Opinion
No. C 03-05814 WHA.
May 25, 2004
ORDER GRANTING PLAINTIFF'S APPLICATION FOR DEFAULT JUDGMENT
In this trademark-infringement action, plaintiff has applied for entry of default judgment against defendants who have never appeared in this action. Review of the Eitel factors favors entry of default judgment in this case with respect to most of plaintiff's claims. Thus, plaintiff's motion is GRANTED. Yet, plaintiff's requested permanent injunction requires a couple of minor modifications.
STATEMENT
On December 24, 2003, plaintiff filed its complaint seeking damages and injunctive relief. In the complaint, plaintiff asserts five claims against defendants: (1) trademark infringement under the Lanham Act, 15 U.S.C. § 1114(1); (2) false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a); (3) unfair competition under state common law; (4) unfair competition under California Business and Professions Code Section 17200; and (5) dilution under California Business and Professions Code Section 14330. In support of those claims, plaintiff asserts the following allegations.
Plaintiff is a national association of chimney-sweep operators whose members are engaged in the business of maintaining and promoting quality services for chimney cleaning throughout the United States. Towards that endeavor, plaintiff has registered several trademarks, all revolving around the term "certified chimney sweep." At issue are two trademarks. One is the trademark "CERTIFIED CHIMNEY SWEEP CHIMNEY SAFETY INSTITUTE OF AMERICA," which has been registered as of March 8, 1994, and renewed on October 8, 1999. The other is the service mark "CERTIFIED CHIMNEY SWEEP" which has been registered as of January 17, 1995.
Plaintiff permits the use of the two marks by those who finish plaintiff's training-and-certification program entitled "Certified Chimney Sweep" program. Plaintiff is purportedly the only organization in the United States and Canada qualified to "certify" chimney sweeps. Those who obtain certification are permitted to use the CERTIFIED CHIMNEY SWEEP® logo for a three-year period, subject to renewal upon re-certification. Plaintiff authorizes the promotional use of the logo on business stationery and forms, advertising and marketing materials, business vehicles and signs, and publications promoting chimney-sweep services. Through widespread use and purportedly favorable public recognition, plaintiff alleges that the logo has become a symbol of plaintiff's organization and its quality of services and products.
Defendants have supposedly used the two marks to identify their services without plaintiff's consent. Defendant Jeff Oneson is allegedly the owner or managing agent of defendant Chimney King, whose principal place of business is located in Walnut Creek, California. While fully aware of plaintiff's requirements of the certification process, defendants allegedly have not obtained certification.
Moreover, plaintiff has repeatedly requested defendants to cease and desist using plaintiff's trademark CERTIFIED CHIMNEY SWEEP CHIMNEY SAFETY INSTITUTE OF AMERICA® plus the logo. Defendants have refused to comply. Instead, defendants have purportedly continued to market their business using plaintiff's registered marks and thereby falsely conveying membership in plaintiff's organization. Plaintiff alleges that defendants' use has fostered likelihood of confusion, deception, and mistake on consumers.
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Plaintiff served defendants with a copy of the summons and the complaint on February 5, 2004. Defendants did not serve plaintiff with a responsive pleading within twenty days as required by FRCP 12(a)(1)(A) or otherwise appear in this case. Default was entered on March 5, 2004. Plaintiff now requests an entry of judgment by default and relief in the form of a permanent injunction.
ANALYSIS
Under the Federal Rule of Civil Procedure 55(b)(2), a party can apply to a district court for entry of judgment by default. A defendant's default does not automatically entitle the plaintiff to a court-ordered judgment. See Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986). Rather, granting or denying a motion for default judgment is entirely within the discretion of the trial court. Lau Ah Yew v. Dulles, 236 F.2d 415, 416 (9th Cir. 1956). The Ninth Circuit has enumerated the following factors that a court may consider in determining whether to grant default judgment:
(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.Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). These factors favor entry of default judgment in this case.
This order notes at the onset that the Court has subject-matter jurisdiction over the federal claims under the Lanham Act, pursuant to 28 U.S.C. § 1331. It has supplemental jurisdiction over the related state-law claims. The Court has personal jurisdiction over defendants, as defendants were served with the summons and complaint within this jurisdiction. See Burnham v. Superior Court, 495 U.S. 604, 610-11 (1990). Furthermore, Defendants are not infants or incompetent persons and are not in the military of otherwise exempted under the Solders' and Sailors' Civil Relief Act of 1940.
1. MERITS AND SUFFICIENCY OF COMPLAINT.
After entry of default, well-pleaded allegations in the complaint regarding liability are taken as true, except as to the amount of damages. Fair Hous. v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Thus, there can be no dispute as to the material facts to the extent they were pled in the complaint. Consequently, this order reviews together Eitel factors two, three, and five to see whether plaintiff has adequately stated a claim upon which it could recover. See Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978).
In this action, plaintiff asserts the following claims: (1) trademark infringement under the Lanham Act, 15 U.S.C. § 1114(1); (2) false designation of origin under the Lanham Act, 15 U.S.C. § 1125(a); (3) unfair competition under state common law; (4) unfair competition under California Business and Professions Code Section 17200; and (5) dilution under California Business and Professions Code Section 14330.
With respect to plaintiff's first two causes of action, the Ninth Circuit has held that the analysis for infringement under Sections 1114(a)(1) and 1125(a)(1) are generally identical. Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1046-47 n. 8 (9th Cir. 1999). Accordingly, to prevail in an action for trademark infringement or false designation of origin, plaintiff must show that: (1) plaintiff's term "CERTIFIED CHIMNEY SWEEP CHIMNEY SAFETY INSTITUTE OF AMERICA" and the logo "CERTIFIED CHIMNEY SWEEP" are valid and protectable trademarks; (2) plaintiff owns these marks as trademarks; (3) plaintiff used these marks in commerce; and (4) defendants used terms or designs similar to plaintiff's marks without the consent of the plaintiff in a manner that is likely to cause confusion among ordinary purchasers as to the source of the goods. Ibid.
The last prong, likelihood of confusion, is also the dispositive issue for common law trademark infringement and California unfair-competition claim. Dr. Seuss Enterprises v. Penguin Books USA, Inc., 109 F.3d 1394, 1403 (9th Cir. 1997). The federal likelihood-of-confusion standard applies to California trademark infringement and unfair-competition claims. See Thane Intl., Inc. v. Trek Bicycle Corp., 305 F.3d 894, 901 n. 3 (9th Cir. 2002). Thus, the same basic test exists for the first four of plaintiff's claims.
In the instant action, plaintiff's complaint properly alleges the elements for the first four claims. First, plaintiff has registered its marks and, therefore, there is proof of the validity of the trademarks. Second, the registration clearly shows that plaintiff is the owner of each mark. Third, plaintiff asserts in its complaint that it certifies chimney-sweep operators to use the marks in commerce. Fourth, plaintiff has set forth in detail facts supporting likelihood of confusion, the dispositive issue in all of plaintiff's claims except for dilution.
In the complaint, plaintiff describes its registered marks and alleges that defendants used and continue to use its marks. Moreover, plaintiff alleges that such continual use is likely to cause confusion or mistake, or to deceive consumers (Compl. ¶¶ 12-13, 18). Moreover, in its supplemental brief, plaintiff has submitted a copy of defendants' advertisement in what appears to be a yellow-page insert. It contains what appears to be a replica of plaintiff's mark with plaintiff's stylistic rendition of a part of a chimney, all within a circle.
There is one difference between defendants' and plaintiff's designs. Defendants' design contains the phrase "NATIONAL CHIMNEY SWEEP GUILD" whereas plaintiff's trademark contains in similar font and at the same location the phrase "CHIMNEY SAFETY INSTITUTE OF AMERICA" (Supp. Br. Exh. A). This difference is barely noticeable, however, due to the small font size of the text which is barely larger than the thickness of the line used to create the circle that, in turn, frames the rest of the design. Overall, defendants' and plaintiff's designs are substantially similar. Such similarity in design is likely to confuse consumers. Moreover, likelihood of confusion is heightened by the fact that both parties offer and advertise chimney sweeping services. Accordingly, plaintiff has adequately pled their claims in the complaint and has shown merit in its claims of federal and common-law trademark infringement, false designation of origin, and California unfair competition.
Unlike the first four claims, plaintiff has failed to adequately plead and to state a claim for dilution. To prevail on the dilution claim, plaintiff must prove a "[l]ikelihood of injury to business reputation or of dilution of the distinctive quality of a mark . . ., notwithstanding the absence of competition between the parties or the absence of confusion as to the source of goods or services." Cal. Bus. Prof. Code 14330 (West 2002). Section 14330 protects only famous marks. See Avery Dennison Corp. v. Sumpton, 189 F.3d 868, 874 (9th Cir. 1999).
Nowhere in the complaint or in the supplemental brief upon the Court's request has plaintiff alleged that its trademarks are famous. In the complaint, plaintiff alleges that defendants' use caused "dilution of the distinctive quality of Plaintiff's marks and forms of advertisement" (Compl. ¶ 29). The supplemental brief merely states in a conclusory manner that "[t]he complaint contains the requisite facts when accepted as true to state and support each claim" (Supp. Br. 3). Unfortunately, no facts have been asserted in the complaint to show that plaintiff's trademarks meet the requisite famousness. Thus, plaintiff cannot obtain default judgment based on this claim for dilution.
2. REMAINING FACTORS.
Excluding plaintiff's claim for dilution, this order finds that on balance the remaining Eitel factors also favor entry of default judgment on plaintiff's other claims. To deny plaintiff's motion will leave plaintiffs without a remedy. Plaintiff does not seek monetary damages; it seeks a permanent injunction. Defendants were properly served with the complaint and notified of the default. Defendants also received numerous cease-and-desist letters. It even appears that plaintiff has attempted to achieve a settlement or some kind of a stipulation with defendants regarding this matter. Defendants have never responded or appeared. Accordingly, it is unlikely that the default was the result of excusable neglect. Although federal policy may favor decisions on the merits, FRCP 55(b) permits entry of default judgment in situations such as this where the defendant refuses to litigate.
3. PERMANENT INJUNCTION.
Plaintiff's demand for relief must be specific, pursuant to FRCP 8(a)(3). As noted above, plaintiff seeks a permanent injunction. At the hearing, specific provisions of the proposed permanent injunction were discussed. Since then, plaintiff has corrected and submitted another proposed permanent injunction that comports with the rulings on the bench.
CONCLUSION
For the foregoing reasons, plaintiff's application for default judgment is GRANTED with respect to its claims for trademark infringement, false designation of origin, common law infringement, and California unfair competition. It is denied with respect to dilution. Plaintiff's request for a permanent injunction (appended hereto) is GRANTED.