1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Whaleco Incorporated, No. CV-23-02578-PHX-JJT
10 Plaintiff, ORDER
11 v.
12 Kape Technologies (Cyprus) Limited, et al.,
13 Defendants. 14 15 At issue is Plaintiff Whaleco Inc.’s Motion for Default Judgment as to Defendants 16 Torrance Xie, Riddle Inc., and Kai Chu (Doc. 61, Mot.). 17 I. BACKGROUND 18 Plaintiff operates the TEMU Platform, which is “a closed-loop e-commerce 19 platform that connects consumers with a vast array of affordable, quality products.” 20 (Doc. 20, Verified First Am. Compl. (FAC) ¶ 18.) Plaintiff registered its TEMU trademark 21 and logo (“TEMU Marks”) with the U.S. Patent and Trademark Office (USPTO) for 22 several classifications of products and services in 2022 and 2023. (FAC ¶¶ 25–26.) Plaintiff 23 claims that Defendants in this lawsuit, including Torrance Xie, Riddle Inc., and Kai Chu, 24 own and operate mobile application distribution platforms that use the TEMU Marks “to 25 dupe people into believing that Defendants’ mobile application distribution platforms . . . 26 and pirated copies of [Plaintiff’s] mobile application software (the ‘Infringing Apps’) are 27 put out or approved by [Plaintiff] when that is not the case.” (Mot. at 1.) Plaintiff contends 28 that “Defendants have illicitly profited from the blatant misuse of the TEMU marks and 1 have irreparably harmed the good will and reputation of the famous TEMU marks.” (Mot. 2 at 1.) As a result, Plaintiff brings claims of trademark counterfeiting, infringement, and 3 dilution as well as unfair competition against Defendants under the Lanham Act, 15 U.S.C. 4 §§ 1114, 1116, and 1125, and Arizona common and statutory law, A.R.S. § 44-1448.01. 5 (FAC ¶¶ 50–69.) 6 On May 15, 2024, the Court entered Consent Judgments against four Defendants— 7 Arshpreet Singh, Mahmoud Nassar, Swap Internet LLC, and Swap Internet Nigeria Ltd. 8 (Docs. 45–47.) Plaintiff voluntarily dismissed its claims against Defendant Kape 9 Technologies (Cyprus) Ltd. on August 15, 2024. (Doc. 59.) Plaintiff timely served the 10 remaining Defendants—Torrance Xie, Riddle Inc., and Kai Chu (Doc. 40)—but they did 11 not timely answer the Verified FAC, so the Court entered default against them on Plaintiff’s 12 application on June 11, 2024. (Doc. 52.) The Court will now resolve Plaintiff’s Motion for 13 Default Judgment against these three Defendants (Doc. 61). 14 II. LEGAL STANDARD 15 Before a district court enters a judgment of default, it must consider seven factors: 16 “(1) the possibility of prejudice to the plaintiff, (2) the merits of the plaintiff’s substantive 17 claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (4) 18 the possibility of prejudice to the plaintiff; (5) the possibility of a dispute concerning 19 material facts, (6) whether the default was due to excusable neglect, and (7) the strong 20 policy underlying the Federal Rules of Civil Procedure that favors a decision on the 21 merits.” Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986) (cleaned up). 22 III. ANALYSIS 23 A. Eligibility for Default Judgment 24 Factors Two and Three of the Eitel test—the merits of the claim and the sufficiency 25 of the complaint—favor entry of judgment with respect to Plaintiff’s claims against the 26 three Defendants who failed to appear in this action. Plaintiff’s Verified FAC alleges facts 27 establishing all the necessary elements for its claims of trademark infringement and unfair 28 competition under 15 U.S.C. §§ 1114, 1125 and Arizona common law because it has 1 demonstrated that it has protectable rights in the TEMU trademark and associated logo and 2 that Defendants are using the TEMU Marks in a manner that is likely to cause consumer 3 confusion. Plaintiff’s Verified FAC also alleges facts establishing all the necessary 4 elements for its claims of counterfeiting under 15 U.S.C. §§ 1114(1)(b), 1116(d) because 5 it has demonstrated that Defendants have used and continue to use counterfeits of the 6 federally registered TEMU Marks in connection with the advertising of goods or services, 7 which is likely to cause consumer confusion, mistake, or deception. And Plaintiff’s 8 Verified FAC alleges facts establishing all of necessary elements of trademark dilution 9 under 15 U.S.C. § 1125(c) and A.R.S. § 44-1448.01 because it has demonstrated that the 10 TEMU Marks are famous and distinctive, that Defendants began using the TEMU Marks 11 in commerce after the TEMU Marks became famous and distinctive, that Defendants acted 12 willfully with intent to trade on Plaintiff’s reputation and goodwill and to cause dilution of 13 the famous TEMU Marks, and that Defendants’ use is likely to dilute the TEMU Marks. 14 The Court takes these well-pleaded and verified factual allegations of the FAC as true, as 15 it must. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). 16 Factors One and Six—the possibility of prejudice and whether default was due to 17 excusable neglect—also favor entry of judgment. Plaintiff has diligently prosecuted this 18 matter and will suffer prejudice if it is unable to stop Defendants’ conduct and seek 19 damages therefor. Moreover, the three Defendants who failed to appear in this matter, who 20 were properly served, are unlikely to be able to demonstrate excusable neglect. 21 Factor Four—the amount of money at stake—further favors entry of judgment. 22 Plaintiff seeks significant statutory damages for Defendants’ trademark infringement, 23 counterfeiting, and dilution as well as conduct constituting unfair competition, as discussed 24 infra. 25 While Factor Five—the possibility of factual disputes—is unknown, as it often is, 26 and Factor Seven—the policy favoring a decision on the merits—always weighs against 27 default, the Court finds that the balance of the factors weigh decidedly in favor of entry of 28 default judgment against the three Defendants who failed to appear in this action. 1 B. Injunctive Relief and Damages 2 Plaintiff seeks both permanent injunctive relief and money damages for Defendants’ 3 violations. With regard to injunctive relief, Plaintiff has satisfactorily demonstrated that it 4 has suffered an irreparable injury through damage to its reputation and goodwill; that 5 monetary damages are inadequate to fully compensate Plaintiff for that injury; that the 6 balance of equities tips in Plaintiff’s favor; and that the issuance of a permanent injunction 7 serves the public interest. (Mot. at 12–13 (citing, inter alia, eBay Inc. v. MercExchange, 8 LLC, 547 U.S. 388, 391 (2006); Liberty Media Holdings, LLC v. Vinigay.com, 2011 WL 9 7430062, at *14 (D. Ariz. Dec. 28, 2011)).) Accordingly, the Court will enter the 10 permanent injunctive relief sought by Plaintiff. 11 With regard to damages, Plaintiff seeks statutory damages of $200,000 each against 12 Torrance Xie and Riddle Inc., and $250,000 against Kai Chu. (Mot. at 13–17.) The Lanham 13 Act, 15 U.S.C. § 1117
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Whaleco Incorporated, No. CV-23-02578-PHX-JJT
10 Plaintiff, ORDER
11 v.
12 Kape Technologies (Cyprus) Limited, et al.,
13 Defendants. 14 15 At issue is Plaintiff Whaleco Inc.’s Motion for Default Judgment as to Defendants 16 Torrance Xie, Riddle Inc., and Kai Chu (Doc. 61, Mot.). 17 I. BACKGROUND 18 Plaintiff operates the TEMU Platform, which is “a closed-loop e-commerce 19 platform that connects consumers with a vast array of affordable, quality products.” 20 (Doc. 20, Verified First Am. Compl. (FAC) ¶ 18.) Plaintiff registered its TEMU trademark 21 and logo (“TEMU Marks”) with the U.S. Patent and Trademark Office (USPTO) for 22 several classifications of products and services in 2022 and 2023. (FAC ¶¶ 25–26.) Plaintiff 23 claims that Defendants in this lawsuit, including Torrance Xie, Riddle Inc., and Kai Chu, 24 own and operate mobile application distribution platforms that use the TEMU Marks “to 25 dupe people into believing that Defendants’ mobile application distribution platforms . . . 26 and pirated copies of [Plaintiff’s] mobile application software (the ‘Infringing Apps’) are 27 put out or approved by [Plaintiff] when that is not the case.” (Mot. at 1.) Plaintiff contends 28 that “Defendants have illicitly profited from the blatant misuse of the TEMU marks and 1 have irreparably harmed the good will and reputation of the famous TEMU marks.” (Mot. 2 at 1.) As a result, Plaintiff brings claims of trademark counterfeiting, infringement, and 3 dilution as well as unfair competition against Defendants under the Lanham Act, 15 U.S.C. 4 §§ 1114, 1116, and 1125, and Arizona common and statutory law, A.R.S. § 44-1448.01. 5 (FAC ¶¶ 50–69.) 6 On May 15, 2024, the Court entered Consent Judgments against four Defendants— 7 Arshpreet Singh, Mahmoud Nassar, Swap Internet LLC, and Swap Internet Nigeria Ltd. 8 (Docs. 45–47.) Plaintiff voluntarily dismissed its claims against Defendant Kape 9 Technologies (Cyprus) Ltd. on August 15, 2024. (Doc. 59.) Plaintiff timely served the 10 remaining Defendants—Torrance Xie, Riddle Inc., and Kai Chu (Doc. 40)—but they did 11 not timely answer the Verified FAC, so the Court entered default against them on Plaintiff’s 12 application on June 11, 2024. (Doc. 52.) The Court will now resolve Plaintiff’s Motion for 13 Default Judgment against these three Defendants (Doc. 61). 14 II. LEGAL STANDARD 15 Before a district court enters a judgment of default, it must consider seven factors: 16 “(1) the possibility of prejudice to the plaintiff, (2) the merits of the plaintiff’s substantive 17 claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (4) 18 the possibility of prejudice to the plaintiff; (5) the possibility of a dispute concerning 19 material facts, (6) whether the default was due to excusable neglect, and (7) the strong 20 policy underlying the Federal Rules of Civil Procedure that favors a decision on the 21 merits.” Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986) (cleaned up). 22 III. ANALYSIS 23 A. Eligibility for Default Judgment 24 Factors Two and Three of the Eitel test—the merits of the claim and the sufficiency 25 of the complaint—favor entry of judgment with respect to Plaintiff’s claims against the 26 three Defendants who failed to appear in this action. Plaintiff’s Verified FAC alleges facts 27 establishing all the necessary elements for its claims of trademark infringement and unfair 28 competition under 15 U.S.C. §§ 1114, 1125 and Arizona common law because it has 1 demonstrated that it has protectable rights in the TEMU trademark and associated logo and 2 that Defendants are using the TEMU Marks in a manner that is likely to cause consumer 3 confusion. Plaintiff’s Verified FAC also alleges facts establishing all the necessary 4 elements for its claims of counterfeiting under 15 U.S.C. §§ 1114(1)(b), 1116(d) because 5 it has demonstrated that Defendants have used and continue to use counterfeits of the 6 federally registered TEMU Marks in connection with the advertising of goods or services, 7 which is likely to cause consumer confusion, mistake, or deception. And Plaintiff’s 8 Verified FAC alleges facts establishing all of necessary elements of trademark dilution 9 under 15 U.S.C. § 1125(c) and A.R.S. § 44-1448.01 because it has demonstrated that the 10 TEMU Marks are famous and distinctive, that Defendants began using the TEMU Marks 11 in commerce after the TEMU Marks became famous and distinctive, that Defendants acted 12 willfully with intent to trade on Plaintiff’s reputation and goodwill and to cause dilution of 13 the famous TEMU Marks, and that Defendants’ use is likely to dilute the TEMU Marks. 14 The Court takes these well-pleaded and verified factual allegations of the FAC as true, as 15 it must. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). 16 Factors One and Six—the possibility of prejudice and whether default was due to 17 excusable neglect—also favor entry of judgment. Plaintiff has diligently prosecuted this 18 matter and will suffer prejudice if it is unable to stop Defendants’ conduct and seek 19 damages therefor. Moreover, the three Defendants who failed to appear in this matter, who 20 were properly served, are unlikely to be able to demonstrate excusable neglect. 21 Factor Four—the amount of money at stake—further favors entry of judgment. 22 Plaintiff seeks significant statutory damages for Defendants’ trademark infringement, 23 counterfeiting, and dilution as well as conduct constituting unfair competition, as discussed 24 infra. 25 While Factor Five—the possibility of factual disputes—is unknown, as it often is, 26 and Factor Seven—the policy favoring a decision on the merits—always weighs against 27 default, the Court finds that the balance of the factors weigh decidedly in favor of entry of 28 default judgment against the three Defendants who failed to appear in this action. 1 B. Injunctive Relief and Damages 2 Plaintiff seeks both permanent injunctive relief and money damages for Defendants’ 3 violations. With regard to injunctive relief, Plaintiff has satisfactorily demonstrated that it 4 has suffered an irreparable injury through damage to its reputation and goodwill; that 5 monetary damages are inadequate to fully compensate Plaintiff for that injury; that the 6 balance of equities tips in Plaintiff’s favor; and that the issuance of a permanent injunction 7 serves the public interest. (Mot. at 12–13 (citing, inter alia, eBay Inc. v. MercExchange, 8 LLC, 547 U.S. 388, 391 (2006); Liberty Media Holdings, LLC v. Vinigay.com, 2011 WL 9 7430062, at *14 (D. Ariz. Dec. 28, 2011)).) Accordingly, the Court will enter the 10 permanent injunctive relief sought by Plaintiff. 11 With regard to damages, Plaintiff seeks statutory damages of $200,000 each against 12 Torrance Xie and Riddle Inc., and $250,000 against Kai Chu. (Mot. at 13–17.) The Lanham 13 Act, 15 U.S.C. § 1117(c)(1), provides that, when a counterfeit mark has been used “in 14 connection with the sale, offering for sale, or distribution of goods or services,” the plaintiff 15 may elect, “to recover, instead of actual damages and profits . . . statutory damages . . . not 16 less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services 17 sold, offered for sale, or distributed, as the court considers just.” For willful counterfeiting, 18 the Court may award up to $2 million per counterfeit mark per type of goods or services 19 sold under 15 U.S.C. § 1117(c)(2). 20 Plaintiff has satisfactorily demonstrated that significant statutory damages are 21 warranted in this case to deter future trademark infringement and counterfeiting. (Mot. at 22 15–16 (citing Playboy Enters. v. Baccarat Clothing Co., 692 F.2d 1272 (9th Cir. 1982)).) 23 Because the Court does not find that Plaintiff’s showing with respect to Kai Chu differs 24 significantly from the showing with respect to Torrance Xie and Riddle Inc., the Court will 25 award Plaintiff damages of $200,000 from each of the three Defendants who failed to 26 appear in this action. 27 Plaintiff also seeks an award of attorneys’ fees and costs incurred in this action and 28 has reserved the right to file an application for attorneys’ fees and a bill of costs. (Mot. at 1 17.) The Court will consider Plaintiff’s request for attorneys’ fees and costs upon the 2 receipt of those filings. 3 IT IS THEREFORE ORDERED granting Plaintiff Whaleco Inc.’s Motion for 4 Default Judgment as to Defendants Torrance Xie, Riddle Inc., and Kai Chu (Doc. 61). 5 IT IS FURTHER ORDERED that, pursuant to Rule 55(b)(2) of the Federal Rules 6 of Civil Procedure, the Clerk of the Court shall enter Judgment in favor of Plaintiff 7 Whaleco, Inc. and against Defendants Torrance Xie, Riddle Inc., and Kai Chu, on all claims 8 against these Defendants in the Verified First Amended Complaint (Doc. 20). 9 Defendants Torrance Xie, Riddle Inc., and Kai Chu shall each individually pay 10 $200,000.00 in statutory damages to Plaintiff Whaleco, Inc. 11 Additionally, Defendants Torrance Xie, Riddle Inc., and Kai Chu, their officers, 12 agents, servants, employees, attorneys, and all those in active concert or participation with 13 them having notice of this Order, are permanently enjoined from violating the TEMU 14 trademark and logo (“TEMU Marks”) by: 15 i. Using, registering, or seeking to use or register any name, mark, trade name, 16 company name, domain name, source identifier, or designation comprised of or 17 containing the TEMU mark, logo, or any similar term(s) or design in any manner 18 likely to cause confusion with Whaleco and/or the TEMU Marks or to otherwise 19 injure Whaleco and/or its goodwill and reputation; 20 ii. Representing, by any means whatsoever, directly or indirectly, that Defendants, 21 their services/goods, and/or their activities originate from, are sponsored by, or 22 are associated, affiliated, or connected with Whaleco in any way; 23 iii. Engaging in acts that constitute trademark infringement, counterfeiting, dilution, 24 false designation of origin, cybersquatting, or unfair competition that would 25 damage or injure Whaleco’s business reputation or damage or dilute the value 26 of the TEMU Marks; 27 28 1 iv. Using, linking, transferring, selling, exercising control over, or otherwise 2 owning any domain name that incorporates, in whole or in part, any of the 3 TEMU Marks, or any domain name that is used in connection with any 4 infringing website or webpage; 5 v. Creating, operating, owning, overseeing, or otherwise exercising control over 6 any infringing website, webpage or parked page embedding, incorporating, 7 including, or otherwise displaying the TEMU Marks, or any version of 8 Whaleco’s names in promotion, advertising, or pay per click campaigns; and ? vi. Assisting, aiding, and/or abetting any other person or business entity in engaging 10 in or performing any of the above activities. The Court retains jurisdiction over this case for the purpose of enforcing the permanent injunction. 8 IT IS FURTHER ORDERED that Plaintiff shall file any application for attorneys’ fees and bill of costs in compliance with Local Rules 54.1 and 54.2 within 30 days of the date of this Order, if Plaintiff so chooses. IT IS FURTHER ORDERED that, because the Court has now resolved Plaintiff’s "7 claims against all Defendants in this case (see Docs. 45-47, 59), the Clerk of Court shall close this case.
50 Dated this 26th day of March, 2025. 14 21 22 Unifgai StatesDistrict Judge 23 24 25 26 27 28
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