Seiko Epson Corporation v. Artem Koshkalda

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 27, 2019
• Docket: 18-15124
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION DEC 27 2019 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

SEIKO EPSON CORPORATION; No. 18-15124 EPSON AMERICA, INC., DC No. 3:16 cv-0524 RCJ Plaintiffs-Appellees,

v. MEMORANDUM*

ARTEM KOSHKALDA; ART, LLC,

Defendants-Appellants.

SEIKO EPSON CORPORATION; No. 18-15245 EPSON AMERICA, INC., DC No. 3:16 cv-0524 RCJ Plaintiffs-Appellees,

v.

ANDRIY KRAVCHUK; IGOR BIELOV; KBF, LLC; VLADIMIR SLOBODIANIUK, AKA Volodymyr Slobodianiuk, AKA Vladimir Westbrook; KRISTINA ANTONOVA, AKA Krystyna Antanova, AKA Kristy Antonova, AKA Krystyna Antonova, AKA Krystyna Taryanik; VITALII MALIUK; ROMAN TARYANIK,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Defendants-Appellants.

Appeals from the United States District Court for the District of Nevada Robert Clive Jones, District Judge, Presiding

Argued and Submitted November 13, 2019 San Francisco, California

Before: THOMAS, Chief Judge, and TASHIMA and WARDLAW, Circuit Judges.

Appellants appeal the default judgment entered against them on Seiko Epson

Corporation’s (“Epson”) claims of trademark counterfeiting, trademark

infringement, and related claims following the entry of default against each

appellant. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

1. The district court did not abuse its discretion by imposing case

terminating sanctions against appellants Artem Koshkalda, ART LLC, Vitalii

Maliuk, Andriy Kravchuk and Igor Bielov. See Conn. Gen. Life Ins. Co. v. New

Images of Beverly Hills, 482 F.3d 1091, 1096 (9th Cir. 2007). Koshkalda and ART

LLC failed to produce discovery, failed to appear in court and violated various

court orders. Maliuk failed to provide useful information as a Fed. R. Civ. P.

30(b)(6) deponent and failed to appear in court. Kravchuk failed to produce

discovery, failed to appear in court, failed to appear for two separate depositions

2 and failed to pay sanctions awarded against him. Bielov failed to produce

discovery, failed to appear in court and failed to appear for a deposition. The

magistrate judge commented that she had “never encountered th[is] level of

obstructionism and failure to respond to the most basic discovery requests” in her

18 years as a judge. The appellants were warned repeatedly of the possibility of

case terminating sanctions, yet continued to disregard discovery obligations and

court orders. Although the appellants other than Maliuk point out that they were

not subject to the June 19, 2017, sanctions order that preceded the entry of case

terminating sanctions, this is irrelevant, because the case terminating sanctions

were entered as a result of the appellants’ overall conduct over several months.

2. The district court did not abuse its discretion by imposing earlier

sanctions on Maliuk and Kravchuk. See Conn. Gen. Life Ins. Co., 482 F.3d at

1096. A corporate officer can be sanctioned under Fed. R. Civ. P. 37(b) when he is

responsible for a corporate defendant’s failure to produce discovery responses. See

David v. Hooker, Ltd., 560 F.2d 412, 415, 420-21 (9th Cir. 1977).

3. The default judgments entered against appellants Vladimir

Slobodianiuk, Kristina Antonova and Roman Taryanik are not void for lack of

personal jurisdiction due to insufficient service of process. See SEC v. Internet

Sols. for Bus. Inc., 509 F.3d 1161, 1165 (9th Cir. 2007) (reviewing de novo).

3 Because “a signed return of service constitutes prima facie evidence of valid

service,” the burden is on the appellants to show “by strong and convincing

evidence” that service was not valid. Id. at 1166. Here, the appellants have

presented no evidence, let alone strong and convincing evidence, that the places

where service occurred were not their “dwelling[s] or usual place[s] of abode.”

Fed. R. Civ. P. 4(e)(2)(B). In the cases of Antonova and Taryanik, the mere fact

that the complaint alleges a residence in Santa Clara and they were served in San

Jose does not constitute strong and convincing evidence of invalid service.

4. Appellant KBF, LLC, does not dispute Epson’s contention that it had

actual notice of the proceedings, through service of its registered agent,

Slobodianiuk. Accordingly, we decline to exercise our discretion to reach this

issue raised for the first time on appeal. See Bolker v. Comm’r, 760 F.2d 1039,

1042 (9th Cir. 1985).

5. The district court did not err by concluding that the appellants’

trademark violations were willful. The operative second amended complaint

alleged willful infringement and these allegations were deemed true by

virtue of the appellants’ defaults. See Derek Andrew, Inc. v. Poof Apparel Corp.,

528 F.3d 696, 702 (9th Cir. 2008).

4 6. The appellants are correct in arguing that the averments of the

complaint regarding the amount of damages were not deemed true by virtue of the

appellants’ defaults. See Fed. R. Civ. P. 8(b)(6); Geddes v. United Fin. Grp., 559

F.2d 557, 560 (9th Cir. 1977). Contrary to the appellants’ assertion, however, the

district court did not rely on the averments of the complaint. In the district court,

Epson presented undisputed expert evidence showing that the defendants’

unauthorized sales of Epson printer cartridges generated revenue of at least $14.4

million. In light of this evidence, the district court’s award of $12 million in

statutory damages was within the court’s discretion. See 15 U.S.C. § 1117(c)(2);

cf. Columbia Pictures Television, Inc. v. Krypton Broad. of Birmingham, Inc., 259

F.3d 1186, 1194 (9th Cir. 2001) (Copyright Act) (“If statutory damages are

elected, the court has wide discretion in determining the amount of statutory

damages to be awarded, constrained only by the specified maxima and minima.”

(alteration adopted and internal quotation marks omitted)).

7. Finally, the district court did not abuse its discretion by awarding

statutory damages for the use of counterfeit marks for printer ink as a class 2 good.

Although gray market goods generally are not considered counterfeit, the

appellants here did much more than purchase genuine Epson cartridges abroad and

resell them in the domestic U.S. market. They also repackaged, reprogrammed,

5 and relabeled the cartridges, changed “Best Before” dates, and degraded the quality

of the cartridges and ink before selling the cartridges to unsuspecting customers.

See 2 Anne Gilson LaLaonde, Gilson on Trademarks § 5.19[3][c][ii], at 5-229

(Matthew Bender 2019) (“If a gray market product is repackaged in a way that will

deceive consumers, that product is also counterfeit.”).

AFFIRMED.