VINCENT L. BRICCETTI, District Judge.
Plaintiff Dish Network L.L.C. brings this action against defendant Imtiyaz Siddiqi, individually and doing business as Global Telecommunications and Global Communications, for violations of the Lanham Act, as well as for unfair competition and tortious interference with an existing contractual relationship and prospective business relations under state law.
Now pending is plaintiff's unopposed motion for partial summary judgment on its contributory trademark infringement and vicarious trademark infringement claims only. (Doc. #37).
For the following reasons, the motion is GRANTED.
The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331.
Plaintiff has submitted a memorandum of law, statement of material facts pursuant to Local Civil Rule 56.1, declarations, and supporting exhibits. Together, they reflect the following uncontested factual background.
Plaintiff, a pay-television provider, operates a direct broadcast satellite system and delivers programming to millions of subscribers nationwide. It conducts business using the trademarks DISH and DISH NETWORK. Moreover, it owns three federally registered word marks for DISH and DISH NETWORK (collectively, the "DISH marks").
Beginning in early 2016, hundreds of plaintiff's subscribers located throughout the United States were contacted by telephone by persons (the "callers") who, using one or both of the DISH marks, identified themselves as representatives of plaintiff. The subscribers' caller IDs identified the calls as coming from DISH, DISH NETWORK, or from plaintiff's toll-free telephone number.
The callers informed plaintiff's subscribers that their broadcast-receiving equipment needed to be upgraded to maintain DISH service and programming. The callers instructed plaintiff's subscribers to pay for the upgrades either by (i) credit card over the telephone, or (ii) check or money order made payable to Global Communications or Global Business Company and deliverable to P.O. Box 1509, Yonkers, NY, or 294 First Street, Yonkers, NY. The callers, using the DISH marks, identified Global Communications and Global Business Company as plaintiff's affiliates.
In reality, the callers were located in Pakistan and not associated with plaintiff, and were not authorized to conduct business on plaintiff's behalf or authorized to use the DISH marks. In other words, the callers were masquerading as plaintiff's agents.
The callers did not process any payments from plaintiff's hoodwinked subscribers. This task was left to defendant. Indeed, Global Communications and Global Business Company were businesses established and operated by defendant. The Yonkers addresses to which the callers told plaintiff's subscribers to mail payments—P.O. Box 1509 and 294 First Street—both belong to defendant. The former is his rented mail box; the latter, his home. Thus, defendant authorized the callers to use his business and address information.
The callers notified defendant of payments he should expect to receive by mail, and defendant returned the favor by notifying the callers once payments were received. Defendant deposited received checks and money orders into several bank accounts under his control. The checks and money orders (i) were made payable to DISH or DISH NETWORK, or (ii) listed defendant's business names in conjunction with DISH or DISH NETWORK. Defendant also deposited checks and money orders referencing DISH or DISH NETWORK in the memo/for fields of the instruments.
When individuals elected to pay for the sham upgrades by credit card, the callers passed along the cardholder information to defendant. Defendant then processed the credit card payments using merchant accounts under his control.
At first, defendant processed these credit card payments using his Global Communications merchant account. A high percentage of the processed payments resulted in chargebacks—
Thereafter, defendant opened a merchant account using his wife's name. Defendant registered this account to Global Business Company. Defendant used the Global Business Company account to continue processing credit card payments procured by the callers.
Defendant and the callers agreed to share the proceeds of the upgrade scheme. Defendant pocketed twenty percent of the payments; the callers pocketed eighty percent. After payments posted to defendant's account, he utilized money transfer services Moneygram and Aayan to remit to the callers their agreed-upon share of the proceeds.
Defendant continued to process mail and credit card payments for the callers after he was served with the complaint, and even after the parties' first appearance in this case.
Between January 11, 2016, and August 23, 2018, defendant deposited at least $238,747 in check and money orders into his bank accounts. More than 55 percent of these payments— $132,429—were from plaintiff's subscribers as payments attributable to the fraudulent upgrade scheme.
During this same time, defendant processed at least $185,793.26 in credit card payments using his two Global merchant accounts. Defendant has not produced records identifying the cardholders whose credit cards were charged for the hoax upgrades.
The Court must grant a motion for summary judgment if the pleadings, discovery materials before the Court, and any affidavits show there is no genuine issue as to any material fact and it is clear the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a);
A fact is material when it "might affect the outcome of the suit under the governing law. . . . Factual disputes that are irrelevant or unnecessary" are not material and thus cannot preclude summary judgment.
A dispute about a material fact is genuine if there is sufficient evidence upon which a reasonable jury could return a verdict for the non-moving party.
If the non-moving party fails to make a sufficient showing on an essential element of his case on which he has the burden of proof, then summary judgment is appropriate.
On summary judgment, the Court construes the facts, resolves all ambiguities, and draws all permissible factual inferences in favor of the non-moving party.
"Where, as here, a party has not opposed a motion for summary judgment, the district `court must ensure that each statement of material fact is supported by record evidence sufficient to satisfy the movant's burden of production even if the statement is unopposed.'"
In deciding a motion for summary judgment, the Court need consider only evidence that would be admissible at trial.
Plaintiff brings two secondary trademark infringement claims against defendant: (i) contributory trademark infringement, and (ii) vicarious trademark infringement. As a preliminary matter, therefore, the Court first must find a direct infringing use of the DISH marks before it may consider whether defendant is liable under either theory of secondary liability.
The Court so finds.
"To prevail on a claim of trademark infringement, a plaintiff must show, first, that its mark merits protection, and second, that [another's] use of a similar mark is likely to cause consumer confusion."
As for the first prong, registered trademarks are presumed to confer to the owner protection and exclusive rights of use in commerce.
As for the second prong, the Court traditionally considers the non-mechanical and nonexclusive list of factors set forth in
However, use of a counterfeit mark, or "the exact same mark," is inherently confusing to a customer.
Here, plaintiff owns federally registered and valid word marks for the DISH marks. (Doc. #40-1 Exs. 1-3). These trademark registrations are prima-facie evidence of the validity of the DISH marks and plaintiff's exclusive right to use the DISH marks in commerce. Accordingly, plaintiff's registered and valid word marks establish the first element of direct trademark infringement.
The second element is also satisfied, as the callers used counterfeit marks, which are inherently confusing.
Even so, when considering the
Accordingly, based on the undisputed record, the Court finds direct trademark infringement of the DISH marks as a matter of law.
Plaintiff argues it is entitled to summary judgment on its contributory trademark infringement claim against defendant.
The Court agrees.
Contributory trademark infringement "derives from the common law of torts" for "culpably facilitating the infringing conduct of . . . counterfeiting vendors."
The Supreme Court explained in
Although "[t]he Second Circuit has left open the
In the services context, contributory trademark infringement "requires that the service provider . . . have more than a general knowledge or reason to know that its service is being used [for an infringing purpose]. Some contemporary knowledge of [the particular infringement] is necessary."
A party with "sufficient control over the instrumentality used to infringe" may not "willfully shut its eyes to the infringing conduct" of a third party.
The undisputed record evidence demonstrates defendant's liability for contributory trademark infringement as a matter of law.
The first element of contributory trademark infringement is satisfied, as defendant provided payment processing services to the callers. Indeed, the scheme was only half-complete once plaintiff's subscribers were scammed by the callers. The second, critical part of the operation was remuneration.
To that end, defendant provided payment processing services through which the callers' direct trademark infringement was actualized. Defendant and the callers exchanged hundreds of calls per month to manage the scheme, and defendant, using his bank and merchant accounts, processed hundreds of fraudulent payments procured by the callers.
The second requirement of contributory trademark infringement is also satisfied, as defendant either knew, or had reason to know, of the DISH marks infringement, and yet continued to process payments for the callers. First, defendant accepted and deposited hundreds of payments by mail or money order that referenced either (i) DISH or DISH NETWORK in the payee line, or (ii) DISH, DISH NETWORK, or DISH products and services in the memo/for fields of the payments.
Second, scores of credit card payments defendant processed using his merchant accounts were reversed for reasons including fraud. Defendant was aware of these chargebacks before, and certainly after, the account issuer closed his Global Communications merchant account and placed his name on its terminated merchant list. Undeterred by these obstacles, defendant opened a second merchant account—Global Business Company—in his wife's name, to avoid detection and restore payment processing services to the callers.
Third, defendant continued to process payments from plaintiff's subscribers after he was served with the complaint in this case, and even after the parties' initial appearance before the Court in this matter.
For these reasons, defendant either knew, had reason to know, or was willfully blind to the fact that the callers were infringing plaintiff's DISH marks, and yet continued to provide payment processing services for an infringing purpose. Accordingly, plaintiff is entitled to summary judgment on its contributory trademark infringement claim.
Next, plaintiff contends it is entitled to summary judgment on its vicarious trademark infringement claim against defendant.
The Court agrees.
Vicarious liability in the federal trademark context is essentially the same as in the tort context: liability of one party based on its relationship with an infringing third party.
Mere knowledge of the primary actor's wrongful conduct does not establish liability for vicarious trademark infringement.
"[O]ne need not show a fiduciary relationship [between the defendant and third party] to establish that an agency relationship exists; rather, fiduciary duties arise as a result of circumstances establishing the agency relationship." 87 C.J.S. Trademark § 294 (2019) (citing
The undisputed record evidence demonstrates defendant's liability for vicarious trademark infringement as a matter of law.
First, defendant and the callers agreed to conduct the upgrade scheme that infringed plaintiff's exclusive right to use the DISH marks in commerce. The callers were authorized to use defendant's Global business names, his rented P.O. Box, and his home address, to convince plaintiff's subscribers to pay for the upgrade con. Defendant and the callers further agreed to split plaintiff's subscribers' payments, and the callers relied on defendant to pay them their share of the bounty. Accordingly, defendant and the callers partnered to facilitate the infringement.
Second, defendant and the callers each exercised control over the scheme. The success of the upgrade ploy depended on both the callers' direct infringement of the DISH marks and defendant's payment processing services. The callers notified defendant of expected payments, and defendant notified the callers when he received them. The callers were responsible for initiating the payments, and defendant was responsible for processing the payments. Each of these components was integral to the operation. Moreover, defendant maintained a fiduciary duty to transmit to the callers their agreed-upon share of the payments. For these reasons, defendant participated in, and shared control over, the scheme to use the DISH marks to turn a profit.
Accordingly, defendant is liable for vicarious trademark infringement.
Plaintiff further argues it is entitled to a permanent injunction against defendant to protect its trademarks.
The Court agrees.
To obtain a permanent injunction, plaintiff must establish "(1) actual success on the merits and (2) irreparable harm."
When liability in a trademark case is established, the Court considers four factors in determining whether injunctive relief shall issue: "(1) the likelihood that the plaintiff will suffer irreparable harm in the absence of an injunction, (2) whether remedies at law (such as monetary damages) are adequate to compensate the plaintiff for that harm, (3) whether the balance of hardships tips in the plaintiff's favor, and (4) whether the public interest would be served by the issuance of an injunction."
For the reasons set forth above, plaintiff has demonstrated success on the merits, "and in this Circuit, `a showing of likelihood of confusion establishes irreparable harm.'"
Accordingly, plaintiff is entitled to a permanent injunction against defendant.
Plaintiff further requests the Court award $300,000 in statutory damages because of defendant's willful trademark infringement.
The Court finds this request appropriate.
In a trademark infringement case, a plaintiff may elect to receive statutory damages in lieu of actual damages.
"To prove willfulness, a plaintiff must show (1) that the defendant was actually aware of the infringing activity, or (2) that the defendant's actions were the result of reckless disregard or willful blindness."
The Lanham Act, however, does not provide guidance on the appropriate award of statutory damages. Rather, courts in this Circuit consider the following factors to calculate an appropriate award:
Finally, defendant bears the burden to prove that any of his earnings is not related to the infringement.
Here, for the reasons set forth above, defendant's conduct was willful. Defendant was aware of the infringement of the DISH marks, or, at the very least, willfully blind to it.
Further, $300,000 is an appropriate award given the facts and circumstances of this case. About 55 percent of the $238,747 defendant deposited in his bank accounts during all times relevant to the complaint, or $132,429, came from check and money order payments from plaintiff's subscribers. As regards processed credit card transactions, defendant has not met his burden to demonstrate that any of these earnings, $185,793.26, is not related to the infringement of the DISH marks.
In consideration of the above, a statutory damages award of $300,000 is both reasonable and just. This is especially so in light of the $6 million maximum authorized by the Lanham Act for defendant's willful blindness to the infringement of the three DISH marks.
Accordingly, the Court awards plaintiff $300,000 in statutory damages against defendant.
Lastly, plaintiff argues the Court should award costs and attorneys' fees pursuant to 15 U.S.C. § 1117(a).
The Court agrees.
In "exceptional cases," a court may award attorney's fees to the prevailing party under the Lanham Act. 15 U.S.C. § 1117(a). Recently, the Supreme Court considered the meaning of "exceptional cases" under the attorney's fees provision of the Patent Act, a provision identical to the one found in Section 1117(a) of the Lanham Act.
In
The Court continued:
This is an exceptional case which, in an exercise of the Court's discretion, warrants the imposition of a reasonable attorney's fee. Defendant processed payments for the callers, who directly infringed plaintiff's exclusive right to use of the DISH marks in commerce. Defendant continued to do so either knowing, or with reason to know, that his and the callers' conduct was unlawful. Further, defendant took measures to maintain processing services for the callers even after one of his accounts was closed by the account issuer and his name placed on a terminated merchants list. Finally, defendant continued to process these payments even after he was served with the complaint in this matter, and again after the parties' initial conference before the Court.
Accordingly, the Court grants plaintiff's motion for an award of costs and a reasonable attorney's fee pursuant to Section 1117(a).
The motion for partial summary judgment and for an award of costs and attorneys' fees is GRANTED.
Defendant is permanently enjoined from selling, offering for sale, or accepting payment for any product or service infringing on any of plaintiff's DISH marks.
By November 20, 2019, plaintiff shall submit documentation of its costs and attorneys' fees incurred in this case, and a concise explanation of why the requested fees are reasonable. By December 4, 2019, defendant may file an opposition to plaintiff's fee application.
Also by November 20, 2019, plaintiff's counsel shall advise the Court by letter how plaintiff wishes to proceed, if at all, on its remaining claims (Counts I, II, V, VI, and VII of the amended complaint).
The Clerk is instructed to terminate the motion. (Doc. #37).
SO ORDERED: