Opinion
Case No.: 5:21-cv-00829-FWS-SHK
01-24-2023
BLUMENTHAL DISTRIBUTING, INC. v. COMOCH INC. et al.
David A. Dillard, Steven Andrew Wilson, Lewis Roca Rothgerber Christie LLP, Glendale, CA, for Blumenthal Distributing, Inc. Andrew R. Nelson, Fortis LLP, Costa Mesa, CA, Mark J. Rosenberg, Pro Hac Vice, Tarter Krinsky and Drogin LLP, New York, NY, for Comoch Inc., Nanjing Times Technology Co., Ltd.
David A. Dillard, Steven Andrew Wilson, Lewis Roca Rothgerber Christie LLP, Glendale, CA, for Blumenthal Distributing, Inc. Andrew R. Nelson, Fortis LLP, Costa Mesa, CA, Mark J. Rosenberg, Pro Hac Vice, Tarter Krinsky and Drogin LLP, New York, NY, for Comoch Inc., Nanjing Times Technology Co., Ltd.
PROCEEDINGS: (IN CHAMBERS) ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT [51]
FRED W. SLAUGHTER, UNITED STATES DISTRICT JUDGE
Before the court is Plaintiff Blumenthal Distributing, Inc.'s ("Plaintiff") Motion for Default Judgment ("Motion" or "Mot."). (Dkt. 51.) The Motion is supported by the declarations of Richard Blumenthal ("Blumenthal Decl.") (Dkt. 51-2), and Plaintiff's counsel Drew Wilson ("Wilson Decl.") (Dkt. 51-3), and the exhibits attached thereto. The Motion is unopposed. (See generally Dkt.) The court heard oral argument on September 29, 2022, and then took the matter under submission. (Dkt. 59.) Based on the record, as applied to the applicable law, the Motion is GRANTED.
I. Background
a. Factual Background
Plaintiff Blumenthal Distributing, Inc. d/b/a Office Star is an importer and distributor of office furniture. (FAC ¶¶ 1, 11.) Plaintiff sells its products under a variety of brands, including but not limited to its SPACE brand of chairs. (Id. ¶ 12.) Plaintiff is the owner of three trademarks: United States Trademark Registration No. 5,553,074 (the "'074 Registration") for the mark OFFICE STAR; United States Trademark Registration No. 2,536,485 (the "'485 Registration") for the mark SPACE; and United States Trademark Registration No. 2,769,759 (the "'759 Registration") for the mark SPACE SEATING. (Id. ¶¶ 14-16.) Plaintiff also has trademark rights in its stylized OFFICE STAR and Design Mark. (Id. ¶ 17.) Plaintiff uses its trademarks in connection with each other, for example, by referring to its SPACE line of chairs as the OFFICE STAR SPACE chairs or OFFICE STAR SPACE SEATING chairs. (Id. ¶ 18.) Plaintiff sells its SPACE line of chairs through various marketing channels, including merchants such as Amazon.com, Staples, Office Depot, Walmart, and Wayfair. (Id. ¶ 19.) Plaintiff alleges it has a preexisting business relationship with Defendant Zhejiang Botai Furniture Co. Ltd. ("Botai") because Plaintiff utilized Botai as a vendor from approximately 2012 to 2020. (Id. ¶¶ 20-21.) On information and belief, as a result of this relationship, Botai was familiar with Plaintiff's intellectual property, including its trademarks. (Id. ¶ 22.)
On information and belief, Defendant Comoch Inc. ("Comoch") imports chairs in connection with the STARSPACE Marks from Defendant Nanjing Times Technology Co., Ltd. ("Nanjing"). (Id. ¶ 26.) Defendant Comoch is the owner of United States Trademark Registration No. 5,708,090 (the "'090 Registration") for a stylized version of the STARSPACE Mark. (Id. ¶ 30.) The chairs that Defendants Comoch and Nanjing sell in association with the STARSPACE Mark are purchased by Nanjing from Botai. (Id. ¶ 27.)
On information and belief, Botai affixes the STARSPACE Mark and STARSPACE and Design Mark to products and product packaging at its factory. (Id. ¶ 28.) Botai sells these chairs to Nanjing with the full knowledge that Nanjing would export the chairs into the United States in violation of Plaintiff's rights in its trademarks. (Id. ¶ 29.) Botai was the previous owner of the '090 Registration who assigned the registration to Comoch. (Id. ¶ 31.) Comoch is the owner of United States Trademark Application No. 90/674,969 (the "'969 Application") for a non-stylized wordmark version of the STARSPACE Mark and is now selling chairs in connection with the STARSPACE Marks through many of the same retail channels as Plaintiff, including Amazon.com, Walmart, and Wayfair. (Id. ¶¶ 32, 33.)
Based on these allegations, Plaintiff asserts the following four claims against Defendants: (1) trademark infringement under the Lanham Act, 15 U.S.C. § 1114 et. seq.; (2) unfair competition under the Lanham Act, 15 U.S.C. § 1125 et seq.; (3) violation of California Business and Professions Code § 17200 et. seq., and (4) California state common law unfair competition. (Id. ¶¶ 40-62.)
b. Procedural Background
The Motion was filed as a redacted document along with an Application to File Document Under Seal ("Sealing Application"). (Dkts. 51, 52.) Plaintiff's Sealing Application sought leave to file unredacted versions of the Motion and Exhibits A through C, E through F, and H through L to the Wilson Declaration, and the proposed judgment under seal. (Dkt. 52.) On August 22, 2022, the court granted the Sealing Application. (Dkt. 56.) On August 23, 2022, Plaintiff filed a sealed document containing the unredacted versions of the Motion, Exhibits A through C, E through F, and H through L to the Wilson Declaration, and the proposed judgment. (Dkt 57.) On January 24, 2023, the court held a status conference regarding the documents filed under seal. (Dkt. 60.) During the January 24, 2023, conference, Plaintiff informed the court of its position that the ruling on the Motion did not need to be under seal.
II. Legal Standard
a. Procedural Requirements for Default Judgment
A party seeking a default judgment must satisfy the procedural requirements of the Federal Rules of Civil Procedure and Local Rules. Under Federal Rule of Civil Procedure 55(b), a party may only seek a default judgment from the court following an entry of default by the Clerk of Court. Fed. R. Civ. P. 55(b). Additionally, the "default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c). Finally, the party also must comply with Local Rule 55-1 by submitting a declaration alongside the application for default judgment that includes the following information:
(1) when and against what party the default was entered; (2) the identification of the pleading to which default was entered; (3) whether the defaulting party is an infant or incompetent person, and if so, whether that person is represented by a guardian, committee, conservator, or other representative; (4) that the Servicemembers Civil Relief Act (50 U.S.C. App. § 521) does not apply; and (5) that notice has been
served on the defaulting party, if required by F.R.Civ.P. 55(b)(2).L.R. 55-1.
b. Substantive Requirements to Grant Default Judgment
Where a party seeking default judgment meets the procedural requirements discussed above, the court then considers the factors set forth by the Ninth Circuit in Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986), to determine whether to grant the requested default judgment. In Eitel, the Ninth Circuit stated:
Factors which may be considered by courts in exercising discretion as to the entry of a default judgment include: (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) 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 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.Id. at 1471-72.
"The district court's decision whether to enter a default judgment is a discretionary one." Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). "The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." TeleVideo Sys. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (internal quotation marks and citations omitted)); see also Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002) ("With respect to the determination of liability and the default judgment itself, the general rule is that well-pled allegations in the complaint regarding liability are deemed true.").
III. Discussion
a. Subject Matter and Personal Jurisdiction
Before entering default judgment against a non-appearing party, district courts have an affirmative duty to consider subject matter jurisdiction, personal jurisdiction, and service. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) ("To avoid entering a default judgment that can later be successfully attacked as void, a court should determine whether it has the power, i.e., the jurisdiction, to enter the judgment in the first place.").
The court finds it has subject matter jurisdiction over Plaintiffs' claims under 15 U.S.C. § 1121 and 28 U.S.C. § 1367. See 15 U.S.C. § 1121(a) ("The district and territorial courts of the United States shall have original jurisdiction . . . of all actions arising under this chapter [of the Lanham Act], without regard to the amount in controversy or to diversity or lack of diversity of the citizenship of the parties."); 28 U.S.C. § 1367 ("[T]he district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.").
As for personal jurisdiction, the court observes that Defendant Comoch is a California corporation with its principle place of business in Ontario, California (FAC ¶ 2), Defendant Nanjing is a company organized and existing under the laws of China with a principal place of business in Nanjing, China (id. ¶ 3), and Defendant Botai is a company organized and existing under the laws of China with a principal place of business in Zhejiang, China (id. ¶ 4).
The court finds it may exercise personal jurisdiction over Defendants Comoch and Nanjing because they previously filed an Answer to the Complaint, (Dkt. 12), and thus consented to the court's jurisdiction. Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986) ("A general appearance or responsive pleading by a defendant that fails to dispute personal jurisdiction will waive any defect in service or personal jurisdiction."). Defendant Botai, though it did not respond to the Complaint, was served with the summons and Complaint via email per the court's order authorizing service in that manner, (Dkts. 28, 32). See Fed. R. Civ. P. 4(k)(2) ("For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.").
The court also finds that service was proper on Defendants for the same reasons. See Jackson v. Hayakawa, 682 F.2d 1344, 1347 (9th Cir. 1982) ("Defendants must be served in accordance with Rule 4(d) of the Federal Rules of Civil Procedure, or there is no personal jurisdiction."). "Rule 4 is a flexible rule that should be liberally construed so long as a party receives sufficient notice of the complaint" and service was made in "substantial compliance with Rule 4." See Crowley v. Bannister, 734 F.3d 967, 975 (9th Cir. 2013) (citation omitted).
Because the court finds that subject matter jurisdiction exists, the court has personal jurisdiction over Defendants, and Plaintiff substantially complied with Rule 4, the court proceeds to assess the procedural requirements for default judgment.
b. Procedural Requirements
As a threshold matter, the court finds Plaintiff has met the procedural requirements of Local Rule 55-1. The declaration of Plaintiff's counsel states that the Clerk entered default against Defendants Nanjing, Botai, and Comoch on May 23, 2022, as to the FAC. (Wilson Decl. ¶ 6; Dkt. 44.) Counsel also states that Defendants are not minors or incompetent persons or persons protected by the Servicemembers Civil Relief Act and notice of the Motion was served on Defendants. (Wilson Decl. ¶ 6.) The court further finds that Plaintiff's requested relief—a permanent injunction, statutory damages, attorney's fees, and costs—does not differ in kind or exceed in amount the relief requested in the Complaint. See Fed. R. Civ. P. 54(c). (See also generally FAC, Prayer for Relief.) Because Plaintiff has met the procedural requirements for default judgment, the court next addresses the Eitel factors.
c. Application of the Eitel Factors
i. Possibility of Prejudice to Plaintiff
The first Eitel factor "considers whether the plaintiff will suffer prejudice if default judgment is not entered." PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). Here, Defendants Comoch and Nanjing—though they filed an Answer (Dkt. 12)—have otherwise stopped participating in this suit since approximately March 2022. (See generally Dkt. 37.) Defendant Botai has not answered or otherwise participated in the suit. (See generally Dkt.) As a result, the court finds Plaintiff will be prejudiced if default judgment is not entered because Plaintiff will "likely be without other recourse for recovery." See PepsiCo, 238 F. Supp. 2d at 1177. Accordingly, the court concludes the first Eitel factor weighs in favor of granting default judgment.
ii. The Merits of Plaintiff's Substantive Claim and the Sufficiency of the Complaint
Next, under the second and third Eitel factors, the court considers the substantive merits of the plaintiff's claims and the sufficiency of the operative complaint. Eitel, 782 F.2d at 1471; see also Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978) (explaining "the issue [as to the second and third factors] is whether the allegations in the complaint are sufficient to state a claim"); Dr. JKL Ltd. v. HPC IT Educ. Ctr., 749 F. Supp. 2d 1038, 1048 (N.D. Cal. 2010) ("Under an Eitel analysis, the merits of plaintiff's substantive claims and the sufficiency of the complaint are often analyzed together.").
In this case, Plaintiff alleges four claims: (1) trademark infringement under the Lanham Act, 15 U.S.C. § 1114 et seq.; (2) unfair competition under the Lanham Act, 15 U.S.C. § 1125 et seq.; (3) violation of California Business and Professions Code § 17200 et seq., and (4) California state common law unfair competition. (FAC ¶¶ 40-62.) The court agrees with Plaintiff that all four claims are "evaluated under the same legal framework as trademark infringement." (Mot. at 17.)
As to the second claim for unfair competition under the Lanham Act, courts have held that there is "no material difference in the law governing relief based upon trademark infringement and unfair competition" under the Lanham Act. Menendez v. Saks & Co., 485 F.2d 1355, 1375 (2d Cir. 1973), rev'd sub nom. on other grounds, Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 96 S.Ct. 1854, 48 L.Ed.2d 301 (1976); Walter v. Mattel, Inc., 210 F.3d 1108, 1111 (9th Cir. 2000) ("The test for false designation under the Lanham Act, as well as the common-law and statutory unfair competition claims, is whether there was a 'likelihood of confusion.' ") (citation omitted), holding modified on other grounds by Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625 (9th Cir. 2005); see also Tactica Int'l, Inc. v. Atl. Horizon Int'l, Inc., 154 F. Supp. 2d 586, 597 n.14 (S.D.N.Y. 2001) ("[Plaintiff's] claims of unfair competition and trademark infringement (for unregistered marks) under Section 43(a) of the Lanham Act are one [and] the same.").
The same is true for the third and fourth claims for violation of the UCL and common law unfair competition. See Cleary v. News Corp., 30 F.3d 1255, 1262-63 (9th Cir. 1994) ("[S]tate common law claims of unfair competition and actions pursuant to California Business and Professions Code § 17200 are 'substantially congruent' to claims made under the Lanham Act."); Rise Basketball Skill Dev., LLC v. K Mart Corp., 2017 WL 2775030, at *3 (N.D. Cal. June 27, 2017) ("The Ninth Circuit has held that a common law unfair competition claim for trademark exploitation is analogous to a Lanham Act claim and may be analyzed under the same standard."). Accordingly, the court assesses the sufficiency of all four claims under the standard for a trademark infringement claim under the Lanham Act.
1. Trademark Infringement under the Lanham Act
The elements of a claim for trademark infringement under the Lanham Act are: "(1) ownership of a valid mark (i.e., a protectable interest), and (2) that the alleged infringer's use of the mark is likely to cause confusion, or to cause mistake, or to deceive consumers." Reno Air Racing Ass'n., Inc. v. McCord, 452 F.3d 1126, 1134 (9th Cir. 2006) (citation and internal quotation marks omitted). As to the first element of a valid mark, "[t]he plaintiff's federal registration of a trademark is prima facie evidence that the plaintiff owns a valid trademark." 2Die4Kourt v. Hillair Cap. Mgmt., LLC, 2016 WL 4487895, at *5 (C.D. Cal. Aug. 23, 2016), aff'd, 692 F. App'x 366 (9th Cir. 2017).
The second element, the likelihood of causing confusion, is evaluated under an eight-factor test. See Pom Wonderful LLC v. Hubbard, 775 F.3d 1118, 1125 (9th Cir. 2014) ("We look to the following eight Sleekcraft factors for guidance in assessing the likelihood of consumer confusion: (1) strength of the protected mark; (2) proximity and relatedness of the goods; (3) type of goods and the degree of consumer care; (4) similarity of the protected mark and the allegedly infringing mark; (5) marketing channel convergence; (6) evidence of actual consumer confusion; (7) defendant's intent in selecting the allegedly infringing mark; and (8) likelihood of product expansion.") (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), abrogated in part on other grounds by Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 810 n.19 (9th Cir. 2003)); J. B. Williams Co. v. Le Conte Cosms., Inc., 523 F.2d 187, 192 (9th Cir. 1975) ("A strong mark is one which is used only in a fictitious, arbitrary and fanciful manner . . . whereas a weak mark is a mark that is a meaningful work in common usage . . . or is merely a suggestive or descriptive trademark.") (cleaned up).
In this case, the court finds the first element of a valid mark is sufficiently alleged based on Plaintiff's ownership of the three relevant trademarks. Plaintiff alleges it owns the '074 Registration for the mark OFFICE STAR, the '485 Registration for the mark SPACE, and the '759 Registration for the mark SPACE SEATING. (FAC ¶¶ 14-16.) Accordingly, the court finds that the first element of a valid mark is sufficiently alleged. See 2Die4Kourt, 2016 WL 4487895, at *5.
The court further finds the second element of the likelihood of causing confusion is sufficiently alleged based on the Sleekcraft factors. Under the first Sleekcraft factor, Plaintiff argues the trademark is strong because the SPACE mark is used in a conceptually "arbitrary" manner and has experienced significant commercial success with over 700,000 units sold. (Mot. at 10-11; Blumenthal Decl. ¶ 3.) Under the second Sleekcraft factor, Plaintiff alleges proximity is met because the products at issue—office chairs—are the same. (Blumenthal Decl. ¶ 4; Wilson Decl. ¶ 7.) Under the third Sleekcraft factor, Plaintiff alleges the parties' products are relatively inexpensive in their product category and consumers are thus unlikely to exercise a great deal of care when making a purchase decision. (FAC ¶ 36; Blumenthal Decl. ¶ 7.) Under the fourth Sleekcraft factor, Plaintiff alleges the parties' marks are similar because Plaintiff's products are often marked as OFFICE STAR SPACE chairs and Defendants sell their chairs using the STAR SPACE mark. (FAC ¶¶ 18, 33; Blumenthal Decl. ¶ 5; Wilson Decl. ¶ 7, Exh. D.) Under the fifth Sleekcraft factor, both parties use the same marketing channels and sell their products through the many of the same online retailers. (FAC ¶ 33.) Under the sixth Sleekcraft factor, Plaintiff concedes this factor is neutral because it is not aware of any instances of actual confusion. (Mot. at 15-16.) Under the seventh Sleekcraft factor, Plaintiff alleges Defendants knowingly used marks similar to Plaintiff's mark because of Defendant Botai's prior business relationship with Plaintiff. (FAC ¶¶ 33, 38.) Under the eighth Sleekcraft factor, Plaintiff alleges the likelihood of product overlap is satisfied by the fact that the products—office chairs—are already in the same product category. (Mot. at 15-16.) In summary, the court finds that seven out of eight Sleekcraft factors are met, such that the likelihood of confusion is sufficiently alleged.
Accordingly, the court finds that the merits and sufficiency of Plaintiff's trademark infringement claim, and relatedly, the claims for unfair competition under the Lanham Act, UCL claim, and common law unfair competition, weigh in favor of entering default judgment.
iii. Sum of Money at Stake
The fourth Eitel factor considers "the amount of money at stake in relation to the seriousness of Defendant's conduct." PepsiCo, 238 F. Supp. 2d at 1176. This Eitel factor "requires a comparison of the recovery sought and the nature of defendant's conduct to determine whether the remedy is appropriate." United States v. Broaster Kitchen, Inc., 2015 WL 4545360, at *6 (C.D. Cal. May 27, 2015). "When the sum of money at stake in the litigation is substantial or unreasonable, default judgment is discouraged." Yelp Inc. v. Catron, 70 F. Supp. 3d 1082, 1100 (N.D. Cal. 2014) (quoting Bd. of Trs. v. Core Concrete Constr., Inc., 2012 WL 380304, at *4 (N.D. Cal. Jan. 17, 2012)).
In this case, Plaintiff requests a default judgment based of $1,404,163.54 for restitution of Defendants' illicit profits under 15 U.S.C. § 1117(a), as well as attorney's fees and costs. (Mot. at 22.) After reviewing Plaintiff's estimate of sales and attorney's fees and costs, as explained in further detail below (see infra Section III(d)), the court adjusts these amounts based on the evidence presented by Plaintiff, but finds that Plaintiff's request for statutory damages, attorney's fees, and costs are reasonable and proportional to the harm suffered. See Broaster Kitchen, 2015 WL 4545360, at *6 (the sixth Eitel factor "requires a comparison of the recovery sought and the nature of defendant's conduct to determine whether the remedy is appropriate.").
The court finds that Plaintiff's estimate for restitution of illicit profits is properly based on gross revenue. See 15 U.S.C. § 1117(a) ("In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed."). See also Epson Am., Inc. v. Century21 Elecs., 2017 WL 8159961, at *3 (C.D. Cal. June 22, 2017) ("Since it is the Defendant's burden to prove its costs and expenses related to its sale of the infringing product, the Defendant is not entitled to offset the Plaintiff's showing of gross revenues [where it fails] to produce any evidence whatsoever of any costs or deductions.").
The court also finds that attorney's fees and costs are appropriate in this case based on Defendants' decision to litigate the case before abandoning the litigation. The Lanham Act permits recovery of attorney fees to the prevailing party in "exceptional cases." 15 U.S.C. § 1117(a). See Discovery Commc'ns, Inc. v. Animal Planet, Inc., 172 F. Supp. 2d 1282, 1291-92 (C.D. Cal. 2001) (for the purposes of recovering attorney's fees, "[a] case is exceptional if the defendant has acted in bad faith or with willful and deliberate conduct" and "a case may be considered exceptional where the defendants disregard the proceedings and do not appear.")
Accordingly, the court concludes the fourth Eitel factor weighs in favor of default judgment.
iv. Possibility of a Dispute Concerning Material Facts
"The fifth Eitel factor considers the possibility of dispute as to any material facts in the case." PepsiCo, 238 F. Supp. 2d at 1177. "Upon entry of default, all well-pleaded facts in the complaint are taken as true, except those relating to damages." Id. (quoting TeleVideo, 826 F.2d at 917-18).
In this case, the court finds Plaintiff "filed a well-pleaded complaint alleging the facts necessary to establish its claims." Philip Morris USA, Inc. v. Castworld Prod. Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003). Because Defendants have failed to plead or otherwise defend in this action and the court must accept well-pleaded facts in the Complaint as true, the court finds Plaintiff's allegations are undisputed at this time. See TeleVideo, 826 F.2d at 917-18. Additionally, the court finds that Plaintiff's supporting exhibits "provid[e] substantial evidence of the alleged infringing use," thus "render[ing] the possibility of a dispute concerning material facts negligible." See Rosen v. Movie Times, Inc., 2021 WL 1338960, *4 (N.D. Cal. Apr. 9, 2021). (See also Mot., Exhs. A-Q.) As a result, the court concludes the fifth Eitel factor weighs in favor of granting default judgment.
v. Whether Default Was Due to Excusable Neglect
"The sixth Eitel factor considers the possibility that the default resulted from excusable neglect." PepsiCo, 238 F. Supp. 2d at 1177. Where a defendant is "properly served with the Complaint, the notice of entry of default, as well as the papers in support of the instant motion," the default "cannot be attributed to excusable neglect." Shanghai Automation Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal. 2001). In this case, as discussed above, the court finds Plaintiff complied with Rule 4 as to all Defendants and indeed, litigated the case for some time against Defendants Comoch and Nanjing before those Defendants abandoned the litigation. (See, e.g., Dkts. 11, 12, 18, 35, 40.) Accordingly, the court finds there is little possibility that Defendants' default resulted from excusable neglect and that the sixth Eitel factor weighs in favor of entering default judgment. See Globe Ent. & Media, Corp. v. Global Images, USA, 2022 WL 2703845, at *5 (C.D. Cal. July 11, 2022) (finding possibility of excusable neglect "remote" where defendant was served with pleadings and motion for default judgment).
vi. Policy Favoring Decision on the Merits
"Under the seventh Eitel factor, the court takes into account the strong policy favoring decisions on the merits." Globe Ent., 2022 WL 2703845, at *5; see also Eitel, 782 F.2d at 1472 ("Cases should be decided upon their merits whenever reasonably possible."). However, "this preference, standing alone, is not dispositive." PepsiCo, 238 F. Supp. 2d at 1177 (quoting Kloepping v. Fireman's Fund, 1996 WL 75314, at *3 (N.D. Cal. 1996)). "[W]hen a defendant's failure to appear and respond makes a decision on the merits impractical, if not impossible, default judgment is appropriate" "[n]otwithstanding the strong policy presumption in favor of a decision on the merits." Constr. Laborers Tr. Funds for S. Cal. Admin. Co. v. Black Diamond Contracting Grp., Inc., 2017 WL 6496434, at *5 (C.D. Cal. Dec. 18, 2017). Here, the court finds a decision on the merits is "impractical, if not impossible" because Defendants have failed to respond. (See generally Dkt.) Accordingly, the court finds this factor weighs against but does not preclude an entry of default judgment.
vii. Summary of the Eitel Factors
In conclusion, the court finds Eitel factors one, two, three, four, five, and six weigh in favor of an entry of default judgment as to Defendants. The court also finds factor seven weighs against default judgment but is not dispositive with regard to all Defendants. Accordingly, the court GRANTS default judgment as to all of Plaintiff's claims against Defendants.
d. Plaintiff's Requested Relief
"The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." TeleVideo Sys., 826 F.2d at 917-18. The plaintiff bears "the burden of proving damages through testimony or written affidavit." Bd. of Trs. Boilermaker Vacation Tr. v. Skelly, Inc., 389 F. Supp. 2d 1222, 1226 (N.D. Cal. 2005). In this case, Plaintiff requests $1,404,163.54 for restitution of Defendants' illicit profits under 15 U.S.C. § 1117(a), $244,508.85 for Plaintiff's attorney fees, and $5,836.11 for Plaintiff's litigation costs. (Mot. at 22; Dkt. 57 at 22.) Plaintiff also requests a permanent injunction against Defendants and that the court issue an order canceling Defendant Comoch's STARSPACE registrations. (Id. at 24-25.)
i. Restitution
The court first considers Plaintiff's request for restitution. Per 15 U.S.C. § 1117(a), a plaintiff is entitled to recover the following damages:
(1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant's sales only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount . . . . The court in exceptional cases may award reasonable attorney fees to the prevailing party.15 U.S.C. § 1117(a).
"Monetary recovery for trademark infringement and unfair competition is measured variously by defendant's profits, plaintiff's actual business damages and losses caused by the wrong, or plaintiff's loss of profits caused by the wrong." Kelley Blue Book v. Car-Smarts, Inc., 802 F. Supp. 278, 292 (C.D. Cal. 1992); see also 15 U.S.C. § 1117(a). "Since it is the Defendant's burden to prove its costs and expenses related to its sale of the infringing product, the Defendant is not entitled to offset the Plaintiff's showing of gross revenues [where it fails] to produce any evidence whatsoever of any costs or deductions." Epson, 2017 WL 8159961, at *3; Adultcon Inc. v. Sol Ent. Inc., 2014 WL 12622419, at *2 (C.D. Cal. Dec. 22, 2014) (granting default and ordering disgorgement of profits based on a finding that "$20,000 is a reasonable profits measurement under the circumstances, and [Plaintiff] is entitled to disgorged profits in that amount.").
Plaintiff argues the recovery sought is based on Defendants' sales from the infringing products sold through online retailers. (Mot. at 18-20; Wilson Decl. ¶¶ 2-10, Exhs. A-C.) Plaintiff estimates its restitution as $1,404,163.54 based on the following sales figures: $12,355.21 from Starspace.com; $117,327.88 from Newegg.com; $928,191.16 from Amazon.com; $155,293.24 from Wayfair.com for Defendant Comoch; $26,664.80 from Overstock.com; and $164,331.25 from Wayfair.com for Defendant Nanjing. (Mot. at 20; Wilson Decl. ¶¶ 2-4, Exhs. A-C.) Plaintiff states that it adjusted the restitution amounts for certain vendors based on the comprehensiveness of the information provided and conversations with those vendors regarding their business and pricing practices. (Wilson Decl. ¶¶ 2-4.) Plaintiff further represents it was unable to determine what, if any costs, should be deducted from gross sales based on lack of information. (Mot. at 18.)
Based on Plaintiff's exhibits, the court finds that the sales figures provided by the online vendors differ from the estimates provided by Plaintiff. Specifically, the court finds insufficient explanation of why Plaintiff adjusted the gross sales figures from Amazon.com and Wayfair.com, as well as insufficient evidence of sales figures from Overstock.com. For Amazon.com, Plaintiff seeks restitution of $928,191.16 despite sales revenue being listed as $931,200.51. (Dkt. 57-1 at 99.) For Wayfair.com, Plaintiff estimates separate revenue figures for Defendants Comoch and Nanjing despite the sales revenue being listed as a total of $186,189.15. (Id. at 359.) For Overstock.com, Plaintiff points to an inventory spreadsheet that lists the office chairs in stock but does not provide any revenue figures. (Id. at 148-51.)
Accordingly, the court adjusts Plaintiff's restitution based on the evidence presented in Exhibits A through C of the Wilson Declaration as follows: $12,355.21 from Starspace.com (Dkt. 57-1 at 146); $117,327.88 from Newegg.com (id. at 144); $931,200.51 from Amazon.com (id. at 99); and $186,189.15 from Wayfair.com (id. at 359). The court finds Plaintiff has presented insufficient evidence demonstrating the sales from Overstock.com. (See Dkt. 57-1 at 148-51 (listing inventory of various chairs)). Accordingly, the court does not include that amount and otherwise finds Plaintiff is entitled to $1,247,072.75 in restitution.
ii. Attorney's Fees
The Lanham Act permits recovery of attorney fees to the prevailing party in "exceptional cases." 15 U.S.C. § 1117(a). For the purposes of recovering attorney's fees, "[a] case is exceptional if the defendant has acted in bad faith or with willful and deliberate conduct." Discovery, 172 F. Supp. 2d at 1291. "Additionally, a case may be considered exceptional where the defendants disregard the proceedings and do not appear." Id. at 1292.
Plaintiff seeks attorney's fees of $244,508.85 based on the fees and costs incurred in litigating this lawsuit, which Defendants Nanjing and Comoch litigated for some time before abandoning the lawsuit. (Mot. at 21-22; Dkt. 57 at 21-22; Wilson Decl. ¶ 11, Exh. E.) In the alternative, Plaintiff seeks attorney's fees of $32,055.31 under the fee schedule of Local Rule 55-3. (Mot. at 22; Dkt. 57 at 22.)
"If a party seeks a fee 'in excess of' the schedule and timely files a written request to have the fee fixed by the court, then the court must hear the request and award a 'reasonable' fee." Vogel v. Harbor Plaza Ctr., LLC, 893 F.3d 1152, 1159 (9th Cir. 2018). The court determines whether the fee is reasonable pursuant to the two-step lodestar method, first "by multiplying the number of hours reasonably expended on the litigation by a reasonable hourly rate." Id. at 1160 (alterations omitted) (quoting Costa v. Comm'r of Soc. Sec. Admin., 690 F.3d 1132, 1135 (9th Cir. 2012)). "The party seeking fees bears the burden of documenting the hours expended in litigation and must submit evidence supporting those hours and the rates claimed." See Welch v. Metro. Life Ins. Co., 480 F.3d 942, 946-47 (9th Cir. 2007) (citing Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983)). "In calculating the lodestar, district courts 'have a duty to ensure that claims for attorneys' fees are reasonable,' and a district court does not discharge that duty simply by taking at face value the word of the prevailing party's lawyer for the number of hours expended on the case." Vogel, 893 F.3d at 1160 (quoting Swedish Hosp. Corp. v. Shalala, 1 F.3d 1261, 1265 (D.C. Cir. 1993)) (citations omitted). Thus, the court may exclude from the fee request any "excessive, redundant, or otherwise unnecessary" hours. Hensley, 461 U.S. at 434, 103 S.Ct. 1933. At step two, and only "in rare and exceptional cases," "the district court may adjust the lodestar upward or downward using a multiplier based on facts not subsumed in the initial lodestar calculation." Welch, 480 F.3d at 946.
In this case, although Plaintiff seeks fees in excess of the schedule, Plaintiff does not sufficiently explain how the requirements of the lodestar method are met, such as by explaining why the hours expended and rates claimed are reasonable. Vogel, 893 F.3d at 1160. In other words, though Plaintiff's counsel provides billing records from this case in support of the fee request, these records list work performed by numerous timekeepers without sufficient explanation of each timekeeper's role, the work performed, or the rates sought. (See Wilson Decl. ¶ 11, Exh. E.) See, e.g., United Steelworkers of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990) ("Affidavits of the plaintiffs' attorney and other attorneys regarding prevailing fees in the community, and rate determination in other cases . . . are satisfactory evidence of the prevailing market rate."). Accordingly, the court has considered Plaintiff's request for fees in excess of the schedule but finds that Plaintiff, as the party seeking fees, has not met its burden of explaining why fees of $244,508.85 are reasonable. See Vogel, 893 F.3d at 1160
The court next considers Plaintiff's request in the alternative for fees under the fee schedule of Local Rule 55-3. (Mot. at 22.) Under Local Rule 55-3, when a judgment over $100,000 is entered, the accompanying attorney's fees award is calculated as "$5600 plus 2% of the amount over $100,000." L. R. 55-3. Per this formula, Plaintiff argues it should be awarded $32,055.31 based on the following calculation: "($1,4322,765.36-$100,000 = $1,322,765.36. $1,322,765.36 * 2% = $26,455.30) $5,600 + $26,455.30 = $32,055.31)". (Mot. at 22, n. 14.)
Because the court finds Plaintiff's calculation includes a typographical error and reasserts an estimate of profits that the court has already revised, the calculation should be revised as follows: $1,247,072.75 - $100,000 = $1,147,072.75. $1,147,072.75 * 0.02 = $22,941.46. $5,600 + $22,941.46= $28,541.46. Based on the record, the parties' arguments, and applicable law, the court finds that attorneys' fees of $28,541.46 are reasonable. See Vogel, 893 F.3d at 1159. Accordingly, the court awards Plaintiff $28,541.46 in attorneys' fees.
iii. Costs
Unless federal law, or the Federal Rules of Civil Procedure provide otherwise, the court may order costs other than attorney's fees to the prevailing party in an action. Fed. R. Civ. P. 54(d)(1); see also L. R. 54-1 (stating the prevailing party, or "the party in whose favor judgment is entered," is entitled to costs). Courts may award "taxable costs" such as: (1) fees of the clerk and marshal; (2) fees for transcripts necessarily obtained for use in the case; (3) fees and disbursements for printing and witnesses; (4) fees for necessarily obtained exemplification and copying costs; (5) docket fees; and (6) compensation of court appointed experts and interpreters. 28 U.S.C. § 1920; see also L. R. 54-3.
In this case, Plaintiff seeks costs of $5,836.11 for fees related to filing, proof of service, legal research, and scanning and printing. (Mot. at 22, Wilson Decl. ¶ 12, Exh. F.) As the party awarded default judgment, Plaintiff is the prevailing party and may recover these costs. See 28 U.S.C. § 1920 (taxable costs include clerk fees, transcript fees, printing and witness fees, copying costs, docket fees, and compensation of experts and interpreters); L. R. 54-3.1 & 54-3.2 ("Reasonable fees for service of process under F.R. Civ. P. 4 . . . are taxable, including reasonable fees for research, surveillance, wait time, and parking incurred in connection with service."). Accordingly, the court awards Plaintiff $5,836.11 in costs.
iv. Permanent Injunction
As for Plaintiff's request for a permanent injunction, Plaintiff seeks to enjoin Defendants from "making, using, selling, offering for sale, importing, and distributing products in connection with the STARSPACE mark or any mark that contains the words STAR and SPACE." (Mot. at 25.) The Lanham Act permits a court to enter an injunction to "prevent the violation of any right of the registrant of a mark registered in the Patent and Trademark Office." 15 U.S.C § 1116(a). As discussed above, Plaintiff has adequately pled its claims with respect to the Defendants. Thus, Plaintiff may properly seek permanent injunctive relief with respect to those claims by demonstrating that: (1) "it has suffered an irreparable injury;" (2) "remedies available at law, such as monetary damages, are inadequate to compensate for that injury;" (3) "considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted;" and (4) "the public interest would not be disserved by a permanent injunction." eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).
In this case, the court finds Plaintiff has appropriately demonstrated that it will suffer irreparable injury because per 15 U.S. Code § 1116(a), "[a] plaintiff seeking any such injunction shall be entitled to a rebuttable presumption of irreparable harm upon a finding of a violation identified in this subsection in the case of a motion for a permanent injunction or upon a finding of likelihood of success on the merits for a violation identified in this subsection." Plaintiff has also appropriately demonstrated that legal remedies would be inadequate because, per Century 21 Real Est. Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988), "[i]njunctive relief is the remedy of choice for trademark and unfair competition cases, since there is no adequate remedy at law for the injury caused by a defendant's continuing infringement." The balance of hardships weighs in favor of Plaintiff because Plaintiff "will lose profits and goodwill without an injunction, while an injunction will only proscribe [Defendants'] infringing activities." Luxottica Grp., S.p.A. v. Eye Story, Inc., 2020 WL 2404913, at *6 (C.D. Cal. May 11, 2020). The court further finds that an injunction would be in the public interest because "[w]here defendant's concurrent use of plaintiff's trademark without authorization is likely to cause confusion, the public interest is damaged by the defendant's use." AT & T Corp. v. Vision One SecuritySystems, 1995 WL 476251, at *7 (S.D. Cal. July 27, 1995). Thus, based on the state of the record, as applied to the applicable law, the court concludes that Plaintiff is entitled to a permanent injunction.
The court further finds that Plaintiff's requested injunction is narrowly tailored to remedy only the specific harms at issue by prohibiting only future infringing conduct by Defendants. See Price v. City of Stockton, 390 F.3d 1105, 1117 (9th Cir. 2004). Accordingly, the court GRANTS Plaintiff's request for a permanent injunction against Defendants.
As for Plaintiff's final request that the court issue an order canceling Defendant Comoch's STARSPACE registrations (Mot. at 25), the court finds that Plaintiff does not sufficiently explain the basis for this request or why the statutory elements are met. Under 15 U.S.C. § 1119, "[i]n any action involving a registered mark the court may determine the right to registration, order the cancelation of registrations, in whole or in part, restore canceled registrations, and otherwise rectify the register with respect to the registrations of any party to the action." Cancellation of a trademark registration is proper "when (1) there is a valid ground why the trademark should not continue to be registered and (2) the party petitioning for cancellation has standing." Star-Kist Foods, Inc. v. P. J. Rhodes & Co., 735 F.2d 346, 348 (9th Cir. 1984) (citation omitted)). Because Plaintiff does not sufficiently address these elements (see generally Mot.), the court finds there is an insufficient basis in the record to cancel Defendant Comoch's registrations.
IV. Disposition
For the reasons set forth above, the Motion is GRANTED. The court awards Plaintiff the following relief:
• $1,247,072.75 in restitution pursuant to 15 U.S.C. § 1117(a)
• $28,541.46 in attorney fees pursuant to L. R. 55-3
• $5,836.11 in litigation costs
• A permanent injunction according to the terms found in the proposed judgment, (Dkt. 57-2).
Plaintiff is ORDERED to lodge a proposed judgment consistent with this Order within ten (10) days of entry of this Order.