely the loss of [the

defendant's] most effective defense. Stated plainly, the rule

applies when the invocation of the privilege would result in

automatic entry of summary judgment." (citations and internal

quotation marks omitted)).

16 See Wehling v. CBS, 608 F.2d 1084 (5th Cir. 1979), in

which the plaintiff in a libel action had requested a stay in

lieu of dismissal pending the outcome of a related criminal

proceeding against him. The court faulted the district court for

failing to "measure[] the relative weights of the parties'

competing interests with a view toward accommodating those

interests, if possible." Id. at 1088.

33

1 quotation marks omitted). In the more common case, the Fifth

2 Amendment privilege is implicated by the denial of a stay, but

not abrogated by it.15 3

4 Indeed, so heavy is the defendant's burden in

5 overcoming a district court's decision to refrain from entering a

6 stay that the defendants have pointed to only one case in which a

7 district court's decision to deny a stay was reversed on appeal,

and that case was decided more than thirty years ago.16 8

9 C. Application

10 We conclude that the district court did not abuse its

11 discretion in this case. 
17 District courts have not, however, treated the fact that

an indictment of the defendants has been handed up at the time of

their making a motion for a stay of the civil proceedings as

requiring that the stay be entered. In addition to the decision

of the district court in this case, see, e.g., Abeckaser, 2009 WL

816343, at *3, 2009 U.S. Dist. LEXIS 24855, at *6 (denying stay

in trademark-infringement action where defendants requested a

stay on the "eve of summary judgment," eighteen months after a

related indictment and when discovery in the civil case had been

completed); Fendi Adele S.R.L. v. Ashley Reed Trading, Inc., No.

06 Civ. 0243 (JES)(MHD), 2006 WL 2585612, at *3, 2006 U.S. Dist.

LEXIS 64245, at *9 (S.D.N.Y. Sept. 8, 2006) (denying stay in

trademark-infringement and counterfeiting action where defendant

waited until six months after indictment to request stay);

Travelers Cas. & Sur. Co. v. Vanderbilt Grp., LLC, No. 01 Civ.

7927 (DLC), 2002 WL 844345, at *2-3, 2002 U.S. Dist. LEXIS 7939,

at *9-11 (S.D.N.Y. May 2, 2002) (declining to stay civil

proceedings where "it is clear that many of the issues in this

litigation have a life independent from the willingness of the

[indicted defendants] to testify or the substance of any

testimony they might give"). 

34

1 There were factors present here that would have

2 supported the entry of a stay. For example, Lam and Chan had

3 been indicted in the parallel criminal proceeding when they

4 sought the stay. The criminal trial was therefore reasonably

5 imminent. See Trs. of Plumbers & Pipefitters Nat'l Pension Fund,

6 886 F. Supp. at 1140 (observing that a court need not "rely upon

7 fortuitous events to manage its dockets"). There is considerable

8 authority for the principle that a stay is most justified where a

9 movant, like the defendants here, is already under indictment for

10 a serious criminal offense and is required at the same time to

defend a civil action involving the same subject matter.17 11

12 And the individual defendants did face the prospect

13 that any testimony they offered in the civil proceeding would be

14 used against them in the course of the criminal prosecution. The
35

1 criminal proceeding involved the same subject matter as the civil

2 action: the trafficking in counterfeit handbags and wallets,

3 including those bearing the counterfeit Louis Vuitton marks. The

4 defendants' ability to make use of their Fifth Amendment

5 privileges would therefore have been implicated by a decision to

6 testify in the civil matter. See Trs. of Plumbers & Pipefitters

7 Nat'l Pension Fund, 886 F. Supp. at 1139. And while the

8 corporate defendants could not avail themselves of the privilege,

9 a stay would arguably have served their interests too because of

10 the adverse inferences that the court might have drawn (but

11 apparently did not draw) from the individual defendants' silence,

12 and because those defendants would have been the most appropriate

13 Rule 30(b)(6) witnesses on their behalf. 

14 Also, even in the absence of this civil case, the

15 criminal prosecution would have likely served to protect the

16 interests of consumers and manufacturers –- interests that

17 ordinarily favor prompt resolution of civil counterfeiting and

18 infringement claims. See Brock v. Tolkow, 109 F.R.D. 116, 121

19 (E.D.N.Y. 1985) ("[W]hile criminal investigations and

20 prosecutions can take a woefully long time, a stay of discovery

21 does not mean that enforcement of the public interests at stake

22 in the civil case will be indefinitely deferred. For one thing,

23 a criminal prosecution serves to enforce those same interests.");

24 Volmar Dist., 152 F.R.D. at 40 (noting, in an antitrust case,

25 that "[t]he public certainly has an interest in the preservation
18 These considerations are related. The "compulsory

production of books and papers" does implicate the Fifth

Amendment privilege. See Spevack v. Klein, 385 U.S. 511, 515

(1967). The defendants here do not argue, however, that they

resisted document production because of the possibility of selfincrimination. Rather, their argument is a purely practical one

–- that the unavailability of these documents due to the parallel

criminal proceeding was unduly prejudicial. 

36

1 of the integrity of competitive markets," and that "the pending

2 criminal prosecution serves to advance those same interests"). 

3 The defendants also urge that their inability to

4 produce documents establishing records of sale, and the

5 implication of their Fifth Amendment privilege, required a

stay.18 6 The burden placed on them by the January 16, 2008,

7 seizure of documents and computers from their headquarters by

8 customs officials, they say, favored a stay. They assert that

9 the district court erred in not considering that burden. 

10 Parts of the defendants' argument, however, ring hollow

11 in light of the defendants' plainly dilatory tactics in tendering

12 discovery even prior to their indictments. And afterwards, the

13 district court did not leave the defendants without remedy for

14 the potential implications of the parallel criminal proceeding. 

15 The court explained that "[i]f there is imposition involved, the

16 court can deal with such matters as and when there is threat of

17 imposition." Order Denying Motion for Stay at 1. The court

18 presumably meant that it was open to considering further requests

19 from the defendants for alternative forms of relief, such as

20 tailored stays, protective orders, quashing or modifying

21 subpoenas, sealing confidential material, or even a renewed
37

1 motion for a stay if specific impositions presented themselves. 

2 Cf. Pollack, Parallel Proceedings, 129 F.R.D. at 211-12

3 (describing alternatives to a complete stay of the civil

4 proceedings). The district court also offered assistance in

5 securing the documents that had supposedly been seized by the

6 government in the criminal prosecution.

7 We see nothing in the record to indicate that the

8 defendants ever pursued such alternative relief. The defendants

9 might have submitted 30(b)(6) witnesses, other than the indicted

10 defendants, who could have offered testimony to fill in the gaps

11 assertedly left by the seizure of these documents. They did not. 

12 They might have sought the district court's proffered help in

13 obtaining records or copies of records gathered in the criminal

14 prosecution for production in the civil proceedings. They did

15 not. And we are unaware of any explanation, persuasive or

16 otherwise, that the defendants have given as to the manner in

17 which the unavailability of these documents, computers, or

18 merchandise actually prejudiced them. 

19 We think the defendants' failure to make use of the

20 ability they had, and the additional assistance the district

21 court offered, to make meaningful disclosure is significant. It

22 paints their insistence that the civil proceedings be stayed as

23 part of a larger pattern of overall delay and obfuscation. 

24 The district court noted that the failure of the

25 defendants to produce records invited the inference of a "massive

26 counterfeiting enterprise." Order Awarding Statutory Damages at
38

1 3. And if the defendants' sales records would have revealed, in

2 full, a counterfeiting operation that netted more than the $8

3 million in potential statutory damages, they had every incentive

4 to keep those records from the plaintiffs. If those records

5 would have revealed a lesser amount of damages, they had the

6 incentive to pursue those records with every tool at their

7 disposal. The apparent indifference on the part of the

8 defendants to the aid offered them suggests that tendering

9 complete documentation to the plaintiff was not in their 

10 interest. To be sure, the challenge of acquiring documentation

11 may have been exacerbated by the criminal proceedings, but the

12 defendants' general failure, with the help of the district court,

13 to work around that set of problems so as to produce substantial

14 information in defense of the civil claims undercuts their claim

15 that the criminal proceedings completely impeded their ability to

16 mount a defense. 

17 Finally, the defendants argue that Lam's and Chan's

18 reliance on their Fifth Amendment privilege favored a stay. 

19 Indeed it did, insofar as it limited their ability to assist in

20 defending against the civil claims. But we see nothing in the

21 record to indicate that their invocation of the privilege alone

22 resulted in one or more adverse inferences being drawn against

23 them. The district court explained in its oral summary judgment

24 ruling that if the defendants "come forward with proofs of their

25 sales and their customers for the accused merchandise" the court
19 In their initial letter seeking a stay, the defendants

did not raise the Fifth Amendment issue. They asserted instead

that discovery would have been more difficult for them to comply

with because some relevant documents had been seized by the

government. It is only now, on appeal, that the parties have

extensively briefed the Fifth Amendment issue. The defendants'

failure to squarely present their Fifth Amendment argument to the

district court in the first instance also calls into question the

degree to which they actually feared prejudice in the civil

proceeding.

39

1 would "take that into consideration in fixing the appropriate sum

2 [of damages]." Summ. J. Hr'g Tr. at 58. The court explained

3 that the counterfeiting charges were proved, in part, by "the

4 absence of any opposition testimony by the defendants, and their

5 indifference, I would say, to the notices of deposition served on

6 them." Id. at 53. But during oral argument the court referred

7 only to the failure of the corporate defendants to offer

8 witnesses under Rule 30(b)(6), and suggested that it was that

9 failure alone -- having little to do with the defendants' Fifth

10 Amendment privilege, assuming that other such witnesses were

available –- that supported the adverse inferences.19 11

12 Even if the district court drew adverse inferences from

13 Lam and Chan invoking their Fifth Amendment rights, such

14 inferences were not necessarily material because there was

15 sufficient evidence without them to adequately support the

16 district court's grant of summary judgment. "If defendants

17 choose to remain silent, the adverse inference that may be drawn

18 will be only one of a number of factors the factfinder will

19 consider and will be given no more evidentiary value than the

20 facts of the case warrant." United States v. Dist. Council of
40

1 New York City, 782 F. Supp 920, 925-26 (S.D.N.Y. 1992) (internal

2 quotation marks and alteration omitted). The record included

3 visual evidence that enabled the district court to conduct its

4 own comparison of the authentic and accused products, the records

5 of customs seizures, and the defendants' own scant document

6 production. Indeed, that is the evidence on which the district

7 court explained it was largely basing its decision. 

8 Also weighing against the stay was the public's 

9 interest in prompt further protection of the plaintiff and the

10 public through the civil action from what the evidence before the

11 district court suggested likely was a counterfeiting enterprise. 

12 See Landscape Forms, Inc. v. Columbia Cascade Co., 113 F.3d 373,

13 375 (2d Cir. 1997) (reminding courts that the "underlying purpose

14 of the Lanham Act . . . is protecting consumers and manufacturers

15 from deceptive representations of affiliation and origin");

16 Dresser Indus., 628 F.2d at 1377 (denying a stay in order to

17 avoid the continued dissemination of false or misleading

18 information by companies to members of the investing public). 

19 And, as the district court found, Louis Vuitton plainly

20 had a compelling interest in prompt resolution of the civil case,

21 in part because of the apparent scale of the counterfeiting

22 operation and the potential for lost sales and consumer

23 confusion. See Order Denying Motion for Stay at 1 (noting that

24 "[p]laintiff has an interest in the prompt prosecution of its

25 case. Its trademark is valuable, and counterfeit goods threaten
20 The defendants argue that Louis Vuitton's commercial

interests must not have been in grave jeopardy because Louis

Vuitton did not seek a temporary restraining order or preliminary

injunction. But the plaintiff's decision to try to bring a

speedy resolution to the entire matter rather than expend its

resources on temporary relief does not mean the plaintiff had no

interest in a speedy resolution of its claims against the

defendants. Vuitton was plainly aware that customs officials had

been active in seizing the infringing and counterfeit goods, and

could have believed a temporary court order would not have

dissuaded the defendants any more than those seizures already

had, whereas a hefty damages award would effect a more permanent

change in the defendants' operational calculus. Indeed, the

failure to seek a preliminary injunction in a case of

infringement is not generally considered a factor that weighs

against a plaintiff seeking permanent injunctive relief. See,

e.g., Mytee Prods., Inc. v. Harris Research, Inc., 439 F. App'x

882, 888 (Fed. Cir. 2011); see also Lermer Germany GmbH v. Lermer

Corp., 94 F.3d 1575, 1577 (Fed. Cir. 1996) (noting that a

preliminary injunction and a permanent injunction "are distinct

forms of equitable relief that have different prerequisites and

serve entirely different purposes"). 

41

the value of its trademark and cut into sales.").20 1 Moreover,

2 Vuitton acted expeditiously to advance its interests, filing the

3 present lawsuit more than a year before Lam and Chan were

4 indicted. In light of the length of time that the lawsuit had

5 progressed by the time the indictments issued, and defendants'

6 dilatory tactics during discovery, granting a stay posed a

7 particular risk to Vuitton's interest in the prompt resolution of

8 its claims.

9 Lastly, the court had reason to proceed forthwith based

10 on its own well-recognized interest in disposing "of the causes

11 on its docket with economy of time and effort for itself . . . ." 

12 Landis, 299 U.S. at 254.

13 While we thus find substantial arguments arrayed both

14 for and against the district court's grant of a stay, we conclude
42

1 that the defendants were not as a matter of law deprived of their

2 constitutional rights, or otherwise gravely and unnecessarily

3 prejudiced, by the court's decision. The court thus did not

4 abuse its discretion in denying the stay.

5 III. Award of Attorney's Fees 

6 The defendants argue that the district court erred in

7 awarding attorney's fees and costs. They contend that because

8 Louis Vuitton opted to receive statutory damages pursuant to 15

9 U.S.C. § 1117(c), it waived the ability to receive an award of

10 attorney's fees. The defendants point out that unlike

11 subsections (a) and (b) of section 1117, which explicitly provide

12 for such an award, subsection (c) does not. 

13 The district court, acknowledging the absence of

14 binding precedent on this issue in this Circuit, ruled that

15 "[a]lthough attorney's fees are frequently awarded in conjunction

16 with actual damages, and often not awarded in conjunction with

17 statutory damages, in [its] discretion they are appropriate here,

18 and Plaintiff should be awarded its expenses of suit." Order

19 Awarding Statutory Damages at 5. The district court imposed an

20 attorney's fee award of $556,034.22, which was 100 percent of the

21 attorney's fees, expenses, and investigative costs that Louis

22 Vuitton had sought. Id. 

23 On appeal, the defendants argue that in making the

24 award the district court abused its discretion by exercising a

25 power that it did not have. They rely heavily on a line of
43

1 district court decisions concluding that attorney's fees are

2 unavailable under section 1117(a) for plaintiffs receiving

3 statutory damages under section 1117(c), as well as on a Ninth

4 Circuit decision, K & N Eng'g, Inc. v. Bulat, 510 F.3d 1079 (9th

5 Cir. 2007).

6 In the alternative, the defendants argue that the

7 attorney's fees awards were excessive and that reimbursement for

8 some expenses awarded was not supported by the required

9 documentation.

10 A. Standard of Review

11 It is of course a longstanding principle of American

12 law that each party must pay his or her own attorney's fees

13 irrespective of who prevails in the litigation. Reimbursement of

14 the winning party by the losing party is not available unless

15 there is an express statutory basis for permitting or requiring

16 it. See, e.g., Arbor Hill Concerned Citizens Neighborhood Ass'n

17 v. Cnty. of Albany, 522 F.3d 182, 186 (2d Cir. 2008) (describing

18 statutory exceptions to the "American Rule"). 

19 Whether attorney's fees are available pursuant to

20 section 1117(c) is a question of statutory interpretation. We

21 therefore review the district court's conclusions de novo. DSI

22 Assocs. LLC v. United States, 496 F.3d 175, 183 (2d Cir. 2007);

23 Ehrenfeld v. Mahfouz, 489 F.3d 542, 547 (2d Cir. 2007). But we

24 review the district court's decision regarding the amount of any

25 such award for abuse of discretion. Scott v. City of N.Y., 626

26 F.3d 130, 132 (2d Cir. 2010) (per curiam); accord Banff, Ltd. v.
21 Section 1117(a) states, in pertinent part: 

Profits; damages and costs; attorney fees.

When a violation of any right of the

registrant of a mark registered in the Patent

and Trademark Office . . . shall have been

established in any civil action arising under

this chapter, the plaintiff shall be entitled,

subject to the provisions of sections 29 and

32 [15 U.S.C. §§ 1111, 1114], and subject to

the principles of equity, to recover

(1) defendant's profits, (2) any damages

sustained by the plaintiff, and (3) the costs

of the action. The court shall assess such

profits and damages or cause the same to be

assessed under its direction. In assessing

profits the plaintiff shall be required to

prove defendant's sales only; defendant must

prove all elements of cost or deduction

claimed. In assessing damages the court may

enter judgment, according to the circumstances

of the case, for any sum above the amount

found as actual damages, not exceeding three

times such amount. If the court shall find

that the amount of the recovery based on

profits is either inadequate or excessive the

court may in its discretion enter judgment for

44

1 Colberts, Inc., 996 F.2d 33, 36 (2d Cir. 1993) (considering an

2 award of attorney's fees under section 35 of the Lanham Act). A

3 court abuses its discretion if it rests its decision on an

4 erroneous determination of law or a clearly erroneous factual

5 finding. Scott, 626 F.3d at 132.

6 B. Governing Law

7 Under Section 35 of the Lanham Act, a plaintiff seeking

8 damages for counterfeiting and infringement has the option of

9 seeking either actual or statutory damages, but not both. A

10 plaintiff may recover actual damages equal to "(1) defendant's

11 profits, (2) any damages sustained by the plaintiff, and (3) the

costs of the action." 15 U.S.C. § 1117(a).21 12 A plaintiff may
such sum as the court shall find to be just,

according to the circumstances of the case.

Such sum in either of the above circumstances

shall constitute compensation and not a

penalty. The court in exceptional cases may

award reasonable attorney fees to the

prevailing party. 

 

15 U.S.C. § 1117(a) (emphasis added). 

22 Section 1117(c) states, in pertinent part:

Statutory damages for use of counterfeit

marks. In a case involving the use of a

counterfeit mark [as defined in 15 U.S.C. §

1116(d)] in connection with the sale, offering

for sale, or distribution of goods or

services, the plaintiff may elect, at any time

before final judgment is rendered by the trial

court, to recover, instead of actual damages

and profits under subsection (a) of this

section, an award of statutory damages for any

such use in connection with the sale, offering

for sale, or distribution of goods or services

in the amount of– 

 (1) not less than $1,000 or more than

$200,000 per counterfeit mark per type of

goods or services sold, offered for sale, or

distributed, as the court considers just; or

 (2) if the court finds that the use of the

counterfeit mark was willful, not more than

$ 2,000,000 per counterfeit mark per type of

goods or services sold, offered for sale, or

distributed, as the court considers just. 

15 U.S.C. § 1117(c). At the time this suit was initiated,

statutory awards ranged from not less than $500 to not more than

$100,000 per counterfeit mark per type of goods sold if the use

of the mark was not willful, or up to $1,000,000 per mark if the

use was willful. 15 U.S.C. § 1117(c)(2004). These amounts were

doubled effective October 13, 2008. See Prioritizing Resources

45

1 elect instead to recover statutory damages for the use of a

2 counterfeit mark that are computed "per counterfeit mark per type

3 of goods or services sold, offered for sale, or distributed." 15

U.S.C. § 1117(c).22 4 The issue is plain: Does the election by a
and Organization for Intellectual Property Act of 2008, Pub. L.

No. 110-403, § 104, 122 Stat. 4256. 

46

1 plaintiff to seek statutory damages under section 1117(c) instead

2 of actual damages and profits under section 1117(a), (1) supplant

3 only that part of section 1117(a) that provides the method for

4 ascertaining the amount of damages with the method set forth for

5 ascertaining damages in section 1117(c), while leaving unaffected

6 the last sentence of the subsection -- "[t]he court in

7 exceptional cases may award reasonable attorney fees to the

8 prevailing party"? Or does it (2) supplant the entirety of

9 subsection (a) including the provision for attorney's fees in

10 "exceptional cases"? If the former, then the plaintiff may make

11 such an election, as Louis Vuitton did in this case, and retain

12 the ability to seek attorney's fees if the case is deemed by the

13 court to be sufficiently "exceptional." If the latter, by making

14 the election to seek damages under subsection (c), Louis Vuitton

15 lost the ability to obtain any attorney's fees award at all,

16 under subsection (a) or otherwise.

17 Some district courts have concluded that a plaintiff

18 who opts to receive statutory damages under section 1117(c) is

19 indeed foreclosed from receiving attorney's fees under section

20 1117(a), even in an "exceptional" case. See, e.g., Global Van

21 Lines, Inc. v. Global Moving Express, Inc., No. 06 Civ. 3776

22 (RJH)(KNF), 2007 U.S. Dist. LEXIS 60794, at *12-*13 (S.D.N.Y.

23 Aug. 20, 2007); John Wiley & Sons, Inc. v. Kauzin Rukiz Entm't &

24 Promotions, No. 06 Civ. 12949 (SAS)(GWG), 2007 WL 1695124, at *4,
47

1 2007 U.S. Dist. LEXIS 42095, at *9-10 (S.D.N.Y. June 12, 2007);

2 Gucci Am., Inc. v. Duty Free Apparel, Ltd., 315 F. Supp. 2d 511,

3 522-23 (S.D.N.Y. 2004). 

4 Other district courts -- including the court in this

5 case -- have taken the contrary position and held that the Lanham

6 Act does not prohibit simultaneous awards of relief under

7 section 1117(a) and section 1117(c) so long as a plaintiff does

8 not obtain a recovery of both actual and statutory damages. See,

9 e.g., Louis Vuitton Malletier S.A. v. LY USA, 2008 WL 5637161, at

10 *3, 2008 U.S. Dist LEXIS 107592, at *7-8 (S.D.N.Y. Oct. 3, 2008)

11 ("Although attorneys' fees are frequently awarded in conjunction

12 with actual damages, and often not awarded in conjunction with

13 statutory damages, in my discretion they are appropriate here . .

14 . ." (citations omitted)); Nike, Inc. v. Top Brand Co., No. 00

15 Civ. 819 (KMW)(RLE), 2006 WL 2946472, at *3, 2006 U.S. Dist.

16 LEXIS 76543, at *9 (S.D.N.Y. Feb. 27, 2006) ("While there has

17 been some question about the availability of an award of

18 attorney's fees where statutory damages are given, courts have

19 found both appropriate in such 'exceptional cases' of willful

20 infringement.").

21 Other district courts have acknowledged this as an

22 unsettled question without proffering an answer to it. Most

23 frequently, courts avoid confronting the issue by implicitly or

24 explicitly accounting for the cost of attorney's fees in setting

25 the amount of the statutory-damages award. See, e.g., Cartier v.

26 Symbolix Inc., 544 F. Supp. 2d 316, 320 (S.D.N.Y. 2008) ("The
48

1 Court finds it unnecessary to resolve this interesting question

2 of statutory interpretation since it concludes that a modest

3 award of [attorney's] fees . . . is appropriate either as a

4 separate award, or as a part of an award of statutory damages.");

5 Louis Vuitton Malletier v. WhenU.Com, Inc., No. 05 Civ. 1325

6 (LAK)(DFE), 2007 WL 257717, at *6, 2006 U.S. Dist. LEXIS 97550,

7 at *17 (S.D.N.Y. Jan. 26, 2007) (award of statutory damages

8 suffices to make plaintiff whole); Rodgers v. Anderson, No. 04

9 Civ. 1149 (RJH)(AJP), 2005 WL 950021, at *3-*4, 2005 U.S. Dist.

10 LEXIS 7054, at *10-*11 (S.D.N.Y. Apr. 26, 2005) (same).

11 Still other district courts in this Circuit have

12 awarded attorney's fees under section 1117(a) and statutory

13 damages under section 1117(c) simultaneously, but without

14 acknowledging the potential statutory hurdle they had to clear in

15 doing so. See, e.g., Union of Orthodox Jewish Congregations of

16 Am. v. Am. Food & Beverage Inc., 704 F. Supp. 2d 288, 293

17 (S.D.N.Y. 2010); Louis Vuitton Malletier v. Artex Creative Int'l

18 Corp., 687 F. Supp. 2d 347, 358-59 (S.D.N.Y. 2010); Louis Vuitton

19 Malletier v. Carducci Leather Fashions, Inc., 648 F. Supp. 2d

20 501, 505-06 (S.D.N.Y. 2009); Tiffany (NJ) Inc. v. Luban, 282 F.

21 Supp. 2d 123, 125 (S.D.N.Y. 2003).

22 The Ninth Circuit appears to be the only circuit court

23 to have explicitly recognized this issue, although the court did

24 not resolve it. In K & N Engineering, the district court awarded
23 Subsection 1117(b) states, in pertinent part:

In assessing damages under [§ 1117(a) for any

violation of 15 U.S.C. § 1114(1)(a)] . . . the

court shall, unless the court finds

extenuating circumstances, enter judgment for

three times such profits or damages, whichever

amount is greater, together with a reasonable

attorney's fee, if the violation consists of

(1) intentionally using a mark or designation,

knowing such mark or designation is a

counterfeit mark (as defined in section 34(d)

of this Act [15 U.S.C § 1116(d)]), in

connection with the sale, offering for sale,

or distribution of goods or services. . . . 

15 U.S.C. § 1117(b)(emphasis added).

49

attorney's fees under section 1117(b)23 1 –- not, as in the present

2 case, under the last sentence of section 1117(a) -– to a

3 plaintiff who, like Louis Vuitton here, opted to receive

4 statutory damages under section 1117(c). 510 F.3d at 1081. On

5 appeal, the Ninth Circuit explained that "Section 1117(c) makes

6 no provision for attorney's fees." Id. at 1082. It ruled that

7 because the plaintiff had elected to receive statutory damages

8 under section 1117(c), there was "no statutory basis to award

9 [the plaintiff] attorney's fees under § 1117(b)." Id.

10 K & N Engineering is, however, critically different

11 from the case at bar. There, as here, statutory damages were

12 awarded under section 1117(c). But there, unlike here,

13 attorney's fees had been awarded by the district court under

14 section 1117(b), rather than 1117(a). As the court of appeals

15 explained, "Section 1117(b)'s attorney's fees provision applies

16 only in cases with actual damages under § 1117(a)," and the

17 district court had assessed no such damages as a result of the
24 The plaintiffs in K & N Engineering may have sought

attorney's fees under section 1117(b) rather than section 1117(a)

because the former provides for an automatic grant of attorney's

fees together with damages, while the latter only provides for

attorney's fees in "exceptional cases," as discussed previously. 

50

1 plaintiff's election to receive statutory damages instead. Id. 

2 The Ninth Circuit explicitly reserved the question at issue here: 

3 "Because the fee award in this case was made pursuant to

4 § 1117(b), we do not reach the issue whether an election to

5 receive statutory damages under § 1117(c) precludes an award of

6 attorney's fees for exceptional cases under the final sentence of

§ 1117(a)." Id. at 1082 n.5.24 7

8 K & N Engineering thus left the present question

9 undecided. Commentators remain divided. Compare 4 Callmann on

10 Unfair Competition, Trademarks and Monopolies § 23:67 (4th ed.

11 2011) ("[A] prevailing plaintiff who elects statutory damages

12 under the Lanham Act in a counterfeiting case is not entitled to

13 attorney's fees.") with 5 McCarthy on Trademarks and Unfair

14 Competition § 30:95 n.9 (4th ed. 2012) (describing the Ninth

15 Circuit's K & N Engineering decision in the subsection (b)

16 context as "a hyper-technical reading of the statute" and

17 lamenting that it fails "to read Lanham Act § 35 as an integrated

18 whole"). 

19 C. Statutory Interpretation

20 As with any question of statutory interpretation, we

21 begin with the text of the statute to determine whether the

22 language at issue has a plain and unambiguous meaning. Robinson
51

1 v. Shell Oil Co., 519 U.S. 337, 340 (1997); see also United

2 States v. Am. Soc. Of Composers, Authors, and Publishers, 627

3 F.3d 64, 72 (2d Cir. 2010). A particular statute's "plain

4 meaning can best be understood by looking to the statutory scheme

5 as a whole and placing the particular provision within the

6 context of that statute." Saks v. Franklin Covey Co., 316 F.3d

7 337, 345 (2d Cir. 2003). "[W]e attempt to ascertain how a

8 reasonable reader would understand the statutory text, considered

9 as a whole." Pettus v. Morgenthau, 554 F.3d 293, 297 (2d Cir.

10 2009). If we can ascertain the plain meaning of the statutory

11 text by examining it in the context of the statute as a whole, we

12 need proceed no further. If, however, the plain meaning is

13 ambiguous, we may consult other sources. "Extrinsic materials

14 have a role in statutory interpretation . . . to the extent they

15 shed a reliable light on the enacting Legislature's understanding

16 of otherwise ambiguous terms." Exxon Mobil Corp. v. Allapattah

17 Servs., Inc., 545 U.S. 546, 568 (2005). "We turn to the

18 legislative history only when the plain statutory language is

19 ambiguous or would lead to an absurd result." In re Ames Dep't

20 Stores, Inc., 582 F.3d 422, 427 (2d Cir. 2009) (per curiam)

21 (internal quotation marks omitted). 

22 1. Textual Analysis. Section 1117(a) distinguishes

23 between a plaintiff's recovery and a court's discretionary award

24 of attorney's fees in exceptional circumstances. Recovery of
52

1 damages is both something to which a successful plaintiff "shall

2 be entitled" and represents "compensation and not a penalty" in

3 the form of "(1) defendant's profits, (2) any damages sustained

4 by the plaintiff, and (3) the costs of the action." 15 U.S.C.

5 § 1117(a). The award of attorney's fees, by contrast, is

6 reserved for "exceptional cases." We have held, moreover, that

7 the prerequisite to a finding that a case is sufficiently

8 "exceptional" to warrant an award of fees is that the

9 infringement was "willful" or in "bad faith." See, e.g., Patsy's

10 Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 221 (2d Cir.

11 2003). 

12 Section 1117(c) characterizes the plaintiff's recovery

13 of statutory damages as being "instead of actual damages and

14 profits under subsection (a) of this section." 15 U.S.C.

15 § 1117(c). To the extent that subsection (a) distinguishes

16 between actual profits and damages on the one hand, and an award

17 of attorney's fees on the other, then, the alternative recovery

18 is instead of damages and profits under subsection (a), not

19 instead of damages, profits and (in some "exceptional cases")

20 attorney's fees under subsection (a). An award of attorney's

21 fees in an exceptional case is thus not foreclosed. Under this

22 reading, section 1117(a) is the primary or default source of

23 trademark infringement remedies available to a victorious

24 plaintiff, and section 1117(c) represents a special exception or
25 It may be helpful to compare section 1117(c) to section

1117(b). Section 1117(b) functions as an independent and freestanding provision separate and apart from section 1117(a) in

that it has its own damages calculation and provision for

attorney's fees. The fact that section 1117(b) expressly

provides for attorney's fees arguably indicates that section

1117(c)'s lack of an attorney's fee provision reflects an intent

not to allow the award of fees in statutory-damages cases. But

the fact that both sections 1117(a) and 1117(b) specifically

allow for attorney's fees suggests that section 1117(c) also

allows for them, especially in light of the purpose of that

subsection, and that it does so by retaining the "exceptional

case" provision of section 1117(a).

The attorney's fee provisions of sections 1117(a) and (b)

differ in an important respect: the former is subject to the

"exceptional case" requirement, and is therefore discretionary,

while the latter is mandatory. See, e.g., Lorillard Tobacco Co.,

Inc. v. A & E Oil, Inc., 503 F.3d 588, 595 (7th Cir. 2007)

(upholding a "mandatory award for attorneys' fees" pursuant to

section 1117(b) because plaintiff sought relief under section

1117(a) for a violation of one of the Lanham Act provisions

entitling the plaintiff to relief under subsection (b)). The

automatic award of attorney's fees under section 1117(b) reflects

the punitive nature of that subsection, which provides for treble

damages when the use of a counterfeit mark is intentional. 

53

1 carveout for part of the remedy otherwise available under section

1117(a): "actual damages and profits."25 2 

3 We find this argument compelling, because it best

4 comports with the statutory text. The phrase "elect[ing] . . .

5 instead of actual damages and profits under subsection (a)" ought

6 not be read to mean: "elect[ing] . . . instead of all remedies

7 provided under subsection (a)." In our view, so long as the

8 "exceptional case" requirement of section 1117(a) is met, the

9 text of sections 1117(a) and 1117(c) leaves an award of

10 attorney's fees within the discretion of the district court. 
26 Judge Livingston disagrees that the text is ambiguous

and so does not join in the subsection that follows. See Exxon

Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568 (2005)

(noting that legislative history and other extrinsic materials

should be relied on "only to the extent they shed a reliable

light on the enacting Legislature's understanding of otherwise

ambiguous terms"). She otherwise fully joins in the analysis

here. 

54

1 Nonetheless, because we recognize that the text demonstrates at

2 least some ambiguity, we turn to an examination of the purpose of

section 1117(c).26 3

4 2. Purpose/Intent-Based Analysis. Our consideration

5 of the history of the statute and Congress's purpose in enacting

6 section 1117(c), reinforces our view that the election of a

7 remedy under section 1117(c) by a plaintiff such as Louis Vuitton

8 here does not foreclose the possibility of a recovery of

9 attorney's fees under section 1117(a).

10 Before 1996, trademark remedies were governed by

11 sections 1117(a) and (b) alone. Section 1117(a) provided as

12 remedies -- then as now -- profits, actual damages, and costs,

13 plus attorney's fees in an "exceptional" case. Section 1117(b)

14 provided -- in cases of willful counterfeiting -- for treble

15 damages, a "reasonable attorney's fee," and prejudgment interest.

16 In 1996, Congress passed the Anticounterfeiting

17 Consumer Protection Act (the "Act"), which amended section 1117

18 to add subsection (c), providing for the alternative of statutory

19 damages. Anticounterfeiting Consumer Protection Act of 1996,
27 The Senate Report provides, with respect to section 7 of

the Act: 

This section amends section 35 of the Lanham

Act, allowing civil litigants the option of

obtaining discretionary, judicially imposed

damages in trademark counterfeiting cases,

instead of actual damages. The committee

recognizes that under current law, a civil

litigant may not be able to prove actual

damages if a sophisticated, large-scale

counterfeiter has hidden or destroyed

information about his counterfeiting. 

Moreover, counterfeiters' records are

frequently nonexistent, inadequate or

deceptively kept in order to willfully

deflate the level of counterfeiting activity

actually engaged in, making proving actual

damages in these cases extremely difficult if

not impossible. Enabling trademark owners to

elect statutory damages is both necessary and

appropriate in light of the deception

routinely practiced by counterfeiters. The

amounts are appropriate given the extent of

damage done to business goodwill by

infringement of trademarks. 

S. Rep. 104-177, at 10.

55

1 § 7, Pub. L. No. 104-153, 110 Stat. 1386 (codified at 15 U.S.C.

2 § 1117(c)). Congress appears to have been motivated by a gap in

3 the law: Plaintiffs who were victorious on their civil

4 counterfeiting claims were often unable to obtain an adequate

5 recovery in actual damages because counterfeiters often maintain

6 sparse business records, if any at all. See S. Rep. 104-177, at

10 (1995).27 7 In passing the Act, which allows trademark

8 plaintiffs to elect to recover statutory damages in counterfeit
56

1 cases in lieu of actual damages, Congress apparently sought to

2 ensure that plaintiffs would receive more than de minimis

3 compensation for the injury caused by counterfeiting as a result

4 of the unprovability of actual damages despite the plain

5 inference of damages to the plaintiff from the defendant's

6 unlawful behavior. The Act was thus apparently designed to

7 provide an alternative to the type of recovery provided in

8 section 1117(a); not to all of the remedies provided for in that

9 section. The Act was meant to expand the range of remedies

10 available to a trademark plaintiff, not restrict them.

11 In light of that history, it seems to us unlikely that

12 Congress intended to prevent a plaintiff who opts to recover

13 statutory damages from also receiving attorney's fees. If

14 Congress's purpose in enacting section 1117(c) was to address the

15 problem facing a plaintiff unable to prove actual damages,

16 denying an attorney's fee award to those plaintiffs making use of

17 the new statutory-damages election would be inconsistent with

18 that remedial purpose. The key legislative-history sources --

19 the House and Senate Reports -- do not indicate that Congress

20 intended a tradeoff between statutory damages and both actual

21 damages and attorney's fees. See H.R. Rep. 104-556 (2005); S.

22 Rep. 104-177.

23 This case is illustrative. The district court

24 concluded that the defendants were responsible for a "massive
57

1 counterfeiting enterprise" based at least in part on plaintiff's

2 allegations and the unavailability of records suggesting

3 otherwise. As we have explained, a defendant facing a statutory

4 damage award less than the actual amount of the damages he or she

5 caused has the incentive to frustrate ascertainment of the actual

6 amount of the damages. It makes little sense, we think, to

7 further reward a defendant successful in defeating the

8 plaintiff's and the court's attempts to fix the actual amount of

9 damages by allowing him or her to avoid an award of attorney's

10 fees. Such a scheme would only further incentivize the defendant

11 to avoid making, keeping, or producing sales records.

12 We therefore conclude that an award of attorney's fees

13 is available under section 1117(a) in "exceptional" cases even

14 for those plaintiffs who opt to receive statutory damages under

15 section 1117(c).

16 D. Application

17 Under the last sentence of section 1117(a), "in

18 exceptional cases [the court] may award reasonable attorney fees

19 to the prevailing party." 15 U.S.C. § 1117(a). We have said

20 that "'[the Lanham Act] allows recovery of a reasonable

21 attorney's fee only . . . on evidence of fraud or bad faith.'" 

22 Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 194 (2d Cir.

23 1996) (quoting Twin Peaks Prods., Inc. v. Publications Int'l,

24 Ltd., 996 F.2d 1366, 1383 (2d Cir. 1993)); see also, e.g.,
28 Many district courts have looked to the "'good faith'

prong of the Polaroid test" for guidance "[i]n determining

whether a defendant's infringing . . . conduct was carried out in

bad faith" for purposes of determining whether to award

attorney's fees. Pfizer Inc. v. Sachs, 652 F. Supp. 2d 512, 527

(S.D.N.Y. 2009)(internal quotation marks omitted); see also

Polaroid, 287 F.2d at 495 (considering whether a defendant

demonstrated good faith in registering its own mark or the

"reciprocal" of good faith in trying to claim a close variation

of a mark already registered).

58

1 Patsy's Brand, Inc., 317 F.3d at 221 ("exceptional cases" include

2 "instances of 'fraud or bad faith' or 'willful infringement'"

3 (citations omitted)); Gordon & Breach Sci. Publishers S.A. v. Am.

4 Inst. of Physics, 166 F.3d 438, 439 (2d Cir. 1999)(per

curiam)(same).28 5 In other words, we have concluded that the key

6 is willfulness on the part of the defendants: "The finding of

7 willfulness determines the right to attorney's fees." Bambu

8 Sales, Inc. v. Ozak Trading Inc., 58 F.3d 849, 854 (2d Cir.

9 1995). We have no trouble agreeing with the district court on

10 the facts as we have described them that the infringement here

11 was willful, involving instances of fraud and bad faith. The

12 award of attorney's fees was therefore justified.

13 The defendants argue that even so, Louis Vuitton's

14 counsel's time and billing records were "scant" and "incomplete,"

15 thereby frustrating the inquiry into whether any of the hours

16 charged were duplicative or unnecessary. They argue that some of

17 the hours were for unnecessary work, because once the district

18 court denied the defendants' motion for a stay, the case became
59

1 "hopeless" and the plaintiff was "assured of a judgment in its

2 favor." The defendants also assert that Louis Vuitton failed to

3 provide appropriate documentation for the fees of its private

4 investigator and that the district court therefore should not

5 have awarded those fees as costs.

6 These arguments are unsupported by the record. In

7 assessing the reasonableness of attorney's fees, a court looks to

8 the amount of time spent as reflected in contemporaneous time

9 records, and then decides how much of that time was "reasonably

10 expended." Clarke v. Frank, 960 F.2d 1146, 1153 (2d Cir. 1992). 

11 If the district court finds that some of the time was not

12 reasonably necessary to the outcome of the litigation, it should

13 reduce the time for which compensation is awarded accordingly.

14 See, e.g., Hensley v. Eckerhart, 461 U.S. 424, 434-35 (1983). 

15 In the present case, Louis Vuitton produced more than

16 one hundred pages of complete billing records. Some of the

17 allegedly unnecessary work in fact resulted from the defendants'

18 own dilatory treatment of Louis Vuitton's discovery requests. 

19 Moreover, Lam's and Chan's decision to invoke their Fifth

20 Amendment privilege did not render legal work already completed

21 unnecessary. We see no error on the part of the district court

22 in making these findings.
60

1 CONCLUSION

2 For the reasons set forth above, we conclude that the

3 district court did not abuse its discretion when it denied the

4 defendants' motion to stay this case pending the conclusion of

5 the related criminal proceeding. We also conclude that the award

6 of attorney's fees was within the discretion of the district

7 court and that the court properly awarded attorney's fees based

8 on the court's finding of willful infringement. 

9 The judgments of the district court are therefore

10 affirmed.