American Clothing Express, Inc. v. CloudFlare, Inc.

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF TENNESSEE

WESTERN DIVISION

)

AMERICAN CLOTHING EXPRESS, )

INC. d/b/a ALLURE BRIDALS and )

JUSTIN ALEXANDER, INC., )

)

Plaintiffs, )

)

v. ) No. 2:20-cv-02007-SHM-atc

)

CLOUDFLARE, INC. and DOES 1- )

200, inclusive, )

)

Defendants. )

)

ORDER AWARDING DAMAGES

Before the Court is Plaintiffs’ Brief on Damages and

supporting evidence. (ECF Nos. 197–204; 207–208.) Defendant

Imerle has not responded. For the reasons that follow, the Court

awards Plaintiffs actual damages to include a reasonable license

fee of $8,535,960.00, investigative and monitoring costs, and

prejudgment interest.

I. Background

On January 6, 2020, Plaintiffs American Clothing Express,

Inc., doing business as Allure Bridals, and Justin Alexander,

Inc. filed this action pursuant to the Copyright Act, 17 U.S.C.

§§ 101, et seq., against Cloudflare, Inc. and the then-unknown

operators of dozens of websites selling knockoff versions of

Plaintiffs’ wedding dresses using Plaintiffs’ copyrighted images

of their dresses. (ECF No. 1.)

Although the identities of the operators were initially

unknown, Plaintiffs were able to obtain the operators’ contact

information from defendant Cloudflare and received permission

from the Court to serve the Doe defendants by electronic mail.

(See ECF Nos. 23–24, 42, 52.) The clerk entered default against

94 of the Doe defendants in 2021, and the Court granted

Plaintiffs’ Motion for Default Judgment as to liability against

those 94 Doe defendants in January 2022. (See ECF Nos. 62, 66,

87.)

Plaintiffs were able to identify the entity Imerle Limited

(HK) (“Imerle”) as the operator of many of the infringing

websites, and Plaintiffs filed amended complaints. (See ECF Nos.

155 ¶¶ 11, 143–50; 165.) Pursuant to stipulations of dismissal,

Imerle is the only remaining Defendant in this case. (See ECF

Nos. 103–04, 170–71, 185 at 2.)

After the initial default, Imerle was granted permission to

enter the case and was joined as a necessary party. (See ECF No.

157.) Imerle then sought to set aside the Court’s entry of

default judgment as to liability. (ECF No. 174.) The Court denied

Imerle’s motion, concluding there was a lack of good cause to

set aside the judgment as to liability. (See ECF No. 184.)

The parties then asked the Court to resolve a dispute about

the proper procedure to determine the amount of damages to which

Plaintiffs are entitled. (See ECF No. 185.) Imerle asserted that

it was entitled to post-default discovery and a jury trial on

the sole remaining issue of damages. (Id. at 7–10.) Plaintiffs

argued that Imerle had no post-default right to a jury trial,

and that neither post-default discovery nor a jury trial was

necessary to determine the appropriate amount of damages in this

case accurately. (Id. at 4–7.) The Court ordered additional

briefing on the issue. (See ECF Nos. 187–192.)

Before the Court could rule on the parties’ dispute about

the proper procedure to determine the amount of damages, counsel

for Imerle sought to withdraw from their representation for

“professional reasons.” (ECF Nos. 193; 193-1.) On March 6, 2025,

the United States Magistrate Judge granted Imerle’s counsel’s

Motion to Withdraw, ordered Imerle to retain new counsel, and

ordered that successor counsel appear by April 7, 2025. (ECF No.

194.) Imerle has failed to comply with the Magistrate Judge’s

Order.

On April 17, 2025, the Court entered an Order Resolving the

Parties’ Joint Motion on Damages Procedure. (ECF No. 196.) The

Court decided that Imerle’s default extinguished any right to a

jury trial, declined to exercise its discretion to order a jury

trial, and reserved ruling on whether the circumstances of the

case require a hearing on the issue of damages pursuant to

Federal Rule of Civil Procedure 55(b)(2). (See id.)

The Court ordered Plaintiffs to submit a brief and evidence

supporting their damages claims within 30 days, and gave Imerle

30 days to respond to Plaintiffs’ brief and evidence, assuming

Imerle retained new counsel who made a timely appearance.

Plaintiffs filed their brief and supporting evidence on May

19 and 20, 2025. (See ECF Nos. 197–207.) On May 28, 2025,

Plaintiffs filed a supplemental expert report clarifying the

apportionment of damages to each plaintiff. (ECF No. 208.)

Imerle remains in violation of the March 6, 2025 order

requiring it to obtain new counsel and for new counsel to enter

a notice of appearance. Therefore, Imerle has not responded to

Plaintiffs’ damages brief and supporting evidence.

II. Law and Analysis

When a defendant has defaulted and the plaintiff’s claim is

not “for a sum certain or a sum that can be made certain by

computation,” the Court must determine the amount of damages to

which the plaintiff is entitled. Fed. R. Civ. P. 55(b). Because

a defaulted defendant admits only the defendant’s liability, any

amount of non-liquidated damages “must be proved.” See Antuine

v. Atlas Turner, Inc., 66 F.3d 105 at 110 (6th Cir. 1995).

Federal Rule of Civil Procedure 55 provides that the Court “may

conduct hearings or make referrals” when it needs to determine

the amount of damages to enter or effectuate judgment.

A court need only hold a hearing addressing damages if it

cannot otherwise “ascertain the amount of damages with reasonable

certainty.” Vesligaj v. Peterson, 331 F. App'x 351, 355 (6th

Cir. 2009) (quoting Credit Lyonnais Sec. (USA), Inc. v.

Alcantara, 183 F.3d 151, 155 (2d Cir. 1999)).

Here, Plaintiffs have filed thousands of pages supporting

their damages claim, including a detailed expert report, images

of the infringing uses, and declarations explaining the evidence,

evidence-gathering processes, and analysis. (See ECF Nos. 197–

204, 207–208.) Because the Court can “ascertain the amount of

damages with reasonable certainty,” a hearing on damages is not

necessary. See Vesligaj, 331 F. App'x at 355.

A. Damages for Copyright Infringement

The Copyright Act provides that a copyright infringer is

liable for either: “(1) the copyright owner’s actual damages and

any additional profits of the infringer, as provided by

subsection (b); or (2) statutory damages, as provided by

subsection (c).” 17 U.S.C. § 504(a).

A Copyright Act plaintiff is empowered to “elect, at any

time before final judgment,” an award of statutory damages. §

504(c)(1). Absent that election, a plaintiff must prove its

actual damages by a preponderance of the evidence. See Smith v.

Thomas, 911 F.3d 378, 382 (6th Cir. 2018).

Here, Plaintiffs seek actual damages for Imerle’s willful

infringement, which include: $4,267,980.00 to $8,535,960.00 for

a reasonable license fee, $662,153.49 in investigative and

monitoring costs, and prejudgment interest.

1. Reasonable License Fee

The Sixth Circuit has joined the Second Circuit in upholding

actual damages based on a hypothetical license fee, or the

“reasonable license fee on which a willing buyer and a willing

seller would have agreed for the use taken by the

infringer.” Thoroughbred Software Int'l, Inc. v. Dice Corp., 488

F.3d 352, 359 (6th Cir. 2007) (citing Davis v. Gap, Inc., 246

F.3d 152, 167 (2d Cir. 2001)). A hypothetical reasonable license

fee may include an adjustment for factors like the scarcity of

the image or competitive usage. See, e.g., D'Pergo Custom

Guitars, Inc. v. Sweetwater Sound, Inc., 111 F.4th 125, 140 (1st

Cir. 2024); Under a Foot Plant, Co. v. Exterior Design, Inc.,

No. CV BPG-15-871, 2017 WL 3593014, at *5–6 (D. Md. Aug. 21,

2017).

Plaintiffs have retained Professor Jeffrey Sedlik of the

Art Center College of Design, an expert in photography licensing,

to opine on the value of a hypothetical license fee for Imerle’s

use of Plaintiffs’ copyrighted images. (ECF No. 197 at PageID

16671.) Professor Sedlik has decades of experience in the

photography industry and has served in high-level positions in

trade associations and standard-setting bodies considering

issues of licensing and copyright. See ECF No. 198 at 2–6.)

Plaintiffs have also retained Daniel Dwoskin, a Manager at

Elysium Digital, LLC (“Elysium”), to provide technical

consulting services and prepare the data about Imerle’s website

domains’ infringing use on which Professor Sedlik’s expert report

relies. (See ECF No. 202.)

Plaintiffs’ data collection strategy was conservative and

“enforced a limitation that if one of Plaintiffs’ images was

detected on a domain, that it would only be claimed once per

domain per each of [] five Usage Types.1 In practice, there are

almost certainly more usages than that.” (Id. at 15.) Plaintiffs

did not count instances when an image was used multiple times

with different product names or additional uses in “Related

Products”, “Top Deals”, or “New Arrivals” sections because those

uses were “uncertain and highly variable.” (Id. at 15–19.)

Plaintiffs’ infringement timeline employs a similarly

conservative methodology. (See id. at 23.)

1 Plaintiffs’ technical consultant determined that Plaintiffs’ images

appeared in at least five locations when they appeared on Defendant’s

websites: Thumbnail—Gallery, Thumbnail—Product, Main Product,

Enlarged, and Full Size. (ECF No. 202 at 9–14.)

Professor Sedlik also employed a conservative methodology.

He first calculated a baseline hypothetical license fee of

$853,596.00 based on consolidating Imerle’s 2,050 infringing

usages into a hypothetical sale of 410 unique licenses at market

rates. (See ECF No. 198 at PageID 16725–28.) The average baseline

market rate of $1,086.00 for a one-year license was “obtained

from reasonable non-speculative market sources, without

consideration of the specific identities of the parties, without

consideration of additional damage suffered (or to be suffered)

by Plaintiffs, and without consideration of Defendant’s

competitive use of the Images.” (Id. at 16728, 17193–215.)

Because Imerle’s use of the images would have been “a

scenario in which an image licensor is approached by a direct

competitor seeking to purchase licenses to make competing use of

the licensor’s images,” Sedlik opines that the actual

hypothetical license fee, adjusted for competitive use, would be

five to ten times the amount of the baseline hypothetical license

fee: $4,267,980.00 to $8,535,960.00.2 (Id. at 16729.)

2 Sedlik’s Supplemental Report apportions the hypothetical license fees

between the Plaintiffs as follows:

Plaintiff Baseline Fee 5x Competitive Use 10x Competitive Use

Allure

$749,340.00 $3,746,700.00 $7,493,400.00

Bridals

Justin

$104,256.00 $521,280.00 $1,042,560.00

Alexander

(ECF No. 208-1 at PageID 19945.)

After considering the record as a whole and specifically

considering Plaintiffs’ briefing, exhibits, the Dwoskin

declarations, and Professor Sedlik’s expert report, as

supplemented, the Court finds that Plaintiffs should be awarded

a reasonable license fee for competitive usage in the amount of

$8,535,960.00. See Vesligaj, 331 F. App'x at 355; Thoroughbred

Software Int'l, Inc., 488 F.3d at 359. (ECF Nos. 197–204, 207–

08.)

As Sedlik notes, the result of his conservative estimates

is that the actual amount of Plaintiffs’ damages is “likely

significantly greater” than $8,535,960.00, but that is the only

amount the Court can determine with reasonable certainty. (See

ECF No. 198 at PageID 16730–31.)

2. Investigative and Monitoring Costs

In addition to a hypothetical license fee, some courts have

awarded pre-suit investigative costs and infringement monitoring

costs as part of a plaintiff’s actual damages. See Millennium

TGA, Inc. v. Leon, No. 12-CV-01360 MKB, 2013 WL 5719079, at *14

(E.D.N.Y. Oct. 18, 2013) (collecting cases and noting that

“Courts are divided on whether to award investigative costs

incurred in connection with copyright infringement, and there is

no clear guidance on whether investigative costs may be

considered as a component of ‘actual damages.’”). Courts have

awarded those costs as part of a plaintiff’s actual damages to

deter infringement and further the Copyright Act’s purpose when

the work of the investigators was “critical not only in

identifying the various sites used to distribute the infringing

materials...but also to providing corroboration for the

determination of plaintiff’s actual damages.” Id. at *15. In

awarding such damages, courts have been careful to award only

the reasonable costs that are attributable to the infringing

defendant. See id. at 16.

Here, Plaintiffs seek $375,910.00 paid to Incopro, Inc.

(“Incopro”) “to provide online brand protection services from

the Spring of 2018 to the present,” and $286,242.50 paid to

Elysium “to investigate and verify the thousands of infringements

and their reporting to Cloudflare by multiple anti-

counterfeiting vendors.” (ECF No. 197 at PageID 16676.)

Plaintiffs’ claim for $286,242.50 paid to Elysium is

supported by Dwoskin’s second declaration, which states that

this amount is “directly attributable to work involving the

collection, identification, and analysis of infringement data,

and the generation of exhibits and other demonstratives related

to the infringement by websites operated by Imerle identified in

the Complaint.” (ECF No. 203 at 4.)

Plaintiffs’ claim for $375,910.99 paid to Incopro is

supported by the declarations of the Chief Financial Officer of

Allure Bridals and the Controller of Justin Alexander. (See ECF

Nos. 197 at PageID 16676; 199–200.) Unlike Dwoskin’s declaration,

these declarations do not represent that Incopro’s work

exclusively addressed Imerle’s infringement. Plaintiffs

represent that Incopro provided “online brand protection

services from the Spring of 2018 to the present,” and “used data

analysts and proprietary image searching software to detect

Plaintiffs’ copyrighted images across multiple online

platforms.” (ECF No. 197 at PageID 16676.) Plaintiffs argue that

these costs “should be compensable because Imerle’s Whac-a-Mole

strategy forced Plaintiffs to incur them.” (Id. at 16677.)

Although Incopro’s work did not exclusively address

Imerle’s infringement, it was “critical not only in identifying

the various sites used to distribute the infringing

materials...but also to providing corroboration for the

determination of [Plaintiffs’] damages.” See Millennium TGA,

2013 WL 5719079, at *15.

In Millennium TGA, the court awarded the plaintiff 50

percent of the fees paid to locate and remove infringing content

online when that defendant “was not [the company’s] sole target,

but was ‘a very high-value target.’” See id. at *13–16. The

situation here, with Imerle and Incopro’s work, is analogous.

Because Incopro’s services were critical in identifying the

infringing websites and determining damages, but did not

exclusively address the harm Imerle caused, the Court awards

Plaintiffs $187,955.50, or 50 percent of the fees they paid for

Incopro’s services. Plaintiffs are awarded $286,242.50 for

Elysium’s work in identifying and helping determine the damages

for Imerle’s infringement. See id. at *15. (ECF No. 203 at 4.)

3. Prejudgment Interest

Courts may also award prejudgment interest in cases brought

under the Copyright Act. See Premier Dealer Servs., Inc. v.

Allegiance Adm'rs, LLC, No. 2:18-CV-735, 2023 WL 2664411, at *3

(S.D. Ohio Mar. 28, 2023), appeal dismissed, No. 23-3427, 2023

WL 5151516 (6th Cir. Aug. 3, 2023), and aff'd, 93 F.4th 985 (6th

Cir. 2024) (Noting that “a majority of federal circuits have

found such awards permissible.”). The Sixth Circuit has noted

that the Copyright Act itself is silent on awards of prejudgment

interest. See Robert R. Jones Assocs., Inc. v. Nino Homes, 858

F.2d 274, 282 (6th Cir. 1988). Courts may award prejudgment

interest when doing so “would further the congressional purposes

underlying the obligations imposed by the statute in question.”

Id. at 282 (quoting Bricklayers’ Pension Trust Fund v. Taiariol,

671 F.2d 988 (6th Cir. 1982)). The purpose of the Copyright Act

is to “deter unauthorized exploitation of someone else's creative

expressions.” Id. District courts in the Sixth Circuit, guided

by Jones, have awarded prejudgment interest in Copyright Act

cases. See, e.g., Premier Dealer Servs., 2023 WL 2664411, at *3;

Goldman v. Healthcare Mgmt. Sys., Inc., 559 F. Supp. 2d 853, 865

(W.D. Mich. 2008).

In awarding prejudgment interest, pursuant to 28 U.S.C. §

1961, courts use the rate “equal to the weekly average 1-year

constant maturity Treasury yield, as published by the Board of

Governors of the Federal Reserve System, for the calendar week

preceding the date of the judgment” and generally compounded

annually. Umfress v. City of Memphis, No. 2:17-cv-02568-SHL-tmp,

2020 WL 12969188, at *2 (W.D. Tenn. Oct. 19, 2020). The average

1-year constant maturity Treasury yield for the week ending June

27, 2025, is 3.98 percent.3 Having been awarded $8,535,960.00 in

reasonable licensing fees, $187,955.50 for Incopro’s services,

and $286,242.50 for Elysium’s services, Plaintiffs should be

awarded $1,725,626.86 in prejudgment interest.4

3 See Market Yield on U.S. Treasury Securities at 1-Year Constant

Maturity, Quoted on an Investment Basis (WGS1YR), Fed. Rsrv. Bank of

St. Louis FRED, https://fred.stlouisfed.org/series/WGS1YR (last

visited July 2, 2025); Selected Interest Rates (Daily) - H.15, Fed.

Resrv. Bd. of Governors (July 1, 2025)

https://www.federalreserve.gov/releases/h15/ (last visited July 2,

2025).

4

Dates Days Principal Interest

1/6/2020 - 1/5/2021 365 $9,010,158.00 $358,604.29

1/6/2021 - 1/5/2022 365 $9,368,762.28 $372,876.74

1/6/2022 - 1/5/2023 365 $9,741,639.02 $387,717.23

1/6/2023 - 1/5/2024 365 $10,129,356.26 $403,148.38

1 /6/2025 - 7/2/2025 177 $10,532,504.63 $203,280.23

Total Prejudgment Interest $1,725,626.86

Total Judgment $10,735,784.86

III. Conclusion

The Court has granted Plaintiffs’ Motion for Default

Judgment as to liability. The Court’s Order Granting Default

Judgment reserved the issue of damages. (See ECF No. 87.)

Plaintiffs are entitled to $10,735,784.86 in actual damages

from Imerle Limited (HK) as a result of Imerle’s willful

infringement of Plaintiffs’ copyrighted images. Actual damages

are allocated between Plaintiffs as follows: Allure Bridals is

entitled to $9,207,670.58 and Justin Alexander is entitled to

$1,528,114.28.5 For which let judgment enter.

SO ORDERED this 2d day of July, 2025.

/s/ Samuel H. Mays, Jr.

SAMUEL H. MAYS, JR.

UNITED STATES DISTRICT JUDGE

5 The Court allocates damages according to Professor Sedlik’s

supplemental materials (ECF No. 208-1), 50 percent of the payments to

Incopro described in the declarations filed by Plaintiffs’ finance and

accounting officers (ECF Nos. 199–200), an equal division of Elysium’s

costs (ECF No. 202–203), and the award of prejudgment interest at a

rate of 3.98 percent.