Opinion
5:23-CV-31-M
04-29-2024
FORTIS DESIGN, INC., Plaintiff, v. YUANDONG ZHANG, Defendant.
MEMORANDUM AND RECOMMENDATION
ROBERT B. JERNES, JR. UNITED STATES MAGISTRATE JUDGE
This matter is before the court on the Plaintiff Fortis Design Inc.'s motion for default judgment against Defendant Yuandong Zhang. [DE-16], No response to the motion was filed, and the time to do so has expired. The motion is referred to the undersigned for a memorandum and recommendation to the district court. See 28 U.S.C. § 636(b)(1)(B); Local Civ. R. 72.3(c). For the reasons that follow, it is recommended that the motion for default judgment be allowed.
I. Background
On January 20, 2023, Fortis filed a complaint against Zhang for copyright infringement. Compl. [DE-1], Fortis sells a line of designer polypropylene tapes with natural wood grain and leather patterns to consumers through its own online retail store. Id. ¶¶ 7-8. In 2016, Fortis created a tape that mimics a natural wood grain (the “Wood Grain Pattern”), and Fortis obtained a registered copyright in the Wood Grain Pattern with the United States Copyright Office, U.S. Copyright Registration No. VA2-291-773 (the ‘“773 Registration”). Id. ¶¶ 9-10.
Zhang also sold a polypropylene tape with a wood grain pattern under the name DUDUA through the Amazon marketplace online. Id. ¶ 11. The DUDUA tape pattern is a direct copy of and directly competes with Fortis's Wood Grain Pattern tape, and Zhang was not authorized by Fortis to copy the Wood Grain Pattern. Id. ¶¶ 11-12. Zhang's sales of the allegedly infringing DUDUA tape resulted in $85,874.79 in sales. Deel, for Mot. for Default J. [DE-18] ¶ 9.
Zhang was served with the complaint on January 26,2023, [DE-8, -10], but failed to answer or otherwise respond. The Clerk of Court entered default against Zhang on June 29, 2023, [DE-13], and Fortis subsequently filed the instant motion for default judgment, [DE-16].
II. Discussion
Once default has been entered, a party may seek a default judgment. Fed.R.Civ.P. 55(b). Upon default, the well-pleaded facts alleged in the complaint, as to liability, are deemed admitted. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001); E.E.O.C. v. Carter Behavior Health Servs., Inc., No. 4:09-CV-122-F, 2011 WL 5325485, at *3 (E.D. N.C. Oct. 7, 2011), adopted by, 2011 WL 5325473 (E.D. N.C. Nov. 3, 2011). A court may enter a default judgment with or without a hearing in order to make an award of damages. Fed.R.Civ.P. 55(b)(2)(B). A hearing is required only when the damages sought are not “a liquidated sum or one capable of mathematical calculation.” W. Sur. Co. v. BeckElec. Co., No. CIV. 3:06-CV-383,2008 WL 345821, at *6 (W.D. N.C. Feb. 5, 2008) (quoting United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)).
Here, default has been entered against Zhang, and he has failed to respond to the instant motion for default judgment. In support of the motion, Plaintiff filed a declaration from the President of Fortis, Robert Jordan; a declaration from Fortis's counsel; and an Excel spreadsheet containing sales information for the DUDUA tape. [DE-16-1, -16-2], Fortis seeks a judgment that it has a valid and enforceable copyright in the ‘773 Registration; that Zhang, his respective agents, servants, employees, and attorneys and all those in active concert or participation with them, be permanently and forever enjoined from infringing the ‘773 Registration; that Zhang and all those acting in concert with him be permanently enjoined from using Fortis's Wood Grain Pattern protected by the ‘773 Registration; that orders the impoundment and destruction of any and all works, derivative works, or products bearing the Wood Grain Pattern, including any unsold goods; that Fortis have and recover actual damages and profits pursuant to 17 U.S.C. § 504 for Zhang's infringement in an amount of $85,874.79 as determined by profit records produced by Amazon; and that the costs of this action be taxed against Zhang. Pl.'s Mot. [DE-16] at 2-3.
To establish a claim of copyright infringement under 17 U.S.C. § 501, “a plaintiff must prove that [he] possesses a valid copyright and that the defendant copied elements of [the] work that are original and protectable.” Chambers v. Amazon.com Inc., 632 Fed.Appx. 742, 744 (4th Cir. 2015) (quoting Copeland v. Bieber, 789 F.3d 484, 488 (4th Cir. 2015)). “Absent direct proof of copying, which is hard to come by, a plaintiff may prove copying indirectly, with evidence showing that the defendant had access to the copyrighted work and that the purported copy is ‘substantially similar' to the original.” Id.
As to the first element, Fortis has presented uncontroverted evidence that it is the owner of the ‘773 Registration, Compl., Ex. 1 [DE-1] at 7 (Certificate of Registration No. VA 2-291-773); Jordan Deel. [DE-16-1] ¶ 4, and Zhang has not contested the validity or enforceability of the copyright. See Microsoft Corp. v. Does, No. L.20-CV-01171-AJT-IDD, 2021 WL 8444748, at *4 (E.D. Va. Aug. 12, 2021) (“A certificate of registration issued by the Copyright Office is prima facie evidence of ownership.”) (citing Universal Furniture Int'l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417,428 (4th Cir. 2010)), adopted by, 2021 WL 8444640 (E.D. Va. Sept. 24, 2021). As for the second element, the Wood Grain Pattern tape is publicly available through Fortis's online store, and Jordan compared Fortis's products using the Wood Grain Pattern with the DUDUA products sold on the Amazon marketplace and found substantial similarities. Compl. [DE-1] ¶ 8; Jordan Deci. [DE-16-1] ¶ 5. Fortis also alleged that Zhang “willfully, and without the knowledge or consent of Fortis, copied or caused to be copied the Wood Grain Pattern and placed the Wood Grain Pattern on counterfeit polypropylene tape,” Compl. [DE-1] ¶ 15, which is now conclusively admitted as a result of Zhang's default. See Mon Cheri Bridals, LLC v. Partnerships, No. 3:15-CV-00021-FDW-DC, 2015 WL 3509259, at *4 (W.D. N.C. June 4, 2015) (granting default judgment for copyright infringement where plaintiff alleged that it was the owner of a valid copyright registration and that defendants made infringing uses of the protected image without plaintiffs authorization). Accordingly, Fortis has established that it possesses a valid copyright in the Wood Grain Pattern through the ‘773 Registration and that Zhang wrongfully copied Fortis's original and protected work.
Turning to the requested relief, Fortis seeks a permanent injunction and monetary damages for Zhang's infringing activity. Both are permissible under the Copyright Act, and Fortis has demonstrated it is entitled to monetary damages and injunctive relief.
Beginning with monetary damages, a prevailing plaintiff in a copyright infringement case may elect to recover actual damages, including any profits attributable to the infringement. See Oppenheimer v. Johnson, No. 1:19-CV-00240-MR, 2020 WL 1923162, at *1 (W.D. N.C. Apr. 21, 2020) (citing 17 U.S.C. § 504(b)). The Fourth Circuit has explained the appropriate burdens of proof to establish an infringer's profits:
In establishing the infringer's profits, the copyright owner is required to present proof only of the infringer's gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work. In other words, once the copyright owner has established the amount of the infringer's gross revenues, the burden shifts to the infringer to prove either that part or all of those revenues are deductible expenses (i.e., are not profits), or that they are attributable to factors other than the copyrighted work.Universal Furniture Int'l, Inc., 618 F.3d at 440 (cleaned up) (quoting Bouchat v. Balt. Ravens Football Club, Inc., 346 F.3d 514, 520 (4th Cir. 2003)). Here, Fortis provided records subpoenaed from Amazon.com Services, LLC containing the sales information for DUDUA's infringing products, which demonstrate that the total infringing sales were $85,874.79. Parsons Deel. [DE-16-2] ¶ 9; Attachment 1 [DE-18] at 4-154. This is sufficient to satisfy Fortis's burden to present proof of gross revenue, and Zhang has not responded with evidence demonstrating those sales were not profits or the sales were attributable to factors other than the infringed Wood Grain Pattern. Accordingly, Fortis is entitled to recover $85,874.79 in profits attributable to the infringement.
Finally, Fortis seeks an injunction permanently enjoining infringement of the ‘773 Registration and the use of the Wood Grain Pattern, as well as impoundment and destruction of infringing products, including unsold goods. Pl.'s Mot. [DE-16] at 2-3. The Copyright Act permits a court to grant a permanent injunction “on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C. § 502(a); Silicon Knights, Inc. v. Epic Games, Inc., 917 F.Supp.2d 503, 530 (E.D. N.C. 2012), aff'd, 551 Fed.Appx. 646 (4th Cir. 2014) (citing Christopher Phelps & Assocs., LLC v. Galloway, 492 F.3d 532, 546-47 (4th Cir. 2007)). This may include “the destruction or other reasonable disposition of all copies . . . found to have been made or used in violation of the copyright owner's exclusive rights . . . .” Silicon Knights, Inc., 917 F.Supp.2d at 530 (quoting 17 U.S.C. § 503(b)). “[A] permanent injunction is especially appropriate where a threat of continuing infringement exists.” Arista Rees. LLC v. Gaines, 635 F.Supp.2d 414, 417 (E.D. N.C. 2009) (citing M.L.E. Music v. Kimble, Inc., 109 F.Supp.2d 469 (S.D. W.Va. 2000) (“Various district courts within this circuit have held that when a claim of copyright infringement has been proven, a permanent injunction prohibiting further infringements is appropriate and routinely entered.”)). Furthermore, the Fourth Circuit has recognized that in order “to obtain a permanent injunction in any type of case, including a . . . copyright case,” a plaintiff must demonstrate the following four well-known factors:
(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.QueTel Corp. v. Abbas, 819 Fed.Appx. 154, 157 (4th Cir. 2020) (quoting Christopher Phelps, 492 F.3d at 543).
Through default, Zhang has admitted selling infringing products. Compl. [DE-1] ¶¶ 1017. Fortis submitted a copyright infringement complaint to Amazon for five infringing products. Jordan Deci. [DE-16-1 ] ¶ 6. Zhang submitted a counter notice to Amazon in an attempt to continue selling the infringing products. [DE-7-1] at 2. This demonstrates that there is a real threat of continuing infringement absent a permanent injunction. See Arista Rees. LLC, 635 F.Supp.2d at 417 (finding permanent inj unction under the Copyright Act appropriate where defendant by default admitted the copyright infringement continued).
Furthermore, the four factors are easily met. First, Fortis has suffered irreparable harm from Zhang's infringement. See Christopher Phelps, 492 F.3d at 544 (“[i]rreparable injury [can be] derive[d] from the nature of copyright violations, which deprive the copyright holder of intangible [and] exclusive rights.”). Second, monetary damages are not adequate to compensate Fortis absent a permanent injunction. See id. (finding damages at law will not remedy ongoing copyright violation and calculation of future damages would entail speculation and guesswork). Third and fourth, the balance of equities and the public interest support imposing a permanent injunction to protect Fortis from further infringement of its copyright. See Banilia Games, Inc. v. AKS Virginia, LLC, No. 3:22-CV-131 (DJN), 2022 WL 16747288, at *4 (E.D. Va. Nov. 7, 2022) (finding defendant demonstrated no hardship, having not responded to the complaint, and the protection of copyrights serves the public interest). Accordingly, the court should allow Fortis's request for a permanent injunction to halt Zhang's infringement of the ‘773 Registration and the use of the Wood Grain Pattern, as well as impoundment and destruction of infringing products, including unsold goods. See QueTel Corp., 819 Fed.Appx. at 157 (affirming imposition of permanent injunction); Banilla Games, Inc. v. Russell Charles Hines, No. 2:22-CV-212, 2022 WL 17085953, at *8 (E.D. Va. Oct. 31, 2022) (finding four requirements for permanent injunction satisfied in light on threat of ongoing copyright infringement), adopted sub nom. Banilla Games, Inc. v. Hines, 2022 WL 17084378 (E.D. Va. Nov. 18, 2022); UMG Recordings, Inc. v. Kurbanov, No. L18-CV-957-CMH-TCB, 2021 WL 6492907, at *12 (E.D. Va. Dec. 16, 2021) (finding that “because of Defendant's continuing infringement and his refusal to participate in this lawsuit, injunctive relief is appropriate and the best means to prevent future harm to Plaintiffs”), adopted by, 2022 WL 20417526 (E.D. Va. Feb. 10, 2022).
III. Conclusion
For the reasons stated herein, it is recommended that the motion for default judgment, [De-16], be allowed.
IT IS DIRECTED that a copy of this Memorandum and Recommendation be served on each of the parties or, if represented, their counsel. Each party shall have until May 13, 2024 to file written objections to the Memorandum and Recommendation. The presiding district judge must conduct his or her own review (that is, make a de novo determination) of those portions of the Memorandum and Recommendation to which objection is properly made and may accept, reject, or modify the determinations in the Memorandum and Recommendation; receive further evidence; or return the matter to the magistrate judge with instructions. See, e.g., 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(3); Local Civ. R. 1.1 (permitting modification of deadlines specified in local rules), 72.4(b). Any response to objections shall be filed by within 14 days of the filing of the objections.
If a party does not file written objections to the Memorandum and Recommendation by the foregoing deadline, the party will be giving up the right to review of the Memorandum and Recommendation by the presiding district judge as described above, and the presiding district judge may enter an order or judgment based on the Memorandum and Recommendation without such review. In addition, the party's failure to file written objections by the foregoing deadline will bar the party from appealing to the Court of Appeals from an order or judgment of the presiding district judge based on the Memorandum and Recommendation. See Wright v. Collins, 766 F.2d 841, 846-47 (4th Cir. 1985).