SALLIE KIM, Magistrate Judge.
Plaintiff Adobe Systems Incorporated ("Adobe") moves for entry of default judgment in this trademark and copyright infringement action, seeking to collect statutory penalties and permanent injunctive relief from Defendant Walter Gray for Defendant's infringement of Adobe's trademark and copyright-protected products. Defendant has not appeared in this action. The Clerk entered default on October 19, 2016, pursuant to Federal Rule of Civil Procedure 55(a).
On March 27, 2017, the Court held a hearing on Plaintiff's motion for default judgement, at which Defendant did not appear. Since Defendant, by virtue of being in default, has not consented to the undersigned, the Court reassigns this action to a district judge and recommends that Plaintiff's motion be GRANTED IN PART AND DENIED IN PART.
Adobe develops and distributes computer software bearing Adobe's trademarks. Adobe alleges ownership to a number of trademarks listed with the U.S. Patent and Trademark Office including Adobe®, Acrobat®, Photoshop®, and Lightroom®. (FAC, ¶17 and Ex. A (a non-exhaustive list of Adobe's registered trademarks); Decl. of Nicole Drey Huerter (Dkt. 29-1, ¶ 2.) Adobe owns the exclusive rights to various copyrighted works registered with the U.S. Copyright Office, including Adobe Photoshop Adobe Lightroom 5© and Adobe Photoshop CS2 for Windows©. (FAC, ¶ 18 and Ex. B (a non-exhaustive list of Adobe's copyrighted works); Dkt. 29-1, ¶ 3.) Hereinafter, Adobe's trademarks and copyrighted works shall be collectively referred to as the "Marks" or "Adobe Marks."
According to the First Amended Complaint, Defendant resides in Leland, North Carolina and uses the internet auction website eBay.com ("eBay") to advertise and sell unauthorized or counterfeit products bearing Adobe Marks to consumers. (FAC, ¶ 24.) The payments arising from the sales are processed electronically by PayPal, Inc. through the account walter1grey@gmail.com. (FAC, ¶¶ 25, 30, 33.)
In July 2014, an investigator hired by Adobe purchased a copy of Adobe Photoshop Lightroom from Defendant's eBay account known as "pc.mod.worx" and received a counterfeit disc containing Adobe Photoshop Lightroom 5© bearing a counterfeit serial number. (FAC, ¶¶ 30-31; Decl. of Beth Chapman (Dkt. 43), ¶¶ 2-3; Decl. of Cindy Ward (Dkt. 46), ¶¶ 2-7.) Thereafter, Adobe issued a takedown notice through eBay that Defendant's products were counterfeit and that eBay would remove them. (FAC, ¶ 32; Dkt. 29-1, ¶¶ 9-10.) In response, Defendant filed a counter-notice with eBay seeking to reinstate the sale of his products. (FAC, ¶ 32.)
In March 2016, another investigator purchased a copy of ADOBE Photoshop CS2 Full Version 9 for Windows XP/Vista/7 from Defendant's eBay account "pc.mod.worx." (FAC, ¶ 33; Ex. 29-1, ¶¶ 7-8.) The investigator received a counterfeit disc of Adobe Photoshop CS2 for Windows© with an affixed serial number for a volume-licensed educational product that had been registered multiple times by individuals unaffiliated with both the investigator and the original licensee. (FAC, ¶¶ 33-34; 29-1, ¶¶ 9-10; (Dec. of L.A. Sowers, (Dkt 44), ¶¶ 1-5.)
Adobe files this action in May 2016, and, after conducting early discovery, Adobe uncovered Defendant's tax identification number and determined Defendant's identity. (Dkt. 29-1, ¶¶ 7-8.) Adobe filed the First Amended Complaint in September 2016. (Dkt. 18.) Defendant was personally served on September 21, 2016. (Dkt. 23.) Adobe sent the Defendant a letter with a copy of the Clerk's default on October 25, 2016. (Dkt. 25; Dkt. 29-1, ¶ 9.)
In its motion for default judgment, Adobe seeks statutory damages for trademark and copyright infringement, as well as injunctive relief.
Before entering default judgment, a court must determine whether it has jurisdiction over defendants. See In Re Tuli v. Rep. of Iraq, 172 F.3d 707, 712 (9th Cir. 1999). The Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a) and (b), in that the case arises out of claims for trademark infringement, false designation of origin/false or misleading advertising/unfair competition, and dilution under the Lanham Act (15 U.S.C. § 1051 et seq.), and copyright infringement under the Copyright Act, 17 U.S.C. § 501(a). This Court has supplemental jurisdiction for the claims arising from California Business & Professions Code § 17200 et seq. pursuant to 28 U.S.C. §§ 1367(a) and 1338(a) and (b).
Adobe is a Delaware company with its principal place of business in San Jose, California, which is within this district. Defendant is a resident of North Carolina. This Court has an affirmative obligation to determine whether or not it has personal jurisdiction over Defendant. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). In Tuli, the Ninth Circuit explained that where a plaintiff seeks default judgment, the court may not assume the existence of personal jurisdiction, even though ordinarily personal jurisdiction is a defense that may be waived, because a judgment in the absence of personal jurisdiction is void. Id. Where there are questions about the existence of personal jurisdiction in a default, the plaintiff should be provided the opportunity to establish the existence of personal jurisdiction. Id.
Generally, federal courts "follow state law in determining the bounds of their jurisdiction over persons." Daimer AG v. Bauman, __ U.S. __, 134 S.Ct. 746, 753 (2014). Personal jurisdiction is properly exercised over a defendant if it is permitted by a long arm statute and if the exercise of jurisdiction does not violate due process. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Because California's long-arm statute allows for the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution, the analysis for personal jurisdiction is the same under both state and federal law. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800-01 (9th Cir. 2004); Cal. Code Civ. Pro. § 410.10. A court may exercise jurisdiction over a nonresident defendant only when the defendant has "`minimum contacts' with the forum state such that jurisdiction `does not offend traditional notions of fair play and substantial justice.'" Schwarzenegger, 374 F.3d at 801 (quoting International Shoe v. Wash., 326 U.S. 310, 316 (1945)). This Court may assert specific personal jurisdiction over nonresident defendants if three requirements are met: (1) defendant purposefully directed its activities at residents of the forum; (2) the plaintiff's claim arises out of or relates to those activities; and (3) the assertion of personal jurisdiction is reasonable and fair. Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010); Schwarzenegger, 374 F.3d at 802. "So long as it creates a substantial connection with the forum, even a single act can support jurisdiction," but such act must not "create only an attenuated affiliation with the forum." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 n. 18 (1985). The plaintiff bears the burden of satisfying the first two prongs; once that is done, the burden shifts to the defendant. Mavrix Photo, Inc. v. Brand Technologies, Inc., 647 F.3d 1218, 1228 (9th Cir. 2011).
To ascertain whether a defendant purposefully directed its activities at residents of the forum, the court must engage in a "qualitative evaluation of the defendant's conduct with the forum state." Core-Vent Corp. v. Nobel Indus., AB, 11 F.3d 1482, 1485 (9th Cir. 1993). The reason is that courts must ensure that a nonresident defendant is not summoned into court based on "random, fortuitous, or attenuated" contacts with the forum state. Panavision International LP v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). Although Defendant in this action is not physically in California, this Court may exercise jurisdiction over him based on the "effects" doctrine, allowing jurisdiction "over a defendant whose only conduct with the forum state is the purposeful direction of a foreign act having effect in the forum state." Core-Vent, 11 F.3d at 1485. To meet the requirements of the effects doctrine, a plaintiff must satisfy the three part test established in Calder v. Jones, 465 U.S. 783 (1984): (i) the defendant must have committed an intentional act; (ii) the defendant's act was expressly aimed at the forum state; and (iii) the defendant knew the brunt of the harm was likely to be suffered in the forum state. Id. at 788-89. All three requirements are met here.
An intentional act is "an external manifestation of the actor's intent to perform an actual, physical act in the real world." Wash. Shoe Co. v. A-Z Sporting Goods, Inc., 704 F.3d 668, 674 (9th Cir. 2012). Here, Defendant committed intentional acts: he purposefully advertised authentic Adobe trademark and copyright registered material on eBay and sold counterfeit Adobe Marks with the assistance of a PayPal account.
This prong requires inquiry as to whether the defendant expressly aimed its act at the forum state. Express aiming exists where the defendant "is alleged to have engaged in wrongful conduct targeted at a plaintiff whom the defendant knows to be a resident of the forum state." Dole Food Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002). To meet this prong, it is sufficient for a plaintiff, filing suit in its home state against an out-of-state defendant, to allege that defendant intentionally infringed its intellectual property rights knowing that plaintiff is located in the forum state. Amini Innovation Corp. v. JS Imps., Inc., 497 F.Supp.2d 1093, 1105-06 (C.D. Cal. 2008).
Here, Adobe not only alleges that Defendant knowingly used the intellectual property of the California-based Plaintiff, but also that Defendant advertised and sold unauthorized products on the California-based internet platform, eBay, and used the California-based payment processor PayPal, Inc. (Dkt. 18, ¶ 9.) Further, given that a large portion of the software industry is located in northern California, it was reasonable to assume that Defendant's activities were directed at California. See, Autodesk, Inc v. Kobayashi + Zedda Architects Ltd., 191 F.Supp.3d 1007, 1016 (N.D. Cal. 2016). Therefore, the Court finds that defendant engaged in conduct expressly aimed at California.
The third prong of the purposeful direction inquiry is whether defendant knew the brunt of the harm would be suffered in California. Dole, 303 F.3d at 1111. Only a "jurisdictionally sufficient amount of harm" must be suffered in the forum state; it does not matter if more harm occurs outside the forum state. Yahoo! Inc. v. La Ligue Contre Le Racisme, 433 F.3d 1199, 1207 (9th Cir. 2006). Where a party brings a claim for infringement of intellectual property, "it is foreseeable that the loss will be inflicted...where the copyright holder has its principal place of business." Wash. Shoe Co., 704 F.3d at 679. Moreover, when a defendant intentionally exploits a California-based plaintiff's goodwill and diverts the plaintiff's potential customers, it has the effect of injuring the plaintiff in California. See Nissan Motor Co., Ltd v. Nissan Computer Corp., 89 F.Supp.2d 1154, 1160 (C.D. Cal. 2000). Therefore, it is assumed that Adobe experienced the financial losses, investigative costs, and legal expenses arising from Defendant's conduct in California. Thus, Adobe suffered a jurisdictionally sufficient amount of harm in California.
The second requirement for specific jurisdiction is that the claim "arises out of or relates to the defendant's forum-related activities." Schwarzenegger, 374 F.3d at 802. "This element is established if Adobe would not have been injured "but for" the nonresident Defendant's forum-related activities. Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995). Here, Defendant's counterfeiting of Adobe's software caused Adobe injury in California, and this particular injury would not have occurred "but for" Defendant's alleged conduct. As such, it arises from Defendant's forum related activities, and the second element of the test for specific jurisdiction is met.
Because the first two requirements for establishing specific personal jurisdiction have been established, the nonresident defendant must present a "compelling case" that asserting jurisdiction would be unreasonable. Marvix Photo, Inc. v. Brand Techs, Inc. 647 F.3d 1218, 1228 (9th Cir. 2011). Defendant essentially waived the opportunity to make this showing by failing to participate in this litigation. Nonetheless, the assertion of personal jurisdiction in this instance is not unreasonable given the fact that Defendant targeted Adobe through his scheme. As a result, Defendant had fair warning that he might be sued in California. Burger King, 471 U.S. at 472.
Adobe seeks a default judgment on the grounds that Defendant failed to answer after valid service. Here, service of process was sufficient. The Defendant was personally served on September 21, 2016. (Dkt. 23.) Defendant did not respond. Under Federal Rule of Civil Procedure 55(b)(2), the court may enter a default judgment where the clerk, under Rule 55(a), has already entered the party's default based upon a failure to plead or otherwise defend the action. The Clerk entered Defendant's default on October 19, 2016. (Dkt. 25.) Adobe sent a copy of the default was sent to Defendant by mail on October 25, 2016. (Dkt. 29-6.)
The district court's decision to enter a default judgment involves some discretion. Lau Ah Yew v. Dulles, 236 F.2d 415 (9th Cir. 1956) (affirming district court's denial of default judgment). In determining whether default judgment is appropriate, the Ninth Circuit has enumerated the following factors for considerations:
Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
After default is entered, the well-pleaded allegations in the complaint regarding liability and entry of default are taken as true, except as to damages. Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). "However, a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law." DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (citation omitted.) The court is not required to make detailed findings of fact. Fair Housing, 285 F.3d at 906. Moreover, default judgment cannot exceed the amount demanded in the pleadings. Fed. R. Civ. P. 54 (c). The Court begins the analysis of the Eitel factors with the most complex of the seven factors, the second and third factors.
In evaluating the merits of the substantive claim and the sufficiency of the Complaint, the Court examines the five claims asserted: (i) federal trademark infringement (15 U.S.C. § 1114); (ii) false designation of origin (15 U.S.C. § 1125(a)); (iii) trademark dilution (15 U.S.C. § 1125(c)); (iv) federal copyright infringement (17 U.S.C. § 501(a)); and (v) unfair and fraudulent business practices (Cal. Bus. & Prof. Code § 17200). As provided below, Plaintiff's claims are well-pled and meritorious.
Adobe alleges in its first claim for relief that Defendant infringed upon Adobe's registered trademarks in violation of Section 32 of the Lanham Act, 15 U.S.C. § 1114 (FAC, ¶¶ 41-51); in its second claim, that Defendant's use of counterfeit reproduction of trademark protected Adobe software constitutes false designation of origin and unfair competition under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125 (FAC, ¶¶ 52-61); and in its fifth claim, that Defendant's promotion and sales of counterfeit trademarked software violates California Business & Professions Code § 17200. (FAC, ¶¶ 74-82.) "Despite the existence of three distinct claims before the Court, the essential elements of the federal claims are identical and if met with adequate evidence are sufficient to establish liability under the state claim as well." Phillip Morris USA Inc. v. Shalabi, 352 F.Supp.2d 1067, 1072 (C.D. Cal. 2004) (citing Brookfield Communications, Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 1046 n. 6, 1047 n.8 (9th Cir. 1999).
Liability is established when the Plaintiff can establish that: (a) it owns a valid and protectable interest/trademark; (b) Defendant used, without authorization, a copy, reproduction, counterfeit or colorable imitation of the Plaintiff's mark in connection with the sale, distribution, or advertising of goods and services; and (c) the Defendant's use of the mark is likely to cause confusion or to deceive. Id. at 1072-1073; Brookfield, 174 F.3d at 1046-53; 15 U.S.C. § 1114(1). When a mark identical to another's mark is adopted, the court may infer that the intent is to confuse the public. M2 Software, Inc. v. Madacy Entertainment Corp., 421 F.3d 1073, 1085 (9th Cir. 2005) (citing E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1293 (9th Cir. 1992)). However, neither intent nor actual confusion are necessary to establishing a likelihood of confusion. Century 21 Real Estate Corp. v. Sanlin, 846 F.2d 1175, 1178 (9th Cir. 1988).
Adobe sufficiently established its ownership interest in the trademarks infringed, as well as efforts made in protecting those marks. (FAC, ¶¶12-21.) It likewise sufficiently charged that Defendant advertised and sold counterfeit discs on eBay that were advertised as Adobe products without Adobe's permission; thus, Defendant's use is likely to confuse or deceive customers as to their source. (FAC, ¶¶ 24-35.) Adobe met its burden in establishing claims for federal trademark infringement, false designation of origin, and California unfair competition claims alleged in the First Amended Complaint.
Adobe asserts a claim for trademark dilution based on 15 U.S.C. § 1125(c). "`Dilution' refers to the `whittling away of the value of a trademark' when used to identify different products." Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 903 (9th Cir. 2002) (citation omitted). A claim for trademark dilution requires: (a) the mark at issue is famous; (b) defendant is making commercial use of the mark in commerce; (c) defendant's use began after the mark became famous; and (d) the defendant's use of the mark dilutes the quality of the mark by diminishing the capacity of the mark to identify and distinguish goods and services. Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1324 (9th Cir. 1998) (interpreting 15 U.S.C. § 1125(c)(1)). "A plaintiff sufficiently alleges dilution of a trademark where the plaintiff alleges `their marks are weakened and tarnished' by another's use of the marks." Adobe Systems Incorporated v. Blue Source Group, Inc., 125 F.Supp.3d 945, 969 (N.D. Cal. 2015) (citation omitted).
Adobe's complaint sufficiently establishes that it is the owner of a number of famous Adobe-branded marks, including the software that is the subject of this litigation, such as Adobe®, Adobe Lightroom®, and Photoshop®. (FAC ¶¶ 12-17.) Adobe alleges that Defendant made commercial use of these Marks, i.e., Defendant used eBay, Inc. to offer for sale various software products to consumers. (FAC ¶ 24.) Further, Defendant's infringement began long after Plaintiff's trademarks became famous, and Defendant's infringement was willful with the intent to trade on Plaintiff's reputation. (FAC ¶ 64.) Finally, Adobe sufficiently asserts that Defendant's intentional sale of the unauthorized software bearing Adobe trademarks dilutes Adobe trademarks and "is likely to impair the distinctiveness, strength and value of Plaintiff's trademarks and injure the business reputation of Plaintiff and its marks." (FAC ¶ 65.) In light of the foregoing, the Court finds that Adobe has sufficiently met the second and third Eitel factors for the claim of trademark dilution.
Federal copyright law provides protection to authors of "original works of authorship, including software programs." Vernor v. Autodesk, Inc., 621 F.3d 1102, 1106 (9th Cir. 2010) (citing 17 U.S.C. §§101-103). The Copyright Act confers exclusive rights on copyright owners, including the exclusive right of distribution by sale or rental. Id. at 1106-07 (citing 17 U.S.C. § 106(3)). Infringement occurs whenever someone "violates any of the exclusive rights of the copyright owner," including the right of distribution. Id. Licensing agreements allow for the exclusive distribution of a copyright holder's products subject to the restrictions in the license. "A licensee infringes the owner's copyright if its use exceeds the scope of the license." Adobe Systems Inc. v. One Stop Micro, Inc. 84 F.Supp.2d 1086, 1092 (N.D. Cal. 2000) (citations omitted.) In situations where a defendant purportedly received a copy of the licensed software from a third-party, the defendant is subject to the restrictions in the licensing agreements and therefore may become liable for copyright infringement. Id.
To recover for copyright infringement, a plaintiff must show: (1) ownership of a valid copyright and (2) copying of constituent elements of the work that are original. Feist Pubs., Inc. v. Rural Telephone Service Co., Inc., 499 U.S. 340, 361 (1991). Here, Adobe describes its ownership of various copyrights that it claims are at issue. (FAC ¶ 18.) Adobe further alleges that Defendant, without consent or authorization, intentionally and knowingly reproduced and counterfeited Adobe protected works by advertising and selling counterfeit Adobe-brand software that were at least substantially similar to Adobe's copyrights. (FAC ¶¶ 70-71.)
Adobe describes a counterfeit disc obtained from Defendant through eBay that included a copy of an academic or educational version of Adobe Photoshop CS2 for Windows©, with a serial number previously registered on multiple occasions by users unaffiliated with the original licensee. (FAC ¶¶ 32-35.) In its moving papers, Adobe describes the purchase of another counterfeit disc of Adobe Photoshop Lightroom 5 Full Software & License DVD for MAC and Windows 7/8 received from Defendant on eBay. (Decl. of C. Yard (Dkt. 46).) In both instances, neither the disc nor the serial number had been authorized by Adobe. (Dkt. 46, ¶7.)
The Court finds that there is adequate factual specificity to meet the second and third Eitel requirements considering the sufficiency of the complaint and the substantive merits of the claim.
All of the remaining Eitel factors support the decision to grant default judgment:
Accordingly it is RECOMMENDED that default judgment be entered against Defendant.
To recover damages after securing a default judgment, the plaintiff must prove entitlement to relief by testimony or written affidavit. PepsiCo, Inc., 238 F.Supp.2d at 1175 (citing TeleVideo Systems, Inc., 826 F.2d at 917-18.) Adobe seeks $1,440,000 for infringement of its copyrighted works and statutory damages for willful trademark infringement in the sum of $3,600,000. Adobe also seeks permanent injunctive relief.
Adobe alleges that Defendant willfully and in bad faith infringed and diluted Adobe's rights in its trademarks. (FAC, ¶40.) An allegation of willful trademark infringement is deemed true on default. Yelp, Inc. v. Catron, 70 F.Supp.3d 1082, 1101 (N.D. Cal. 2014) (citing Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008). Nevertheless, "[w]illfulness can be established by evidence of knowing conduct or by evidence that the defendant acted with an aura of indifference to plaintiff's rights...." Id. (citing Philip Morris USA Inc. v. Liu, 489 F.Supp.2d 1119, 1123 (C.D. Cal. 2007)). Here, Adobe not only alleged willful trademark infringement in its complaint, but also presented evidence that Defendant was notified through eBay that Defendant's products were counterfeit and would be removed from the website. (FAC, ¶ 32.) However, Defendant filed a counter-notice with eBay in order to reinstate his status as seller and resumed the sale of counterfeit products. (FAC, ¶¶ 32, 33.) Thus, Defendant knowingly and willfully infringed Adobe's Marks.
Under the Lanham Act, a plaintiff may elect to recover an award of statutory damages for actions involving the use of a counterfeit mark at any time before final judgment is entered. 15 U.S.C. § 1117(c). Section 1117(c) provides for statutory damages of 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 or, if the use was willful, 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). Adobe seeks $200,000 per trademark.
Similarly, the Copyright Act provides for damages between $750 and $30,000 for all infringements involved and it is increased to up to $150,000 per copyright where the infringement is found to be willful. 17 U.S.C. § 504(c). Adobe seeks $30,000 per copyrighted work.
Adobe provides evidence of the purchase of two counterfeit discs from Defendant, the first on July 17, 2014. (Dkt. 29-1, ¶ 4; Dec. of C. Ward (Dkt 46), ¶¶ 3-7) and the second on March 3, 2016 (Dkt. 29-1, ¶ 5; Dkt 44, ¶ 2-5; Dkt. 46, ¶ 8.) The disc purchased on July 17, 2014 contained 7 trademarks and 1 copyrighted software program.
Adobe also provided copies of records produced by PayPal, Inc. in response to a subpoena seeking sales records related to Defendant's PayPal account. (Dkt. 29-1, ¶ 10.) Adobe estimates sales of unauthorized Adobe products amounting to $271,590.29 based on these records, reflecting the sale of product bearing two additional serial numbers. (Dkt. 29-1, ¶ 11.) While Adobe has met its evidentiary burden in establishing the violation of the Lanham Act with regard to the two counterfeit discs purchased by investigators, the sales records without more are inadequate to establish additional violations. Therefore, the Court will consider only the Marks included with the two discs in determining statutory damages. However, the Court will consider the Defendant's ongoing efforts to sell and profit from the unauthorized distribution of infringing products in fashioning the appropriate remedy.
To determine the appropriate statutory damages award on default judgment, the amount of damages requested should bear a "plausible relationship to Plaintiff's actual damages." Yelp, 70 F. Supp.3d at 1102 (citing Adobe Systems Inc. v. Tilley, 2010 WL 309249, at *5 (N.D. Cal. Jan. 19, 2010)). "While a plaintiff in a trademark or copyright infringement suit is entitled to damages that will serve as a deterrent, it is not entitled to a windfall. Id.; Tilley, 2010 WL309249, at *5-6. Tilley involved a determination of statutory damages for willful infringement of five trademarks. In that case, the court rejected a request for $250,000 or $50,000 per infringement as a windfall and instead awarded Adobe $10,000 per trademark infringement. Id.; Tilley, 2010 WL 309249, at * 4. Other claims brought by Adobe have resulted in statutory damage awards for trademark infringement in the range of $5,000 to $100,000 per mark. See Adobe v. Software Tech, 2016 WL 4728119, at *6-7 (N.D. Cal. Sept. 8, 2016) ($100,000 per mark); see also Chanel, Inc. v. Gupton, 2015 WL 1094849, at *8 (N.D. Cal. March 2, 2015) ($5,000 to $50,000 per mark).
Adobe seeks $250,000 per infringed trademark. The Court finds that the Defendant infringed upon the fifteen trademarks listed above, which would total $3,000,000. The Court finds such an award would be a windfall to Adobe. Even assuming that Adobe is correct in its claim that Defendant earned over $270,000 from infringing upon Adobe Marks and that it continued to sell infringing material despite receiving a shut-down notification via eBay, a $5,000,000 award is not be justified. The Court finds that $20,000 per trademark, or $300,000 in total, to be reasonable for Trademark infringement. The Court further finds that the request for $30,000 for each of the two infringed upon copyrights to be reasonable. The total award for statutory damages recommended by this Court is $360,000.
Under 17 U.S.C. § 502(a), a court may enter an injunction against a defendant to prevent future copyright infringement. Injunctive relief is also authorized under the Lanham Act. 15 U.S.C. § 1116(a); 15 U.S.C. § 1125(c). Here, Defendant has on more than one occasion infringed upon Adobe's copyrights and trademarks. Plaintiff will suffer irreparable injury if the ongoing infringement is not enjoined. Furthermore, Defendant's refusal to participate in this action makes it difficult for Adobe to prevent further infringement. The Court is unaware of any reason why an injunction would impose undue hardship on Defendant or harm the public interest. Accordingly, injunctive relief is warranted. Plaintiff's motion for a permanent injunction is GRANTED as described below.
Defendant has not consented to the jurisdiction of a magistrate judge under 28 U.S.C. § 636(c) and therefore, the Court does not have authority to make a dispositive ruling in this case. Accordingly, the Court ORDERS that this case be REASSIGNED to a district judge.
For the reasons set forth above, this Court RECOMMENDS that Plaintiff Adobe Systems Incorporated's motion for default judgment against Defendant Walter Gray a.k.a. Walter Grey be GRANTED IN PART AND DENIED IN PART.
The Court recommends that Defendant Walter Gray and his agents, employees, affiliates, distributors, successors, assigns, and any other persons acting in concert or in participation with his scheme be now and forever enjoined from:
1. Importing, exporting, manufacturing, downloading, uploading, marketing, selling, offering for sale, distributing or dealing in any Adobe registered trademarks and copyrighted products or incorporate words, numbers, or symbols that collectively or in isolation are confusingly similar to Adobe Marks, including, but not limited to, Adobe®, Acrobat®, Acrobat Connect©, After Effects®, Cold Fusion®, Contribute®, Creative Suite®, Device Central©, Dreamweaver®, Encore®, Fireworks®, Flash®, Illustrator®, Indesign®, Lightroom®, onlocation©, Pagemaker®, Photo Deluxe©, Photoshop®, Adobe Premiere®, Soundbooth©, Ultra®, and Version Cue® marks and works, and/or any intellectual property that is confusingly or substantially similar to, or that constitutes a colorable imitation of any of Adobe's trademarks or copyrights;
2. Using the Adobe Marks or any confusingly similar marks in advertisements or otherwise in commerce in any manner likely to confuse consumers as to the association, affiliation, endorsement, or sponsorship of Adobe; and
3. Engaging in any infringing acts involving Adobe Marks.
The Court further recommends that, pursuant to 15 U.S.C. § 1117 (c) and 17 U.S.C. § 504(c), statutory damages be awarded to Adobe Systems Incorporated in the sum of $300,000 and $60,000, respectively or a total of $360,000.
Any party may file objections to this report and recommendation with the District Judge within 14 days of being served a coy. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); N.D. Cal. Civil L.R. 72-3. The parties are advised that failure to file objections within the specified time may waive the right to appeal the District Court's order. IBEW Local Trust 595 Trust Funds, v. ACS Controls Corp., No. C-10-5568, 2011 WL 1496056, at *3 (N.D. Cal. April 20, 2011).
