Opinion
1:20-cv-02238-MC
01-10-2022
DAREX, LLC, Plaintiff, v. FAT BOY TOOLS, LLC, and FAT BOY TOOLS2, LLC, Defendants,
OPINION AND ORDER
Michael McShane United States District Judge
Plaintiff DAREX, LLC moves for Default Judgment, attorney fees, and costs. See ECF No. 21. For the reasons that follow, Plaintiffs' motion, ECF No. 21, is GRANTED.
BACKGROUND
Plaintiff brought this copyright infringement, trademark infringement, and unfair competition action against Defendants Fat Boy Tools, LLC and Fat Boy Tools2, LLC due to Defendants' unauthorized use and reproduction of Plaintiff's DRILL DOCTOR and WORK SHARP trademarks and copyrights. Defendants failed to appear or file responsive pleadings. As a result, any allegations in the Complaint that do not relate to the amount of damages are deemed admitted. See Fed. R. Civ. P. 8(b)(6).
Plaintiff registered multiple DRILL DOCTOR trademarks and copyrights with the United States Trademark Registration that were reproduced by the Defendants. Pl.'s Compl. at 5-7, ECF No.1. Additionally, Plaintiff registered multiple WORK SHARP trademarks and copyrights with the United States Trademark Registration that were also reproduced by the Defendants. Id. Defendants were not authorized to use the DRILL DOCTOR or WORK SHARP trademarks in connection with any product or product listings and was not authorized to mix or combine the DRILL DOCTOR or WORK SHARP trademarks as alleged by Plaintiff in the Complaint. Id. Defendant infringes both trademarks by advertising products with the marks on its website. Pl.'s Compl. at 11-12.
Under the Lanham Act, Plaintiff is entitled to recover any profits generated by the selling of unauthorized products by the Defendants, any damages sustained by the Plaintiff, and the cost of the court fees regarding this action. 15 U.S.C. § 1117 (1946)(a). Plaintiff also seeks an injunction preventing Defendants from further infringing on Plaintiff's trademarks and copyrights.
STANDARDS
A defendant must file a responsive pleading within 21 days of being served or within 60 days if the defendant has timely waived service. Fed.R.Civ.P. 12(a)(1)(A). “When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a).
After entering an order of default, the district court may enter a default judgment. See Fed. R. Civ. P. 55(b); DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 852 (9th Cir. 2007). In exercising its discretion, the court may consider:
(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).
DISCUSSION
I. Entry of Default
As Defendants have not responded to the complaint and more than 60 days have passed without Defendants filing any responsive pleadings, the Court entered default against Defendants. ECF No. 18.
II. Entry of Default Judgment
In considering an entry of default judgment, this Court examines the seven factors laid out in Eitel. To satisfy the first factor, if this Court does not enter a default judgment in Plaintiff's favor, Plaintiff has no other avenue of recovery. To satisfy the next two factors, Plaintiffs must state a valid claim in a well-pleaded complaint, for which the refusal to grant a default judgment would be prejudicial to Plaintiff.
To establish a valid claim of copyright infringement, Plaintiff must establish ownership of a valid copyright and copying by the Defendant. Data East USA, Inc. v. Epyx, Inc., 862 F.2d 204, 206 (9th Cir. 1988). Plaintiff provides evidence of the registered copyrights Plaintiff owns as well as evidence that Defendants made and distributed exact copies of Plaintiff's registered copyrighted work. Pl.'s Compl. at 5-8. Plaintiff has made a valid claim of copyright infringement.
To establish claims of trademark infringement and unfair competition, Plaintiff must show use in commerce of a trademark that is likely to cause confusion or mistake as to the source of the product or service. See 15 U.S.C. §§ 1114, 1125(a). Plaintiff has provided evidence of valid trademarks regarding its DRILL DOCTOR and WORK SHARP products. Pl.'s Compl. at 5-7. Plaintiff further alleges that the Defendants used its trademarked images without authorization on Defendants websites. Id.. The Lanham Act broadly defines commerce as “all commerce which may lawfully be regulated by Congress.” 15 U.S.C. § 1127. Plaintiff alleges the Defendants used its trademarks in commerce, via online displays, in a way that is likely to cause confusion among consumers. Pl.'s Compl. at 6-7.
To determine if the Defendant used Plaintiff's trademark in a way that causes confusion, the Court considers the “Sleekcraft Factors:”:
(1) strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendant's intent in selecting the mark; and (8) likelihood of expansion of the product lines.M2 Software, Inc. v. Madacy Ent., 421 F.3d 1073, 1080 (9th Cir. 2005) (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979)).
A.Strength of the Mark.
A trademark's strength is measured by its inherent distinction. Marks are “classified in one of five categories of increasing distinctiveness” that warrant increasing protection: (1) generic, (2) descriptive, (3) suggestive, (4) arbitrary, or (5) fanciful. Zobmondo Ent., LLC v. Falls Media, LLC, 602 F.3d 1108, 1113 (9th Cir. 2010). Generic or descriptive marks are not entitled to protection from the Patent and Trademark office. Id. The Patent and Trademark Office issued a registration to Plaintiff which is prima facie evidence that the mark is at least suggestive and thus inherently distinctive. Id. As inherently distinctive marks, DRILL DOCTOR and WORK SHARP are entitled to greater protection.
B. Proximity of the Goods.
The goods at issue are unauthorized products which Defendants use in a manner to confuse customers. Pl.'s Compl. at 2. The proximity or relatedness of the unauthorized product to the protected product is such that the buying public would reasonably believe they come from an authorized source.
C. Similarity of the Marks.
The marks used on the Defendant's unauthorized products and the Plaintiff's registered products are identical. Pl.'s Compl. at 2.
D. Evidence of Actual Confusion.
Evidence of actual confusion is not required in order to prove that a likelihood of confusion exists because a Plaintiff bringing a trademark claim will likely not have this information. Sleekcraft, 599 F.2d at 353. Plaintiff's failure to provide evidence of actual confusion is not fatal to Plaintiff's claim.
E. Marketing Channels Used.
“In assessing marketing channel convergence, courts consider whether the parties' customer bases overlap and how the parties advertise and market their products.” Pom Wonderful LLC v. Hubbard, 775 F.3d 1118, 1130 (9th Cir. 2014). Both parties use the internet as their main marketing channel. Plaintiff sells its products through authorized resellers while the Defendants sells the unauthorized products on its website. Pl.'s Compl. at 4-7.
F. Type of Goods and the Degree of Care.
The authorized and unauthorized goods are identical in the eyes of the consumer. A consumer shopping on online would not be able to tell the difference between the Plaintiff's authorized products and Defendant's unauthorized products.
G. Defendant's Intent.
Plaintiff holds a market leading position in the tool-sharpening industry. Pl.'s Compl. at 3. The Defendants' intent is clear in that they wanted to use the marks to exploit Plaintiff's brand recognition. Pl.'s Compl. at 12-13.
H. Likelihood of Expansion.
Because the parties here “are direct competitors, the ‘likelihood of expansion' factor is unimportant.” Hero Nutritionals LLC v. Nutraceutical Corp., 2013 WL 4480674 at *8 (C.D. Cal. Aug. 16, 2013) (citing Network Automation, Inc. v. Adv. Sys. Concepts, Inc., 638 F.3d 1137, 1153 (9th Cir.)).
The Court finds that Plaintiff adequately pleaded that Defendants used Plaintiff's trademark in a way that causes confusion.
Returning to the Eitel factors, the Fourth and Fifth factors are satisfied because there are $10,145.50 in attorney's fees and costs at stake in this action and there are no material disputes of fact. Plaintiff has provided verifiable images and evidence captured from the Defendants' product listings. Concerning the Sixth factor, the Defendants failed to provide any explanation constituting excusable neglect. Although the Seventh factor favors decisions on the merits, Defendants' inaction in this matter has made a decision on the merits impossible. If the general policy in favor of a decision on the merits, standing alone, outweighed the previous six Eitel factors, then defendants could always refuse to defend an action and still avoid a default judgment. Therefore, the Eitel factors in this case support an entry of default judgment.
Plaintiff seeks $10,145.50 in attorney's fees and costs. Under the Lanham Act, successful plaintiffs are entitled to the costs of the action and, if the action is deemed exceptional, reasonable attorney fees. 15 U.S.C. § 1117(a). The Supreme Court has explained that “an ‘exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). Based on the record, the fees sought here are reasonable. Accordingly, plaintiff is entitled to the full $10,145.50 in attorney's fees and costs.
Plaintiffs' motion for Default Judgment, attorney fees, and costs, ECF No. 21 is GRANTED. Plaintiffs are entitled to $10,145.50 in attorney's fees and costs.
Additionally, the Court concludes that Plaintiff has demonstrated the likelihood of irreparable harm going forward. Plaintiff may submit a proposed permanent injunction for the Court to consider.
IT IS SO ORDERED.