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finding that infringing products sold on eBay four to six years after the plaintiff began using the trademark satisfied the second and third elements of trademark dilution
Summary of this case from Adobe Sys. Inc. v. TanvirOpinion
CV 13-4384 RSWL (AGRx)
2013-10-10
Otter Products, LLC, a Colorado Limited Liability Company, Plaintiff, v. Angel Luis Berrios, Jr., an Individual, Defendants.
ORDER Re: Plaintiff's
Motion for Default
Judgment Against
Defendant Angel Luis
Berrios, Jr. [22]
On August 23, 2013, Plaintiff Otter Products, LLC ("Plaintiff") filed the present Motion for Default Judgment [22]. The Court, having reviewed all papers submitted pertaining to this Motion and having considered all arguments presented to the Court, NOW FINDS AND RULES AS FOLLOWS:
Plaintiff's Motion for Default Judgment is hereby GRANTED.
I. Background
Plaintiff is a leading retailer and distributor of high quality protective cases, peripherals, and accessories for portable electronic devices and computers. Compl. ¶ 13. Plaintiff develops and manufactures these cases for a wide range of devices and products. Id. at ¶ 14. In particular, Plaintiff claims that its OTTERBOX® branded products have received extensive media coverage and achieved an extraordinary reputation. Id. at ¶ 16. Moreover, Plaintiff has received local and national accolades for its products, such as being named "The Best Mobile Case Brand" in 2011 by About.com Reader's Choice. Id. at ¶ 17.
Plaintiff is the exclusive owner of six trademarks for its OTTERBOX® and DEFENDER SERIES® branded products and product packaging (the "Marks"). Id. at ¶¶ 19-21; see Garibyan Decl. ¶ 2, Exs. A-F. Plaintiff claims that it has spent substantial time, money, and effort in developing consumer recognition and awareness of its marks and has spent an enormous amount of money on print and internet advertising to inform customers of the benefits of its products. Compl. ¶ 18.
Plaintiff claims that at some point, without the Plaintiff's consent, Defendant Angel Luis Berrios, Jr. ("Defendant") began offering for sale and selling goods that were neither made by or consented to by Plaintiff using reproductions, counterfeits, copies, and colorable imitations of one or more of Plaintiff's marks. Id. at ¶ 24. Plaintiff claims that Defendant maintains and operates a storefront on eBay under the username "wirelessexpressions." Id. at ¶ 25. Through this storefront, Defendant regularly advertised and sold products bearing the Marks. Garibyan Decl. ¶ 4, Ex. G.
On April 10, 2012, in its ongoing investigation of counterfeit sales of OTTERBOX® branded products, Plaintiff purchased an "IPHONE 4 4S 4G OTTERBOX DEFENDER CASE COVER + HOLSTER BELT CLIP WHITE NEW IN BOX" (Item #220998879310) from Defendant for $19.95, paid through Plaintiff's PayPal account. Compl. ¶ 27, Ex. G. According to Plaintiff, the package arrived bearing a shipping label identifying Defendant's home address, 13536 Lakes Way, Orlando, Florida 32828. Garibyan Decl. ¶¶ 3, 7, Ex. O. The product purchased from Defendant clearly displayed marks identical to the Marks. Garibyan Decl. ¶ 8, Ex. P. Plaintiff confirmed that the item Defendant sold to Plaintiff was a counterfeit after inspecting the item using security measures. Compl. ¶ 28; Garibyan Decl. ¶ 9.
On May 28, 2012, Plaintiff sent Defendant a cease and desist letter along with a draft complaint to the e-mail address identified on the PayPal purchase receipt; Defendant failed to respond. Garibyan Decl. ¶ 10, Ex. Q. On May 30, 2012, Plaintiff sent a second cease and desist letter to Defendant at his home address via certified mail; Defendant received and signed for the correspondence. Garibyan Decl. ¶ 11, Ex. R. On May 7, 2013, U.S. Customs and Border Protection seized a shipment of 300 counterfeit OTTERBOX® branded products en route from China to Defendant's home address for Defendant's resale. Garibyan Decl. ¶ 13, Ex. S.
Plaintiff filed its Complaint against Defendant on June 18, 2013, and Defendant was personally served, with a copy of the Summons and Complaint on June 27, 2013, at his home address. Garibyan Decl. ¶ 14; Dkt. #18. Defendant failed to respond to Plaintiff's Complaint. Garibyan Decl. ¶ 14.
Plaintiff requested entry of default against Defendant on August 8, 2013, and the Clerk of the Court entered default on Defendant on August 9, 2013. Garibyan Decl. ¶ 15, Dkts. ##19-20. Plaintiff filed the present Motion for Default Judgment against Defendant on August 23, 2013 [22].
II. Discussion
As a matter of initial concern, the Court finds that it has proper subject matter and personal jurisdiction in this case. Pursuant to 28 U.S.C. §§ 1331 and 1338, the Court has subject matter jurisdiction because this Action was brought, in part, under the Lanham Act. Personal jurisdiction arises from Defendant's commercial activities within California. A. Procedural Requirements for Default Judgment
The Court finds that Plaintiff has met all local procedural requirements for default judgment. First, default was entered by the Clerk of the Court against Defendant on August 8, 2013 [20]. Second, default was entered as to the Complaint filed in this proceeding. Third, Defendant is not an infant or an incompetent person. Garibyan Decl. ¶ 16. Fourth, Defendant is not in the military service of the United States of America. Id. Fifth, Plaintiff has attached proof of service to its Motion stating that notice of the Motion has been served [22].
Thus, the Court finds that the procedural requirements of Local Rule 55-1 (a-e) are met in this case. B. Substantive Requirements for Default Judgment
For the reasons set forth below, the Court finds that Plaintiff has met the substantive requirements for a default judgment as set forth by Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
1. Possibility of Prejudice to Plaintiff
The first factor in granting default judgment looks at the possibility of prejudice to the plaintiff if default judgment were not entered. See Eitel, 782 F.2d at 1471-72. Here, this factor weighs in favor of Plaintiff as Defendant has failed to appear. If default is not entered, Plaintiff cannot be compensated for its losses. Furthermore, without injunctive relief, Plaintiff will continue to suffer harm from Defendant's violation of Plaintiff's trademark rights. Prejudice has been found in analogous situations. See e.g. Sennheiser Elec. Corp. v. Eichler, No. CV 12-10809 MMM (PLAx), 2013 U.S. Dist. LEXIS 105319 at *8 (C.D. Cal. July 19, 2013) (finding prejudice where plaintiff alleged that defendants infringed on its trademark name by selling counterfeit products bearing trademark name through their online storefronts). As such, the Court finds that this factor weighs in favor of granting default judgment.
2. Merits of Plaintiff's Case and Sufficiency of Plaintiff's Complaint
The second and third factors concern the merits of Plaintiff's case and the sufficiency of Plaintiff's complaint. Eitel, 782 F.2d at 1471. Courts commonly analyze these two factors together, as this Court does as well. F.D.I.C. v. Quest, F.S., Inc., SACV 10-0710-DOC(RNBx), 2011 U.S. Dist. LEXIS 69210, at *6 (C.D. Cal. June 27, 2011).
Plaintiff has alleged five causes of action in its Complaint against Defendant: (1) Trademark Infringement under 15 U.S.C. § 1114; (2) False Designation of Origin under 15 U.S.C. § 1125(a); (3) Trademark Dilution under 15 U.S.C. § 1125(c); (4) Unfair Competition under California Business & Professions Code § 17200 et seq.; (5) Declaratory Relief. Compl. ¶¶ 35-58.
a. Plaintiff's Trademark Infringement, False Designation of Origin, and Unfair Competition Claims
A claim for false designation of origin under 15 U.S.C. § 1125 requires proof of the same elements as a claim for trademark infringement under 15 U.S.C. § 1114. Brookfield Commc'ns, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1047 n.6 (9th Cir. 1999). Additionally, actions pursuant to California Business & Professions Code § 17200 are "substantially congruent" to claims made under the Lanham Act. Cleary v. News Corp., 30 F.3d 1255, 1263 (9th Cir. 1994). In other words, the Court should analyze Plaintiff's trademark infringement, false designation of origin, and unfair competition claims together.
To prove a claim of trademark infringement, a plaintiff must show that: (1) it has a valid, protectable trademark and (2) that Defendant's use of the mark is likely to cause confusion. Applied Info. Scis. Corp. v. eBay, Inc., 511 F.3d 966, 970 (9th Cir. 2007).
"Registration of a mark 'on the Principal Register in the Patent and Trademark Office constitutes prima facie evidence of the validity of the registered mark and of [the registrant's] exclusive right to use the mark on the goods and services, specified in the registration.'" Id. (quoting Brookfield, 174 F.3d at 1047). Because Plaintiff alleges that it owns federal registration of the Marks in its Complaint (and because Plaintiff attached the registrations to the Complaint), Plaintiff has adequately shown the validity of the Marks and its ownership of the Marks.
Courts typically apply the eight factors set out in AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) to determine whether a defendant's use of a mark or name creates a likelihood of confusion. See Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190, 1199 (9th Cir. 2012); Lahoti v. Vericheck, Inc., 636 F.3d 501, 507 (9th Cir. 2011). Those factors are: (1) the strength of the mark; (2) the proximity of the goods; (3) the similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendant's intent in selecting its mark; and (8) likelihood of expansion into other markets. Sleekcraft, 599 F.2d at 348.
i. Strength of the Mark
The first Sleekcraft factor looks at the strength of the mark. "Trademark law offers greater protection to marks that are 'strong,' i.e., distinctive." E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1291 (9th Cir. 1992). "Arbitrary and fanciful marks have no intrinsic connection to the product with which the mark is used; the former consists of words commonly used in the English language, whereas the latter are wholly made-up terms." Brookfield, 174 F.3d at 1058 n.19 (citations omitted). Additionally, "[m]arks may be strengthened by extensive advertising, length of time in business, public recognition, and uniqueness." Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1179 (9th Cir. 1988).
The Court finds that the Marks here are strong. Other than being associated with the products at issue, the word "OTTERBOX" and the pictographic marks stemming therefrom do not connote anything of meaning. Moreover, Plaintiff has been using the Marks in commerce since 2007. Compl. ¶¶ 19-21, Exs. A-F. Plaintiff's products have achieved an extraordinary reputation and have been recognized both locally and nationally, winning many awards in the process. Id. at ¶¶ 16-17. Plaintiff has coupled this public recognition with extensive advertising, investing substantial time, money, and effort in developing consumer recognition and awareness of its marks. Id. at ¶ 18. The Court thus finds that the Marks are strong, thereby weighing toward a finding of a likelihood of confusion.
ii. Proximity or Relatedness of Goods
The second Sleekcraft factor looks to the proximity or relatedness of the goods on which the mark is used. "Where goods are related or complementary, the danger of consumer confusion is heightened." Gallo Cattle, 967 F.2d at 1291. Here, both Plaintiff's and Defendant's products are form-fit protective cases for cellular phones. Both Plaintiff's and Defendant's products bear the Marks. Garibyan Decl. ¶ 8, Ex. P. As both Plaintiff's and Defendant's products are identical, the Court finds that this factor weighs heavily in favor of a finding of likelihood of confusion.
iii. Similarity of the Marks
The third Sleekcraft factor looks to the similarity of the marks. "Three general principles help determine whether marks are similar. First, '[s]imilarity is best adjudged by appearance, sound, and meaning.' Second, the 'marks must be considered in their entirety and as they appear in the marketplace.' Third, 'similarities are weighed more heavily than differences.'" Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., 618 F.3d 1025, 1032 (9th Cir. 2010) (citations omitted).
The Court finds that the marks on Defendant's goods are highly similar to Plaintiff's Marks. The photographs Plaintiff submitted show that Defendant's goods use the Marks in an identical manner on practically identical goods to Plaintiff's products. As such, the Court finds that the marks are similar and that this factor weighs toward a finding that Defendant's use of the Marks is likely to cause confusion.
iv. Evidence of Actual Confusion
The fourth Sleekcraft factor looks to evidence of actual confusion. While "[e]vidence that use of the two marks has already led to confusion is persuasive proof that future confusion is likely . . . failure to prove instances of actual confusion is not dispositive." Sleekcraft, 599 F.2d 352-53 (citing Plough, Inc. v. Kreis Labs., 314 F.2d 635, 639-40 (9th Cir. 1963); Drexel Enters., Inc. v. Hermitage Cabinet Shop, Inc., 266 F. Supp. 532, 537 (N.D. Cal. 1967)).
Here, Plaintiff has presented evidence of Defendant's sale of at least 4,100 counterfeit products. Garibyan Decl. ¶ 5, Exs. H-M. That so many consumers purchased Defendant's counterfeit products evidences actual consumer confusion. As such, the Court finds that this factor weighs in Plaintiff's favor.
v. Marketing Channel Convergence
The fifth Sleekcraft factor looks to whether the marketing channels used by Plaintiff and Defendant converge or are identical. Plaintiff alleges that Defendant operates a storefront on eBay.com, an online marketplace, through which Defendant advertised, marketed, distributed, and sold products bearing the Marks. Compl. ¶ 25; Garibyan Decl. ¶ 4, Ex. G. Plaintiff also alleges that it sells its products at third party retailers and online through its website. Garibyan Decl. ¶ 12. Plaintiff thus contends that it and Defendant's marketing channels overlap because they both sell products over the Internet. Mot. 13:3-8.
While this may be true, "[g]iven the broad use of the Internet today . . . this factor merits little weight." Playboy Enters. v. Netscape Commc'ns Corp., 354 F.3d 1020, 1028 (9th Cir. 2004).
As such, this factor neither weighs in favor nor against a finding of likelihood of confusion.
vi. Type of Good
The sixth Sleekcraft factor examines whether the good is one in which buyers are likely to exercise greater care in their purchase. "When goods are expensive, it is assumed that buyers will exercise greater care in their purchases." Gallo Cattle, 967 F.2d at 1293. Conversely, "when dealing with inexpensive products, customers are likely to exercise less care, thus making confusion more likely." Brookfield, 174 F.3d at 1060.
Here, Plaintiff alleges that the goods in question are fairly inexpensive. For example, Plaintiff purchased one of Defendant's items for $19.95. Garibyan Decl. ¶ 6. Because the goods at issue are relatively inexpensive, this factor weighs in favor of finding a likelihood of confusion.
vii. Defendant's Intent
The seventh Sleekcraft factor looks at the defendant's intent in selecting the mark. "When the alleged infringer knowingly adopts a mark similar to another's, [the court] must presume that the public will be deceived." M2 Software, Inc. v. Madacy Entm't, 421 F.3d 1073, 1085 (9th Cir. 2005) (citing Sleekcraft, 599 F.2d at 354).
Plaintiff has alleged that Defendant intentionally chose Plaintiff's Marks to confuse consumers and aid in the promotion and sales of its unauthorized and counterfeit products. Compl. ¶ 29. Defendant continued to do this even after Plaintiff attempted to contact Defendant prior to the instigation of the instant lawsuit. Garibyan Decl. ¶¶ 10-11, Exs. Q-R. Defendant continued to engage in the sale of the infringing goods even after notice of the lawsuit. Id. at ¶ 13-14, Ex. S.
Furthermore, the failure of a party to defend itself against allegations of trademark counterfeiting is indicative of willful trademark infringement. See Philip Morris U.S.A. Inc. v. Castworld Products, Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003) (finding that a party's failure to comply with the judicial process or to participate in litigation indicates willful use of a counterfeit mark).
Thus, the Court finds that Defendant knowingly adopted marks similar to Plaintiff's Marks. As such, the Court finds that this factor weighs in favor of finding a likelihood of confusion.
viii. Expansion of Product Lines
The eighth Sleekcraft factor concerns whether Defendant will expand the product line to include other products. Plaintiff has not alleged any facts or raised any arguments regarding this factor. As such, the Court finds that this factor is neutral.
ix. Conclusion
Because all of the Sleekcraft factors either weigh in favor of a finding of a likelihood of confusion or are neutral, the Court finds that Defendant's use of the marks was likely to cause confusion.
The Court thus finds that Plaintiff has adequately alleged both elements necessary for a trademark infringement claim.
b. Plaintiff's Trademark Dilution Claim
"In order to prove a violation of the Federal Trademark Dilution Act, a plaintiff must show that (1) the mark is famous; (2) the defendant is making a commercial use of the mark in commerce; (3) the defendant's use began after the mark became famous; and (4) the defendant's use of the mark dilutes the quality of the mark by diminishing the capacity of the mark to identify and distinguish goods and services." Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316,1316, 3124 (9th Cir. 1998).
i. Famousness of Plaintiff's Marks
The first element of a trademark dilution claim requires the plaintiff to establish that the mark is famous. In determining whether a mark is famous, courts may consider several factors, including: (1) the degree of inherent or acquired distinctiveness; (2) the duration and extent of use; (3) the duration and extent of advertising and publicity; (4) the geographical extent of the market; (5) the channels of trade; (6) the degree of recognition in the trading areas and channels of trade; (7) the nature and extent of use of the same or similar marks by third parties; and (8) whether the mark is registered. Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1013 (9th Cir. 2004) (citing 15 U.S.C. § 1125(c)(1)).
The Court finds that the Marks are famous under 15 U.S.C. § 1125(c)(1). Plaintiff's Mark is highly distinct; as discussed above, Plaintiff's OTTERBOX® Mark does not connote anything of meaning other than Plaintiff's products. Furthermore, Plaintiff has been using these Marks extensively since 2007. Compl. ¶¶ 19-21, Exs. A-F. Plaintiff has spent substantial time, money, and effort in advertising and publicity. Id. at ¶ 18. Additionally, Plaintiff's Marks and products are highly recognized both locally and nationally, indicating a national market. Id. at ¶ 17. Finally, the Marks are registered. Id. at ¶¶ 19-21, Exs. A-F. As nearly all of the statutory factors weigh in Plaintiff's favor, the Court finds that the Marks are famous.
ii. Defendant's Commercial Use of Plaintiff's Famous Marks
The Court finds that Defendant has made a commercial use of Plaintiff's Marks.
First, Defendant operates and maintains an eBay storefront under the name "wirelessexpressions," through which he regularly and systematically advertised, marketed, distributed, and sold products bearing unauthorized Plaintiff's Marks. Compl. ¶¶ 24-34; Garbiyan Decl. ¶ 4-13, Ex. G-S. In other words, Defendant routinely uses Plaintiff's Marks to market and sell its products.
Second, on April 10, 2012, Plaintiff purchased an "IPHONE 4 4S 4G OTTERBOX DEFENDER CASE COVER + HOLSTER BELT CLIP WHITE NEW IN BOX" (Item #220998879310) from Defendant for $19.95, paid through Plaintiff's PayPal account. Compl. ¶ 27, Ex. G. The product purchased from Defendant was inspected for authenticity and determined to be a counterfeit. Compl. ¶ 28; Garibyan Decl. ¶¶ 8-9, Ex. P.
Given Defendant's extensive marketing and sales of his counterfeit products using Plaintiff's Marks, the Court finds that Defendant has made commercial use of Plaintiff's Marks.
iii. Defendant's Use Began After Plaintiff's Marks Were Famous
Plaintiff has been using the Marks since as early as 2007. Compl. ¶¶ 19-21, Exs. A-F; Garibyan Decl. ¶ 2, Exs. A-F. Defendant has, according to Plaintiff's monitoring software, sold counterfeit "OTTERBOX" products from August 2011 to March 2013 through his "wirelessexpressions" eBay storefront. Garibyan Decl. ¶ 5, Ex. H-M. Accordingly, the Court finds that Defendant used the Marks after they became famous.
iv. Defendant's Use Tarnishes the Quality of Plaintiff's Marks
The final element for a trademark dilution claim is that Defendant's use of the Marks has tarnished the quality of Plaintiff's Marks. "Tarnishment occurs 'when a famous mark is improperly associated with an inferior or offensive product or service.'" Playboy Enters., 354 F.3d at 1033 (quoting Panavision, 141 F.3d at 1326 n.7).
Defendant has associated Plaintiff's Marks with counterfeit versions of Plaintiff's products by selling counterfeits bearing the Marks. Compl. ¶¶ 22-34, 45-50; Garibyan Decl. ¶¶ 4-14, Exs. G-S. As such, the Court finds that Defendant tarnished Plaintiff's Marks.
c. Conclusion
The Court thus finds that Plaintiff has adequately alleged the elements necessary for a trademark dilution claim. Because Plaintiff has adequately pled and established all the elements and factors necessary for its trademark infringement and trademark dilution claims, the Court finds that the second and third Eitel factors weigh in favor of granting default judgment.
3. Sum of Money At Stake
The fourth factor in granting default judgment looks at the amount of money at stake in the action. See Eitel, 782 F.2d at 1471-72.
The Lanham Act, 15 U.S.C. § 1117(c), authorizes statutory damages of up to "$2,000,000 per counterfeit mark per type of good or services sold, offered for sale, or distributed" where "the use of the counterfeit mark was willful". 15 U.S.C. § 1117(c)(2). A "counterfeit mark" is "a counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services." 15 U.S.C. § 1116(d)(1)(B)(i).
Plaintiff seeks statutory damages in the amount of $4,000,000 for willful trademark infringement and trademark dilution pursuant to 15 U.S.C. § 1117(c)(1) for Defendant's intentional infringement of Plaintiff's Marks. Mot. 20:15-18.
Plaintiff has alleged that Defendant has sold thousands of counterfeit versions of Plaintiff's products bearing the Marks for hundreds of thousands of dollars. Garibyan Decl. ¶ 5, Exs. H-M. Given that Plaintiff's Marks were registered for the duration of Defendant's activities, these facts indicate that Defendant has knowingly, willfully, and intentionally used counterfeit marks. As such, pursuant to 15 U.S.C. § 1117(c)(1), this Court finds that Plaintiff is authorized to seek statutory damages of up to $12,000,000.
The significant amount of money at stake here outweighs the egregiousness of Defendant's conduct, weighing against awarding default judgment.
4. Possibility of Dispute Over Material Facts
The fifth factor in granting default judgment looks at whether there is a possibility of dispute concerning material facts. Eitel, 782 F.2d at 1471-72.
There is nothing to suggest the possibility of a dispute over material facts here because Defendant has not filed a responsive pleading to the Complaint. Furthermore, where a plaintiff has filed a well-pled complaint, the possibility of a dispute concerning material facts is remote. Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F. Supp. 2d 916, 921-22 (C.D. Cal. 2010). Thus, this factor weighs toward granting default judgment.
5. Whether Default Due to Excusable Neglect
The sixth factor in granting default judgment looks at whether default was due to some excusable neglect. Eitel, 782 F.2d at 1472.
Here, there is no evidence that default was due to Defendant's excusable neglect. Defendant was personally served with a copy of the Summons and Complaint on June 27, 2013 [18]. Garibyan Decl. ¶ 14. Defendant did not file an answer. Furthermore, Plaintiff filed this Motion for Default Judgment on August 23, 2013 and served notice of the Motion that same day [23]. Defendant has not appeared or filed a responsive pleading. As such, the Court finds that this factor weighs toward granting default judgment.
6. Strong Policy Favoring Decision on Merits
The seventh and last factor in granting default judgment considers the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel, 782 F.2d at 1472. However, the preference of deciding a case upon its merits is not alone dispositive, given the existence of Federal Rule of Civil Procedure 55(b). PepsiCo, Inc. v. California Security Cans., 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). In addition, a defendant's failure to answer a plaintiff's complaint "makes a decision on the merits impractical, if not impossible." Id.; Elektra Entm't Group Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005). Here, Plaintiff's federal trademark claims are unopposed and Defendant has failed to appear in this Action. Therefore, this factor favors granting default judgment.
Accordingly, because Plaintiff meets both the substantive and procedural requirements, the Court GRANTS Plaintiff's Application for Default Judgment. C. Terms of the Judgment
After determining that entry of default judgment is warranted, the Court must next determine the terms of the judgment.
1. Statutory Damages
Plaintiff seeks $4,000,000 in statutory damages for Defendant's federal trademark violations as compensation for Plaintiff's damages, as a punishment for Defendant's willful conduct, and as a deterrent to future infringement by Defendant and other counterfeiters. Mot. 21:26-28.
"Several courts have found statutory damages are appropriate in default judgment cases because the information needed to prove actual damages is within the infringers' control and is not disclosed." Microsoft Corp. v. Nop, 549 F. Supp. 2d 1233, 1238 (E.D. Cal 2008). Pursuant to the Lanham Act, a plaintiff may recover statutory damages "not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just." 15 U.S.C. § 1117(c)(1). Additionally, where a defendant's conduct is willful, a court may grant enhanced statutory damages for "not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just." 15 U.S.C. § 1117(c)(2). Willfulness requires a connection between the defendant's awareness of its competitors and the defendant's actions at those competitors' expense. See Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936, 944 (9th Cir. 2011); Lindy Pen Co., Inc. v. Bic Pen Corp., 982 F.2d 1400, 1406 (9th Cir. 1993). However, willfulness can be inferred from a defendant's failure to defend. Castworld Products, 219 F.R.D. at 501. Moreover, in determining whether the amount of statutory damages sought is reasonable, courts will look to see if the amount is calculated to serve the purposes of awarding statutory damages, such as compensating lost profits, punishing willful infringing conduct, and deterring infringing activity. See id. at 501-02.
Courts tasked with determining statutory damages awards under the Lanham Act often turn to the analysis developed for a similar provision within the Copyright Act. Phillip Morris USA Inc. v. Shalabi, 352 F. Supp. 2d 1067, 1076 (C.D. Cal. 2004); Sara Lee Corp. v. Bags of New York, Inc., 36 F. Supp. 2d 161, 166-167 (S.D.N.Y. 1999). Based on the factors considered for the award of statutory damages under the Copyright Act, some courts applying the Lanham Act have looked to estimates of actual damages when making statutory damages awards, requiring a "plausible relationship" between plaintiff's actual damages and the requested statutory damages award. See Adobe Sys v. Tilley, No. C-09-01085 PJH (JCS), 2009 U.S. Dist. LEXIS 123438, at *12 (N.D. Cal. Dec. 23, 2009); see also Sara Lee, 352 F. Supp. 2d at 170.
Defendant's unwillingness to participate in the legal process in spite of his knowledge of the suit, as well as his significant infringing activity indicates that his infringement was willful. Plaintiff is thus entitled to up to $12,000,000 in statutory damages pursuant to 15 U.S.C. § 1117(c) given that Defendant has willfully infringed on Plaintiff's six Marks.
However, the Court hereby finds that Plaintiff's requested $4,000,000 is unreasonable as it is not "plausibly related" to Plaintiff's actual damages. Plaintiff provides evidence that it has been damaged in the amount of its lost profits, though the total amount cannot be ascertained. See Garibyan Decl. ¶ 5, Exs. H-M. In particular, Plaintiff provides tracking data for Defendant's "wirelessexpressions" eBay storefront showing that from August 2011 through March 2013, Defendant sold no less than 4,101 counterfeit OTTERBOX® products with gross receipts of no less than $88,812.00. Id. Defendant's infringing activity, then, is extensive and pervasive, continuing even after notice of this Action. See id. at ¶ 6, 10-11. However, an award of $4,000,000 here would go beyond deterring future infringement and would serve as a windfall for Plaintiff. See Adobe Systems, Inc. v. Tilley, No. C 09-1085 PJH, 2010 WL 309249 at *5-6 (N.D. Cal. Jan. 19, 2010) ("while the plaintiff in a trademark or copyright infringement case is entitled to damages that will serve as a deterrent, it is not entitled a windfall.").
The Court has significant discretion to determine the amount of damages to be awarded. See Rolex Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704, 712 (9th Cir. 1999); Moroccanoil, Inc. v. Allstate Beauty Prods., Inc., 847 F. Supp. 2d 1197, 1202 (C.D. Cal. 2012). Courts have been predictably varied in their damages awards for similar default judgments involving trademark counterfeiting. See E.I. Du Pont de Nemours and Co. v. Drabek, No. CV 12-10574 DDP AJWX, 2013 WL 4033630, at *7 (C.D. Cal. May 3, 2013) (awarding $25,000 per product bearing plaintiff's mark for a total of $525,000 where plaintiff failed to present evidence regarding the extent of sales and evidence that defendant sold infringing products to a wide market); Sweet People Apparel, Inc. v. Zipper Clothing, No. CV 12-02759-ODW (CWx), 2012 WL 1952842 at *4-5 (C.D. Cal. May 31, 2012) (awarding plaintiff $150,000 in statutory damages per infringed mark where plaintiffs alleged that their jeans retailed for about $100 and that sales of the jeans totaled tens of millions of dollars); Beachbody, LLC v. Johannes, No. CV 11-1148 PSG RZX, 2011 WL 3565226, at *3 (C.D. Cal. Aug. 12, 2011) (rejecting plaintiff's request for $2,150,000 in statutory damages and instead awarding $35,000 per mark willfully infringed for a total of $105,000 where plaintiff could only show sales of 132 allegedly infringing DVDs); Castworld Products, 219 F.R.D. at 501 (awarding $2,000,000 in statutory damages where defendant imported 8,000,000 counterfeit cigarettes with a street value of millions of dollars). Given Defendant's serious infringing conduct and Plaintiff's evidence that it has been damaged at least in the amount of $88,812.00, the Court finds that Plaintiff is entitled to $100,000 per willfully infringed mark for a total of $600,000. The Court finds that such an award is reasonably calculated to deter further illegal conduct and compensate Plaintiff for any loss in reputation.
2. Injunctive Relief
Plaintiff asks the Court to issue a permanent injunction prohibiting Defendant from (1) manufacturing, advertising, distributing, offering for sale, selling, whether directly or indirectly, counterfeit merchandise bearing Plaintiff's Marks, including those bearing marks or names confusingly similar to Plaintiff's Marks, (2) using Plaintiff's Marks or any colorable imitation thereof on or in connection with the promotion, advertising, distribution, manufacture, or sale of Defendant's goods, and (3) ordering Defendant to cancel, withdraw, and recall all its promotions, advertisements, and merchandise bearing Plaintiff's Marks or any confusingly similar simulation to Plaintiff's Marks, which have been published, placed, or shipped by Defendant or under Defendant's authority. Mot. 24:2125:12. The Lanham Act gives courts the power to grant reasonable injunctions when necessary to prevent further violations of the statutes. See 15 U.S.C. § 1116(a). A plaintiff, however, is not automatically entitled to an injunction simply because it proves its affirmative claims. Pyrodyne Corp. v. Pyrotronics Corp., 847 F.2d 1398, 1402 (9th Cir. 1988).
In order for a court to grant a permanent injunction, the plaintiff must show:
(1) that it has suffered an irreparable injury;eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
(2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury;
(3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
(4) that the public interest would not be disserved by a permanent injunction.
Regarding the first element, when a plaintiff establishes in a trademark infringement or unfair competition action a likelihood of confusion, it is generally presumed that the plaintiff will suffer irreparable harm if an injunction is not granted. Abercrombie & Fitch Co. V. Moose Creek, Inc., 486 F.3d 629, 633 (9th Cir. 2007); Vision Sports, Inc., v. Melville Corp., 888 F.2d 609, 612 n.3 (9th Cir. 1989). The Ninth Circuit has found that an analogous presumption for preliminary injunctions in the copyright infringement context has effectively been overturned in light of Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) and eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). See Flexible Lifeline Sys., Inc. V. Precision Lift, Inc., 654 F.3d 989, 994-98 (9th Cir. 2011). However, the Ninth Circuit has yet to address the effect upon the presumption of irreparable harm for permanent injunctions in the trademark infringement context. Accordingly, courts have continued to apply the irreparable harm presumption in trademark infringement cases for permanent injunctions, and this Court follows suit. See Choice Hotels Intern., Inc. v. Kusum Vali, Inc., No. 11CV1277 BTM(WMc), 2012 WL 2838183, at *3 (S.D. Cal. July 9, 2012); T-Mobile USA, Inc. V. Terry, 862 F. Supp. 2d 1121, 1133 (W.D. Wash. 2012). Here, Plaintiff alleges that Defendant's use of the counterfeit OTTERBOX® mark in their manufacture, marketing, sale, and distribution of goods is likely to cause confusion, mistake, and deception among the general public. Compl. ¶ 31. Thus, the Court finds that Plaintiff is entitled to a presumption of irreparable harm.
However, even without the legal presumption afforded it by law, Plaintiff maintains that it will be irreparably harmed by Defendant's continued use and infringement of Plaintiff's trademark. Compl. ¶¶ 44, 49, 54. Thus, Plaintiff has satisfied the first element.
Plaintiff has also satisfied the second element concerning inadequate legal remedy. Plaintiff alleges that unless enjoined, Defendant will continue to infringe upon Plaintiff's trademark. Id. ¶¶ 44, 49, 54. Defendant's failure to respond or otherwise appear in this Action does not assure that Defendant has stopped infringing. See Jackson v. Sturkie, 255 F. Supp. 2d 1096, 1103 (N.D. Cal. 2003) (granting a permanent injunction as part of default judgment in part because "defendant's lack of participation in this litigation has given the court no assurance that defendant's infringing activity will cease"). Although an award of money damages may remedy Defendant's past wrongful acts, it will not adequately compensate for Defendant's future acts. Thus, the second element is satisfied.
The third element requiring a balance of hardships favors Plaintiff because if the injunction does not issue, Defendant is more likely to continue violating Plaintiff's rights, imposing a hardship on Plaintiff.
Finally, the public interest will not be disserved by a permanent injunction. To the contrary, if the injunction is not granted, continued infringement will discourage future innovative developments by failing to provide an adequate forum through which corporations, such as Plaintiff, may protect their ideas. See Amini Innovation Corp. v KTY Intern. Marketing, 768 F. Supp. 2d 1049, 1057 (C.D. Cal. 2011). Additionally, prohibiting Defendant from manufacturing, marketing, selling, and distributing counterfeit OTTERBOX® products will prevent the likelihood of future confusion to consumers.
Therefore, because Plaintiff has demonstrated the requisite facts necessary to satisfy the aforementioned four-part test, the Court GRANTS Plaintiff's request for a permanent injunction against Defendant: (1) enjoining and permanently restraining Defendant from manufacturing, advertising, distributing, offering for sale, or selling, whether directly or indirectly, counterfeit merchandise bearing Plaintiff's Marks, including any merchandise of any kind bearing Plaintiff's Marks or names that are confusingly similar to the trademarks, trade names, designs or logos of Plaintiff; (2) enjoining and permanently restraining Defendant from using Plaintiff's Marks or any copy, reproduction, or colorable imitation, or confusingly similar simulation of Plaintiff's Marks on or in connection with the promotion, advertising, distribution, manufacture, or sale of Defendant's goods; and (3) ordering Defendant to cancel, withdraw, and recall all its promotions, advertisements, and merchandise bearing Plaintiff's Marks or any confusingly similar simulation of Plaintiff's Marks, which have been published, placed, or shipped by Defendant or under Defendant's authority.
3. Attorneys' Fees
The Lanham Act permits attorneys' fees to be granted in "exceptional" cases in which the defendant's behavior has been malicious, fraudulent, deliberate, or willful. 15 U.S.C. § 1117(a)-(b); Sealy, Inc. v. EasyLiving, Inc., 743 F.2d 1378, 1384 (9th Cir. 1984). Willful infringement can be inferred from a defendant's failure to defend. eAdGear, Inc. v. Liu, No. CV-11-05398 JCS, 2012 WL 2367805, at *19 (N.D. Cal. June 21, 2012); Ringcentral, Inc. v. Quimby, 711 F. Supp. 2d 1048, 1065 (N.D. Cal. 2010) (citing Castworld Products, 219 F.R.D. at 500).
As Defendant has failed to defend this Action, his willful infringement of Plaintiff's Marks can be inferred. Moreover, Plaintiff has alleged Defendant's willful exploitation of Plaintiff's Marks multiple times in its Complaint, further showing Defendant's willful infringement. See Compl. ¶¶ 25-26, 29.
According to Local Rule 55-3, the amount of attorney's fees that a plaintiff may recover from a default judgment hinges on the amount of judgment awarded to the plaintiff, exclusive of costs. Pursuant to the Local Rule 55-3 schedule, Plaintiff is entitled to $5,600 plus 2% of the damages award over $100,000, or $15,600. The Court thus awards Plaintiff $15,600 in attorneys' fees.
4. Costs
Plaintiff also requests costs under 15 U.S.C. § 1117(a) in the amount of $639.90. Mot. 23:21-24. Under the Lanham Act, a plaintiff that prevails on a claim under 15 U.S.C. § 1125(a) or on a willful violation under 15 U.S.C. § 1125(c) is entitled to costs of the action. See § 1117(a). Here, Plaintiff has prevailed on its claims under § 1125(a) and also prevailed on a willful violation under § 1125(c). As such, the Court awards Plaintiff $639.90 in costs.
IV. Conclusion
The Court GRANTS Plaintiff's Motion for Default Judgment and awards Plaintiff $600,000 in statutory damages; $15,600 in attorney's fees; and $639.90 in costs. The Court also GRANTS Plaintiff's request for a permanent injunction, the details of which to be outlined in the Judgment.
IT IS SO ORDERED.
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HONORABLE RONALD S.W. LEW
Senior, U.S. District Court Judge