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Coach, Inc., et al. v. Sunfastic Tanning Resort

November 9, 2011

COACH, INC., ET AL.
v.
SUNFASTIC TANNING RESORT, ET AL.



The opinion of the court was delivered by: Legrome D. Davis, J.

MEMORANDUM

Plaintiffs Coach, Inc. and Coach Services, Inc. move for partial summary judgment (Doc. No. 37) as to the liability of Defendants Sunfastic Tanning Resort and Marlene Prendergrast for trademark counterfeiting, infringement, false designation of origin, and false advertising under the Lanham Trade-Mark Act, 15 U.S.C. §§ 1051-1127, see §§ 1114(1), 1125(a). Plaintiffs also move for summary judgment as to Defendants' liability for infringement under the U.S. Copyright Act, 17 U.S.C. §§ 101-1332, see §§ 106, 501. Jurisdiction is federal question. 15 U.S.C. § 1121, 28 U.S.C. §§ 1331, 1338(a). Defendants have not presented any probative evidence raising a genuine issue of material fact as to their liability. The motion will be granted and judgment will be entered as to liability in favor of Plaintiffs and against Defendants.

I. PROCEDURAL BACKGROUND AND SUMMARY JUDGMENT RECORD On April 13, 2010, Plaintiffs Coach, Inc. and Coach Services, Inc. ("Coach") commenced this action seeking money damages for Defendants' sale of counterfeit goods in violation of federal and state laws protecting trademarks, copyrights, and fair competition. By stipulation, all defendants were dismissed with prejudice except Defendants Marlene Prendergrast and Sunfastic Tanning Resort ("Sunfastic"), a tanning salon in Huntingdon Valley, Pennsylvania. Mar. 25, 2011 and Apr. 18, 2011 Orders, Doc. Nos. 34, 36. On April 23, 2011, Plaintiffs filed the Amended Complaint. Doc. No. 4. On April 29, 2011, Coach moved for partial summary judgment as to the liability of Defendants Sunfastic and Prendergrast.*fn1

Prendergrast admits that she sold handbags at Sunfastic "that had the Coach name and label on them." Prendergrast Deposition Transcript, Mar. 24, 2011 ("MP Dep."),*fn2 120:17-20. On October 24, 2009, Richard Smith of ISC Associates, Inc., Coach's investigator, saw handbags and accessories bearing Coach trademarks, designs, and logos displayed at Sunfastic. He purchased one of the handbags for $89.00 plus $5.34 tax. He was given a sales receipt that recorded the sale of one "Coach handbag." Am. Compl. ¶ 36; Sales receipt, Pls.' Mot. ¶ 6, Ex.

C. The handbag was a counterfeit. Affidavit of Dayanara Y. Perez, Nov. 23, 2009 ("Perez Aff."), Pls.' Mot. ¶ 7, Ex. D, Doc. No. 37-2. During this litigation, Prendergrast produced additional items bearing the Coach name, marks, designs, and logos: two handbags, one swingpack, and one pair of sunglasses. Coach's intellectual property assistant confirmed that these goods were also counterfeit. Perez Aff., Pls.' Mot., Ex. E, Doc. No. 37-3.

The counterfeit items bore the Coach name and designs similar to those used by Coach, which are registered with the U.S. Patent and Trademark Office for a variety of goods and services. Am. Compl. ¶ 25; Pls.' Mot. ¶¶1-3, Doc. No. 37. Specifically, Coach owns the trademark registrations: "COACH" name, "COACH LEATHERWARE EST. 1941 [Heritage Logo]" (with horse and carriage design), "CC & DESIGN (Signature C)," "COACH OP ART & Design," and "COACH & LOZENGE DESIGN." Am. Compl. ¶ 25. These marks are registered for use with fabrics, handbags, and sunglasses, among other accessories. Id. Am. Compl. ¶¶ 26-30. Coach also owns the copyright registrations for the "Coach Op Art Design," "Horse & Carriage Design," and "CC & Design (Signature C)." Am. Compl. ¶¶31-32; Pls.' Br. at 18, Ex. H, Doc. No. 37-2. Defendants have not presented any evidence to the contrary.

According to Coach, the marks, designs, and logos in this case have been in use for more than five consecutive years subsequent to the date of registration. Am. Compl. ¶¶ 25, 26; Pls.' Br. at 15, Doc. No. 37 ("the marks in question have been registered as early as 1963 in some cases"); Pls.' Mot. ¶ 1, Doc. No. 37 ("Coach and their predecessors have, since approximately 1941, used the name and mark "COACH" . . . in the manufacture, advertisement, marketing, and sale of apparel, accessories, and luxury goods."). Coach maintains that these trademarks and copyrighted works are well recognized by consumers. Am. Compl. ¶ 24, 29. Defendants have not presented any evidence to the contrary.

Prendergrast and Marion Zeno, Inc., a Pennsylvania corporation,*fn3 are both designated on an agreement as "the Purchaser" of the assets of Sunfastic. Nov. 30, 2001 Agreement, Pls.' Mot. ¶ 14, Ex. F, Doc. No. 37-2; MP Dep. 81:3-5. It is also recited: "The Purchaser, MZI desires to assume the operation of the Business . . . ." Id. at 1, ¶ 4. Prendergrast signed the agreement as president of Marion Zeno. Id. at 9; MP Dep. 81:13-18. Prendergrast is the sole owner and officer of Marion Zeno. MP Dep. 81:19-21. Prendergrast is also the sole owner, officer (treasurer), and employee of Sunfastic, a Pennsylvania corporation. MP Dep. 67:21-69:24, 134:6-16, 190:6-23; Defs.' Br., Doc. Nos. 38 & 39 at 7; Defs.' Answer, ¶¶ 5, 7, Doc. No. 19.

The finances of Marion Zeno and Sunfastic, including a bank account, a credit card, and loans, are in both Prendergrast's name as an individual and one or the other of the corporations' names. MP Dep. 169:4-170:23, 171:14-173:6. Prendergrast's personal funds were used for Sunfastic's operations, and Marion Zeno's funds were used for Prendergrast's personal needs. MP Dep. 18:7-17, 67:20-69:24, MP Dep. 173:22-174:8, 175:9-176:11, 213:15-214:20. The record does not reflect any evidence that corporate formalities were ever observed for either Sunfastic or Marion Zeno. At deposition, Prendergrast could not recollect whether she was president of Marion Zeno until her memory was refreshed using her signature as "president" on the asset purchase agreement. MP Dep. 81:6-18.

According to Prendergrast, "Dave Greenstein" came into the Sunfastic store selling bags that had the Coach name and label on them. Greenstein showed the bags to Suzyn Buschner, who was employed as Sunfastic's store clerk at that time. Buschner, speaking on the phone to Prendergrast, told her the bags were " discontinued merchandise or closeouts" and "mostly Coach." Prendergrast delivered a check for the bags to the store, and Buschner later delivered the check to Greenstein in exchange for the bags. MP Dep. 120:17-121:12, 124:10-125:6, 126:13-23, 128:3-129:8, 132:17-24, 148:18-149:23. It is unclear how many bags or other items Greenstein delivered to Sunfastic or how many were eventually sold to the public. MP Dep. 165:12-21 ("I don't think it was that many.") The record establishes the sale of one bag to Smith.

In response to the instant motion, Defendants provide an account that differs from Prendergrast's deposition testimony. Defendants submit that a man delivered the "Coach products" to Prendergrast's girlfriend, Hope Stelweck, who was helping to mind the store but was not an employee. Defendants maintain that the October 24, 2009 sale of a handbag to Smith was the only "Coach product" sold and it was sold by Hope Stelweck. Defs.' Brs. at 7-8, Doc. Nos. 38 & 39. In a May 12, 2011 affidavit, Stelweck affirmed:

On September 21, 2009, a gentlemen [sic] walked into Sunfastic selling Coach products that he claimed were closeouts. I called Marlene, described the products, and suggested she should buy them. Based upon my recommendations, she dropped off a check the following day in the amount of $146.00, and I took delivery of the Coach products when the gentlemen returned.

I continued to help Marlene [at the store] . . . and on October 24, 2009, a gentlemen walked into Tanfastic [sic] and purchased a Coach handbag for $89.00 plus tax. Affidavit of K. Hope Stelweck. Def's Mot. ΒΆ 18, Ex. C, Doc. No. 39; MP Dep. 133:9-134:3; ...


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