RONALD S.W. LEW, Senior District Judge.
Currently before the Court is Plaintiff Deckers Outdoor Corporation's ("Deckers" or "Plaintiff") Motion for Default Judgment [15] against Defendants Ozwear Connection Pty Ltd. ("Ozwear") and Alexander Adams ("Adams") (collectively, "Defendants"), filed by Plaintiff on July 31, 2014. Plaintiff moves for Default Judgment against Defendants as to the following claims: (1) Trademark Infringement in violation of 15 U.S.C. §§ 1114(1) and 1125(a); (2) Unfair Competition and False Designation of Origin in violation of 15 U.S.C. § 1125(a); (3) Dilution of a Famous Mark in violation of 15 U.S.C. § 1125(c); (4) "Cybersquatting" in violation of 15 U.S.C. § 1125(d); and (5) two claims of Patent Infringement in violation of 35 U.S.C. § 271. Plaintiff requests as relief $4 million ($2 million per defendant) in statutory damages pursuant to 15 U.S.C. § 1117(c)(2), a permanent injunction, and various orders.
The Motion was set for hearing on September 10, 2014, and was taken under submission by the Court on September 4, 2014 [16]. The Court, having reviewed all papers submitted pertaining to this Motion,
Plaintiff Deckers is an American corporation that designs, markets, and sells footwear and other merchandise under its UGG® brand. Compl. ¶¶ 6, 14-19. Plaintiff owns the trademark "UGG," a valid and incontestible trademark registered with the U.S. Patent & Trademark Office (hereinafter referred to as the "UGG Trademark"). Compl. ¶¶ 15-17. Plaintiff and its predecessors in interest have continuously used the UGG trademark since at least 1979, and since acquiring the UGG trademark and its business goodwill in 1995, Plaintiff has continuously sold footwear, clothing, and accessories under the UGG trademark. Compl. ¶ 15, 16. Plaintiff's UGG®-brand products are distributed and sold to consumers throughout the United States, including on the Internet through Plaintiff's website, www.ugg.com. Compl. ¶ 14.
Plaintiff also owns two United States design patents, registered with the U.S. Patent & Trademark Office as design patent No. D616,189 and No.D599,999. Compl. ¶ 20-21. Plaintiff has not granted to Defendants any form of consent to use Plaintiff's patents or the UGG Trademark. Compl. ¶¶ 17, 22.
Defendant Ozwear is an Australian business that sells products, including sheepskin footwear, that bear a label that includes the "UGG" mark. Compl. ¶ 7; Mot. for Default J. ("Mot.") at 22-23, Decl. Of Robert L. Holmes;
Plaintiff alleges that Defendants Ozwear and Adams have and continue to knowingly and willfully infringe on Plaintiff's UGG Trademark by advertising, manufacturing for sale, offering for sale, importing, or selling counterfeit products bearing Plaintiff's UGG Trademark in the United States through Defendants' Internet website, ozwearuggs.com.au. Compl. ¶¶ 12, 27-36. Plaintiff also alleges that Defendants, through ozwearuggs.com.au, sell footwear in the United States that infringes on the ornamental design protected in two of Plaintiff's design patents, Patent No. D599,999 and Patent No. D616,189. Compl. ¶¶ 25-26, 65-72, & Exs. B-C.
Plaintiff filed this action against Defendants on March 26, 2014 [1]. The Summons and Complaint were served on Defendants on April 10, 2014. Mot. at 4;
Federal Rule of Civil Procedure 55 governs the entry of default judgment: "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend . . ., the clerk must enter the party's default." Fed. R. Civ. P. 55(a). After default is properly entered, a party seeking relief other than a sum certain must apply to the Court for a default judgment.
When application is made to the Court for default judgment, the application must comply with the procedural requirements in Federal Rules of Civil Procedure 55 and 56, and must comply with Local Rule 55-1.
Substantively, the decision to grant or deny default judgment is within the discretion of the district court.
(1) the possibility of prejudice to the plaintiff;
(2) the merits of the 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 default was due to excusable neglect; and;
(7) the strong policy underlying the Federal Rules of Civil Procedure that favors decisions on the merits.
Additionally, "[w]hen entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties."
The Court has subject matter jurisdiction over Plaintiff's claims pursuant to 28 U.S.C. § 1338, 15 U.S.C. § 1121, and 28 U.S.C. § 1331.
For a district court to properly exercise personal jurisdiction over a nonresident defendant, the forum state's laws must provide a basis for exercising personal jurisdiction, and the assertion of personal jurisdiction must comport with due process.
The California long-arm statute permits the exercise of jurisdiction "on any basis not inconsistent with the Constitution . . . of the United States." Cal. Civ. Proc. Code § 410.10. This language renders California's long-arm statute "coextensive with federal due process requirements" so that only a due-process analysis is required.
Due process requires a nonresident defendant to have "certain minimum contacts" with the forum state "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice."
As both Defendants are "nonresidents" of California, Compl. ¶¶ 7-10, Plaintiff must show that Defendants have sufficient contacts with California to justify personal jurisdiction. Sufficient contacts can be established by proving either general or specific personal jurisdiction.
A district court may assert specific personal jurisdiction over a defendant if the defendant has "purposefully directed" his activities at the forum and if the plaintiff's alleged claims and injuries "arise out of or relate to those activities."
The Ninth Circuit applies a three-part test to determine whether the exercise of specific jurisdiction over a nonresident defendant comports with due process:
The Court finds that it has specific personal jurisdiction over Defendants. Plaintiff has made a prima facie showing that Defendants have purposefully directed their activities at residents in this forum state and that Plaintiff's claims and injuries "arise out of or relate to" Defendants' infringing activities in this forum.
Defendants are both residents of New South Wales, Australia; Defendant Adams is an individual, and Defendant Ozwear is a business. Compl. ¶¶ 8, 10; Mot. at 23, Holmes Decl. Plaintiff's proofs of service indicate that Defendants were personally served by an Australian private process server named Joseph Khoury from Clark International Pty. Ltd. in Caringbah, New South Wales, Australia. Dckt. # 9, 10.
Rule 4 of the Federal Rules of Civil Procedure governs service of process, and subsection (f) allows a foreign individual to be served by "any internationally agreed means of service," such as the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents ("Hague Service Convention"). Fed. R. Civ. P. 4(f)(1). Subsection (h)(2) allows service on a foreign corporation "in any manner prescribed by Rule 4(f) for serving an individual, except personal service under (f)(2)(C)(I)." Fed. R. Civ. P. 4(h)(2).
Because the United States and Australia are parties to the Hague Service Convention, "compliance with the Convention is mandatory."
Because Plaintiff's personal method of service complies with the Hague Service Convention, it complies with Fed. R. Civ. P. 4(f)(1). Plaintiff's proper service of Defendant Ozwear under Fed. R. Civ. P. 4(f)(1) complies with Fed. R. Civ. P. 4(h)(2). Plaintiff's service on Defendants was proper.
The Clerk properly entered Defendants' default on June 3, 2014, and to date, Defendants have not responded or appeared in this Action. Upon reviewing Plaintiff's Motion, the Court finds that Plaintiff has satisfied the applicable procedural requirements for entry of default judgment.
The Court finds that, on the whole, the Eitel factors weigh in favor of entry of default judgment as to all of the claims that Plaintiff submitted for default judgment except for Plaintiff's Cybersquatting claim under 15 U.S.C. § 1125(d).
Plaintiff has established that it will suffer prejudice if a default judgment is not entered.
To prevail on a trademark infringement claim under 15 U.S.C. § 1114, a plaintiff must show: (1) it owns the trademark at issue; (2) the defendant has used in commerce without authorization, "any reproduction, counterfeit, copy, or colorable imitation" of the plaintiff's registered mark in connection with the sale, offering for sale, distribution, or advertising of goods; and (3) the defendant's use of the mark is "likely to cause confusion, or to cause mistake, or to deceive."
To prevail on a claim under § 1125(a) (use of counterfeit mark, unfair competition, false designation of origin), Plaintiff must show that Defendants, "in connection with any goods or services, or any container for goods, use in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact" that "is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person." 15 U.S.C. § 1125(a)(1)(A).
When analyzing a claim under sections 1114(1) and 11125(a), the same standard applies for both claims: "that [the defendant] is using a mark confusingly similar to [the plaintiff's] valid, protectable trademark."
Plaintiff has sufficiently pleaded facts to show that Defendants have used, and are using, a mark confusingly similar to Plaintiff's valid UGG Trademark. First, Plaintiff's Complaint asserts that Plaintiff owns the UGG Trademark, registered as U.S. Trademark Registration No. 3,050,925, and that the mark is valid and incontestible. Compl. ¶ 16, Ex. A. Plaintiff alleges that Defendants' use of the UGG mark is unauthorized. Compl. ¶¶ 30-32. Plaintiff shows that the UGG mark used by Defendants is a "reproduction, counterfeit, copy, or colorable imitation" of the UGG Trademark by providing images of Defendants' UGG mark, which looks nearly identical to the UGG Trademark Plaintiff registered with the Patent and Trademark Office. Compl. ¶ 25; id. at 20, Ex. A. Plaintiff sufficiently alleges and shows that Defendants use the mark "in commerce." Compl. ¶¶ 22-25, 28-36; Mot. at Exh. D.
As to the final requirement, "likelihood of confusion," Plaintiff alleges that Defendants' use of the UGG mark creates a "likelihood of confusion" because Defendants' UGG mark is "identical with or substantially indistinguishable from the [Plaintiff's] UGG mark" and is placed on merchandise that looks like merchandise sold by Deckers' UGG brand.
"Likelihood of confusion" is the "central element" of a trademark infringement claim.
The first factor requires a showing that the mark at issue is strong enough to be entitled to the protection of trademark laws. Because Plaintiff's UGG Trademark is a federally registered trademark, Plaintiff is entitled to a presumption that the UGG Trademark is protected under the Lanham Act.
The second factor considers whether the relatedness of the goods bearing the contested mark is likely to cause consumer confusion. "Related goods are generally more likely than unrelated goods to confuse the public as to the producers of the goods."
The third factor considers the similarity of the marks at issue. Plaintiff alleges that "[a] comparison of the marks on Defendants' products to Deckers' [UGG Trademark] reveals identical copying." Mot. at 6. The similarity of Plaintiff's UGG Trademark and the UGG mark used by Defendants is immediately apparent upon viewing the two marks: both marks display the letters "UGG" in all caps, centered, and prominent in a large font; both marks are black in color; both marks are in very similar font; both marks are placed in the same location — the lower back side of the footwear, near the heel area; and Defendants' product label includes the word "Australian" in smaller font below, which is similar to the way Deckers' UGG-brand marketing appears. Compl. ¶ 25, Ex. A; Mot. at Exs. A, D, E;
The fourth factor looks for evidence of actual confusion in the marketplace. Plaintiff asserts that mere purchases made by consumers of Defendants' products bearing the UGG mark "evidences actual confusion as to their source and origin." Mot. at 6-7; see Compl. ¶¶ 23, 25, 31, 33, 36. This conclusory statement is not sufficient to show actual confusion. But due to "the difficulty of garnering such evidence, the failure to prove instances of actual confusion is not dispositive," and the factor is heavily weighed only when the particular circumstances of the case indicate that such evidence should have been available and proven.
The fifth factor considers whether both plaintiff and defendant use the same "marketing channels" for the products at issue, as "[c]onvergent marketing channels increase the likelihood of confusion."
The sixth factor looks at the degree of care with which a purchaser would choose the type of good at issue. "Low consumer care . . . increases the likelihood of confusion."
The seventh factor considers the defendant's intent in selecting the mark at issue. "This factor favors the plaintiff where the alleged infringer adopted his mark with knowledge, actual or constructive, that it was another's trademark."
The eighth factor, likelihood of expansion of product lines, is "relatively unimportant where two companies already compete to a significant extent."
The
To prevail on a claim for dilution of a famous mark under § 1125(c), Plaintiff must show that Defendants' use of its UGG mark is likely to cause dilution of a famous mark through blurring or tarnishment. 15 U.S.C. § 1125(c). Plaintiff has alleged sufficient facts to establish that its UGG mark is "famous" under 15 U.S.C. 1125(c) and that Defendants are liable for dilution by both blurring and tarnishment.
To prevail on a claim for cybersquatting under 15 U.S.C. § 1125(d), Plaintiff must show that 1) Defendants have or had a "bad faith intent to profit from that mark" and 2) "registers, traffics in, or uses a domain name that" is identical or confusingly similar to a mark that was "distinctive" or "famous" at the time of registration of the domain name, or causes dilution of a mark that was famous at the time of the domain name's registration. 15 U.S.C. § 1125(d)(1)(A).
Plaintiffs allege that Defendants used the UGG Trademark with a bad faith intent to profit from that trademark by claiming that Defendants knowingly and willfully placed the UGG Trademark in the domain names of Defendants' two websites ("ozwearuggs.com" and "ozwearuggs.com.au"), which sell products similar to those sold by Deckers, in order to benefit from the goodwill associated with the UGG Trademark. Compl. ¶ 62. Plaintiff alleges that its UGG Trademark was famous "before and at the time of the registration of Defendants' domain names." Compl. ¶ 61.
An important question in this case is whether using the term "uggs" is "confusingly similar to" or "dilutes" the UGG trademark. Defendants use the term "uggs" in their domain names, not the Plaintiff's trademark, "UGG." The word "uggs" is a term for a type of sheepskin boot, while Deckers' registered trademark, "UGG," is not a generic product term.
In most cases, merely adding an "s" to the end of an otherwise distinctive trademark still creates a "confusingly similar" mark (e.g., "nationalgeographics.com" is confusingly similar to nationalgeographic.com). But where adding an "s" turns the mark into a generic product name that would not be protected under the Lanham Act,
The fact that Defendants include "ozwear" in their domain names further undermines Plaintiff's claim of confusing similarity. By including "ozwear" in the domain names, confusion is diminished, if not eradicated: a consumer is expressly put on notice that this is not a Deckers UGG-brand website. After reviewing Plaintiff's allegations, the Court finds that Plaintiff does not allege sufficient facts to show that Defendants' use of the term "uggs" in Defendants' domain names is "confusingly similar" to Plaintiff's UGG Trademark. Plaintiff also does not allege sufficient facts to show that the term "uggs" in Defendants' domain names dilutes Plaintiff's famous UGG mark.
Thus, the Court finds that Plaintiff has failed to allege sufficient facts to establish Defendants' liability for cybersquatting under 15 U.S.C. § 1125(d).
Patent infringement is defined in 35 U.S.C. § 271(a): "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent."
Plaintiff alleges infringement of two design patents.
Plaintiff's patents are "presumed valid" under 35 U.S.C. § 282, as Defendants have not challenged the patents' validity. Plaintiff provides images of its patented designs and photographs of the footwear sold by Defendants through ozwearuggs.com.au to show the similarity of Defendants' and Plaintiff's designs. Compl. at Exs. B-C; Mot. at Exs. A, D, E-F. Both Defendants' and Plaintiff's products have similar, if not identical, ornamental designs consisting of a side slit in the material on the outward side of the upper portion of the boot with fur protruding from the slit and with the slit fastened together by buttons hooked to a band that is attached to the opposite side of the slit.
While Plaintiff has failed to prove its cybersquatting claim under 15 U.S.C. § 1125(d), it has proved the majority of its claims, including trademark infringement, dilution of a famous mark, and patent infringement of two design patents. Thus, this factor weighs in favor of default judgment as to the claims sufficiently proved by Plaintiff.
Default judgment is disfavored when a large amount of money is involved and is unreasonable in light of the potential loss caused by the defendant's actions.
Because Defendants have failed to respond or appear in this action, there is no possibility of a dispute concerning material facts, as all facts alleged in the Complaint, except those relating to the amount of actual damages, are deemed admitted once default has been entered against a party.
There is no indication that Defendants have defaulted due to excusable neglect. Plaintiff served Defendants properly and has also provided Defendants with a copy of its Motion for Default Judgment; to date, Defendants have not appeared.
While cases "should be decided upon their merits whenever reasonably possible,"
Balancing the
The court has "wide latitude" and discretion in determining the amount of damages and other relief to award upon default judgment,
Plaintiff requests $2 million "per defendant" for Defendants' trademark infringement. Mot. at 15. Because the two defendants in this case are acting effectively as a single entity, the Court, in its discretion, will not award a statutory damage award "per defendant."
Neither the Lanham Act nor clear precedent provides guidelines for courts to use when determining an appropriate award of statutory damages for trademark infringement.
In the context of copyright infringement, the U.S. Supreme Court noted that awarding mere "restitution of profit and reparation of injury" would "fall short of an effective sanction for enforcement of the copyright policy" and that deterrence of future infringement and related wrongful conduct was a proper purpose for a damages award, "[e]ven for uninjurious and unprofitable invasions of copyright."
Plaintiff has sufficiently alleged that Defendants willfully and knowingly used the UGG counterfeit mark on counterfeit footwear that was sold in the United States through Defendants' website. Such intentional and knowing infringement justifies a high award of damages to deter Defendants and others,
Plaintiff seeks permanent injunctive relief pursuant to 15 U.S.C. § 1116(a) and 35 U.S.C. § 283. Compl. ¶¶ 39, 52, 59, 67, 71; Mot. at 1. This Court has statutory authority to grant such relief in its discretion. 15 U.S.C. § 1116(a); 35 U.S.C. § 283.
The Supreme Court requires that, before a district court grants a permanent injunction, the movant must satisfy a four-factor test by showing: "(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."
Actual irreparable harm must be demonstrated to obtain a permanent injunction.
Balancing the hardships involves considering the "relative effect of granting or denying an injunction on the parties."
"[T]he touchstone of the public interest factor is whether an injunction . . . strikes a workable balance between protecting the [holder's] rights and protecting the public from the injunction's adverse effects." i4i Ltd., 598 F.3d at 863. Here, granting a permanent injunction would protect Plaintiff's federally protected rights, which is in the public interest, and would have no adverse effect on the public.
The Court finds that Plaintiff is entitled to injunctive relief. The terms of the injunctive relief are stated below and in the Court's Judgment.
Based on the foregoing, the Court
The Court
(1) Trademark Infringement in violation of 15 U.S.C. §§ 1114(a) and 1125(a);
(2) Unfair Competition and False Designation of Origin in violation of 15 U.S.C. § 1125(a);
(3) Dilution of a Famous Mark in violation of 15 U.S.C. § 1125(c); and
(4) Patent Infringement of Plaintiff's design patents No. D599,999 and No. D616,189, in violation of 35 U.S.C. § 271;
and for the following relief:
1. Plaintiff is awarded statutory damages of two million dollars ($2,000,000) pursuant to 15 U.S.C. § 1117(c)(2), and post-judgment interest at the federal statutory rate pursuant to 28 U.S.C. § 1961;
2. Defendants are each permanently enjoined from:
(a) importing, selling, marketing, offering for sale, or advertising in the United States any goods or materials bearing Plaintiff's UGG® Trademark, attached for reference as Exhibit A, any colorable imitation of the UGG® Trademark, or the mark "UGG";
(b) using Plaintiff's UGG® Trademark, or any reproduction, copy, counterfeit, or colorable imitation of the UGG® Trademark in the United States in connection with the promotion, advertisement, display, sale, offer for sale, manufacture, production, circulation, or distribution of any products with such design as to relate or connect, or tend to relate or connect, in any way to Deckers' UGG® brand of products;
(c) using any trademark that imitates or is confusingly similar to Plaintiff's UGG® Trademark;
(d) making any statement or representation whatsoever, or using any false designation of origin or false description, or performing any act, which can or is likely to lead the trade or public, or individual members thereof, to believe that any product manufactured, distributed, or sold by Defendants is in any manner associated with, sponsored by, or connected with Plaintiff, or are sold, manufactured, licensed, sponsored, approved, or authorized by Plaintiff;
(e) using any mark likely to dilute, as defined by 15 U.S.C. § 1125(c), Plaintiff's famous UGG mark;
(f) importing, offering for sale, or selling any product not authorized by Plaintiff that is a reproduction, copy, or colorable imitation of the ornamental features of the design claimed in Plaintiff's U.S. Patent No. D599,999, attached for reference as Exhibit B, and/or the design claimed in Plaintiff's U.S. Patent No. D616,189, attached for reference as Exhibit C, with the ornamental features including a vertical slit in the boot's material on the outward side of the upper portion of the boot with fur or fur-like material protruding from the slit and with the slit fastened together, or overlaid, by buttons hooked into a band that is attached to the material on the opposite side of the slit from where the buttons are attached to the material;
(g) using, linking to, exercising control over, operating, hosting, or otherwise owning any domain name or website, including, but not limited to, ozwearuggs.com and ozwearuggs.com.au, to engage in activity that violates the terms of this Order or that is involved with the distribution, advertising, offering for sale, or sale of any product that infringes on Deckers UGG® Trademark, U.S. Patent No. D599,999, and/or U.S. Patent No. D616,189; and
(h) effecting assignments or transfers, forming new entities or associations or utilizing any device for the purpose of circumventing or otherwise avoiding the prohibitions in this Order or aiding, abetting, contributing to, or otherwise assisting anyone from infringing upon Plaintiff's UGG® Trademark, U.S. Patent No. D599,999, and/or U.S. Patent No. D616,189;
3. Defendants are ordered to immediately, upon Notice of this Order, transfer to Plaintiff, at the address provided by Plaintiff, all footwear, products, goods, labels, signs, packages, wrappers, receptacles, advertisements, and/or materials in Defendants' possession or control that bear the mark "UGG" or any simulation, reproduction, counterfeit, copy, or colorable imitation of Plaintiff's UGG® Trademark, as well as any footwear bearing the patented design of U.S. Patent No. D5999,999 or U.S. Patent No. D616,189.
The balance of Plaintiff's claims is dismissed, including Plaintiff's state-law claims and federal cybersquatting claim. A Final Judgment will follow.
