SAMUEL CONTI, District Judge.
Plaintiff Ploom, Inc. ("Ploom") seeks the entry of a default judgment against Defendants iPloom, LLC ("iPloom") and Anthony Marino ("Defendants"). ECF No. 21 ("Mot."). Ploom filed this action on December 16, 2013, asserting federal claims for trademark infringement, 15 U.S.C. § 1114; unfair competition, false representation, and false designation of origin,
Except where otherwise indicated, the following allegations are taken from Ploom's Complaint. Ploom designs and sells vaporizers (devices that heat tobacco for inhalation without smoke), tobacco, and related accessories. Compl. ¶ 13. Ploom's unique products include the "Ploom modelTwo" and "PAX" vaporizers, which it markets exclusively on its website and through authorized retailers.
Ploom alleges that Defendants used reproductions of the Ploom Marks, X Design trade dress, and the PAX Marks in creating the "iPloom Pax" and "Pax by Ploom" vaporizers.
In October of 2013, a private investigator retained by Ploom purchased two iPloom Pax units from Defendants' website for a total of $159.90. Upon delivery of the units, the investigator discovered that the units' packaging included the mark "PAX."
On December 9, 2013, another of Ploom's investigators placed an order on iPloom's website for one Pax by Ploom for a total of $199.95. The next day, the investigator received an email from acmarino@iploom.com informing the investigator that the Pax by Ploom products were backordered, but that a new shipment was due on December 16.
In January of 2014, Ploom submitted a takedown request to Defendants' web hosting provider. The hosting provider communicated the request to iPloom and shut down the website eleven days later. ECF No. 16-1 ("Pfefferkorn Decl. II") ¶ 17. Defendants then switched hosting providers, registered the domain aroma420.com, and continued to sell their products from that website.
After entry of a default, the Court may enter a default judgment. Fed. R. Civ. P. 55(b)(2). Its decision whether to do so, while "discretionary,"
As a preliminary matter, the Court must "assess the adequacy of the service of process on the party against whom default judgment is requested."
Federal Rule of Civil Procedure 4(h) provides that a corporation, partnership, or other unincorporated association may be served in the manner prescribed by Rule 4(e)(1), which allows service to be perfected in the manner prescribed by state law. California law provides that a corporation or unincorporated association may be served by delivery of a copy of the summons and complaint:
Cal. Civ. Proc. Code § 416.10. Federal Rule of Civil Procedure 4(e)(2)(A) provides that an individual may be served in a judicial district of the United States by "delivering a copy of the summons and of the complaint to the individual personally."
Here, service was delivered personally to Anthony Marino, both in his capacity as an individual and in his capacity as the authorized agent and principal officer of iPloom, on December 24, 2013. ECF No. 10 ("Marino Proof of Service"); ECF No. 22 ("Pfefferkorn Decl. I") Ex. A; ECF No. 9 ("iPloom Proof of Service"). The Court finds that service of process upon defendants iPloom and Anthony Marino was adequate and complete by December 24, 2013.
After entry of a default, a court may grant a default judgment on the merits of the case.
Here, the majority of the
Ploom has tried to work with web hosting providers and Defendants' referral service to shut down Defendants' websites that sell counterfeit Ploom products. Defendants responded by creating new websites, with new hosting providers, and continuing to sell their products. If the motion for default judgment were to be denied, then Ploom would likely be left without a remedy, as its efforts to shut down Defendants' operations have been unsuccessful. Thus, Ploom would be prejudiced absent entry of default judgment.
Taken together, the second and third
To prevail on its trademark infringement claim, Ploom must prove that, without its consent, Defendants used in commerce a reproduction or copy of Ploom's registered trademark in connection with the sale or advertising of any goods or services, and that such use is likely to cause confusion, mistake, or deceive customers. 15 U.S.C. § 1114(1)(a);
To prevail on its cybersquatting claim, Ploom must prove that iPloom (1) registered or used a domain name that was identical or confusingly similar to Ploom's distinctive registered trademark with (2) a bad faith intent to profit from Ploom's mark. Ploom alleges that iPloom registered the iploom.com domain name, which is confusingly similar to the Ploom Marks and Ploom's domain, ploom.com. The Ninth Circuit has developed the
With regard to the similarity factor, there can be no doubt that iPloom and Ploom are very similar. The companies also provide virtually identical services: selling vaporizers and other tobacco products. IPloom's products were made to look like, and some were apparently even advertised as, legitimate Ploom products. Both use the Internet to sell their products. Ploom has produced evidence of the strength of its mark based on the uniqueness of its product, substantial press coverage, and significant traffic to its website. Compl. ¶¶ 26-30. There is little evidence regarding Defendants' intent, but much can be inferred by the fact that the iPloom Pax and Pax by Ploom appeared to be its flagship products. Compl. Ex. G. No evidence has been presented on the last three factors. Given that the first five factors strongly favor a finding of confusing similarity, and the Ninth Circuit's emphasis on three that particularly favor that finding in this context, the Court finds that the domain iploom.com was confusingly similar to Ploom's ploom.com domain.
Ploom must also demonstrate that Defendants registered the iploom.com domain with bad faith intent to profit from Ploom's marks. The facts Ploom has pled demonstrate that Defendants registered the iploom.com domain with the intention of profiting by selling counterfeit Ploom products. The similarity of the marks, the similarity of the products offered for sale by Defendants, and Mr. Marino's statements establishing his knowledge of Ploom's brand are sufficient evidence of the required bad faith intent. Ploom has adequately stated a claim on which it may recover.
Pursuant to the fourth
The fifth
Defendants have had nearly five months to respond to the Complaint and have not done so. There is no evidence in the record that Defendants' failure to appear and otherwise defend was the result of excusable neglect. Defendants' failure to appear after being served with the Complaint indicates that their failure to appear was willful.
Finally, the mere existence of Federal Rule of Civil Procedure 55(b) indicates that the seventh
The remedies available to a plaintiff who prevails on a claim for trademark infringement and counterfeiting under 15 U.S.C. § 1114 are listed under 15 U.S.C. § 1117(a)-(c). Under § 1117(a), a registered mark holder may recover: (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action, subject to the principles of equity. Section 1117(b) requires the court to treble the damages assessed under subsection (a) if the defendant "intentionally us[es] a mark or designation, knowing such mark ... is a counterfeit mark ... in connection with the sale, offering for sale, or distribution of goods or services." Section 1117(c) permits a plaintiff to elect statutory damages, instead of actual damages and profits, in cases involving the use of a counterfeit mark in connection with the sale of goods. Plaintiffs who elect statutory damages may recover "not less than $1,000 or more than $200,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just." 15 U.S.C. § 1117(c)(1). Additionally, in cases where the defendant's conduct is willful, a court may enhance the statutory damages award to an amount "not more than $2,000,000 per counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court considers just." 15 U.S.C. § 1117(c)(2). If a plaintiff elects to recover statutory damages, the court has wide discretion in determining the amount of statutory damages to be awarded.
In the instant case, where Ploom has established that Defendants' conduct was willful, Ploom may recover statutory damages pursuant to § 1117(c) in an amount not less than $1,000 and not more than $2,000,000 per counterfeit mark per type of goods sold or offered for sale, as the Court considers just. Ploom alleges that Defendants offered for sale two types of goods — the iPloom Pax (which included counterfeit Ploom and Pax marks) and the Pax by Ploom (which included two distinct counterfeit Ploom Marks and counterfeit Pax marks). However, the Court is not satisfied that the iPloom Pax and the Pax by Ploom are different types of goods. "Common sense cuts in favor of defining the phrase `type of goods' to be the general product type as opposed to many sub-forms of that product."
Section 1117(c) does not give any specific guidance as to how a court should determine an appropriate statutory damages award. "Although the statutory damages need not reflect the defendants' unlawfully obtained profits, some district courts use § 1117(b) as a guide for setting damages under § 1117(c). In doing so, courts both counteract the profitability of counterfeiting and execute the punitive purposes of the statute."
When determining the appropriate amount of statutory damages to award under § 1117(c), some courts have considered the following factors that guide the award of statutory damages under an analogous provision of the Copyright Act: (1) the expenses saved and the profits reaped by the defendant; (2) the revenues lost by the plaintiff; (3) the value of the copyright; (4) the deterrent effect on others besides the defendant; (5) whether the defendant's conduct was innocent or willful; (6) whether a defendant has cooperated in providing particular records from which to assess the value of the infringing material produced; and (7) the potential for discouraging the defendant.
Here, Ploom requests $100,000 in statutory damages per counterfeit mark, for a total of $500,000. ECF No. 21-1 ("Proposed Order") at 4. Ploom provides no basis for this figure. However, the Court will consider both the willful nature of Defendants' acts and the scale of Defendants' operations.
The lack of discovery in this case leaves no data as to Defendants' expenses saved and profits reaped. Ploom's investigators purchased products from Ploom at prices of $79.95 (the iPloom Pax) and $199.95 (the Pax by Ploom). There is, however, no way for the Court to determine how many infringing items Defendants sold. The only evidence of the scale of the operation is Mr. Marino's statement to Ploom's investigator that he was expecting an order of 10,000 units of the Pax II. Assuming that Defendants did receive such an order and managed to sell all such units at the $199.95 price, Defendants reaped revenues of $1,999,500. However, the fact that Defendants were unable to deliver the investigator's order of the Pax by Ploom indicates that Defendants did not have such large inventories. Given the lack of evidence on this point, the Court cannot make a determination as to whether the requested damages of $100,000 per infringement are proportionate to Ploom's actual damages.
Ploom has provided no evidence of its revenues lost, either as a result of Defendants' infringing activities or as a result of counterfeiting in general. Ploom alleges that Defendants have unlawfully obtained the benefits of Ploom's brand and reputation and caused confusion among potential customers by using Ploom's marks and trade dress. Compl. ¶ 52. Nonetheless, absent some evidentiary showing, the Court cannot reach any conclusion about the magnitude of lost revenues to Ploom.
The Ploom Marks, Pax Marks, and X Design trade dress are valuable because they are affiliated with a unique and recognizable brand that has garnered considerable media attention. Compl. ¶¶ 26-30.
Defendants' conduct was undoubtedly willful, as they admitted knowledge of Ploom's brand, continued their infringing conduct after the commencement of this lawsuit, and repeatedly evaded Ploom's efforts to shut down their websites.
Defendants have not provided any discovery or participated in this litigation in any way.
Defendants have created multiple websites to sell products that infringe upon Ploom's trademarks. Ploom's efforts to shut down those websites have clearly not been an effective deterrent. Defendants' persistence suggests that a modest damages award will not deter them.
A significant award against Defendants would clearly have some kind of deterrent effect on other would-be infringers, although the magnitude of this effect is difficult to determine.
Taking into account all of the above, the Court finds the requested $100,000 per infringement to be an appropriate award. This amount is well within the guidelines established by Congress, takes into account the willfulness shown by continuing to sell counterfeit merchandise after multiple efforts to shut down its website and the culpability of failing to respond, and is significant enough to serve as compensation to Ploom and a deterrent to both the Defendants and others.
A party that prevails on a claim of cybersquatting may elect to recover "instead of actual damages and profits, an award of statutory damages in the amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just." 15 U.S.C. § 1117(d). Ploom requests the maximum statutory damages of $100,000. Proposed Order at 4.
In determining appropriate statutory damages for cybersquatting,
Courts in similar cases have awarded a range of damages.
In addition to damages, Ploom requests a permanent injunction enjoining Defendants from using in commerce: (1) Ploom trademarks and trade dress or similar marks; (2) the iPloom mark; (3) trade dress confusingly similar to Ploom's PAX trade dress; and (4) the iploom.com domain name. The Lanham Act gives the court "power to grant injunctions according to the rules of equity and upon such terms as the court may deem reasonable, to prevent the violation" of a trademark holder's rights. 15 U.S.C. § 1116(a). Permanent injunctions are routinely granted in cases like the instant one where a defendant has not appeared in the action at all.
Ploom also requests the transfer of the iploom.com domain name to it. The Lanham Act gives the Court the power to "order the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark." 15 U.S.C. § 1125(d)(1)(C). The court finds such relief appropriate given the intentional misuse of the domain at Ploom's expense.
Ploom also requests costs and attorney's fees under 15 U.S.C. § 1117(a), which authorizes recovery of the costs of an action for the violation of any right of the registrant of a trademark. That section also authorizes the court to award attorney's fees to a plaintiff in "exceptional cases."
However, it is still not immediately obvious that Ploom may recover its attorney's fees. Whether a plaintiff who elects statutory damages under § 1117(c) may also recover costs under § 1117(a) is an open question in this Circuit: "we do not reach the issue whether an election to receive statutory damages under § 1117(c) precludes an award of attorney's fees for exceptional cases under the final sentence of § 1117(a)."
Ploom is entitled to the costs of this action.
The Court GRANTS the Motion for Default Judgment filed by Ploom against Defendants iPloom, LLC and Anthony Marino. Defendants are jointly and severally liable for $350,000 to Ploom, plus Ploom's costs. Plaintiffs shall submit their Bill of Costs within fourteen (14) days of this Order as provided by Civil Local Rule 54-1. Failure to do so will result in a waiver of costs. An injunction shall issue with the judgment. Plaintiffs have the responsibility to serve the injunction in such a manner to make it operative in contempt proceedings.
