Blumenthal Distributing, Inc. v. Gamesis, Inc.

Opinion

Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 1 of 20 Page ID #:211

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 Case No. 5:22-cv-01307-SPG-JC 11 BLUMENTHAL DISTRIBUTING, INC.

12 dba OFFICE STAR, a California ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT 13 Corporation, JUDGMENT [ECF NO. 21]

14 Plaintiff,

15 v.

16 GAMESIS, INC., a suspended California

17 corporation, and TONY S. CHENG, an 18 individual, 19 Defendants. 20 Before the Court is Plaintiff Blumenthal Distributing, Inc. d/b/a Office Star’s 21 (“Plaintiff”) motion for default judgment against Defendants Gamesis, Inc. and Tony S. 22 Cheng (together “Defendants”). (ECF No. 21). Defendants did not oppose the motion and 23 have not otherwise appeared in this action. The Court has read and considered the matters 24 raised with respect to the motion and concluded that this matter is suitable for decision 25 without oral argument. See Fed. R. Civ. P. 78(b); Local Rule 7-15. Having considered 26 Plaintiff’s submission, the relevant law, and the record in this case, the Court GRANTS 27 Plaintiff’s motion. 28 -1- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 2 of 20 Page ID #:212

1 I. BACKGROUND 2 A. Factual Background 3 The following facts are alleged in the Plaintiff’s Complaint and are taken as true due 4 to the entry of default against Defendants: 5 Plaintiff is an importer and distributor of office furniture, including office chairs. 6 (ECF No. 1 (“Compl.”) ¶ 10). Plaintiff protects its brands, including the “Office Star” 7 brand, in part through trademark registration of key marks. (Id. ¶¶ 11–13). For instance, 8 Plaintiff has registered its “Office Star” name and logo. (Id. ¶¶ 13–14). As a part of its 9 distribution network, Plaintiff began a relationship with Defendants in mid-2013 whereby 10 Defendants would sell Plaintiff’s office chairs on its website and then have Plaintiff deliver 11 them. (Id. ¶ 15). As a part of this relationship, Plaintiff informally gave Defendants 12 permission to use the name “Office Star” in its domain name officestarstore.com. (Id. ¶ 13 16). However, Plaintiff never gave Defendants permission to use the trademarked Office 14 Star logo, nor did it give Defendants permission to describe Gamesis as an “Authorized 15 Office Star Dealer.” (Id. ¶¶ 17–18). 16 In 2017, Plaintiff discovered that Defendants were using the Office Star logo, a 17 registered trademark, on the website at officestarstore.com and were describing Gamesis 18 as an “Authorized Dealer.” (Id. ¶ 20). Plaintiff then wrote a letter to Defendants directing 19 them to remove “all copyrighted images and product descriptions from your site within ten 20 days of this letter.” (Id. ¶ 21). The letter also informed Defendants that the informal sales 21 relationship was over and gave Defendants a short period to wind down their sale of 22 Plaintiff’s products. (Id. ¶¶ 21–22). Plaintiff processed the final legitimate order from 23 Defendants in January 2018. (Id. ¶ 22). 24 However, around March 2022, an individual who had ordered an “Office Star” chair 25 on Defendants’ website, officestarstore.com, contacted Plaintiff to inquire about the status 26 of the chair she had ordered. (Id. ¶ 23). She stated that Defendants informed her there 27 were shipping delays with her order but that it would be fulfilled. (Id.). Plaintiff proceeded 28 to investigate Defendants’ website and learned that Defendants continued to hold Gamesis -2- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 3 of 20 Page ID #:213

1 out as an “Authorized Dealer” of Plaintiff’s chairs. (Id. ¶ 24). Plaintiff also discovered 2 that Defendants were using Plaintiff’s Office Star mark and logo to sell office chairs. (Id.). 3 Further investigation revealed that multiple customers had been deceived into placing 4 orders for Office Star products from Defendants’ website and had never received them 5 despite paying Defendants for the goods. (Id. ¶ 25). Plaintiff alleges this practice by 6 Defendants confused consumers and damaged Plaintiff’s reputation. (Id. ¶¶ 27–28). 7 Plaintiff specifically states that Defendants’ representations that Plaintiff was experiencing 8 issues with quality control or shipping further damaged Plaintiff’s reputation in the eyes of 9 consumers. (Id.). Plaintiff alleges that Defendants’ continued use of Plaintiff’s registered 10 marks was willful and was intended “to free ride on the goodwill” associated with 11 Plaintiff’s marks. (Id. ¶ 32). 12 B. Procedural History 13 Plaintiff filed the Complaint in this action on July 25, 2022. (ECF No. 1). While 14 Plaintiff initially struggled to adequately serve Defendants, on August 23, 2022, Defendant 15 Gamesis filed an updated statement with the California Secretary of State listing Defendant 16 Cheng as its agent and 324 S. Diamond Bar Blvd., # 197, Diamond Bar, CA 91765 as its 17 address. (ECF No. 21-1 at 14, n.5). Plaintiff then served Defendants at the new address 18 on August 24, 2022. (ECF Nos. 12, 13). On September 26, 2022, after Defendants failed 19 to answer or otherwise respond to the Complaint, Plaintiff filed a request for entry of 20 default. (ECF No. 15). The clerk entered default as to both Defendants on September 28, 21 2022. (ECF No. 18). On October 13, 2022, Plaintiff filed the instant motion for default 22 judgment, which Defendants have not opposed. (ECF No. 21). 23 II. LEGAL STANDARD 24 A court may order default judgment following the entry of default by the Clerk of 25 Court pursuant to Federal Rule of Civil Procedure 55(b). Fed. R. Civ. P. 55(b). Generally, 26 after the Clerk enters default, the defendant’s liability is conclusively established, and the 27 well-pleaded factual allegations in the complaint are accepted as true, except those 28 pertaining to damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. -3- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 4 of 20 Page ID #:214

1 1987). To determine damages, a court may rely on the declarations submitted by the 2 plaintiff or order a full evidentiary hearing. Fed. R. Civ. P. 55(b)(2). Additionally, “[a] 3 default judgment must not differ in kind from, or exceed in amount, what is demanded in 4 the pleadings.” Fed. R. Civ. P. 54(c). 5 Before a court can enter a default judgment against a defendant, the plaintiff must 6 comply with the procedural requirements set forth in Federal Rules 54(c) and 55, as well 7 as those in Local Rule 55-1. Local Rule 55-1 requires the party moving for default 8 judgment to submit a declaration establishing: (1) when and against which party default 9 was entered; (2) identification of the pleading to which default was entered; (3) whether 10 the defaulting party is a minor or incompetent person; (4) that the Servicemembers Civil 11 Relief Act, 50 U.S.C. § 3931, does not apply; and (5) that the defaulting party was properly 12 served with notice, if required under Federal Rule 55(b)(2). C.D. Cal. L.R. 55-1. 13 If these procedural requirements are satisfied, a district court has discretion to enter 14 a default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). That a 15 defendant has defaulted “does not automatically entitle the plaintiff to a court-ordered 16 judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002). 17 Instead, the court, in its discretion, considers several factors, colloquially known as the 18 “Eitel factors.” The Eitel factors ask courts to weigh: (1) the possibility of prejudice to the 19 plaintiff; (2) the merits of plaintiff’s substantive claim; (3) the sufficiency of the complaint; 20 (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning 21 material facts; (6) whether the default was due to excusable neglect; and (7) the strong 22 policy favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 23 1986). 24 III. DISCUSSION 25 “When entry of judgment is sought against a party who has failed to plead or 26 otherwise defend, a district court has an affirmative duty to look into its jurisdiction over 27 both the subject matter and parties.” In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). The 28 Court therefore examines jurisdiction and service of process in addition to the Eitel factors. -4- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 5 of 20 Page ID #:215

1 A. Jurisdiction 2 1. Subject-Matter Jurisdiction 3 Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. 4 of Am., 511 U.S. 375, 377 (1994). However, district courts have subject-matter jurisdiction 5 over civil actions arising under federal law. 28 U.S.C. § 1331. Furthermore, where such 6 “federal question” jurisdiction exists, courts may exercise supplemental jurisdiction over 7 any state law claims that “derive from a common nucleus of operative fact.” City of 8 Chicago v. Int’l Coll. Of Surgeons, 522 U.S. 156, 157 (1997) (citing United Mine Workers 9 of Am. v. Gibbs, 383 U.S. 715, 725 (1966)). 10 Here, Plaintiff asserts claims for federal trademark infringement and counterfeiting, 11 federal unfair competition, and violation of the federal anticybersquatting consumer 12 protection act, in addition to several state law claims. (ECF No. 1). The Court has subject 13 matter jurisdiction under section 1331 over each of Plaintiff’s claims arising under federal 14 law. Additionally, the Court may exercise supplemental jurisdiction over Plaintiff’s state 15 law claims because they arise out of the same nucleus of operative fact. All the claims 16 relate to Defendants’ use of Plaintiff’s marks and goods in falsifying online sales. See 17 (ECF No. 1 ¶¶ 37–77). Therefore, the Court may properly exercise subject matter 18 jurisdiction in this action. 19 2. Personal Jurisdiction 20 A court may exercise general personal jurisdiction over a corporation that is fairly 21 regarded as “at home” in the forum state. Bristol-Meyers Squibb Co. v. Superior Court, 22 137 S. Ct. 1773, 1779–80 (2017). A corporation is considered to be “at home” in both its 23 “place of incorporation and principal place of business.” Daimler AG v. Baumann, 571 24 U.S. 117, 137 (2014). Likewise, a court has general jurisdiction over an individual 25 defendant where a defendant is domiciled in the forum state or his activities there are 26 “substantial” or “continuous and systematic.” Panavision Intern.. L.P. v. Toeppen, 141 27 F.3d 1316, 1320 (9th Cir. 1998) (quoting Helicopteros Nacionales de Colombia, S.A. v. 28 Hall, 466 U.S. 408, 414 –16 (1984). -5- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 6 of 20 Page ID #:216

1 Here, the Court has general personal jurisdiction over both Defendants. Plaintiff has 2 presented public records indicating that Defendant Chen’s most recent known residence is 3 located in California. Plaintiff has also presented public records demonstrating that 4 Gamesis is incorporated in the state of California, where, to date, the corporation is listed 5 as suspended. Therefore, the Court finds it has personal jurisdiction over both Defendants. 6 B. Service of Process 7 Before entering a default judgment, courts must assess whether the defendant was 8 properly served with notice of the action. See e.g., SEC v. Ross, 504 F.3d 1130, 1138 (9th 9 Cir. 2007). Federal Rule of Civil Procedure 4 provides that service may be effectuated 10 “pursuant to the law of the state in which the district court is located.” See Fed. R. Civ. P. 11 4(e)(1). Under California law, a summons and complaint may be served through 12 “substitute service,” which is defined as “leaving a copy of the summons and complaint 13 during usual office hours in his or her office or, if no physical address is known, at his or 14 her usual mailing address, other than a United States Postal Service post office box, with 15 the person who is apparently in charge thereof, and by thereafter mailing a copy of the 16 summons and complaint by first-class mail, postage prepaid to the person to be served at 17 the place where a copy of the summons and complaint were left.” Cal. Code Civ. P. 18 §415.20(a). 19 Here, Plaintiffs have filed proofs of service demonstrating service on both 20 Defendants. (ECF Nos. 12, 13). The only known address for Defendant Gamesis is located 21 at 324 S. Diamond Bar Blvd., # 197, Diamond Bar, CA 91765. The address is that of a 22 store called PostNet, which monitors Gamesis’s mailbox. (ECF No. 21-1 at 14–15). 23 Furthermore, Defendant Gamesis recently updated its address to match the above PostNet 24 box on a Statement of Information filed with the California Secretary of State on August 25 23, 2022. (ECF No. 21-1 at 14); see also (ECF No. 15-2). The Statement of Information 26 also listed Cheng as Gamesis’s agent, apparently reachable at the PostNet address. (ECF 27 No. 15-2). After diligently attempting to personally serve Cheng, both in his individual 28 capacity and as agent of Gamesis, at several previously listed addresses subsequently -6- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 7 of 20 Page ID #:217

1 determined to be outdated, Plaintiff attempted substitute service at the PostNet address on 2 August 24, 2022. (ECF Nos. 12, 13). Plaintiff delivered the summons and complaint to 3 Francisco Ramirez, a clerk for Post Net and the person apparently in charge of the address 4 listed by Defendants. (Id.). Plaintiff then mailed a copy of the same documents to the 5 address as well. (ECF Nos. 12, 13, 15). This satisfies the requirements of substitute service 6 under California law. The fact that Gamesis is a suspended corporation does not affect the 7 adequacy of service of process. Under California law, a plaintiff may effect service of 8 process on a suspended corporation under the regular service of process statutes. See Grell 9 v. Laci Lea Beau Corp., 73 Cal.App.4th 1300, 1306 (1999) (“A suspended corporation may 10 be sued, and service of process upon a suspended corporation is effected in the same 11 manner as service upon a corporation that is not suspended”). 12 C. Additional Procedural Requirements 13 Plaintiff has similarly satisfied the additional procedural requirements under the 14 local rules in this district. Default against Defendants was entered on September 28, 2022, 15 for failure to Answer or otherwise appear in this action. (ECF No. 18). Plaintiff then 16 moved for default judgment on October 13, 2022. (ECF No. 21). Plaintiff alleges that 17 Defendants are neither infants nor incompetent persons, nor are they subject to the 18 Servicemembers Civil Relief Act. (ECF No. 21-1 at 13). Therefore, Plaintiff has met Rule 19 55’s additional procedural requirements for default judgment. 20 D. Eitel Factors 21 Overall, an analysis of the Eitel factors weighs in favor of granting default judgment 22 against Defendants. 23 1. Possibility of Prejudice to Plaintiff 24 The first Eitel factor asks the court to consider whether Plaintiff will be left without 25 a remedy if default judgment is not entered. Philip Morris USA v. Castworld Prods. Inc., 26 219 F.R.D. 494, 499 (C.D. Cal. 2003) (“Plaintiff would suffer prejudice if the default 27 judgment is not entered because Plaintiff will be without other recourse for recovery.”); 28 PepsiCo, 238 F. Supp. 2d at 1177 (“If Plaintiffs’ motion for default judgment is not granted, -7- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 8 of 20 Page ID #:218

1 Plaintiffs will likely be without other recourse for recovery.”). Defendants have failed to 2 appear or otherwise participate in this litigation. Therefore, Plaintiff will suffer prejudice 3 if a default judgment is not entered because it will be left without a remedy. The first Eitel 4 factor favors entry of default judgment. 5 2. Substantive Merits of Plaintiff’s Claims and Sufficiency of Complaint 6 The second and third Eitel factors assess the merits of the claims of the moving party 7 and the sufficiency of its pleadings. These two factors “require that a [movant] state a 8 claim on which it may recover.” PepsiCo, 238 F. Supp. 2d at 1175 (internal citation 9 omitted). Courts regularly analyze these factors together. See id. Thus, if the complaint 10 is sufficient, a plaintiff’s substantive claim has merit for the purposes of a default judgment. 11 See id. In analyzing these factors, a court accepts as true all well-pleaded allegations 12 regarding liability. Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). 13 Here, Plaintiff brings claims for (1) federal trademark infringement and 14 counterfeiting; (2) false designation of origin; (3) violation of the federal anti- 15 cybersquatting consumer protection act; (4) violation of California business and 16 professions code § 17200; (5) false advertising; (6) intentional interference with existing 17 and prospective economic advantage; and (7) California common law unfair competition. 18 (ECF No. 1). The Court examines each in turn. 19 a. Plaintiff’s Trademark Infringement and Counterfeiting Claims 20 To prevail on a trademark counterfeiting claim under 15 U.S.C. § 1114(1)(b), 21 Plaintiff “must prove that Defendant reproduced, counterfeited, copied or colorably 22 imitated a registered mark and applied such reproduction, counterfeit, copy, or colorable 23 imitation to labels, signs, prints, packages, wrappers, receptacles, or advertisements 24 intended to be used in commerce upon or in connection with the sale, offering for sale, 25 distribution, or advertising of goods or services on or in connection with which such use 26 is likely to cause confusion, or to cause mistake or to deceive.” PepsiCo, 238 F. Supp. 2d 27 at 1175. To prevail on its trademark infringement claim, on the other hand, Plaintiff must 28 prove that, without Plaintiff’s consent, Defendant “use[d] in commerce any reproduction, -8- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 9 of 20 Page ID #:219

1 counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, 2 offering for sale, distribution, or advertising of any goods or services on or in connection 3 with which such use is likely to cause confusion, or to cause mistake, or to deceive.” 15 4 U.S.C. § 1114(a). 5 Here, Plaintiff’s Complaint sufficiently alleges the elements of these causes of 6 action. It sets forth the details of Plaintiff’s registered marks and explains the ways in 7 which Defendants continued use of the marks to elicit sales on their website was likely to 8 cause confusion. (Compl. ¶¶ 13–14). Plaintiff alleges that Defendants used the marks to 9 imply that they would sell customers office chairs designed and manufactured by 10 Plaintiff. (Id. ¶¶ 28–32). Plaintiff alleges it has gained acclaim for its design of its office 11 chairs. (Id. ¶ 10). Plaintiff admits that before 2017, Defendants’ use of some of 12 Plaintiff’s marks was not infringement because of the informal agreement between the 13 two parties. (Id. ¶ 15). However, Plaintiff’s allegations establish that Plaintiff 14 subsequently ended its relationship with Defendants after learning that Defendants had 15 exceeded the scope of their agreement with Plaintiff. (Id. ¶¶ 20–22). Thus, when 16 Defendants continued to use Plaintiff’s marks and hold their website out as an 17 “Authorized Dealer” of Plaintiff’s office chairs after their relationship with Plaintiff had 18 ended, Defendants were doing so without authorization from Plaintiff. (Id. ¶¶ 23–26). 19 Furthermore, because the chairs for sale on Defendants’ website continued to be 20 described as “Office Star” products after the end of the parties’ relationship, this 21 circumstance had a high likelihood of confusing and deceiving consumers. This was 22 particularly damaging to Plaintiff’s reputation, according to the Complaint, because 23 Defendant continued to represent that the chairs were Plaintiff’s products when 24 customers inquired about outstanding orders. (Id. ¶ 27). Rather than taking 25 responsibility for shipping delays or explaining that the products were not affiliated with 26 Plaintiff, Plaintiff alleges Defendants told consumers that Plaintiff was experiencing 27 quality control issues and/or shipping delays that were impacting their orders. (Id.). 28 -9- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 10 of 20 Page ID #:220

1 Therefore, Plaintiff has sufficiently alleged its trademark infringement and counterfeiting 2 claims. 3 b. Plaintiff’s False Designation of Origin Claim 4 To prevail on a false designation of origin claim, Plaintiff must “prove that 5 Defendant used in commerce any word, term, name, symbol, or device, or any combination 6 thereof, or any false designation of origin, false or misleading description of fact, or false 7 or misleading representation of fact, which is likely to cause confusion, or to cause mistake, 8 or to deceive as to the affiliation, connection, or association of Defendant[s] with 9 Plaintiff[], or as to the origin, sponsorship, or approval of his goods by Plaintiffs.” 10 PepsiCo, 238 F. Supp. 2d at 1176; see also 15 U.S.C. § 1125(a). Here, as explained above, 11 Plaintiff has alleged that Defendants’ use of the Office Star name improperly deceived 12 consumers regarding an ongoing affiliation with Plaintiff. Therefore, Plaintiff has 13 sufficiently alleged its false designation of origin claim. 14 c. Plaintiff’s Unfair Competition Claims 15 Plaintiff brings three separate unfair competition claims in its Complaint: (1) 16 federal unfair competition; (2) violation of California Business & Professions Code § 17 17200; and (3) California common law unfair competition. To state a claim for unfair 18 competition under the Lanham Act, Plaintiff must make the same showing as required in 19 the trademark infringement context that “the public is likely to be deceived or confused 20 by the similarity of the marks.” Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 21 1178 (9th Cir. 1988) (internal citation omitted). To prevail on its claim for unfair 22 competition under the California Business & Professions Code, Plaintiff must prove that 23 Defendants engaged in “any unlawful, unfair or fraudulent business act or practice and 24 unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 17200. 25 To prevail on its common law unfair competition claim, Plaintiff must prove that 26 Defendants tried to pass off false goods as those of Plaintiff. See, e.g., Bank of the West 27 v. Superior Court, 2 Cal.4th 1254, 1263 (1992). 28 -10- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 11 of 20 Page ID #:221

1 Here, as established above, Plaintiff’s Complaint adequately alleges that 2 Defendants’ use of the Office Star mark on its website was likely to deceive or confuse 3 consumers. The Complaint alleges that the logo used on Defendants’ website was 4 essentially identical to Plaintiff’s registered mark. (Compl. ¶ 14–17). Furthermore, the 5 mark on Defendant’s website was used in a context, the sale of office chairs, that was 6 likely to confuse customers as to the source of the chairs. Indeed, Defendants furthered 7 this confusion by holding out the chairs expressly as Plaintiff’s products, even as issues 8 arose with fulfilling orders paid for by customers. In essence, Plaintiff’s complaint 9 alleges that Defendants tried to “pass off false goods as those of Plaintiff.” Therefore, 10 Plaintiff has adequately alleged all its unfair competition claims. 11 d. Violation of Federal Anticybersquatting Consumer Protection Act 12 The Anticybersquatting Consumer Protection Act (“ACPA”) provides a remedy 13 when “a person other than the trademark holder registers the domain name of a well- 14 known trademark and then attempts to profit from this by either ransoming the domain 15 name back to the trademark holder or by using the domain name to divert business from 16 the trademark holder to the domain name holder.” Bosley Med. Inst., Inc. v. Kremer, 403 17 F.3d 672, 680 (9th Cir. 2005) (internal citation omitted). The elements of a claim under 18 the ACPA are (1) the registration, use, or trafficking in a domain name, (2) that is 19 identical or confusingly similar to a distinctive or famous trademark, (3) with a bad faith 20 intent to profit from the mark. See 15 U.S.C. § 1125(d)(1)(A); see also Bosley, 403 F.3d 21 at 680. 22 Here, Plaintiff’s Complaint alleges that it owns the trademark and Plaintiff has 23 provided the relevant registration as evidence of ownership of the “Office Star” mark. 24 (ECF Nos. 1, 1-1). Plaintiff also alleges that Defendants use the domain 25 Officestarstore.com, despite Plaintiff’s revocation of their permission to use the Office 26 Star mark. (Compl. 21–22). While Plaintiff admits to having initially given Defendants 27 permission to use the Office Star name in their domain name, Plaintiff also alleges that it 28 revoked that permission after discovering Defendants were exceeding the scope of their -11- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 12 of 20 Page ID #:222

1 agreed relationship. (Id.). Therefore, Plaintiff’s Complaint states that Defendants 2 continued to use the Officestarstore.com domain even after Plaintiff made clear that the 3 use of the domain for sale of Plaintiff’s products was not permissible. (Id.). Plaintiff 4 alleges the domain name at issue and Plaintiff’s mark over the “Office Star” name are 5 confusingly similar. (Id. ¶¶ 51–52). Plaintiff also alleges the mark is distinctive in the 6 context of office supplies. (Id. ¶ 10). Additionally, Plaintiff alleges a bad faith intent to 7 profit from the mark based on Defendants’ use of the mark to elicit sales it knew it could 8 not fulfill. (Id. ¶ 53). Therefore, Plaintiff has adequately demonstrated likelihood of 9 success on its claim under the ACPA. 10 e. False Advertising under Cal. Bus. & Prof. Code § 17500 11 To state a claim for false advertising under California Business and Professions 12 Code § 17500, Plaintiff must show Defendants “made a statement, in connection with the 13 sale of personal property, which is known, or which by the exercise of reasonable care 14 should be known, to be untrue or misleading.” PepsiCo, 238 F. Supp. 3d at 1176 15 (internal citations omitted); see also Cal. Bus. & Prof. Code § 17500. 16 Here, Plaintiff alleges that Defendants “knowingly made false and misleading 17 representations that are misleading customers and potential customers as to the source of 18 their goods or services and as to their affiliation with [Plaintiff].” (Compl. ¶ 63). 19 Combined with the additional factual allegations raised in the Complaint, analyzed 20 above, the allegations are sufficient to state a claim under Cal. Bus. & Prof. Code § 21 17500. 22 f. Intentional Interference with Existing and Prospective Business 23 Relations 24 To state a claim for the tort of intentional interference with business relations 25 Plaintiff must assert “(1) an economic relationship between the plaintiff and some third 26 party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s 27 knowledge of the relationship; (3) the defendant’s intentional acts designed to disrupt the 28 relationship; (4) actual disruption of the relationship; and (5) economic harm to the -12- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 13 of 20 Page ID #:223

1 plaintiff proximately caused by the defendant’s acts.” Reeves v. Hanlon, 33 Cal. 4th 2 1140, 1152, n.6 (2004). The prospective economic relationship must be reasonably 3 probable and not speculative. See Pardi v. Kaiser Found. Hosps., 389 F.3d 840, 852 (9th 4 Cir. 2004). Plaintiff must allege that Defendants “engaged in an independently wrongful 5 act in disrupting the relationship,” in addition to the interference itself. Reeves, 33 6 Cal.4th at 1152 (describing an act as “independently wrongful . . . if it is proscribed by 7 some constitutional statutory, regulatory, common law, or other determinable legal 8 standard”) (internal quotation omitted). 9 Here, Plaintiff alleges that it has existing and prospective relationships with 10 retailors, customers, and vendors for the sale of its products. (Compl. ¶ 67). Plaintiff 11 alleges it has developed these relationships for over 30 years and further states that 12 Defendants were aware of these relations throughout the relevant time period. (Id. ¶¶ 67– 13 68). Despite this alleged knowledge, according to the Complaint, Defendants 14 intentionally operated the webstore at officestarstore.com and held themselves out as 15 authorized dealers of Plaintiff’s goods to interfere with Plaintiff’s relationships with 16 third-party retailers and consumers. (Id. ¶¶ 69–70). As a part of this interference, 17 Plaintiff alleges Defendants used Plaintiff’s marks without authorization. (Id.). And, 18 because of this interference, Plaintiff alleges these relationships with third-party 19 consumers, vendors, and retailers were disrupted, causing Plaintiff to suffer economic 20 harm. (Id. ¶¶ 71–72). Therefore, Plaintiff has sufficiently stated its claim for intentional 21 interference with business relations. 22 In sum, based on the analysis above, Plaintiff has met the second and third Eitel 23 factors. 24 3. Sum of Money at Stake 25 In applying the fourth Eitel factor, “the court must consider the amount of money at 26 stake in relation to the seriousness of Defendant’s conduct.” PepsiCo, 238 F. Supp. 2d at 27 1176. A default judgment is discouraged when the amount of money at stake in the 28 litigation is “too large or unreasonable in light of defendant’s actions.” Truong Giang -13- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 14 of 20 Page ID #:224

1 Corp. v. Twinstar Tea Corp., No. C 06-03594 JSW, 2007 WL 1545173, at *12 (N.D. Cal. 2 May 29, 2007). However, default judgment may be appropriate “where the amount sought 3 is tailored to the specific misconduct of the defendant.” Patagonia, Inc. v. McHugh, No. 4 LA CV19-07666 JAK (AFMx), 2020 WL 4258818, at *5 (C.D. Cal. Apr. 21, 2020). 5 Here, Plaintiff seeks a permanent injunction, transfer of an infringing domain name, 6 and attorneys’ fees and costs. Plaintiff does not seek monetary damages. Therefore, this 7 factor weighs in favor of default judgment. 8 4. Possibility of Dispute Concerning Material Facts 9 The fifth factor considers the likelihood of dispute between the parties concerning 10 material facts in the case. Due to the entry of default against Defendants, the Court may 11 assume the truth of the well-pleaded facts in the Complaint, meaning there is a very low 12 likelihood that any genuine dispute of material fact exists. See, e.g., Elektra Entm’t. Group 13 Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005) (“Because all allegations in a well- 14 pleaded complaint are taken as true after the court clerk enters default . . . there is no 15 likelihood that any genuine issue of material fact exists”). 16 Defendants have failed to rebut the presumption that the well-pleaded facts in the 17 Complaint are true because they have failed to oppose the application for default or default 18 judgment. Therefore, this factor favors granting default judgment. 19 5. Whether Default was Due to Excusable Neglect 20 The sixth Eitel factor considers whether a defendant’s inaction is due to excusable 21 neglect. Excusable neglect is unlikely when a defendant is properly served, and therefore, 22 aware of a plaintiff’s pending action in court, and yet has failed to appear or present a 23 defense. See, e.g., Patagonia, Inc., 2020 WL 4258818, at *6. 24 Here, Defendants were properly served by substitute service and yet have failed to 25 appear. Furthermore, while it is true that Defendant Gamesis is a suspended corporation 26 generally unable to initiate or defend a lawsuit, California law liberally allows a 27 corporation to reinstate its status before final judgment and defend an action. See e.g., 28 United States v. 2.61 Acres of Land, 791 F.2d 666, 668 (9th Cir. 1985). Therefore, -14- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 15 of 20 Page ID #:225

1 Defendant Gamesis’s suspended status alone does not create excusable neglect. 2 Accordingly, this factor weighs in favor of a default judgment against Defendants. 3 6. Policy Favoring Decision on the Merits 4 Generally, default judgments are disfavored because “[c]ases should be decided 5 upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472 (citing Pena v. 6 Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). However, “where a 7 defendant fails to appear and respond,” default judgment is appropriate. Wecosign, Inc. v. 8 IFG Holdings, Inc., 845 F. Supp. 2d 1072, 1083 (C.D. Cal. Jan. 23, 2012). Here, 9 Defendants’ failure to appear or defend against this action renders a decision on the merits 10 impracticable. Therefore, this factor weighs in favor of default judgment. 11 In sum, the Court finds the Eitel factors weigh in favor of entry of a default judgment 12 against Defendants, who have not appeared in the Action or opposed the instant motion. 13 E. Relief Sought by Plaintiff 14 Plaintiff seeks a permanent injunction against Defendants’ use of their trademarks, 15 the transfer of the officestarstore.com domain name to Plaintiff, and attorneys’ fees. 16 Plaintiff does not seek damages. 17 1. Permanent Injunctive Relief 18 Under the Lanham Act courts possess the “power to grant injunctions according to 19 the rules of equity and upon such terms as the court may deem reasonable, to prevent the 20 violation” of a trademark holder’s rights. 15 U.S.C. § 1116(a). “A plaintiff is not 21 automatically entitled to an injunction simply because it proves its affirmative claims.” 22 PepsiCo, 238 F. Supp. 2d at 1177. “Injunctive relief is appropriate if (1) the plaintiff has 23 suffered irreparable injury, (2) legal remedies are inadequate to compensate that injury, (3) 24 a balance of the hardships between the plaintiff and defendant justifies equitable relief, and 25 (4) the public interest would be served by the permanent injunction.” Rolex Watch U.S.A., 26 Inc. v. LSM Watch, Inc., 2022 WL 3575771 at *8 (C.D. Cal. Jun. 7, 2022) (citing Daimler 27 AG v. A-Z Wheels LLC, 498 F. Supp. 3d 1282, 1292 (S.D. Cal. 2020). 28 -15- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 16 of 20 Page ID #:226

1 To establish irreparable injury in the trademark context, a plaintiff must demonstrate 2 that “the infringement manifests as the loss of control over a business’ reputation, a loss of 3 trade, and a loss of goodwill.” Id. (internal citations omitted). Here, Plaintiff has satisfied 4 this standard by alleging facts relating to its longstanding reputation for quality office 5 furniture as well as Defendants’ use of Plaintiff’s mark to sell office chairs for which it 6 received payment but then failed to deliver. Plaintiff further alleges Defendants were using 7 Plaintiff’s mark to imply any of Defendants’ failures to deliver were caused by Plaintiff. 8 These allegations demonstrate that customers would be prone to associating Defendants’ 9 subpar products and service with Plaintiff, thereby damaging Plaintiff’s reputation. 10 Therefore, Plaintiff has demonstrated it has suffered irreparable injury. It has also 11 demonstrated it is likely to continue to suffer such injury based on its allegations that 12 Defendants continue to use Plaintiff’s mark on Defendants’ subsidiary websites. Because 13 this injury consists of ongoing harms to Plaintiff’s reputation, Plaintiff has likewise 14 demonstrated that a remedy at law would be inadequate. See Sandlin, 846 F.2d at 1180 15 (“Injunctive relief is the remedy of choice for trademark and unfair competition cases, since 16 there is no adequate remedy at law for the injury caused by a defendant’s continuing 17 infringement”). 18 The balance of hardships also favors injunctive relief. Plaintiff has alleged that it 19 has been and will continue to be injured by Defendants’ conduct. Meanwhile a “defendant 20 suffers no hardship in merely refraining from willful trademark infringement.” Anhing 21 Corp. v. Thuan Phong Co. Ltd., No. CV 13-05167 BRO (MANx), 2015 WL 4517846, at 22 *24 (C.D. Cal. July 24, 2015) (internal citation omitted). 23 Finally, a permanent injunction here would serve the public interest. “Where 24 defendant’s concurrent use of plaintiff’s trademark without authorization is likely to cause 25 confusion, the public interest is damaged by the defendant’s use.” Daimler AG, 498 F. 26 Supp. 3d at 1295. Here, Plaintiff has alleged that Defendants’ use of its marks is likely to 27 cause consumer confusion. Therefore, the public “interest in being free from deception” 28 favors entry of an injunction. See Anhing Corp., 2015 WL 4517846, at *24. -16- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 17 of 20 Page ID #:227

1 Overall, Plaintiff has met all four requirements for a permanent injunction and the 2 Court GRANTS Plaintiff’s request for permanent injunctive relief enjoining Defendants 3 from using Plaintiff’s marks. 4 2. Transfer of the Officestarstore.com Domain Name 5 Under the ACPA, available remedies include the “transfer of the domain name to 6 the owner of the mark.” 15 U.S.C. § 1125(d)(1)(C). While Plaintiff admits that Defendants 7 appear to have removed content from Officestarstore.com since the filing of this lawsuit, 8 that does not preclude Defendants from using it again in the future. Therefore, to keep 9 Plaintiff from having to monitor the domain indefinitely, the Court orders the domain 10 transferred to Plaintiff. 11 3. Attorneys’ Fees 12 “When a party properly requests attorneys’ fees in default actions, the court is 13 obliged to calculate a reasonable fee in the usual manner,” i.e., the lodestar method. Vogel 14 v. Harbor Plaza Ctr., LLC, 893 F.3d 1152, 1159 (9th Cir. 2018). An award of reasonable 15 attorneys’ fees and costs is expressly provided for in “exceptional cases” of trademark 16 infringement. See 15 U.S.C. § 1117(a). What qualifies as “exceptional” remains undefined 17 in the statute, however, the Ninth Circuit has held that “attorneys’ fees are available in 18 infringement cases where the acts of infringement can be characterized as malicious, 19 fraudulent, deliberate, or willful.” Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 20 1023 (9th Cir. 2002). Where default has been entered, allegations of willfulness are 21 accepted as true. See Rio Props., 284 F.3d at 1023. Therefore, courts may award 22 “reasonable” attorneys’ fees in trademark infringement cases ending in default judgment if 23 a complaint properly alleged malicious, fraudulent, deliberate, or willful infringement. See 24 id. Here, Plaintiff’s Complaint alleges Defendants’ infringing conduct was willful, 25 therefore the Court will analyze Plaintiff’s request for reasonable attorneys’ fees. (Compl. 26 ¶ 41). 27 In an application for default judgment, where attorneys’ fees are sought under a 28 statute, fees are generally calculated according to the schedule provided in Local Rule 55- -17- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 18 of 20 Page ID #:228

1 3. See C.D. Cal. L.R. 55-3. However, when a party properly requests attorneys’ fees in 2 excess of this schedule, “the court is obliged to calculate a reasonable fee in the usual 3 manner” utilizing the lodestar method. Vogel v. Harbor Plaza Ctr., LLC, 893 F.3d 1152, 4 1159 (9th Cir. 2018). The lodestar method asks courts to calculate “the number of hours 5 reasonably expended on the litigation multiplied by a reasonable hourly rate.” Hensley v. 6 Eckerhart, 461 U.S. 424, 433 (1983). The party seeking fees bears the burden of providing 7 evidence of the hours expended in the litigation as well as the rates claimed. Id. “Although 8 in most cases, the lodestar figure is presumptively a reasonable fee award, the district court 9 may, if circumstances warrant, adjust the lodestar to account for other factors which are 10 not subsumed within it.” Camacho v. Bridgeport Financial, Inc., 523 F.3d 973, 978 (9th 11 Cir. 2008) (quoting Ferland v. Conrad Cerdit Corp., 244 F.3d 1145, 1149 n.4 (9th Cir. 12 2001). 13 Here, Plaintiff seeks attorneys’ fees in excess of what would be awarded pursuant to 14 Rule 55-3. Specifically, Plaintiff seeks fees in the amount of $33,675.30 and costs of 15 $1,471.10. (ECF No. 21-1 at 27). Plaintiff calculated the fees amount by multiplying the 16 hourly rates of the two attorneys handling the matter by the number of hours each 17 respectively spent working on it. (ECF No. 21-2 “Kellar Dec’l.” ¶¶ 18–24). The hourly 18 rates for the two attorneys are $485.00 and $875.00, with Plaintiff receiving an additional 19 10% discount. (Id. ¶ 20). Plaintiff’s counsel represents that all together the attorneys spent 20 a total of 56 hours working on this matter. (ECF No. 21-14). 21 The hourly rates here appear reasonable. Though Defendants’ failure to appear or 22 otherwise defend the action meant that the case did not progress to a stage in which 23 particularly complex legal issues were presented, the two attorneys primarily responsible 24 for the matter both have extensive experience in intellectual property litigation. (Kellar 25 Dec’l. ¶ 21). Indeed, the rates of each attorney appear to represent the relative years of 26 experience each possesses. See (Id.) (attorney with 40 years’ experience bills at rate double 27 that of attorney with 8 years’ experience). Furthermore, these rates are comparable to rates 28 previously approved in this District for attorneys with similar levels of experience. See -18- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 19 of 20 Page ID #:229

1 Universal Elecs., Inc. v. Universal Remote Control, Inc., 130 F. Supp. 3d 1331, 1337 (C.D. 2 Cal. 2015) (finding rates of $750 to 975 for partners was appropriate in the community); 3 see also Perfect 10, Inc. v. Giganews, Inc., No. CV 11-07098-AB (SHx), 2015 WL 4 1746484, at *16 (C.D. Cal. Mar. 24, 2015) (approving rates of $825 to $930 for partners, 5 $350 to $690 for associates, and $240 to $290 for staff in trademark infringement suit). 6 The rates here therefore fall within the reasonable range in the community. 7 The number of hours spent on the case also appears reasonable. Reasonable hours 8 are those that are not “excessive, redundant, or otherwise unnecessary.” McCown v. City 9 of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009) (internal citation omitted). Plaintiff has 10 included documentation of the hours expended by each of his attorneys, including details 11 regarding each of the tasks completed. (Kellar Dec’l. Ex. L). Given these records, the 12 Court finds that the number of hours spent on the case was reasonable. See Garrapata, 13 LLC v. Norok Innovation, Inc., No. CV 21-00356-CJC (PDx), 2022 WL 4099471, at *2–3 14 (C.D. Cal. Jun. 24, 2022) (finding 46.5 hours spent on trademark infringement default 15 judgment reasonable); see also ROAR, LLC v. ROAR Glob. Ltd., 2016 WL 7115902, at *8 16 (C.D. Cal. Dec. 5, 2016) (finding 130 hours spent to obtain default judgment reasonable). 17 Therefore, the Court finds Plaintiff’s request for $33,675.30 to be reasonable and awards 18 the requested amount. 19 Plaintiff also requests an award of $1,471.10 in costs accrued in bringing this action. 20 (ECF No. 21-1 at 27). Plaintiff has provided an itemized list explaining how the costs were 21 incurred. (Kellar Dec’l. Ex L). Furthermore, under the Lanham Act, a plaintiff that 22 prevails on its trademark infringement or counterfeiting claims is entitled to an award of 23 costs. See 15 U.S.C. § 1117(a). Therefore, because the Court has reviewed the list of costs 24 and finds it reasonable, it awards the requested amount. 25 26 27 28 -19- Case 5:22-cv-01307-SPG-JC Document 28 Filed 12/12/22 Page 20 of 20 Page ID #:230

1 IV. CONCLUSION 2 In accordance with the foregoing, the Court GRANTS Plaintiff’s motion for default 3 judgment. The Court further directs Plaintiff to submit a proposed judgment in accordance 4 with this Order within seven days. 5 6 IT IS SO ORDERED. 7 8 DATED: December 12, 2022

9 HON. SHERILYN PEACE GARNETT UNITED STATES DISTRICT JUDGE 10

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