HAYWARD INDUSTRIES, INC. v. SALTWATER POOL SUPPLIES

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

HAYWARD INDUSTRIES, INC.,

Civ. No. 20-6105 (KM)(ESK)

Plaintiffs,

OPINION

v.

SALTWATER POOL SUPPLIES, ET AL.

Defendants.

KEVIN MCNULTY, U.S.D.J.:

This matter comes before the Court on the unopposed motion (DE 13)1

for default judgment of plaintiff Hayward Industries, Inc. Plaintiff, a

manufacturer of equipment for commercial and residential swimming pools,

initiated this action against defendant Saltwater Pool Supplies (“Salt Pool

Store”), d/b/a Salt Pool Store and d/b/a SaltPoolStore.com, and Salt Pro

Systems (“Salt Pro”) d/b/a Salt Pro Systems LLC, d/b/a Salt Pro System Direct

and d/b/a SaltProDirect.com (collectively “Salt Pool Store”) for trademark

infringement, false advertising, counterfeiting, passing off, false designation of

1 Citations to the record will be abbreviated as follows. Citations to page numbers

refer to the page numbers assigned through the Electronic Court Filing system, unless

otherwise indicated:

“DE” = Docket entry number in this case.

“Am. Compl.” = Plaintiffs’ Amended Complaint (DE 5)

“Pf. Brief” = Plaintiff’s Memorandum in Support of Plaintiff’s Motion for Default

Judgment (DE 13-1)

“Myers Decl.” = Declaration of Anthony Myers, a customer of Salt Pool Sore (DE

13-8)

“Davila Decl.” =Declaration of Jason Davila, Product Manager of Sanitization at

Hayward Industries, Inc. (DE 13-6)

“Belt Decl.” = Declaration of Erik Paul Belt, Esq. (DE 13-9).

origin, unfair competition, and related claims, all in violation of the Lanham

Act (15 U.S.C. § 1051 et seq), as well as New Jersey statutory and common law.

The Amended Complaint asserts on information and belief that defendants “are

all affiliated or owned and controlled by the same ownership or management

entity.” (Am. Compl. ¶4). Therefore, I refer to those entities as a single

defendant.

Defendant has failed to respond to the initial and Amended Complaint or

this motion. For the reasons provided herein, I will grant plaintiff’s motion (DE

13) and enter default judgment.

I. Summary

a. Factual Allegations

Plaintiff is a “manufacturer of equipment for commercial and residential

swimming pools, such as pumps, heaters, filters, and chlorination systems.”

(Am. Compl. ¶9). Plaintiff offers products under numerous brands including,

HAYWARD®, its house mark, as well as AQUA RITE®, SWIMPURE®,

GOLDLINE®, TURBO CELL®, T-CELL-3®, T-CELL-9®, T-CELL-15®, GLX-

CELL™, and GLX-CELL-15-1™. (Am. Compl. ¶10). One of plaintiff’s most

popular and profitable products is known as a “salt cell,” a part of the salt

chlorination system which is used to covert saltwater into chlorine for purposes

of sanitization. (Am. Compl. ¶¶11-12). Plaintiff manufactures and sells salt

cells under its federally registered marks. (Am. Compl. ¶¶11, 14). The Amended

Complaint alleges that Plaintiff has continuously used most of it marks “on and

in connection with electrolytic chlorine generators and salt cells for at least the

past 20 years and, in some cases, even longer.” (Am. Compl. ¶27).

Salt cells need to be replaced periodically and, therefore, “a market for

replacement salt cells has arisen.” (Am. Compl. ¶32). Plaintiff sells its salt cells,

including replacement salt cells, through authorized retailers. (Am. Compl.

¶31). Plaintiff alleges that defendant unfairly competes in the salt cell

replacement market “by falsely advertising or passing off its replacement salt

cells as HAYWARD® replacement cells, by infringing Hayward’s trademarks, by

counterfeiting, and by improperly trading on Hayward’s brand recognition and

good will.” (Am. Compl. ¶33).

The Amended Complaint alleges that defendant engages in unlawful

conduct in the form of (1) bait-and-switch tactics, (2) passing-off and

trademark infringement, (3) false advertisements and false association, and (4)

passing-off and counterfeiting. (Am. Compl. ¶¶ 34-69). Because of that

unlawful conduct, plaintiff submits, it is directly harmed by actual customer

confusion. (Am. Compl. ¶¶70-77).

i. Bait-and-Switch Tactics

Regarding the bait-and-switch scheme, the Amended Complaint alleges

that defendant falsely advertises and passes off its generic salt cells “by luring

customers with pop-up ads” that state, for example, “Hayward’s T-Cell-15 Just

$269.00 40,000 Gallons 5 Year Warranty.” (Am. Compl. ¶34). Upon clicking the

advertisement, the customer is directed to “Salt Pool Store’s own ‘Platinum

Edition replacement salt cell for HAYWARD T-CELL-15’ on Salt Pool’s website.”

(Am. Compl. ¶35). Plaintiff submits that defendant’s use of the HAYWARD®

and other marks lures current and potential Hayward customers into visiting

defendant’s website and mistakenly purchasing a competing product, believing

it to be a genuine Hayward product. (Am. Compl. ¶36). Additionally,

defendant’s “ads appear when a potential customer conducts an Internet

search seeking a genuine HAYWARD® product.” (Am. Compl. ¶38).

ii. Passing-Off and Trademark Infringement

The Amended Complaint further asserts that defendant’s

“advertisements prominently display and use the Hayward Marks . . . to pass of

Salt Pool Store’s own generic salt cells as genuine HAYWARD® branded salt

cells or salt cells that are somehow affiliated with, or authorized by Hayward.”

(Am. Compl. ¶44). For example, the Amended Complaint includes a photo of

defendant’s website depicting a header labeled “Hayward/ Aqua Rite

Replacement Cells.” (Id.). Under that header is the product named “PLATINUM

EDITION REPLACEMENT SALT CELL FOR HAYWARD-CELL-15|40,000

GALLONS| 5-Year WARRANTY.” (Id.). The description for that product states,

inter alia, “compatible with Goldline” and “Aqua Rite” and “[r]eplacement for

Hayward T-CELL-15 and GLX-CELL-15-W.” (Id.).

Plaintiff contends that defendant’s statement of compatibility is false or

misleading and that the repeated use of its marks causes confusion and

suggests that Hayward is affiliated with the product. (Am. Compl. ¶¶45-49).

Additionally, the advertisement suggests that the generic products are covered

under Hayward’s warranty. (Am. Compl. ¶50). Because the product is not so

covered, “dissatisfied customers will think poorly of Hayward and are likely to

complain” on customer ratings sites and social media, which “harms Hayward’s

good will and reputation among [its] current and prospective customers.” (Am.

Compl. ¶51).

iii. False Advertisements and False Association

Next, the Amended Complaint alleges that defendant’s “replacement cells

do not work perfectly and prompt many consumer complaints” to plaintiff,

suggesting that defendant’s statements of compatibility constitute false

advertisement and false association. (Am. Compl. ¶¶53-55). Additionally,

defendant’s website “inaccurately states” that its salt is “is equivalent to the T-

CELL-3 and T-CELL-9.” (Am. Compl. ¶56). Plaintiff submits that defendant

uses the Hayward name and marks “to capitalize on Hayward’s goodwill” and

to “promote its knock-off products as HAYWARD® brand salt cells or as

products that Hayward has sponsored or authorized to work with pool systems

manufactured and sold by Hayward.” (Am. Compl. ¶57).

iv. Passing-Off and Counterfeiting

Finally, the Amended Complaint alleges that defendant engages in

counterfeiting and passing-off its generic products as genuine Hayward

products (Am. Compl. ¶¶59-69). Plaintiff ordered a product from defendant’s

website, which was then shipped to a Hayward employee in New Jersey. (Am.

Compl. ¶59). The shipping label for that product stated: “Content Description

T-Cell-15 40,000 GALLONS 5 YEAR WARRANTY.” (Am. Compl. ¶60). However,

the product is not a Hayward T-Cell-15® and is not covered under Hayward’s

warranty. (Am. Compl. ¶61). Additionally, the product’s Instructional Manual

states that it is a “generic replacement cell for Aqua Rite Turbo Cell” which,

contends plaintiff, “is not only false but it misleadingly and confusingly

suggests to consumers that this product is a genuine Hayward product or

product approved by Hayward.” (Am. Compl. ¶64). Further, the manual states

that “no re-configuration is necessary” when replacing an existing Hayward

product with the generic product, but, as alleged in the Amended Complaint,

“re-configuration is necessary unless it is an authorized direct replacement.”

(Am. Compl. ¶66). Moreover, the back of the manual states “Platinum Goldline

Manual” which “misleadingly suggest[s] that the product is a genuine Hayward

GOLDLINE® product or sponsored, affiliated or authorized by Hayward.” (Am.

Compl. ¶67).

Plaintiff submits that it is directly harmed by actual consumer confusion,

given the allegations of unlawful conduct described above. (Am. Compl. ¶¶70-

73). Further, the Amended Complaint alleges that “overwhelming numbers of

customers [are] dissatisfied with Salt Pool Store and its ‘comparable with

Hayward’ products” as depicted by negative reviews. (Am. Coml. ¶70).

b. Procedural History

On April 2, 2020, plaintiff “demanded that Salt Pool Store stop the false

ads and infringement” and “asked that Salt Pool Store respond by April 10,

2020.” (Am. Compl. ¶73). When defendant failed to respond, plaintiff initiated

this action. (Id.). The Amended Complaint asserts these claims:

Count 1: False advertising in violation of Section 43(a) of the

Lanham Act, 15 U.S.C. § 1125(a) (Am. Compl. ¶¶78-91);

Count 2: Federal trademark infringement of the HAYWARD® mark

in violation of Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1)

(Am. Compl. ¶¶92-101);

Count 3: Federal trademark infringement of the AQUA RITE®

mark in violation of Section 32(1) of the Lanham Act, 15 U.S.C. §

1114(1) (Am. Compl. ¶¶102-111);

Count 4: Federal trademark infringement of the GOLDLINE® mark

in violation of Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1)

(Am. Compl. ¶¶112-119);

Count 5: Federal trademark infringement of the SWIMPURE®

mark in violation of Section 32(1) of the Lanham Act, 15 U.S.C. §

1114(1) (Am. Compl. ¶¶120-127);

Count 6: Federal trademark infringement of the TURBO CELL®

mark in violation of Section 32(1) of the Lanham Act, 15 U.S.C. §

11141(1) (Am. Compl. ¶¶128-135);

Count 7: Federal trademark infringement of the T-CELL-3® mark

in violation of Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1)

(Am. Compl. ¶¶136-143);

Count 8: Federal trademark infringement of the T-CELL-9® mark

in violation of Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1)

(Am. Compl. ¶¶144-151);

Count 9: Federal trademark infringement of the T-CELL-15® mark

in violation of Section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1)

(Am. Compl. ¶¶152-159);

Count 10: Federal trademark counterfeiting in violation of Section

32 of the Lanham Act, 15 U.S.C. § 1114 (Am. Compl. ¶¶160-166);

Count 11: Unfair competition and false designation of origin in

violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a),

by unauthorized use of the HAYWARD®, GOLDLINE®, AQUA

RITE®, SWIMPURE®, TURBO CELL®, T-CELL-3®, T-CELL-9®, T-

CELL-15® trademarks (Am. Compl. ¶¶167-173);

Count 12: Unfair competition and false designation of origin in

violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a),

by unauthorized use of the T-CELL™, GLX-CELL™, GLX-CELL-15-

W™, GLX-CELL-9™, GLX-CELL-5™, GLX-CELL-3™ trademarks

(Am. Compl. ¶¶174-181);

Count 13: Unfair competition and false designation of origin in

violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a),

by passing off (Am. Compl. ¶¶ 182-190);

Count 14: False advertising in violation of N.J.S.A. § 56:8-2 et seq.

(Am. Compl. ¶¶191-198);

Count 15: Unfair competition in violation of N.J.S.A. § 56:4-1 (Am.

Compl. ¶¶199-208) (Am. Compl. ¶¶199-208);

Count 16: Trademark infringement and unfair competition under

New Jersey common law (Am. Compl. ¶¶209-217);

Count 17: Tortious interference with prospective economic

advantage (Am. Compl. ¶¶218-224);

Count 18: Unjust enrichment (Am. Compl. ¶¶225-229).

Defendant has failed to answer or otherwise respond to the Amended

Complaint. On September 28, 2020, the Clerk entered default. Plaintiff now

moves for default judgment.

II. Legal Standard

“[T]he entry of a default judgment is left primarily to the discretion of the

district court.” Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984) (citing

Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d Cir. 1951)).

Because the entry of a default judgment prevents the resolution of claims on

the merits, “this court does not favor entry of defaults and default judgments.”

United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984).

Thus, before entering default judgment, the Court must determine whether the

“unchallenged facts constitute a legitimate cause of action” so that default

judgment would be permissible. DirecTV, Inc. v. Asher, 2006 WL 680533, at *1

(D.N.J. Mar. 14, 2006) (citing Wright, Miller, Kane, 10A Fed. Prac. & P. Civil 3d

§ 2688, at 58–59, 63).

“[D]efendants are deemed to have admitted the factual allegations of the

Complaint by virtue of their default, except those factual allegations related to

the amount of damages.” Doe v. Simone, 2013 WL 3772532, at *2 (D.N.J. July

17, 2013). While “courts must accept the plaintiff's well-pleaded factual

allegations as true,” they “need not accept the plaintiff's factual allegations

regarding damages as true.” Id. (citing Chanel, Inc. v. Gordashevsky, 558 F.

Supp. 2d 532, 536 (D.N.J. 2008)). Moreover, if a court finds evidentiary

support to be lacking, it may order or permit a plaintiff seeking default

judgment to provide additional evidence in support of the allegations. Doe,

2013 WL 3772532, at *2.

III. Prerequisites for Entry of Default Judgment

Before a court may enter default judgment against a defendant, the

plaintiff must have properly served the summons and complaint, and the

defendant must have failed to file an answer or otherwise respond to the

complaint within the time provided by the Federal Rules, which is twenty-one

days. See Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 18–19 (3d Cir.

1985); Fed. R. Civ. P. 12(a).

Plaintiff filed its initial complaint against Salt Pool Store on May 19,

2020. (DE 1). After having trouble effectuating service, and in the course of

investigating an alternative address, plaintiff discovered a second entity, Salt

Pro, that appears to be closely related to Salt Pool Store and, plaintiff alleges, is

jointly involved in the misconduct giving rise to this litigation. (Pf. Brief at 3).

Plaintiff amended its complaint to add Salt Pro on July 21, 2020. (DE 5).

Plaintiff served Salt Pro on July 28, 2020 and Salt Pool Store on August 12,

2020.2 (DE 10; DE 11; DE 12-1). Salt Pro’s deadline to respond was August 18,

2 On August 12, 2020, this Court granted plaintiff’s motion for alternative service

via email with respect to defendant Salt Pool Store. (DE 9 at 3). Prior to filing its

motion, plaintiff attempted to contact Salt Pool Store by first mailing two cease-and-

desist letters to its last known address and at least one cease-and-desist letter and a

copy of the complaint by email to sales@saltpoolstore.com. (DE 9 at 1). That email was

returned as undeliverable, but the overnight mail sent to Salt Pool Store “was returned

either because it was ‘refused’ or because [Salt Pool Store] no longer was located at

that address.” (DE 9 at 1-2). Plaintiff also attempted to serve Salt Pool Store at the two

locations listed on its website via a process server. (DE 9 at 2). Both attempts were

unsuccessful. (Id.). Finding plaintiff’s unsuccessful efforts to serve Salt Pool Store

sufficient, the Court authorized alternative service by email as being “reasonably

calculated, under all circumstances, to apprise interested parties of the pendency of

2020 and Salt Pool Store deadline was September 2, 2020. Neither entity

responded, and plaintiff’s request for entry of default was granted on

September 23, 2020. Therefore, the prerequisites for default judgment have

been satisfied.

IV. Three-Factor Analysis

After the prerequisites have been satisfied, a court must evaluate the

following three factors: “(1) whether the party subject to default has a

meritorious defense, (2) the prejudice suffered by the party seeking default, and

(3) the culpability of the party subject to default.” Doug Brady, Inc. v. N.J. Bldg.

Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008) (citing Emcasco

Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987)).

a. Factor one: Existence of meritorious defense

As always, evaluation of the first factor is made difficult by defendant’s

failure to answer or to oppose the motion for default judgment. Nevertheless,

my independent review of the record does not suggest that plaintiff’s claims are

legally flawed. See Doe, 2013 WL 3772532, at *5. Accepting the allegations in

the Complaint as true, Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir.

1990), I find that the plaintiff has successfully stated a claim for relief against

defendant.

As explained more fully below, I find that plaintiff has (1) established a

prima facie case of specific jurisdiction over defendant and (2) sufficiently

demonstrated entitlement to relief based on the causes of action asserted in the

Amended Complaint.

the action.” (DE 9 at 2-3 (citing Mullane v. Central Hanover Bank & Trust Co., 339 U.S.

306, 314 (1950)).

Through additional research, plaintiff uncovered an additional entity associated

with Salt Pool Store, Salt Pro. (Id.). Plaintiff attempted to serve Salt Pro at its listed

address in Norcross, Georgia, but was initially unsuccessful. (Id.). Plaintiff eventually

did succeed in serving Salt Pro on July 28, 2020. (Id.)

i. Personal Jurisdiction

As an initial matter, I address this Court’s personal jurisdiction over

defendant. See Allaham v. Naddaf, 635 F. App’x 32, 36 (3d Cir. 2015) (“[W]hen

a default judgment is requested, a court is required to make a threshold

determination regarding any jurisdictional defects.”) (citing Bolden v. Se. Pa.

Transp. Auth., 953 F.2d 807, 812 (3d Cir. 1991)). If a court lacks personal

jurisdiction over a defendant, the court does not have authority to render a

default judgment, and any such judgment will be deemed void. Budget Blinds,

Inc. v. White, 536 F.3d 244, 258 (3d Cir. 2008). “In the absence of an

evidentiary hearing, a plaintiff[’]s complaint need only establish a prima facie

case of personal jurisdiction.” Allaham, 635 F. App’x at 36-37 (citing Eurofins

Pharma U.S. Holdings v. BioAlliance Pharma SA, 623 F.3d 147, 155 (3d Cir.

2010); Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009)).

“In determining whether a plaintiff has made a prima facie showing, a district

court is ‘required to accept the allegations in the complaint as true and to

construe any disputed facts in [the plaintiff's] favor.’” CoachSource, LLC v.

Coachforce, No. 17-5126, 2019 WL 1385200, at *1 (D.N.J. Mar. 27, 2019)

(quoting Fatouros v. Lambrakis, 627 F. App’x 84, 87 (3d Cir. 2015)).

A federal court may exercise personal jurisdiction over a defendant to the

extent authorized by state law. Fed. R. Civ. P. 4(k)(1)(A). New Jersey law

provides for jurisdiction coextensive with constitutional due process. Miller

Yacht Sales, Inc. v. Smith, 384 F.3d 93, 96 (3d Cir. 2004) (citing N.J. Ct. R. 4:4-

4). Due process allows for general or specific jurisdiction. Danziger & De Llano,

LLP v. Morgan Verkamp LLC, 948 F.3d 124, 129 (3d Cir. 2020). A court has

general jurisdiction when a defendant has “continuous and systematic”

contacts with the forum state, O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312,

317 (3d Cir. 2007). A court has specific jurisdiction when a plaintiff’s claim

arises from a defendant’s actions within the forum state, such that the

defendant could “reasonably anticipate being haled into [the state’s] court[s].”

Vetrotex Certainteed Corp. v. Consol. Fiber Glass Prods. Co., 75 F.3d 147, 151

(3d Cir. 1996) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S.

286, 297 (1980)) (internal quotation marks omitted).

Salt Pool Store has its principal places of business in Illinois and Georgia

(Am. Compl. ¶2) and Salt Pro is a Delaware limited liability company having its

principal place of business in Delaware (Am. Compl. ¶3). Plaintiff does not

submit that this Court has general jurisdiction over defendant. Instead, the

Amended Complaint alleges that this Court has personal jurisdiction based on

defendant’s contacts with the forum, i.e., that the Court has specific personal

jurisdiction. (Am. Compl. ¶7)

For specific jurisdiction, the Supreme Court has delineated three due

process requirements: First, the plaintiff must demonstrate that the defendant

“purposefully directed [its] activities at the forum.” O'Connor, 496 F.3d at 317

(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)) (internal

quotation marks omitted). Second, “the litigation must ‘arise out of or relate to’

at least one of those activities.” Id. (quoting Helicopteros Nacionales de

Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). Third, if the plaintiff satisfies

the first two requirements, “a court may consider whether the exercise of

jurisdiction otherwise ‘comport[s] with fair play and substantial justice.’” Id.

(quoting Burger King Corp., 471 U.S. at 476) (internal quotation marks

omitted).

A defendant can be subject to personal jurisdiction in a state it never

entered:

Jurisdiction in these circumstances may not be avoided merely

because the defendant did not physically enter the forum State.

Although territorial presence frequently will enhance a potential

defendant’s affiliation with a State and reinforce the reasonable

foreseeability of suit there, it is an inescapable fact of modern

commercial life that a substantial amount of business is

transacted solely by mail and wire communications across state

lines, thus obviating the need for physical presence within a State

in which business is conducted. So long as a commercial actor’s

efforts are “purposefully directed” toward residents of another

State, we have consistently rejected the notion that an absence of

physical contacts can defeat personal jurisdiction there.

Burger King, 471 U.S. at 476.

I find plaintiff has pled a prima facie case of specific jurisdiction, and,

given the procedural context, I will not require more. First, plaintiff alleges that

defendant is “regularly engaged in business in this District and has

purposefully targeted its unlawful business activities to the residents of this

District, for example, falsely advertising, offering for sale, and selling infringing,

counterfeit products in New Jersey.” (Am. Compl. ¶7). The Amended Complaint

further asserts that Defendant “sells the infringing products through its own

interactive, retail website, www.saltpoolstore.com and www.saltprodirect.com”

and “does not place any geographic restrictions on who can view the

advertisement or buy its products from its website.” (Id.). Therefore, “the

infringing advertisements and products are made available to New Jersey

residents,” and, plaintiff alleges, defendant “has shipped infringing products to

the residents of New Jersey” (Id.), including the plaintiff (Am. Compl. ¶59). See

J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 884-86 (2011) (noting the

difference, for personal jurisdiction purposes, between directly selling products

to a forum and products that end up in a forum because of the stream of

commerce); Celgene Corp. v. Distinct Pharma, No. 17-5303, 2019 WL 1220320,

at *3 (D.N.J. Mar. 13, 2019) (finding plaintiff pled a prima facie case of specific

jurisdiction because, inter alia, plaintiff alleged that defendant purposefully

directed its activities to New Jersey and sold pharmaceutical products directly

to customers in New Jersey). Accepting those allegations as true, I find

defendant has engaged in sufficient minimum contacts with the forum.3

3 Plaintiff alleges, albeit with limited factual support, that defendant ships its

infringing products to New Jersey residents. Instead of disputing that allegation, or

challenging jurisdiction, defendants have persistently avoided service and have not

responded. The Court is aware of the case law holding that, in the context of a

commercial website accessible nationwide, more is needed to demonstrate purposeful

availment than shipment to the forum orchestrated by the plaintiff. See Toys “R” Us,

Inc. v. Step Two, S. A., 318 F.3d 446, 455-56 (3d Cir. 2003). Here, however, plaintiff

alleges that defendants have regularly engaged in business in New Jersey and have

shipped infringing products to other residents in the forum, as well as itself. (Am.

Compl. ¶7). I find plaintiff has sufficiently pleaded a prima facie case of specific

Second, the litigation arises out of defendant’s activity in the forum. The

advertisement for and shipment of the alleged New Jersey sales are the very

activities that plaintiff submits violate trademark and unfair competition law.

Finally, the exercise of jurisdiction comports with “fair play and

substantial justice.” Factors to consider in this inquiry include “the burden on

the defendant,” “the forum State’s interest in adjudicating the dispute,” “the

plaintiff’s interest in obtaining convenient and effective relief,” “the interstate

judicial system’s interest in obtaining the most efficient resolution of

controversies,” and the “shared interest of the several States in furthering

fundamental substantive social policies.” World-Wide Volkswagen Corp., 444

U.S. at 292; see also Burger King, 471 U.S. at 477. These factors do not weigh

against a finding of personal jurisdiction here.

ii. Plaintiff’s Causes of Action

I now address the claims asserted in the Amended Complaint.

1. Trademark Infringement, Unfair Competition, and False Designation

of Origin Claims (Counts 2-9, 11-13, and 15-16)

Under the Lanham Act Section 32, 15 U.S.C. Section 1114(1):

(1) Any person who shall, without the consent of the registrant—

(a) use in commerce any reproduction, counterfeit, copy, or

colorable imitation of a registered mark in connection with the

sale, offering for sale, distribution, or advertising of any goods or

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

confusion, or to cause mistake, or to deceive

. . .

Shall be liable in a civil action by the registrant . . . .

15 U.S.C.A. § 1114(l)(a). Additionally, the Lanham Act Section 43(a) proscribes

unfair competition or, as the statute refers to it, “false designation of origin” or

“false description.” 15 U.S.C.A. § 1125(a). The statute provides that:

jurisdiction based on the limited information available to it due to defendant’s failure

to answer or otherwise respond to the Amended Complaint.

(1) Any person who, on or in connection with any goods or services,

or any container for goods, uses in commerce any word, term,

name, symbol, or device, or any combination thereof, or any false

designation of origin, false or misleading description of fact, or

false or misleading representation of fact, which—

(A) is likely to cause confusion, or to cause mistake, or to

deceive as to the affiliation, connection, or association of

such person with another person, or as to the origin,

sponsorship, or approval of his or her goods, services, or

commercial activities by another person . . .

shall be liable in a civil action by any person who believes

that he or she is or is likely to be damaged by such act.

15 U.S.C.A. § 1125(a)(1)(A).

To state a claim for trademark infringement, 15 U.S.C. § 1114(1), and

unfair competition/false designation of origin, 15 U.S.C. § 1125(a)(1), a plaintiff

must show three elements: “(1) it has a valid and legally protectable mark; (2) it

owns the mark; and (3) the defendant’s use of the mark to identify goods or

services causes a likelihood of confusion.” A & H Sportswear, Inc. v. Victoria's

Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000) (“We measure federal

trademark infringement, 15 U.S.C. § 1114, and federal unfair competition, 15

U.S.C. § 1125(a)(1)(A), by identical standards”); See also Chanel, Inc. v. Matos,

No. 14-3509, 2015 WL 4773072, at *10 n.6 (D.N.J. Aug. 13, 2015) (“Courts in

the Third Circuit consider claims for trademark infringement and for false

designation of origin under an identical standard.”) (citing A&H Sportswear). A

plaintiff bears the burden of proving these elements.

As to the first and second elements, plaintiff has alleged ownership of

trademarks and provided the registration numbers and the date of registration

for each. (Am. Compl. ¶¶16-25). Plaintiffs allege that the trademarks are

incontestable under 15 U.S.C. § 1065 “by virtue of years of continuous and

uncontested use.” (Id.). Additionally, plaintiff has also provided the certificates

of registration. A “certificate of registration issued by the United States Patent

and Trademark Office constitutes prima facie evidence of the validity and

ownership of a disputed mark.” Coach, Inc. v. Cosmetic House, No. 10-2794,

2011 WL 1211390, *2 (D.N.J. Mar. 29, 2011) (certificate of registration by U.S.

Patent and Trademark Office is sufficient to establish the first and second

elements of trademark infringement and unfair competition claims). As such, I

am satisfied that the first two elements are met.

Regarding the third element, a “likelihood of confusion” exists where

“consumers viewing the mark would probably assume that the product or

service it represents is associated with the source of a different product or

service identified by a similar mark.” Coach, 2011 WL 1211390, at *3 (quoting

Ford Motor Co. v. Summit Motor Prods., Inc., 930 F.2d 277, 292 (3d Cir. 1991)).

Courts consider a variety of factors when assessing whether two marks are

likely to cause consumer confusion. In this Circuit those factors, known as the

Lapp factors, include the following:

(1) the degree of similarity between the owner’s mark and the

alleged infringing mark; (2) the strength of the owner’s mark; (3)

the price of the goods and other factors indicative of the care and

attention expected of consumers when making a purchase; (4) the

length of time the defendant has used the mark without evidence

of actual confusion arising; (5) the intent of the defendant in

adopting the mark; (6) the evidence of actual confusion; (7)

whether the goods, though not competing, are marketed through

the same channels of trade and advertised through the same

media; (8) the extent to which the targets of the parties’ sales

efforts are the same; (9) the relationship of the goods in the minds

of consumers because of the similarity of function; (10) other

factors suggesting that the consuming public might expect the

prior owner to manufacture a product in the defendant’s market,

or that he is likely to expand into that market.

Freedom Card, Inc. v. JPMorgan Chase & Co., 432 F.3d 463, 471 (3d Cir. 2005)

(quoting Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983)).

The Third Circuit has “repeatedly insisted that the Lapp factors are not

to be mechanically tallied, but rather that they are tools to guide a qualitative

decision.” A & H Sportswear, Inc., 237 F.3d at 216. “The single most important

factor in determining likelihood of confusion is mark similarity.” Id. Marks are

confusingly similar if “ordinary consumers would likely conclude that [the two

products] share a common source, affiliation, connection, or sponsorship.” Id.

(quoting Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 477 (3d Cir.

1994)). Nevertheless, “when the mark owner and the alleged infringer sell

similar goods or services, the court need rarely look beyond the marks

themselves.” Luxottica Grp., S.p.A. v. Shore Enuff, No. 16-5847, 2019 WL

4027547, at *5 (D.N.J. Aug. 27, 2019). In other words, “when the goods sold

are similar to mark owner’s goods, as is the case here, analysis narrows to

observing the extent of similarity between the registered and allegedly

infringing marks.” Id.

Here, plaintiff alleges that defendant competes with it directly by selling

purported replacement salt cells that are counterfeits of and/or confusingly

similar to Hayward’s trademarks. (Am. Compl. ¶33). Indeed, defendant’s

website uses Hayward’s marks (e.g., T-CELL-15) to advertise their products.

(See, e.g., Am. Compl. ¶37 (“Hayward T-Cell-15 Just $269.00 Direct

Replacement, In Stock”)). Defendant also uses the Goldline mark on its user

manual. (Am. Compl. ¶67). Based on those allegations, which I must accept as

true, Comdyne I, 908 F.2d at 1149, I find plaintiff has sufficiently established

likelihood of confusion.

In addition, I find the same with respect to plaintiff’s claims for unfair

competition under New Jersey’s statute, N.J.S.A. 56:4-1, and trademark

infringement and unfair competition under common law (Counts 15 and 16

respectively). See N. V.E., Inc. v. Day, No. 7-4283, 2009 WL 2526744, at *2

(D.N.J. Aug. 18, 2009) (quoting Am. Tel. & Tel. Co. v. Winback & Conserve

Program, Inc., 42 F.3d 1421, 1433 (3d Cir. 1994)) (“By virtue of . . . Lanham Act

violations,” the defendant “also established its common law and state law

claims for unfair competition.”); Coach, Inc. v. Bags & Accessories, No. 10-

2555, 2011 WL 1882403, at *5 (D.N.J. May 17, 2011) (“[L]iability for common

law trademark infringement is established when a defendant violates the

federal Lanham Act for trademark infringement.”).

Based on the foregoing, I find that plaintiff has stated a viable cause of

action for trademark infringement, unfair competition, and false designation of

origin and will enter default judgment as to these claims (Counts 2-9, 11-13,

and 15-16).

2. Counterfeiting (Count 10)

To establish trademark counterfeiting, plaintiff “must show (1) the

defendant infringed a registered trademark in violation of the Lanham Act, 15

U.S.C. § 1114(1)(a) and (2) the defendant intentionally used the trademark

knowing it was counterfeit or was willfully blind to such use.” Coach, Inc. v.

Ocean Point Gifts, No. 09-4215, 2010 WL 2521444, at *3 (D.N.J. June 14,

2010) (citing Chanel, 558 F. Supp. 2d at 537). Intent may be inferred from a

defendant’s continued use after given notice of infringement. Id. (citing

Platypus Wear, Inc. v. Bad Boy Club, Inc., No. 08–02662, 2009 WL 2147843, at

*6 (D.N.J. July 15, 2009)).

Plaintiff has established both elements. As discussed supra, plaintiff has

established a viable claim for trademark infringement. Defendant’s willful

intent may be inferred from its continued infringement after receiving two cease

and desist letters and after receiving service of the initial and Amended

Complaint, all of which it ignored. See Ocean Point Gifts, 2010 WL 2521444 at

*3 (finding the intent element established where the defendant continued to sell

infringing handbags nearly three months after service of the complaint).

Therefore, I will enter default judgment for the counterfeiting claim in Count

10.

3. False Advertising (Counts 1 and 14)

To establish a claim for false advertising under the Lanham Act, plaintiff

must prove five elements:

1) that the defendant has made false or misleading statements as

to his own product [or another’s]; 2) that there is actual deception

or at least a tendency to deceive a substantial portion of the

intended audience; 3) that the deception is material in that it is

likely to influence purchasing decisions; 4) that the advertised

goods traveled in interstate commerce; and 5) that there is a

likelihood of injury to the plaintiff in terms of declining sales, loss

of good will, etc.

Groupe SEB USA, Inc. v. Euro-Pro Operating LLC, 774 F.3d 192, 198 (3d Cir.

2014) (alteration in original) (quoting Pernod Ricard USA, LLC v. Bacardi U.S.A.,

Inc., 653 F.3d 241, 248 (3d Cir.2011)).

Here, plaintiff alleges that defendant’s advertisements and website

contain false or misleading statements. (Am. Compl. ¶¶34-69). For example,

defendant markets its salt cells as replacements for Hayward products.

However, plaintiff alleges that defendant’s salt cells are not compatible with

Hayward products, and, contrary to the statements in defendant’s product

manual, re-configuration is necessary to install non-Hayward salt cells. (Am.

Compl. ¶¶65-66). Therefore, factor one is satisfied.

Plaintiff has also demonstrated factors two through four through the

declaration (DE 13-8) of Anthony Myers, a dissatisfied Salt Pool Store customer

who mistakenly believed he had purchased a Hayward-approved salt cell.

Myers, who resides in Florida, purchased a “Platinum Edition Replacement Salt

cell for Hayward T-CELL-9 | 25,000 Gallons | 5-Year Warranty” from

defendant’s website www.saltpoolstore.com. (Myers Decl. ¶3). Myers states that

he purchased the salt cell because the website advertised it as “‘compatible

with Hayward’ salt systems,” stated that the product “included a 5 year

warranty,” and boasted that “installation did not require any tools, plumbing,

or re-threading.” (Id.). However, Myers was unable to effectively install the Salt

Pool Store product. (Id. ¶4). Myers “had to tighten the cell with tools in order

for the salt cell to connect to the Hayward salt system but it leaked the entire

time,” and after six months the salt cell stopped working. Id. Myers attempted

to contact Salt Pool Store, which eventually suggested he send his broken

product back to them and provided an address in Illinois. (Id.). Because Myers

believed that Hayward was responsible for the product, he contacted plaintiff.

(Id. ¶7). Myers’ declaration demonstrates that defendant’s product tends to

deceive customers, that the deception is material, and that defendant’s goods

travelled in interstate commerce. Therefore, factors two through four are

satisfied.

Finally, regarding likely injury, the Amended Complaint provides

numerous instances of actual consumer dissatisfaction and confusion through

online reviews. (Am. Compl. ¶¶70-77). I find those reviews establish a

reputational harm to plaintiff and tarnish its good will.

For those reasons, I will enter default for plaintiff’s false advertising claim

under the Lanham Act (Count 1).

I also find that plaintiff has pled a viable claim for false advertising under

the New Jersey Consumer Fraud Act (“NJCFA”). That act makes it unlawful to

use fraud in connection with the sale or advertisement of merchandise.

N.J.S.A. 56:8-2. To establish a prima facie claim of false advertising under the

NJFCA, a plaintiff must demonstrate “(1) unlawful conduct; (2) an

ascertainable loss; and (3) a causal relationship between the unlawful conduct

and the ascertainable loss.” Smajlaj v. Campbell Soup Co., 782 F. Supp. 2d 84,

97 (D.N.J. 2011) (quoting Int’l Union of Operating Engineers Local No. 68

Welfare Fund v. Merck & Co., 929 A.2d 1076, 1086 (N.J. 2007)).

Here, plaintiff has sufficiently alleged that defendant engaged in unlawful

conduct by infringing on its registered trademarks. Regarding ascertainable

loss, plaintiff has demonstrated, through negative reviews and the Myers

Declaration, that customers have purchased defendant’s salt cells under the

mistaken belief that they are compatible with the Hayward system or constitute

a suitable replacement for Hayward salt cells. See id. (“Misrepresenting a

product in order to get a consumer to purchase it does cause an injury, and

what New Jersey Courts require for that loss to be ‘ascertainable’ is for the

consumer to quantify the difference in value between the promised product and

the actual product received.”). Finally, I find the causal link is satisfied

because, but for defendant’s misleading advertisements and infringement on

plaintiff’s trademarks, the customers would have purchased suitable

replacement parts from plaintiff or its approved retailers. Therefore, I will enter

default judgment with respect to plaintiff’s state false advertising claim under

Count 14.

4. Claims for Unjust Enrichment and Tortious Interference with

Prospective Economic Advantage (Counts 17-18)

To state a claim for unjust enrichment under New Jersey law, a plaintiff

must show: that “(1) at plaintiff’s expense (2) defendant received a benefit (3)

under circumstances that would make it unjust for defendant to retain benefit

without paying for it.” Dzielak v. Whirlpool Corp., 26 F. Supp. 3d 304, 330

(D.N.J. 2014) (internal quotation marks omitted) (quoting Synder v. Farnam

Co., Inc., 792 F. Supp. 2d 712, 723-34 (D.N.J. 2011)). At the pleading stage, a

plaintiff “need only allege facts sufficient to show: 1) Plaintiff conferred a benefit

on Defendant; and 2) circumstances are such that to deny recovery would be

unjust.” Palmeri v. LG Electronics USA, Inc., No. 07-5706, 2008 WL 2945985, *5

(D.N.J. July 30, 2008) (citing Weichert Co. Realtors v. Ryan, 128 N.J. 427, 437,

608 A.2d 280 (1992)).

Here, the Amended Complaint alleges that plaintiff “has spent significant

time and resources developing, advertising, and protecting its brands, and

those efforts, along with the high quality of the products, have resulted in

consumer goodwill.” (Am. Compl. ¶10). In particular, plaintiff’s efforts included

“considerable research, time, strategic planning, and evaluation of market and

economic trends, new technologies, innovations and their impact on the pool

equipment industry.” (Am. Compl. ¶¶ 226). Plaintiff alleges that it conferred the

benefit of that research on defendant when it used Hayward’s marks without

permission. (Am. Compl. ¶¶227-229). Specifically, if defendant did not

appropriate Hayward’s marks and take advantage of Hayward’s goodwill,

defendant “would have had to expend considerable time and expense in

independent research, development, marketing and advertising of its Platinum

Edition salt cells in order to enter the relevant marker and directly compete

with Hayward.” (Am. Compl. ¶¶228). Accepting that allegation as true, I find

that defendant unjustly received the benefit of plaintiff’s time and resources.

Therefore, I will enter default judgment for plaintiff’s unjust enrichment claims

under Count 18.

Finally, I find that defendant has also tortiously interfered with plaintiff’s

prospective economic advantage by misappropriating Hayward’s marks to re-

direct customers to their own salt cells.

Under New Jersey law, a claim for tortious interference with prospective

economic gain has four elements: “(1) a reasonable expectation of economic

advantage to plaintiff, (2) interference done intentionally and with ‘malice,’ (3)

causal connection between the interference and the loss of prospective gain,

and (4) actual damages.” Tonkinson v. Byrd, No. 17-6162, 2018 WL 1919829,

at *6 (D.N.J. Apr. 24, 2018) (quoting Varrallo v. Hammond Inc., 94 F.3d 842,

848 (3d Cir. 1996)).

Here, plaintiff alleges that defendant use false and deceptive advertising,

including “bait-and-switch” tactics, to redirect internet searches for Hayward

products to defendant’s products and websites. (Am. Compl. ¶¶34-43). For

example, defendant generates a pop-up ad for “Hayward’s T-Cell-15” that will

lead a consumer to defendant’s own website. (Am. Compl. ¶34). Plaintiff had a

reasonable expectation of economic advantage with respect to the consumers

who searched for Hayward products and were led, misleadingly, to defendant’s

websites. Defendant’s interference was clearly done intentionally as it used

Hayward’s marks and generated the pop-up ad in connection with searches for

Hayward products. (See Am. Compl. ¶¶34-36). There is a causal connection

between the interference and plaintiff’s loss of prospective gain as defendants

have effectively substituted its own products after a consumer expressed

interest in the advertised Hayward product. (Am. Compl. ¶37). Plaintiff suffered

actual damages by loss of would-be sales. See Nat’l Sportswear, Inc. v. Red

Diamond Co.-Athletic Lettering, No. 14-1117, 2014 WL 3887853, at *5 (D.N.J.

Aug. 6, 2014) (“Plaintiff has satisfied all four elements of the cause of action.

Plaintiff had prospective economic opportunities with potential customers on

the internet, Defendant intentionally and without justification interfered with

those opportunities by manipulating internet searches and purporting to be

Plaintiff to secure business. This caused Plaintiff to lose economic benefits and

resulted in damages.”). Therefore, I will enter default judgment as to plaintiff’s

claim under Count 17.

In light of the foregoing, I find that plaintiff has sufficiently demonstrated

(1) this Court’s jurisdiction over defendant and (2) entitlement to relief based

on the causes of action asserted in the Amended Complaint. Therefore, the first

factor in assessing whether to enter default judgment – whether there appears

to be a meritorious defense – weighs in favor of default.

b. Factors two and three: Prejudice to Plaintiff and Defendants’

culpability

The second and third factors also weigh in favor of a default judgment.

Salt Pool Store and Salt Pro were properly served but failed to appear, defend,

or otherwise respond to the Amended Complaint. It is clear that the plaintiff

has been prejudiced by this dereliction because it has been “prevented from

prosecuting [its] case, engaging in discovery, and seeking relief in the normal

fashion.” See Teamsters Pension Fund of Philadelphia & Vicinity v. Am. Helper,

Inc., 2011 WL 4729023, at *4 (D.N.J. Oct. 5, 2011) (finding that a defendant’s

failure to answer prejudiced the plaintiff); see also Gowan v. Cont’l Airlines,

Inc., 2012 WL 2838924, at *2 (D.N.J. Jul. 9, 2012) (“[Plaintiff[s] will suffer

prejudice if the Court does not enter default judgment as Plaintiff[s] [have] no

other means of seeking damages for the harm caused by Defendant.”). Absent

any evidence to the contrary, defendant’s “failure to answer evinces [its]

culpability in [the] default.” Teamsters Pension Fund of Philadelphia & Vicinity,

2011 WL 4729023 at *4. In this case, “there is nothing before the Court to

show that the Defendant[’s] failure to file an answer was not willfully

negligent.” Id. (citing Prudential Ins. Co. of America v. Taylor, 2009 WL 536043,

at *1 (D.N.J. Feb. 27, 2009)) (finding that when there is no evidence that the

defendant’s failure to answer the complaint was due to something other than

its own willful negligence, the defendant’s conduct is culpable and default

judgment is warranted).

Overall, then, the three factors support the entry of default judgment.

Therefore, I will grant the motion (DE 13) for default judgment.

V. Remedies

Plaintiff seeks damages, injunctive relief, and attorneys’ fees and costs. I

will address each in turn.

a. Damages

For plaintiff’s Lanham Act claims, statutory damages are available under

15 U.S.C. § 1117. They are, in this Court’s view, particularly appropriate

where, as here, the defendant’s failure to respond has made it difficult or

impossible for the plaintiff to demonstrate its actual damages. Indeed, that

failure to respond has impeded plaintiff’s ability to calculate damages for its

trademark infringement, false advertising, false designation of origin, and

unfair competition claims as well. (Pf. Brief at 27). That said, plaintiff submits

that its counterfeiting claim “provides a good substitute for actual damages –

namely, an election of statutory damages under 15 U.S.C. § 1117(c).” (Id.).

Statutory damages are available in an amount of $1000 to $200,000 per

counterfeit mark, or type of good or service sold. In the case of willful

infringement, the court may impose damages of “not more than $2,000,000 per

counterfeit mark per type of goods or services sold, offered for sale, or

distributed.” 15 U.S.C. § 1117(c). “Such willful conduct must have included an

‘aura of indifference to plaintiff's rights’ or a ‘deliberate and unnecessary

duplicating of a plaintiff’s mark . . . calculated to appropriate or otherwise

benefit from the good will the plaintiff had nurtured.’” Shore Enuff, 2019 WL

4027547 at *6 (quoting Platypus Wear, 2009 WL 2147843 at *6).

The statute provides little guidance as to the selection of a statutory

damages figure, and much is left to the discretion of the courts. Luxottica Grp.

S.p.A. v. Accessory Consultants LLC, No. 19-11732, 2020 WL 1910378, at *5

(D.N.J. Apr. 20, 2020) (citing Luxottica Group S.p.A. v. Individual, Partnership,

etc., 2017 WL 9324773 at *5 (S.D. Fla. 2017)). Relevant factors have included

compensation of actual loss, to the extent it can be estimated; the

circumstances of the infringement; and deterrence. Id. Such factors serve as a

reality check against simply imposing the maximum statutory damages in lieu

of proof.

Count 10 is representative. There, Plaintiff alleges counterfeiting of eight

federally registered trademarks. (Am. Compl. ¶161). By defaulting, defendant

has, in effect, waived any defense. Thus, plaintiff is entitled to ordinary

statutory damages of $1000 to $200,000 for each of the eight counterfeited

marks, yielding a range of $8000 to $1,600,000. Plaintiff submits, however,

that this is a case of willful infringement, entitling it to as much as $2 million

per mark, yielding a total of $16 million for the eight marks. Defendant, argues

Hayward, has full knowledge of Hayward’s ownership in the trademarks and

the goodwill associated with the marks, which is why it capitalizes on

Hayward’s reputation. Further, defendant continues to sell counterfeit and

infringing salt cells while ignoring plaintiff’s cease-and-desist letters and filings.

While those letters and filings were insufficient to stop defendant, plaintiff

contends the entry of a statutory damage award in the amount requested

should be sufficient to deter defendant from continuing to counterfeit or

otherwise infringe Hayward’s marks. Defendants advertise and sell their

counterfeit salt cells anywhere from $189-$600, which is within the same

general range of prices that Hayward charges for its salt cells. (Davila Decl.

¶12). Given the number of federal registrations infringed, the estimated profits,

and the reasonable inference that plaintiff’s limited investigation – hindered by

defendant’s refusal to respond – did not capture the full scale of defendant’s

operation, I will award a significant amount in statutory damages available

under the Lanham Act to ensure that defendant does not continue its

intentional and willful infringement.

As I say, the statute would authorize a theoretical maximum of $2

million for each of the eight marks, for a total of $16 million. Still, the number

of marks involved may be a fairly arbitrary proxy for the harm done, in that

they seem to cluster around a limited number of similar products.4 There are

no indications either way as to whether defendants’ operation is substantial,

although it has apparently been difficult to locate. Plaintiff, through no fault of

its own, has not estimated lost sales. But neither has plaintiff even revealed

how profitable its own products are, to lend some perspective. The only

financial information before the court is that infringing salt cells are priced

anywhere from $189 to $600. Thus, they are moderately priced items—far from

inexpensive, but not luxury or designer goods, either.

In Ocean Point Gifts, the late Chief Judge Simandle of this district

contributed a useful survey of Lanham Act damages in the context of high-

priced items sold on the internet, a marketplace that lends itself to high-

volume infringement:

The typical Internet case involves a suit against someone selling

counterfeit luxury items on the Internet. These cases often have

high damage awards due in part to the wide market exposure that

the Internet can provide. See Louis Vuitton v. Mosseri, 2009 WL

3633882, at *3 (awarding $25,141.31 per infringement for

$4,072,892.22 total); Chanel, Inc. v. Guetae, 2009 WL 1653137, at

*5 (D.N.J. June 8, 2009) (awarding $490,818.45 total); Chanel, Inc.

v. Mosseri, No. 07–2619, Order at 2 (D.N.J. May 20, 2008)

(awarding $180,000 per infringement for $3,780,000 total); Chanel

v. Gordashevsky, 558 F.Supp.2d at 538 (awarding $2,238,624.50

total); Chanel, Inc. v. Craddock, No. 05–1593, 2006 WL 1128733, at

*1 (D.N.J. April 27, 2006) (awarding $100,000 per infringement for

$8,100,000 total); see also Louis Vuitton & Oakley, 211 F.Supp.2d

567, 584–85 (awarding $1,500,000 total and stating “the point of

sale is very relevant to the statutory damages discussion”).

Coach, Inc. v. Ocean Point Gifts, No. CIV.A.09-4215 JBS, 2010 WL 2521444, at

*6 (D.N.J. June 14, 2010).

4 Compare, for example, Audi AG v. Posh Clothing, LLC, discussed in text below,

in which the three marks belonged to separate automobile manufacturers, Audi,

Bentley, and Lamborghini (although those companies are under the common

ownership of Volkswagen AG).

In Audi AG v. Posh Clothing, LLC, Judge Vazquez of this district awarded

$3,000,000 in statutory damages related to the defendant’s willful use of

counterfeit marks. No. CV 18-14254, 2019 WL 1951166, at *6 (D.N.J. May 2,

2019). There, the marks were world-famous and associated with luxury

automobiles, but the goods to which they were applied (clothing and personal

accessories) were more prosaic. Judge Vazquez’s reasoning is instructive:

[T]he Court finds $3,000,000 in statutory damages [$1,000,000 for

each general company mark infringed upon] to be appropriate. As

noted, the Court is unable to determine Defendants’ profits and

saved expenses, or Plaintiffs’ lost revenues, because Defendants

failed to respond. However, Defendants’ state of mind supports a

significant award of damages given that this conduct appears to be

brazen and willful. The Court finds that Plaintiffs’ request is

appropriate in light of the statutory maximum and circumstances

alleged. Courts in this district have awarded comparable sums in

similar circumstances. See Chanel, Inc. v. Gordashevsky, 558 F.

Supp. 2d 532, 538 (D.N.J. 2008) (awarding $2,238,624.50 in

statutory damages for counterfeit handbags, wallets, sunglasses,

jewelry, and scarves); see also Louis Vuitton Malletier, S.A. v.

Joseph Mosseri, No. 07-2620 (Oct. 28, 2009 Order) (awarding

$3,780,000 in statutory damages for counterfeit handbags, wallets,

and key chains).

Id.; See also Chanel, Inc. v. Matos, 133 F. Supp. 3d 678, 688 (D.N.J. 2015)

($30,000 per infringement for a total of $180,000, thirty times the minimum

statutory damages, which the Court found appropriate given the Defendant’s

“culpability (and even willfulness), and constitutes a sum significant enough to

compensate Plaintiff for any arguable losses and to deter Defendant and

others”);Sara Lee Corp. v. Bags of New York, Inc., 36 F. Supp. 2d 161, 170

(S.D.N.Y. 1999) (awarding $750,000 and noting that awards increase to deter

and punish a willful continuous course of infringements and defiance to the

judicial process); Tommy Hilfiger Licensing, Inc., v. Goody's Family Clothing, Inc.,

No. 100-1934, 2003 WL 22331254, at *44 (N.D. Ga. May 9, 2003) (awarding

$2,100,000).

In luxury-goods or luxury-trademark cases, typical of those this Court

sees, it is often the trademark itself that is the source of the item’s value. By its

mere presence, the trademark multiplies the perceived dollar value of the item.

The item itself—say, a knockoff Gucci bag—whatever its practical uses, is a

status or lifestyle signifier, valuable to the consumer as such. The salt cells at

issue here, however, are utilitarian items, presumably not observed even by

swimmers, and valued solely for the function they perform in chlorinating pool

water. The wrong being done here is the misuse of the plaintiff’s trademarks to

steer the internet customer to a purchase of a competing (and allegedly lower

quality) product. The likelihood of confusion is perhaps mitigated to some

degree by the defendants’ grudging and equivocal statements that the products

are a “replacement for” those of plaintiff, or, more defensibly, “compatible with”

those of the plaintiff. In short, the infringement is real, but far from the most

brazen trickery or effrontery this Court has seen.

I observe in passing that the defendants’ business, though infringing, is

not wholly without redeeming qualities. The business of placing counterfeit

luxury trademarks on cheap handbags is often pure piracy, and nothing more.5

By contrast, the sale of generic substitutes for the consumables used in a

brand-name product has some legitimacy. It may be compared to the sale of

generic drugs, or razor blades that fit a name-brand razor.6 I do not minimize

the wrongfulness of passing off such consumables as if they originated with the

brand-name manufacturer, as was allegedly done here; I merely note that, if

kept within the bounds of trademark law, the sale of compatible supplies may

have some economic value. And the plaintiff’s legitimate interest in suppressing

misuse of its trademark must of course be distinguished from its interest in

stamping out all generic competition, whether infringing or not.

5 Query, however, whether the consumers are being fooled, or whether the

consumers are fooling their friends.

6 To some degree, we have all seen the “steering” effect in our local pharmacy

chain, where such products are shelved next to their brand-name equivalents.

I start from the permissible range of statutory damages for eightfold

infringement, ranging from $8000 to $16 million, although the number of

marks seems a somewhat arbitrary measure in a case of this kind. I consider

as well the potential for widespread infringement afforded by internet

commerce and the willfulness of the infringement. Defendants’ noncooperation

makes an estimate of actual damages impractical, although plaintiffs point to

no outward signs of a substantial operation. I also consider that the

infringement is not so severe in nature as many, and that the defendant’s

business, by contrast with the luxury-goods cases, has economic substance

and value beyond the mere pirating of trademarks. And I assess all of these

factors in the context of awards in other cases, most of which involve luxury

goods or trademarks, and most of which seem to fall in a heartland of

$500,000 to $3 million, albeit with many outliers.

Balancing all of these factors, I will, within my discretion, enter a money

judgment of $2,000,000 in statutory damages.

b. Injunctive relief

Plaintiff seeks a permanent injunction to prevent additional and ongoing

harm caused by defendant’s counterfeiting, infringement, and other

misconduct.

The Lanham Act, 15 U.S.C. § 1116, authorizes injunctive relief to

restrain acts of infringement. The court’s discretion is guided by the four

traditional equitable factors: (1) irreparable injury; (2) inadequacy of legal

remedies; (3) the balance of hardships as between the plaintiff and defendant;

and (4) the public interest. See Shore Enuff, at *9 (citing eBay Inc. v.

MercExchange, LLC, 547 U.S. 388, 391 (2006)). I find those factors weigh in

favor of issuing the injunction.

Infringement based on a likelihood of confusion is tantamount to a

finding of irreparable injury. See id. (citing Pappan Enters., Inc. v. Hardee’s

Food Sys., Inc., 143 F.3d 800, 805 (3d Cir. 1998)). I have already made such a

finding.

Current damages, let alone future damages, are difficult or impossible to

calculate with precision as a result of the defendant’s default. In addition, an

ongoing loss to the plaintiff’s business goodwill cannot be readily estimated or

compensated in damages. Id. (citing Louis Vuitton v. Mosseri, 2009 WL

3633882, at *5 (D.N.J. Oct. 2, 2009)).

The balance of hardships favors the plaintiff. Defendant is not being

deprived of anything to which it is entitled. Moreover, the plaintiff has done

what can reasonably be expected to enforce its rights; defendant’s non-

appearance implies that efforts to identify and restrain future infringement

might not be fruitful. See id.

Finally, “[t]he Third Circuit has recognized that the public interest weighs

in favor of trademark enforcement because ‘there is a public interest in the

protection of the trademark and to avoid confusion in the public.’ Coach, Inc. v.

Fashion Paradise, LLC, No. 10-4888, 2012 WL 194092, at *9 (D.N.J. Jan. 20,

2012) (citing Bill Blass, Ltd. v. SAZ Corp., 751 F.2d 152, 156 (3d Cir. 1984)).

Similarly, issuing an injunction will serve the public interest goals of

preventing consumer confusion and plaintiff’s property interest. See id.

c. Attorneys’ fees and costs

Finally, plaintiff requests attorneys’ fees and costs.

“Reasonable attorney’s fees may be awarded in exceptional cases;

exceptional cases include those where the Court has made a finding of

willfulness.” Chanel, 558 F.Supp.2d at 539; see 15 U.S.C. § 1117(a) (“The court

in exceptional cases may award reasonable attorney fees to the prevailing

party”). The Third Circuit has indeed held that “a district court must make a

finding of culpable conduct on the part of the losing party, such as bad faith,

fraud, malice, or knowing infringement, before a case qualifies as ‘exceptional.’”

Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44, 47 (3d Cir.1991) (citing

15 U.S.C. § 1117(a)).

As discussed above, Defendant’s conduct constitutes willful

infringement. Accordingly, I will award reasonable attorneys’ fees.

Plaintiff has submitted proof that it has incurred attorneys’ fees of

$73,591.70 and $3,105.56 in costs associated with this case. (See Belt Decl.)

However, I will grant plaintiff’s request to update that total, upon entry of

default judgment, to include the fees and costs billed on this matter to date.

VI. Conclusion

For the reasons set forth above, I will grant plaintiff’s motion (DE 13) for

default judgment. An appropriate order, granting the motion and imposing a

permanent injunction, accompanies this opinion. Plaintiff shall, within 15

days, submit a form of money judgment reflecting the Court’s award and

updating the figures for fees and costs.

Dated: May 14, 2021

/s/ Kevin McNulty

____________________________________

Kevin McNulty

United States District Judge