Kinsley Technology Co. v. Ya Ya Creations, Inc.

Opinion

Case 2:20-cv-04310-ODW-KS Document 205 Filed 11/04/22 Page 1 of 8 Page ID #:2858

O 1

2 3 4 5 6 7

8 United States District Court 9 Central District of California

11 KINSLEY TECHNOLOGY CO., Case № 2:20-cv-04310-ODW (KSx)

12 Plaintiff, ORDER ON DAMAGES [194];

13 v. ORDER DENYING REQUEST FOR ATTORNEYS’ FEES [204] 14 YA YA CREATIONS, INC. et al.,

15 Defendants.

16 17 I. INTRODUCTION 18 Plaintiff Kinsley Technology Co. (“Kinsley”) sued Amazon.com, Inc. 19 (“Amazon”) and numerous third-party sellers for trademark infringement committed 20 in connection with the sale of counterfeit disposable facemasks on Amazon’s online 21 sales platform. Kinsley moved for entry of default judgment against the sole 22 remaining Defendant in this action, National Supply Distributors (“National”). 23 (Renewed Mot. Default J., ECF No. 194-1.) The Court granted the Motion in part, 24 deferring determination of damages pending receipt of additional evidence. (Order 25 Granting in Part Default J., ECF No. 198.) Kinsley also presently requests attorneys’ 26 fees. (Req. Fees, ECF No. 204.) As discussed below, the Court AWARDS $5,000 in 27 statutory damages and DENIES Kinsley’s request for attorneys’ fees. 28 Case 2:20-cv-04310-ODW-KS Document 205 Filed 11/04/22 Page 2 of 8 Page ID #:2859

1 II. BACKGROUND 2 The Court is familiar with the facts of this case, including those regarding 3 Kinsley’s trademark and the sale of counterfeit facemasks on the Amazon 4 Marketplace. (See Order Granting in Part Default J. 2–3.) In examining the factors 5 relevant to default judgment, the Court observed, based solely upon Kinsley’s then- 6 operative allegations and no additional evidence, that “the allegations . . . strongly 7 support intentionality because it is not plausible that National accidentally or 8 innocently used another seller’s product page to sell its own products.” (Id. at 12.) 9 Kinsley initiated this action on May 12, 2020, asserting four claims against 10 several Defendants: (1) trademark infringement (15 U.S.C. § 1114); (2) trademark 11 counterfeiting (15 U.S.C. § 1114); (3) unfair competition under federal law (15 U.S.C. 12 § 1125(a)); and (4) unfair competition under California state law (Cal. Bus. & Prof. 13 Code §§ 17200–17210). (Compl. ¶¶ 44–75, ECF No. 1.) Kinsley added additional 14 Defendants by way of a First Amended Complaint. (First Am. Compl., ECF No. 31.) 15 Some Defendants have since settled with Kinsley, and Kinsley eventually dismissed 16 every Defendant in this case other than National. (See Status Rpt., ECF No. 175; Stip. 17 Dismiss Amazon, ECF No. 186; Notice Dismissal, ECF No. 193.) 18 Kinsley moved for default judgment against National, requesting $70,000 in 19 statutory damages under the Lanham Act, roughly based on three times National’s 20 claimed sales of infringing facemasks. On August 30, 2022, the Court granted in part 21 Kinsley’s Motion for Default Judgment, finding National liable to Kinsley and 22 deferring the question of damages. (Order Granting in Part Default J. 17.) The Court 23 provided Kinsley with an additional opportunity to submit damages evidence and set 24 forth detailed instructions regarding how to properly file under seal certain digital 25 spreadsheet (“Excel”) files Kinsley received from Amazon in these proceedings. (Id. 26 at 14–16.) 27 On September 20, 2022, Kinsley filed its supplemental materials in support of 28 damages. (Suppl., ECF No. 199; Suppl. Errata, ECF No. 200.) In filing its

2 Case 2:20-cv-04310-ODW-KS Document 205 Filed 11/04/22 Page 3 of 8 Page ID #:2860

1 supplemental materials, Kinsley attempts to present the Excel files it received from 2 Amazon as evidence, but fails to follow the Court’s instructions regarding filing 3 materials under seal, and accordingly, the Court cannot and does not take the Excel 4 files into account. (OSC Den. Mot. Default J. 1–2, ECF No. 201); cf. C.D. Cal. 5 L.R. 79-5.2.2(a). Kinsley did, however, provide some authenticating information 6 regarding a certain email attachment it received from National purportedly 7 demonstrating National’s infringing sales. (OSC Den. Mot. Default J. 2.) 8 In reviewing the email attachment, the Court noted that it appeared to indicate 9 that virtually all of National’s sales of allegedly infringing facemasks were “refunded” 10 and that the date range of the transactions was concentrated in a three-day period 11 approximately one week after the filing of the initial Complaint. (Id.) Based on those 12 observations, the Court concluded that Kinsley failed in its burden of supporting its 13 request for $70,000 in statutory damages “when the sole document that purports to 14 prove damages indicates that all the sales were refunded, the record contains 15 Plaintiff’s concession that the document indicates that all sales were refunded, and 16 Plaintiff makes no present attempt to address the concern.” (Id.) The Court observed 17 that the authentication of the attachment was minimal, and that Kinsley had not 18 “provided the Court with the email exchange with Fiona L to which the document was 19 originally attached” or any other relevant information, which left the Court “guessing 20 at exactly what this document is supposed to show and the circumstances under which 21 National Supply Distributors sent it to Plaintiff.” (Id. at 3.) The Court further noted 22 that its confidence in Plaintiffs’ forthrightness had “eroded” as the case proceeded. 23 (Id.) 24 The Court provided Kinsley with one final opportunity to address these 25 deficiencies, (id.), and on September 27, 2022, Kinsley filed its final supplemental 26 response, (Final Resp., ECF No. 202). Shortly thereafter, the Court set a special 27 deadline for attorney fee requests, (Min. Order Fees, ECF No. 203), and on 28 October 13, 2022, Kinsley filed its request for attorney fees.

3 Case 2:20-cv-04310-ODW-KS Document 205 Filed 11/04/22 Page 4 of 8 Page ID #:2861

1 III. DISCUSSION 2 The Court first finalizes its grant of Kinsley’s Motion for Default Judgment by 3 awarding Kinsley $5,000 in statutory damages for National’s trademark infringement. 4 The Court then denies the attorney fee request because the case is not “exceptional” 5 under 15 U.S.C. § 1117(a). 6 A. Damages 7 After the Court’s prior order on Kinsley’s motion for default judgment, the sole 8 issue remaining in connection with that motion is the amount of damages to which 9 Kinsley is entitled. Under the Lanham Act, a plaintiff is entitled to choose between an 10 award of “actual damages and profits” or statutory damages. 15 U.S.C. § 1117(a), (c). 11 Statutory damages range from $1,000 to $200,000 per mark infringed, and up to 12 $2,000,000 per mark infringed if the infringement was willful. 15 U.S.C. § 1117(c). 13 In this case, Kinsley pursues statutory damages. (Final Resp. 4.) An award of 14 statutory damages under the Lanham Act does not necessarily require proof of actual 15 damages. Chanel, Inc. v. Doan, No. C 05-03464 VRW, 2007 WL 781976, at *5 (N.D. 16 Cal. Mar. 13, 2007) (noting dual “compensatory and punitive purposes” of Lanham 17 Act statutory damages and recognizing a plaintiff can recover statutory damages 18 without offering evidence of actual damages). This holds true in the default judgment 19 context, where a defendant’s failure to appear may make proof of actual damages 20 difficult. See, e.g., Sarieddine v. Andrews, No 2:18-cv-00077-MWF (SSx), 2018 WL 21 5919206, at *4 (C.D. Cal. June 18, 2018). Nevertheless, here, Kinsley expressly 22 indicated that its basis for its statutory damages request was roughly thrice the claimed 23 actual damages, so at the very least, the strength of Kinsley’s demonstration of actual 24 damages remains relevant to whether Kinsley is entitled to the amount of statutory 25 damages it requests. 26 Here, in support of its damages request, Kinsley submits evidence of National’s 27 sales. See 15 U.S.C. § 1117(a) (“[T]he plaintiff shall be entitled . . . to recover . . . 28 defendant’s profits . . . . In assessing profits the plaintiff shall be required to prove

4 Case 2:20-cv-04310-ODW-KS Document 205 Filed 11/04/22 Page 5 of 8 Page ID #:2862

1 defendant’s sales only.”). It attempts to do so by submitting the above-discussed 2 email attachment listing sales over a three-day period and indicating that the vast 3 majority of the sales were “Refunded.” (Aff. Nicholas Lee (“Lee Aff.”) Ex. 2 (“Sales 4 List”), ECF No. 199-1.) The Court made clear its concerns about this document, and 5 Kinsley’s proof of National’s sales in general, its September 21, 2022 Order to Show 6 Cause, and gave Kinsley an additional opportunity to address these concerns. (Order 7 to Show Cause, ECF No. 201.) In response, Kinsley did not submit additional 8 evidence, but instead provided further arguments regarding why its prior showing was 9 sufficient. (See, e.g., Final Resp. 6 (“It is . . . reasonable to infer, given the 10 circumstances, that Defendant presented only a document that it felt supported its 11 efforts to reduce potential liability during settlement discussions and withheld 12 documents that would have expanded its liability.”).) Kinsley’s additional arguments 13 do not satisfactorily address the concerns the Court previously raised. 14 Moreover, Kinsley’s authentication of this document consists of a declaration 15 that merely states that Kinsley received the document from National. (Lee Aff. ¶ 8.) 16 But stating the source of a document is not equivalent to authenticating it. See Fed. R. 17 Evid. 901. The Court is still left wanting a clear explanation of what the National 18 sales record is and what information it contains, beyond simply the identity of the 19 person who sent it. 20 For all the reasons articulated in the record thus far, the Court cannot say that 21 Kinsley has submitted evidence that meaningfully demonstrates National’s “sales” of 22 infringing masks. Kinsley fails to demonstrate “sales” as that term is used in 23 15 U.S.C. § 1117(a) and thus fails to support its request for $70,000 in statutory 24 damages. 25 Nevertheless, the allegations, when taken as true, indicate that trademark 26 infringement has indeed taken place. Under such circumstances, the dual deterrent 27 and compensatory purposes of statutory damages support the award of some amount 28 of statutory damages. See Philip Morris USA, Inc. v. Castworld Prods., Inc.,

5 Case 2:20-cv-04310-ODW-KS Document 205 Filed 11/04/22 Page 6 of 8 Page ID #:2863

1 219 F.R.D. 494, 501 (C.D. Cal. 2003) (“Even for uninjurious and unprofitable 2 invasions of copyright the court may, if it deems just, impose a liability within 3 statutory limits to sanction and vindicate statutory policy.” (quoting F.W. Woolworth 4 Co. v. Contemp. Arts, Inc., 344 U.S. 228, 233 (1952))); see also Chanel, 2007 WL 5 781976, at *5 (“To calculate statutory damages under the Lanham Act, many district 6 courts turn to the analysis developed for a similar provision within the Copyright 7 Act.”). 8 “As other courts have observed, 15 U.S.C. § 1117(c) provides no guidelines for 9 determining an appropriate award” beyond limiting awards to what “the court 10 considers just.” See Lifted Rsch. Grp., Inc. v. Salem, No. C-08-4497 SC, 2009 WL 11 1371416, at *5 (N.D. Cal. May 15, 2009). Considering all the facts and circumstances 12 of the case, along with the evidence presented and its strengths and weaknesses as 13 discussed herein and elsewhere in the record, the Court hereby FINALIZES its Order 14 Granting Kinsley’s Renewed Motion for Default Judgment, (ECF No. 194), and 15 awards statutory damages in the amount of five thousand dollars ($5,000.00) against 16 National. The Court finds that this amount is just and appropriate to effectuate the 17 dual compensatory and punitive purposes of Lanham Act statutory damages. See 18 Chanel, 2007 WL 781976, at *5. 19 An evidentiary hearing is not necessary. Pursuant to Federal Rule of Civil 20 Procedure 55(b)(2): (A) there is no need to conduct an accounting because the 21 accounts in this case are not complicated; (B) there is no need to determine the 22 amount of damages because, as Kinsley itself argues, proving a particular amount of 23 damages is not required to recover under the Lanham Act, (Final Resp. 2–4); 24 (C) Kinsley does not point to any allegation whose truth it wishes to establish by 25 evidence; and (D) there are no other matters to investigate. 26 B. Attorneys’ Fees 27 Kinsley requests $24,712.53 in attorneys’ fees pursuant to 15 U.S.C. § 1117(a) 28 incurred in connection with pursuit of judgment against National. (Req. Fees 6.) The

6 Case 2:20-cv-04310-ODW-KS Document 205 Filed 11/04/22 Page 7 of 8 Page ID #:2864

1 Lanham Act, 15 U.S.C. § 1117(a), authorizes reasonable attorneys’ fees for the 2 prevailing party in “exceptional cases.” “[A]n ‘exceptional’ case is simply one that 3 stands out from others with respect to the substantive strength of a party’s litigating 4 position (considering both the governing law and the facts of the case) or the 5 unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. ICON 6 Health & Fitness, Inc., 572 U.S. 545, 554 (2014) (discussing Patent Act); SunEarth, 7 Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1181 (9th Cir. 2016) (applying 8 Octane Fitness approach to attorney fee application under Lanham Act). To 9 determine whether a case is exceptional, courts “consider[] the totality of the 10 circumstances” and exercise their “equitable discretion” to award attorneys’ fees on a 11 “case-by-case” basis. Octane Fitness, 572 U.S. at 554. Factors courts consider 12 include (1) “the substantive strength of a party’s litigating position (considering both 13 the governing law and the facts of the case);” (2) “the unreasonable manner in which 14 the case was litigated;” (3) “frivolousness, motivation, objective unreasonableness 15 (both in the factual and legal components of the case);” and (4) “the need in particular 16 circumstances to advance considerations of compensation and deterrence.” SunEarth, 17 839 F.3d at 1180–81. Importantly, for many courts in the Central District of 18 California, a “default finding of willfulness,” “without some additional extraordinary 19 circumstances plead[ed] in the complaint,” is not enough. Pretty Star Store, LLC v. 20 Yuanmin Chen, No. 2:18-cv-05187-JAK (AGRx), 2019 WL 13039949, at *6 (C.D. 21 Cal. Apr. 10, 2019). Instead, “[a]n attorneys’-fees award should be premised upon a 22 finding of unfairness, bad faith, or other equitable consideration of similar force that 23 makes it grossly unjust that the prevailing party be left to bear the burden of its 24 counsel’s fees.” Id. 25 Kinsley argues that this case is exceptional on the mere basis of the Court’s 26 default finding that National acted willfully. (Req. Fees 3.) This is insufficient. See 27 Chen, 2019 WL 13039949, at *6. Moreover, that finding was based on the allegations 28 alone. But, for the reasons discussed above and elsewhere in the record, the sole piece

7 Casq@ 2:20-cv-04310-ODW-KS Document 205 Filed 11/04/22 Page 8of8 Page ID #:2865

1 || of evidence Kinsley submits in support of damages in this matter—the email 2|| attachment National sent Kinsley—casts serious doubt on whether National’s 3 | infringement was in fact willful. In short, Kinsley does not meet its burden of 4|| showing that this case is exceptional. Moreover, the Court’s independent review of 5 || the record confirms that this case does not present the “extraordinary circumstances” 6 || necessary to support a finding of exceptionality. Chen, 2019 WL 13039949, at *6; see 7 || Reflex Media, Inc. v. Chan, No. 8:16-cv-00795-JFW (JEMx), 2021 WL 5936912, 8 | at *12 (C.D. Cal. June 4, 2021) (“In this case, Plaintiffs offer no basis for its request 9 || for attorneys’ fees beyond the willfulness of Defendant’s infringement. Therefore, 10 || considering the totality of the circumstances, the Court concludes that this case is not 11 || ‘exceptional.’”’); cf CAO Lighting, Inc. v. Lights of Am., Inc., No. 5:20-cv-02367-AB- 12] SP, 2021 WL 3376936, at *7 (finding patent case not exceptional, even where 13 | plaintiff's allegations of willful and intentional infringement were admitted by 14 || default). 15 IV. CONCLUSION 16 For the reasons discussed above, the Court finalizes GRANTING Kinsley’s 17 || Renewed Motion for Entry of Default Judgment. (ECF No. 194.) Kinsley is entitled 18 || to recover from National Supply Distributors statutory damages pursuant to 15 U.S.C. 19 | § 1117(c) in the amount of five thousand dollars ($5,000.00). Kinsley’s Request for 20 | Attorneys’ Fees is DENIED. (ECF No. 204.) 21 The Court will issue Judgment consistent with this Order. 22 23 IT IS SO ORDERED. 24 25 November 4, 2022 ~~ . 26 es 27 ibiet 28 OTIS D. GHT, I UNITED STATESDISTRICT JUDGE