AK Futures LLC v. Smoke Tokes LLC

CourtDistrict Court, C.D. California
DecidedNovember 17, 2021
Docket8:21-cv-01061
StatusUnknown

This text of AK Futures LLC v. Smoke Tokes LLC (AK Futures LLC v. Smoke Tokes LLC) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
AK Futures LLC v. Smoke Tokes LLC, (C.D. Cal. 2021).

Opinion

CUENNTITREADL S DTIASTTERSIC DTI SOTFR CICATL ICFOOURRNTIA CIVIL MINUTES - GENERAL Case No. 8:21-cv-01061-JVS (ADSx) Date November 17, 2021 Title AK Futures LLC v. Smoke Tokes, LLC

Present: The James V. Selna, U.S. District Court Judge Honorable Lisa Bredahl Not Present Deputy Clerk Court Reporter Attorneys Present for Plaintiffs: Attorneys Present for Defendants: Not Present Not Present Proceedings: [IN CHAMBERS] Order Regarding Motion for Default Judgment Plaintiff AK Futures LLC (“AK Futures”) moved for a default judgment. Dkt. No. 19. Defendant Smoke Tokes, LLC (“Smoke Tokes”) does not oppose the motion. For the following reasons, the Court GRANTS the motion. I. BACKGROUND AK Futures filed suit against Smoke Tokes for counterfeiting and the willful infringement of AK Futures’s intellectual property rights in its CakeTM (“Cake”) brand of hemp derivative Delta-8 products. Compl. ¶ 1. AK Futures owns and sells Cake branded Delta-8 products, including disposable electronic delivery systems and electronic cigarette e-liquid. Id. ¶ 2. Delta-8 is a hemp- derived product, regulated under the PACT Act and other regulations. Id. AK Futures does not manufacture, distribute, or sell Delta-9 vaping products. Id. The Cake product is the top-selling brand of Delta-8 vaping goods in the country. Id. AK Futures launched Cake in October 2020, and since then, demand has been overwhelming, with revenue from sales of authentic Cake products exceeding $44,000,000. Id. ¶ 14. By virtue of this success, AK Futures has established substantial consumer goodwill in the Cake mark, trade name, and designs. Id. ¶ 15. AK Futures has also filed for registration of the Cake marks before the United CUENNTITREADL S DTIASTTERSIC DTI SOTFR CICATL ICFOOURRNTIA CIVIL MINUTES - GENERAL Case No. 8:21-cv-01061-JVS (ADSx) Date November 17, 2021 Title AK Futures LLC v. Smoke Tokes, LLC

has continuously used one or more of the aforementioned marks in commerce, currently, all Cake products bear one or more of the marks. Id. ¶ 20. AK Futures investigated Smoke Tokes’s inauthentic products, engaging a private investigator to purchase and inspect samples of the same. Id. ¶ 25. On May 27, 2021, its investigator purchased three Cake Lookah devices from Smoke Tokes in downtown Los Angeles. Id. ¶ 26. AK Futures examined the products, which were counterfeits not made by or with the permission of AK Futures. Id. ¶ 27. The inauthentic products sold by Smoke Tokes include a device designed for vaping cannabinoid or Delta-9 concentrates—a product that AK Futrues does not manufacture or sell—packaged in authentic Cake-branded packaging with reproductions of AK Futures’s copyrighted stylized drawing and AK Futures’s Cake mark. Id. As a result of the inauthentic products, Smoke Tokes is “intentionally deceiving customers into believing that they are receiving authentic Cake products.” Id. ¶ 31. In addition, “the quality, performance, and safety of [Smoke Tokes’s] products is unknown.” Id. ¶ 32. As a result, consumers are harmed by the inauthentic products, which are at risk of being “lower quality, less reliable, and less safe” than the authentic ones. Id. ¶ 33. Based on these allegations, AK Futures brought suit against Smoke Tokes for: (1) copyright infringement, 17 U.S.C. § 101 et seq.; (2) federal unfair competition and false designation or origin, 15 U.S.C. § 1125(a); (3) California false advertising, Cal. Bus. Prof. Code 17500; and (4) California unfair competition, Cal. Bus. & Prof. Code § 17200 et seq.. Compl., Dkt. No. 1. On July 2, 2021, AK Futures moved for preliminary injunction enjoining the sale of counterfeit goods and for leave to immediately commence discovery. Dkt. No. 15. The Court granted that motion on August 16, 2021. Dkt. No. 27. Then, on September 27, 2021, AK Futures filed the instant motions for default judgment and permanent injunction. Dkt. No. 30. The motion is unopposed. II. LEGAL STANDARD CUENNTITREADL S DTIASTTERSIC DTI SOTFR CICATL ICFOOURRNTIA CIVIL MINUTES - GENERAL Case No. 8:21-cv-01061-JVS (ADSx) Date November 17, 2021 Title AK Futures LLC v. Smoke Tokes, LLC

satisfy the procedural and substantive requirements for default judgment. A. Procedural Requirements For a default judgment, a plaintiff must satisfy the procedural requirements of the Federal Rules of Civil Procedure. Rule 54(c) states that a default judgment cannot grant relief that is different from the requested relief in a complaint. Fed. R. Civ. P. 54(c). Under Rule 55(a), a clerk must enter a default when a defendant has failed to plead, defend, or appear in any form. Fed. R. Civ. P. 55(a). Lastly, if a defaulting party has appeared in an action, then a plaintiff needs to serve a motion for default on the defaulting party. Fed. R. Civ. P. 55(b)(2). In addition, a party seeking a default judgment must satisfy the requirements of Local Rule 55-1. To satisfy Local Rule 55-1, a plaintiff needs to submit a declaration establishing (1) when and against who the clerk entered a default, (2) the pleading on which default was entered, (3) whether the defaulting party is an infant or incompetent “and if so, whether that person is represented by a guardian, committee, conservator or other representative”, (4) whether the Servicemembers Civil Relief Act applies; and (5) whether the plaintiff served a notice of the motion on the defaulting party, if required by Federal Rule of Civil Procedure 55(b)(2). L.R. 55-1. B. Substantive Requirements The Ninth Circuit has identified seven factors (together, the “Eitel factors”) that a court considers when determining whether to grant a default judgment: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff’s substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at issue; (5) the possibility of a dispute regarding material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Taken together, the second and third Eitel factors, related to the merits of a plaintiff’s claims and the sufficiency of the complaint, address whether the party seeking CUENNTITREADL S DTIASTTERSIC DTI SOTFR CICATL ICFOOURRNTIA CIVIL MINUTES - GENERAL Case No. 8:21-cv-01061-JVS (ADSx) Date November 17, 2021 Title AK Futures LLC v. Smoke Tokes, LLC

PepsiCo Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172 (C.D. Cal. 2002)). On an application for a default judgment, the factual allegations in the complaint are taken as true, with the exception of those regarding damages. See Pope v. United States, 323 U.S. 1, 12 (1944); Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). “[N]ecessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins.

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Bluebook (online)
AK Futures LLC v. Smoke Tokes LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ak-futures-llc-v-smoke-tokes-llc-cacd-2021.