1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 BMW OF NORTH AMERICA LLC, et al., Case No. 17-cv-00543-SK
8 Plaintiffs, REFERRAL FOR REASSIGNMENT AND REPORT AND 9 v. RECOMMENDATION REGARDING MOTION FOR DEFAULT JUDGMENT 10 K VIP AUTO BODY, et al., 11 Defendants. Regarding Docket Nos. 36, 37
12 Now before the Court is the motion for default judgment filed by Plaintiffs BMW of North 13 America, LLC and Bayerische Motoren Werke AG (collectively referred to as “Plaintiffs”). 14 Defendants K VIP Auto Body, Guo Yong Chen, Jing Jing Deng a/k/a Tina Deng, Shao Chun 15 Chen, and Fen Deng a/k/a Andy Deng (collectively referred to as “Defendants”) have not 16 appeared in this action. The Clerk entered default against Guo Yong Chen, Jingjing Deng a/k/a 17 Tina Deng, Shao Chun Chen, and Fen Deng a/k/a Andy Deng (collectively referred to as 18 “Individual Defendants”) on May 2, 2017 and against K VIP Auto Body on May 9, 2017. 19 After Plaintiff filed this action, Defendant K VIP Auto Body dissolved as a California 20 corporation. (Dkt. 44-27 (Declaration of Nicole Drey Huerter (“Huerter Decl.”), ¶ 16, Ex. QQ.) 21 As a result, Plaintiffs request that the Court dismiss K VIP Auto Body without prejudice. However, Federal Rule of Civil Procedure 41(a)(1)(A)(i) authorizes a plaintiff to dismiss an action 22 against a party without a court order by filing “a notice of dismissal before the opposing party 23 serves either an answer or a motion for summary judgment[.]” The Court construes Plaintiff’s 24 request in the motion as a notice of dismissal. Because Defendants have not consented to the 25 jurisdiction of a magistrate judge under 28 U.S.C. § 636(c), the undersigned Magistrate Judge 26 does not have authority to make a dispositive ruling in this case. Accordingly, the Court 27 1 The Court RECOMMENDS that, pursuant to Plaintiffs’ notice of dismissal, K VIP Auto 2 Body be DISMISSED from this action. Plaintiffs now move for default judgment against the 3 Individual Defendants and seek a permanent injunction and statutory damages. For the reasons 4 stated below, the Court RECOMMENDS that Plaintiffs’ motion be GRANTED. 5 BACKGROUND 6 Plaintiffs are in the business of designing, manufacturing, and/or distributing motor 7 vehicles, parts, and accessories, including but not limited to air caps, valve stem caps, badges, 8 emblems, and key chains, which feature the BMW® trademarks. (Dkt. 1 (Complaint), ¶ 20.) 9 Plaintiffs allege that their motor vehicles and related products have earned a reputation for 10 innovation, quality and performance, and that they have spent substantial time, money and effort 11 on developing consumer recognition and awareness of their BMW and M marks and products. 12 (Id. ¶ 21.) Plaintiffs have developed significant goodwill in their entire product line through the 13 use of their marks. (Id. ¶ 23.) Plaintiffs own numerous registered trademarks for their BMW and 14 M branded products and contend that Defendants infringed many of their marks. (Id. ¶ 24; see 15 also Dkt. 44-27 (Declaration of Nicole Drey Huerter), ¶ 17, Ex. RR.) 16 Plaintiffs allege that Defendants use the Internet auction website located at eBay.com to 17 advertise, sell and distribute counterfeit products featuring Plaintiffs’ marks to consumers. The 18 Individual Defendants have used a number of account IDs and aliases on eBay, including, but not 19 limited to, “tina_0918,” “us85_whoesale,” “us85com,” “tina900918,” “us85_seller,” “us85cp,” 20 and “us85_everything.” (Id. ¶ 29.) Plaintiffs also allege that the Individual Defendants have used 21 the website located at www.us85.com to advertise, sell and distribute counterfeit products 22 featuring Plaintiffs’ marks. (Id. ¶ 30.) The Individual Defendants have used the payment 23 processing service located at PayPal.com, which is provided by PayPal, Incorporated, to complete 24 the sales of these counterfeit products, using the PayPal accounts and email addresses 25 bmw@live.hk and info@us85.com. (Id. ¶ 31.) 26 As part of an investigation into the Defendants’ counterfeiting activities, Plaintiffs 27 purchased several BMW branded products from them. (Id. ¶¶ 34-41; Dkt. 44-1 (Declaration of 1 item “Black CAR Wheel Tyre Tire Valve Dust Stems Air Caps + Keychain With BMW M 2 Emblem” from eBay seller “tina_0918” for $7.60. The investigator paid “K VIP Auto Body” with 3 an email address of bmw@live.hk through PayPal. (Dkt. 44-1, ¶ 3, Exs. A, B.) On November 12, 4 2015, Plaintiffs’ investigator received a package in Woodland Hills, California pursuant to this 5 transaction from “tina_0918” with a return address of Jing Jing Deng, 174 Niagara Avenue, San 6 Francisco, California 94112. (Id., ¶ 4, Ex. C.) The package contained a set of four air caps and a 7 keychain each featuring the M® trademark. (Id., ¶ 4, Ex. D.) Plaintiffs inspected the air caps and 8 key chain and determined that they were counterfeit. (Dkt. 44-26 (Declaration of Charlotte 9 Jablanczy), ¶ 2.) 10 On November 3, 2015, Plaintiffs’ investigator purchased the item “Black Car Wheel Tyre 11 Tire Air Valve Caps Stem Cover For BMW With Emblem M” from eBay seller “us85_whoesale” 12 for $6.51. The investigator paid “K VIP Auto Body” with an email address of bmw@live.hk 13 through PayPal. (Dkt. 44-1, ¶ 5, Exs. E, F.) On November 20, 2015, Plaintiffs’ investigator 14 received a package in Woodland Hills, California pursuant to this transaction from 15 “us85_whoesale” with a return address of “Shao Chun Chen, 123 Thrift Street, San Francisco, 16 94112. (Id., ¶ 6, Ex. G.) The package contained a set of four valve caps featuring the BMW® 17 word and logo trademarks. (Id., ¶ 6, Ex. H.) Plaintiffs inspected the valve caps and determined 18 that they were counterfeit. (Dkt. 44-26, ¶ 3.) 19 On December 18, 2015, Plaintiffs’ investigator purchased the item “Black Car Wheel Tyre 20 Tire Air Valves Dust Caps Stems Cover With BMW M Emblem” from eBay seller “us85com” for 21 $6.51. The investigator paid “K VIP Auto Body” with an email address of bmw@live.hk through 22 PayPal. (Dkt. 44-1, ¶ 7, Exs. I, J.) On December 23, 2015, Plaintiffs’ investigator received a 23 package in Woodland Hills, California pursuant to this transaction from “us85com” with a return 24 address of Tina Deng, 174 Niagara Avenue, San Francisco, California 94112. (Id., ¶ 8, Ex. K.) 25 The package contained a set of valve caps featuring the M® trademark. (Id., ¶ 8, Ex. L.) 26 Plaintiffs inspected the valve caps and determined that they were counterfeit. (Dkt. 44-26, ¶ 4.) 27 On March 11, 2016, Plaintiffs’ investigator purchased the item “Silver CAR Wheel Tyre 1 “tina900918” for $8.71. The investigator paid “K VIP Auto Body” with an email address of 2 bmw@live.hk through PayPal. (Dkt. 44-1, ¶ 9, Exs. M, N.) On March 18, 2016, Plaintiffs’ 3 investigator received a package in Woodland Hills, California pursuant to this transaction from 4 “tina900918” with a return address of Jing Jing Chen, 233 South Maple Avenue, Suite 11, South 5 San Francisco, California 94080. (Id., ¶ 10, Ex. O.) The package contained a set of four air caps 6 and one keychain each featuring the M® trademark. (Id., ¶ 10, Ex. P.) Plaintiffs inspected the air 7 caps and keychain and determined that they were counterfeit. (Dkt. 44-26, ¶ 5.) 8 On April 1, 2016, Plaintiff sent a “cease and desist” letter by certified mail to the registered 9 agent for service of process for K VIP Auto Body. (Dkt. 44-27 (Declaration of Nicole Drey 10 Huerter), ¶ 2, Ex. Y.) On April 7, 2016, Plaintiffs telephoned Guo Yong Chen and Jing Jing Deng 11 a/k/a Tina Deng to follow up on the “cease and desist” letter, but both of whom hung up on 12 Plaintiffs. (Id., ¶ 2.) On April 8, 2016, Plaintiffs sent “cease and desist” letters by certified mail to 13 each of the Defendants identified on the return addresses on the packages. (Id., ¶ 2, Ex. Z.) 14 Plaintiff received return receipts for at least two of these letters. (Id.) On April 25, 2016, and May 15 9, 2016, Plaintiffs then sent follow-up correspondences by email, but did not receive any 16 responses. (Id., ¶ 2, Ex. AA.) 17 On April 26, 2016, Plaintiffs issued notices to eBay of Defendants’ infringement of 18 Plaintiffs’ trademarks through Defendants’ eBay IDs “tina_0918,” “tina900918,” 19 “us85_whoesale,” and “us85com.” (Dkt. 44-27, ¶ 3, Ex. BB.) Plaintiffs identified specific listings 20 of infringing products by Defendants. (Id., Ex. BB.) eBay removed all of the listings identified 21 by Plaintiffs, but then Defendants posted additional listings through their eBay IDs “tina_0918” 22 and “tina900918.” (Id., ¶ 3.) On May 12, 2016, Plaintiffs then issued another notice to eBay of 23 Defendants’ continued infringement of Plaintiffs’ trademarks through the Individual Defendants’ 24 eBay IDs “tina_0918” and “tina900918.” (Id., ¶ 3, Ex. CC.) eBay removed these listings as well. 25 (Id., ¶ 3.) Again, the Individual Defendants posted another infringing listing on eBay. On June 26 20, 2016, Plaintiffs issued another notice to eBay of the Individual Defendants’ continued 27 infringement of Plaintiffs’ trademarks through Defendants’ eBay ID “tina900918,” and eBay 1 On June 3, 2016, Plaintiffs’ investigator purchased the item “1PC Silver ///M Motorsport 2 Metal Car Fender Skirts Side Sticker Badge Emblem” from eBay seller “us85_seller” for $14.16. 3 The investigator paid “US85.COM” with an email address of bmw@live.hk through PayPal. 4 (Dkt. 44-1, ¶ 11, Exs. Q, R.) On June 7, 2016, Plaintiffs’ investigator received a package in 5 Woodland Hills, California pursuant to this transaction from “us85_seller” with a return address of 6 Andy Deng, 418 Athens Street, San Francisco, California 94112. (Id., ¶ 12, Ex. S.) The package 7 contained one badge/emblem featuring the BMW® and M® trademarks. (Id., ¶ 12, Ex. T.) 8 Plaintiffs inspected the emblem and determined that it was counterfeit. (Dkt. 44-26, ¶ 6.) 9 On February 2, 2017, Plaintiff filed this action asserting claims for trademark 10 infringement, unfair competition, trademark dilution under the Lanham Act, 15 U.S.C. § 1051, et 11 seq., and California Business and Professions Code § 17200 for unlawful, unfair and fraudulent 12 business practices. (Dkt. 1.) Plaintiffs served Defendants Guo Yong Chen and Jing Jing Deng 13 a/k/a Tina Deng at a home they purchased in September 2016 and at which they were residing. 14 (Dkt. 44-27, ¶ 4, Ex. EE; Dkts. 12, 13.) Based on their investigation, Plaintiffs determined that 15 Fen Deng a/k/a Andy Deng was residing at the same address, and, thus, Plaintiffs served him there 16 as well. (Id.; Dkt. 14.) Plaintiffs determined that Defendant Shao Chun Chen had purchased a 17 home in May 2016, and served her at that address. (Dkt. 44-27, ¶, Ex. FF; Dkt. 16.) 18 After Plaintiffs served Defendants, on February 26, 2017, Plaintiffs’ investigator purchased 19 the item “Car Wheel Tire Tyre Air Valve Caps Stem Dust Cover Black White BMW Logo 20 Emblem” from eBay seller “us85_seller” for $7.62. The investigator paid “Maggie Hu” with an 21 email address of mhu1989130@yahoo.com through PayPal. (Dkt. 44-1, ¶ 13, Exs. U, T.) On 22 March 3, 2017, Plaintiffs’ investigator received a package in Woodland Hills, California pursuant 23 to this transaction from “us85_seller” with a return address of Andy Deng, 418 Athens Street, San 24 Francisco, California 94112. (Id., ¶ 14, Ex. W.) The package contained four valve caps featuring 25 the BMW® word and BMW® logo trademarks. (Id., ¶ 14, Ex. X.) Plaintiffs inspected the valve 26 caps and determined that it was counterfeit. (Dkt. 44-26, ¶ 7.) 27 Through PayPal’s records, Plaintiff have identified at least 4,089 unauthorized sales by 1 MM.) At various times, each of the Individual Defendants had their names and addresses listed on 2 the PayPal accounts. (Dkt. 44-27, Ex. KK.) The eBay seller IDs used by Defendants were 3 registered to either Fen Deng a/k/a Andy Deng or Jing Jing Deng a/k/a Tina Deng and either used 4 email addresses with the name Tina and Jing Jing Deng a/k/a Tina Deng’s birthdate or 5 bmw@live.hk. (Dkt. 44-27, ¶ 9, Ex. OO.) Guo Yong Chen’s bank accounts and credit cards, and 6 Jing Jing Deng a/k/a Tina Deng’s credit cards were listed and used on the PayPal accounts. (Dkt. 7 44-27, Ex. KK; see also Dkt. 53, ¶ 3, Ex. SS.) Three of the packages Defendants sent to 8 Plaintiffs’ investigators had Jing Jing Deng a/k/a Tina Deng’s name in the return address, two of 9 the packages had Fen Deng a/k/a Andy Deng’s name in the return address, and one of the 10 packages had Shao Chun Chen’s name in the return address. (Dkt. 44-1, ¶¶ 3-14, Exs. C, G, K, O, 11 S, W.) One of the addresses Defendants used for their counterfeit activities is the home in which 12 Shao Chun Chen lived. (Dkt. 44-27, Ex. FF.) Shao Chun Chen also was one of the owners of the 13 address used for the now dissolved corporation K VIP Auto Body. (Dkt. 44-27, Ex. EE.) 14 In addition to eBay, Defendants sold counterfeit BMW®-related products through the 15 website www.us85.com. (Dkt. 44-27, Ex. HH.) Guo Yong Chen registered this website, using his 16 personal address and bwm@live.hk as the email address. (Dkt. 44-27, Exs. EE, GG.) This 17 website is powered by Shopify. Plaintiffs sought information about sales made through the 18 website, but Shopify informed Plaintiff that the parent company, a Canadian entity, had the 19 information. (Dkt. 44-27, ¶ 8.) The parent company would not respond to a subpoena issued in 20 the United States. (Id.) 21 After Defendants were served with the Complaint in this action, they switched to using 22 codes to refer to BMW® products. (Dkt. 44-27, ¶ 9, Ex. NN.) They also used the name “Maggie 23 Hu” and the email address mhu1989130@yahoo.com with the eBay seller ID “us85_seller” after 24 they were served with the complaint. Fen Deng a/k/a Andy Deng, Jing Jing Deng a/k/a Tina 25 Deng, and Guo Yong Chen’s names and addresses were all used with this account. (Dkt. 44-27, ¶ 26 9, Ex. KK.) Fen Deng a/k/a Andy Deng sent the item purchased from “Maggie Hu” from his 27 address. (Dkt. 44-1, ¶ 14, Ex. W.) 1 injunction. 2 ANALYSIS 3 A. Jurisdiction and Service. 4 Before entering default judgment, a court has “an affirmative duty to look into its 5 jurisdiction over both the subject matter and the parties.” See In re Tuli v. Rep. of Iraq, 172 F.3d 6 707, 712 (9th Cir. 1999). Plaintiffs bring claims for trademark infringement, false designation of 7 origin, and dilution under the Lanham Act, 15 U.S.C. § 1051, et seq. Therefore, the Court has 8 subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a). The Court has 9 supplemental jurisdiction over Plaintiffs’ state-law claim pursuant to 28 U.S.C. §§ 1367(a). 10 The Court also has personal jurisdiction over Defendants. When there is no applicable 11 federal statute governing personal jurisdiction, as is the case here, the law of the forum state 12 determines personal jurisdiction. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 13 (9th Cir. 2004). California’s long arm statute, California Civil Code § 410.10, which determines 14 personal jurisdiction, is coextensive with federal due process requirements, and therefore the 15 analysis for personal jurisdiction is the same under both state and federal law. Id. at 800–01. 16 “Due process requires that a defendant have minimum contacts with the forum ‘such that the 17 maintenance of the suit does not offend traditional notions of fair play and substantial justice.’” 18 Brainerd v. Governors of the Univ. of Alberta, 873 F.2d 1257, 1259 (9th Cir. 1989) (quoting Int’l 19 Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)). “Personal jurisdiction may be founded on either 20 general jurisdiction or specific jurisdiction.” Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 21 1320 (9th Cir. 1998). Here, although not necessary, the Court finds that Plaintiffs have 22 demonstrated both general and specific jurisdiction over Defendants. 23 1. General Jurisdiction. 24 “For an individual, the paradigm forum for the exercise of general jurisdiction is the 25 individual’s domicile.” Goodyear Dunlop Tire Operations, S.A. v. Brown, 564 U.S. 915, 924 26 (2011). Plaintiffs allege that each of the Individual Defendants reside in California. Plaintiffs also 27 allege, and submit evidence demonstrating, that the Individual Defendants are conducting their 1 live in California, but have no intent to leave and, thus, are domiciled here. Accordingly, the 2 Court finds that Plaintiffs have demonstrated general jurisdiction over the Individual Defendants. 3 2. Specific Jurisdiction 4 Specific jurisdiction over a defendant exists where: (1) the defendant has purposefully 5 directed its activities at the forum state or has purposefully availed itself of the privileges of doing 6 business in the forum; (2) the plaintiff’s claim arises out of or relates to those activities; and (3) 7 the assertion of personal jurisdiction is reasonable and fair. Schwarzenegger, 374 F.3d at 802; see 8 also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-77 (1985). “The plaintiff bears the 9 burden of satisfying the first two prongs of the test. If the plaintiff fails to satisfy either of these 10 prongs, personal jurisdiction is not established in the forum state.” Schwarzenegger, 374 F.3d at 11 802 (internal citation omitted). 12 Here, Plaintiffs allege, and submit evidence to demonstrate, that the Individual Defendants 13 committed the alleged trademark infringement and unfair competition in California. Plaintiffs’ 14 investigator viewed the listings for, and purchased, the counterfeit products from an address in 15 California. Defendants mailed the counterfeit products to Plaintiffs’ investigator in California, 16 and the return addresses on the packages indicate that Defendants mailed all of the packages from 17 California. (Dkt. 1 at ¶¶ 34-41; Dkt. 44-1 at ¶¶ 2-14.) Therefore, Plaintiffs have shown that 18 Defendants purposefully directed its activities at residents of the forum by advertising and selling 19 counterfeit products to Plaintiffs. Moreover, Plaintiffs’ claims arise out of those activities. 20 Additionally, the Court finds that the assertion of personal jurisdiction is reasonable and fair. 21 Schwarzenegger, 374 F.3d at 802. Accordingly, the Court may exercise specific jurisdiction over 22 the Individual Defendants. Id. 23 Moreover, service here was adequate. A plaintiff must serve each defendant with a 24 summons and a copy of the complaint. Fed. R. Civ. P. 4(c)(1). Rule 4(e)(2)(B) of the Federal 25 Rules of Civil Procedure permits service by leaving a copy of the Summons and Complaint at the 26 defendant’s place of residence with another person of suitable who lives at that residence. 27 Plaintiffs complied with this method of service. (Dkts. 12, 13, 14, and 16.) Plaintiffs served 1 930 Capitol Avenue, San Francisco, 94112 and served defendant Shao Chun Chen at 2910 2 Norbridge Avenue in Castro Valley, California, 94546. (Dkts. 12, 13, 14, and 16.) Plaintiffs left 3 copies of the summons and complaint with another adult co-occupant at the residences and then 4 mailed copies to the addresses. (Id.) Plaintiffs served the Individual Defendants at their current 5 residences, which differed from the addresses on the issued summons. (Dkt. 44-27, ¶ 4, Exs. EE, 6 FF.) 7 B. Standards Governing Default Judgment. 8 After entry of default, a court may grant default judgment on the merits of the case. See 9 Fed. R. Civ. P. 55. Upon default, the factual allegations of the complaint, except those concerning 10 damages, are deemed to have been admitted by the non-responding party. Geddes v. United 11 Financial Group, 559 F.2d 557, 560 (9th Cir.1977). “The district court’s decision whether to 12 enter a default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th 13 Cir.1980). In determining whether to enter default judgment, a court should consider the 14 following factors: 15 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) 16 the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to 17 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 18 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Here, these factors weigh in favor of 19 granting Plaintiffs’ motion for default judgment. 20 C. Plaintiffs’ Motion. 21 1. Prejudice to Plaintiffs. 22 If the Court denied Plaintiffs’ motion, they would likely be left without a remedy given 23 Defendants’ failure to appear or otherwise defend this action. See Pepsico, Inc. v. Cal. Sec. Cans, 24 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). 25 2. Merits of Plaintiffs’ Claims and Sufficiency of the Complaint. 26 The second and third factors, which look to the merits of Plaintiffs’ substantive claims and 27 the sufficiency of the Complaint, also support entry of default judgment. After an entry of default, 1 well-pled allegations in the complaint are deemed true, except for the amount of damages. Fair 2 Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). 3 Plaintiffs claim that the Individual Defendants infringed several of their trademarks. To 4 prevail on a claim of trademark infringement, Plaintiffs must prove that: (1) they own the rights to 5 a valid trademark and (2) that Defendants’ use of the mark in interstate commerce is likely to 6 cause consumer confusion. KP Permanent Make-Up Inc., v. Lasting Impression I, Inc., 408 F.3d 7 596, 602 (9th Cir. 2005). Plaintiffs have sufficiently alleged, and supported with evidence, both. 8 They allege that they own a number of BMW and M marks, and that their marks are registered 9 with the USPTO. (Dkt. 1 (Compl.) ¶ 24; Dkt. 44-27, ¶ 17.) Plaintiffs also properly allege 10 likelihood of confusion under the test established in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 11 348-49 (9th Cir. 1979). They also allege that items at issue here are counterfeits that are closely 12 similar to the marks Plaintiffs are attempting to protect. See Louis Vuitton Malletier, S.A. v. 13 Akanoc Solutions, Inc., 658 F.3d. 936, 945 (9th Cir. 2011) (“[T]here is a likelihood of confusion . . 14 . when the offending mark is a counterfeit mark, or a mark virtually identical to the previously 15 registered mark coupled with the intent to pass off or borrow from established good will.”). 16 Despite Plaintiffs’ attempts to contact Defendants to prevent further infringement, the Individual 17 Defendants have continued market and sell counterfeit items bearing Plaintiffs’ trademarked 18 logos. Moreover, Plaintiffs sufficiently allege, and supplement with substantial evidence of, each 19 Individual Defendant’s direct involvement in the infringing acts.1 20 3. Sum of Money at Stake. 21 The fourth Eitel factor focuses on the amount at issue in the action. “[C]ourts should be 22 hesitant to enter default judgments in matters involving large sums of money.” Yelp Inc. v. 23 Catron, 70 F. Supp. 3d 1082, 1099-1100 (N.D. Cal. 2014). “When the money at stake in the 24 litigation is substantial or unreasonable, default judgment is discouraged.” Board of Trs. v. Core 25 Concrete Const., Inc., 2012 WL 380304, at *4 (N.D. Cal. Jan. 17, 2012) (citing Eitel, 782 F.2d at 26 1 Plaintiffs are only seeking statutory damages under the Lanham Act, and Plaintiffs’ claim 27 for trademark infringement under the Lanham Act supports an award of such damages. Therefore, 1 1472). However, when “the sum of money at stake is tailored to the specific misconduct of the 2 defendant, default judgment may be appropriate.” Id. (citations omitted); see also Landstar 3 Ranger, Inc. v. Parth Enters., 725 F. Supp. 2d 916, 921 (C.D. Cal. 2010) (holding this factor 4 “requires that the court assess whether the recovery sought is proportional to the harm caused by 5 defendant’s conduct.”). 6 Here, Plaintiffs seek $200,000 in statutory damages. Although this amount is large, the 7 Court notes that Plaintiffs discovered that Defendants grossed over $43,000 from sales of 8 counterfeit BMW® products. This amount does not include sales made from Defendants’ website 9 at www.us85.com, which Defendants also used to sell their counterfeit products. Moreover, the 10 Lanham Act provides for a maximum of $2,000,000 per counterfeit mark per type of goods or 11 services sold when the use of the counterfeit mark was willful. See 15 U.S.C. § 1117(c)(2); see 12 also Yelp Inc., 70 F. Supp. 3d at 1100 (finding plaintiff’s request for $2,000,000 reasonable under 13 Eitel in light of the maximum statutory damages for willful counterfeiting). Here, there is 14 substantial evidence demonstrating that Defendants’ counterfeiting activities were willful. 15 4. Remaining Eitel Factors. 16 Because Defendants have not answered the Complaint or otherwise appeared in this action, 17 the possibility of a dispute concerning material facts is unknown. Next, there is no evidence or 18 indication that Defendants’ failure to appear was due to excusable neglect. Plaintiffs properly 19 served Defendants. Defendants’ conduct in seemingly trying to shield their identity and their 20 counterfeiting activities after Plaintiffs served them indicates that they were fully aware of this 21 litigation. Finally, although the seventh Eitel factor – balancing the policy consideration that 22 whenever reasonably possible cases should be decided on their merits – weighs against default 23 judgment, the majority of other factors weigh heavily in favor of default judgment. 24 Despite the policy of favoring decisions on the merits, default judgment is appropriate 25 when a defendant refuses to litigate a case. Fed. R. Civ. P. 55(b); see also Bd. of Trustees v. RBS 26 Washington, LLC, 2010 WL 145097 at *4 (N.D. Cal. Jan. 8, 2010.) Here, Defendants failed to 27 litigate. 1 Defendants. 2 D. Remedy. 3 1. Statutory Damages. 4 While the allegations in the Complaint are taken as true for purposes of default judgment, 5 courts must make specific findings of fact in assessing the amount of damages. See Fair Hous. of 6 Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). The Court has discretion to determine the 7 amount of damages to be awarded. Rolex Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704, 712 8 (9th Cir. 1999). 9 Here, Plaintiffs seek statutory damages pursuant to the Lanham Act in the amount of 10 $200,000 in damages, as well as injunctive relief. Under the Lanham Act, a plaintiff may elect to 11 recover an award of statutory damages for actions involving the use of a counterfeit mark at any 12 time before final judgment is entered. 15 U.S.C. § 1117(c). Section 1117(c) provides for statutory 13 damages of not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or 14 services sold, offered for sale, or distributed, as the court considers just or, if the use was willful, 15 not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, 16 or distributed, as the court considers just. Id. 17 The Court finds that Plaintiffs’ requested damages are within a reasonable range of what is 18 proscribed by statute. See 15 U.S.C. 1117(a),(c). Moreover, the amount of $200,000 is reasonable 19 in relation to the allegations and harm stated in the Complaint, as well as the alleged willful nature 20 of the infringement. As noted above, Plaintiffs have shown that Defendants sold over $43,000 in 21 counterfeit BMW® products, and this does not include the amounts from Defendants’ 22 sales of counterfeit BMW® products from the website www.us85.com. 23 Additionally, Plaintiffs have shown that the infringement was willful. Allegations of 24 willful trademark infringement are deemed true on default. Yelp, Inc. v. Catron, 70 F.Supp.3d 25 1082, 1101 (N.D. Cal. 2014) (citing Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 26 (9th Cir. 2008). Here, Plaintiffs not only alleged willful trademark infringement in their complaint 27 but also presented substantial evidence that Defendants continued to sell counterfeit BMW® 1 Defendants continued to sell products with BMW® and M® trademarks, after Plaintiffs served 2 them with “cease and desist” letters, after eBay took down listings of their counterfeit BMW® and 3 M® products, and after Plaintiffs served each Individual Defendant. (Dkt. 44-27, ¶¶ 2, 3, 9, 10, 4 15, Exs. Z, AA, BB, CC, DD, MM, ¶; Dkts. 12, 13, 14, 16.) After Plaintiffs served Defendants 5 with this lawsuit, Defendants then attempted to hide their counterfeit sales and their identity. 6 (Dkt. 44-27, ¶¶ 9, 15, Ex. NN.) 7 As other courts have observed, “the Court has discretion in determining the amount of any 8 damages award, thus ensuring that the award corresponds to Plaintiffs’ actual injuries based on 9 Defendants’ infringement.” IO Grp., Inc. v. Jordon, 708 F. Supp. 2d 989, 999 (N.D. Cal. 2010). 10 Additionally, courts should, however, award damages in trademark infringement cases that are 11 sufficient to deter future infringement. See Playboy Enters., Inc., v. Baccarat Clothing Co., 692 12 F.2d 1272, 1274-75 (9th Cir. 1982). 13 The Court finds that, in light of Defendants’ voluminous sales of counterfeit goods and 14 efforts to shield their activities after receiving notice of this lawsuit, $200,000 in statutory 15 damages is reasonable. Therefore, the Court recommends that Plaintiffs be awarded $200,000 in 16 statutory damages. 17 2. Injunctive Relief. 18 Under 17 U.S.C. § 1116(a), a court may enter an injunction against a defendant to prevent 19 future infringement. Here, Defendant has repeatedly infringed upon Plaintiffs’ BMW® and M® 20 trademarks. Plaintiff will suffer irreparable injury if the ongoing infringement is not enjoined. 21 Furthermore, Defendants’ refusal to participate in this action makes it difficult for Plaintiffs to 22 prevent further infringement. The Court is unaware of any reason why an injunction would 23 impose undue hardship on Defendants or harm the public interest. Accordingly, injunctive relief 24 is warranted. Therefore, the Court further recommends that Plaintiffs’ request for a permanent 25 injunction be granted as described below. 26 CONCLUSION 27 The Court RECOMMENDS that Defendant K VIP Auto Body be DISMISSED from this 1 GRANTED. Accordingly, the Court RECOMMENDS that Plaintiffs’ be AWARDED $200,000 2 in statutory damages pursuant to 15 U.S.C. § 1117(c) and that, pursuant to 15 U.S.C. § 1116(a), 3 the Individual Defendants, and their agents, representatives, and all persons acting in concert with 4 them, be PERMANENTLY ENJOINED from: 5 a. The import, export, manufacture, reproduction, assembly, use, acquisition, 6 purchase, offer, sale, transfer, brokerage, consignment, distribution, shipment, licensing, 7 development, display, delivery, marketing, advertising or promotion of any counterfeit products 8 bearing the BMW®, M2®, M3®, M5®, M6®, MINI®, MINI COOPER®, the BMW® 9 blue/white/black circle colored mark, the BMW® white circle mark, the BMW® black circle 10 mark, the MINI® wing emblem, the ///M® colored striping mark, the ///M® non-colored striping 11 mark, and the stylized S® mark, specifically including but not limited to any air caps, valve stem 12 caps, badges, key chains, automobile parts or accessories, and any other unauthorized 13 merchandise bearing any of Plaintiffs’ Trademarks (including any non-genuine reproduction, 14 counterfeit, copy or colorable imitation thereof); 15 b. The import, export, manufacture, reproduction, assembly, use, acquisition, 16 purchase, offer, sale, transfer, brokerage, consignment, distribution, shipment, licensing, 17 development, display, delivery, marketing, advertising or promotion of any counterfeit products 18 bearing the BMW®, M2®, M3®, M5®, M6®, MINI®, MINI COOPER®, the BMW® 19 blue/white/black circle colored mark, the BMW® white circle mark, the BMW® black circle 20 mark, the MINI® wing emblem, the ///M® colored striping mark, the ///M® non-colored striping 21 mark, and the stylized S® mark, specifically including but not limited to any air caps, valve stem 22 caps, badges, key chains, automobile parts or accessories, and any other product which infringes 23 or dilutes any of Plaintiffs’ Trademarks, trade name, and/or trade dress, including but not limited 24 to any of Plaintiffs’ Trademarks; 25 c. The unauthorized use, in any manner whatsoever, of any of Plaintiffs’ 26 Trademarks, trade names and/or trade dress, including but not limited to BMW®, M2®, M3®, 27 M5®, M6®, MINI®, MINI COOPER®, the BMW® blue/white/black circle colored mark, the 1 colored striping mark, the ///M® non-colored striping mark, and the stylized S® mark, any 2 variants, colorable imitations, translations and/or simulations thereof, and/or any items that are 3 confusingly similar thereto, including specifically: 4 i. on or in conjunction with any product or service; and 5 ii. on or in conjunction with any advertising, promotional materials, labels, 6 hangtags, packaging, or containers; 7 d. The use of any trademark, trade name, or trade dress that falsely represents, or is 8 likely to confuse, mislead or deceive purchasers, customers, or members of the public to believe 9 that unauthorized product imported, exported, manufactured, reproduced, distributed, assembled, 10 acquired, purchased, offered, sold, transferred, brokered, consigned, distributed, stored, shipped, 11 marketed, advertised and/or promoted by Defendants originate from Plaintiffs, or that said 12 merchandise has been sponsored, approved, licensed by, or associated with Plaintiffs or is, in 13 some way, connected or affiliated with Plaintiffs; 14 e. Engaging in any conduct that falsely represents that, or is likely to confuse, 15 mislead, or deceive purchasers, customers, or members of the public to believe that Defendants 16 are connected with, or are in some way sponsored by or affiliated with Plaintiffs, purchases 17 product from or otherwise has a business relationship with Plaintiffs; and/or 18 f. Affixing, applying, annexing, or using in connection with the manufacture, 19 distribution, advertising, sale, and/or offering for sale or other use of any goods, a false 20 description or representation, including words or symbols, tending to falsely describe or represent 21 such goods as being those of Plaintiffs; 22 / / / 23 / / / 24 / / / 25 / / / 26 / / / 27 / / / 1 Any party may file objections to this report and recommendation with the District Judge 2 || within 14 days of being served a copy. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); N.D. Cal. 3 Civil L.R. 72-3. The parties are advised that failure to file objections within the specified time 4 || may waive the right to appeal the District Court’s order. IBEW Local Trust 595 Trust Funds, v. 5 || ACS Controls Corp., No. C-10-5568, 2011 WL 1496056, at *3 (N.D. Cal. April 20, 2011). 6 IT IS SO ORDERED. 7 Dated: May 9, 2018 { ( ° le . 8 □□ SALLIE KIM 9 United States Magistrate Judge 10 11 a 12
15 16
Z 18 19 20 21 22 23 24 25 26 27 28