Deckers Outdoor Corporation v. PINKCOBOUTIQUE LLC ( 2024 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 DECKERS OUTDOOR Case No. 2:24-cv-03129-WLH-JC 11 CORPORATION, a Delaware corporation, ORDER RE PLAINTIFF’S MOTION 12 FOR DEFAULT JUDGMENT [24] Plaintiff, 13 14 v. 15 PINKCOBOUTIQUE LLC, a Florida Limited Liability Company; 16 QUKNHIYA HILL, an individual; QUANEISHA HILL, an individual; 17 and DOES 1-10, inclusive, 18 Defendants. 19 20 21 Before the Court is Plaintiff Deckers Outdoor Corporation’s (“Plaintiff”) 22 Motion for Default Judgment against Defendants Pinkcoboutique LLC 23 (“Pinkcoboutique”), Quknhiya Hill (“Quknhiya”), Quaneisha Hill (“Quaneisha”), and 24 Does 1-10 (collectively, “Defendants”). (Mot., Docket No. 24). For the reasons set 25 forth below, the Court GRANTS the Motion. 26 I. BACKGROUND 27 This case concerns violations of the Lanham Act – including trademark 28 infringement, false designation of origin and false advertising – as well as unfair 1 competition in violation of California Business and Professions Code § 17200 et seq., 2 trademark infringement and unfair competition under California Common Law. 3 (“Complaint,” Docket No. 1). 4 Plaintiff is a Delaware corporation that “designs and markets footwear products 5 . . . including UGG® products[.]” (Id. ¶ 5). UGG® brand is a “well-recognized 6 premium comfort-leisure shoe brand[] . . . which prominently displays its highly- 7 recognizable and federally-registered trademarks, including UGG® (the “UGG 8 Mark.”).” (Id. ¶ 11). Plaintiff, additionally, has registered U.S. trademarks for 9 stylized variations of the UGG Mark (collectively, the “UGG Trademarks”). (Id. 10 ¶ 15). The UGG Trademarks are often “displayed in more than one location on a 11 single product[.]” (Id. ¶ 16). 12 Defendants Quaneisha and Quknhiya own and/or operate Pinkcoboutique’s 13 website (“Website”) and Instagram account, through which Pinkcoboutique 14 “engage[s] in the retail sale of a wide range of apparel and accessories[.]” (Id. ¶¶ 20- 15 21). Appearing for sale are “certain footwear products that bear marks that are 16 identical with, substantially indistinguishable from, or confusingly similar to one or 17 more of [Plaintiff’s] trademarks, including the UGG Mark (the “Accused Product”).” 18 (Id. ¶ 19). Plaintiff alleges that Defendants “manufactured, designed, imported into 19 the U.S., advertised, marketed, offered for sale, and/or sold at least the Accused 20 Product identified by name as ‘Ribbon bow’ through the PinkCoBoutique Website to 21 consumers nationwide[.]” (Id. ¶ 22). Defendants included in the sale of the Accused 22 Product an information card and label (the “Care Card and Label”) with information 23 about the source of the Accused Product and its required care. (Id. ¶ 23). Though the 24 Accused Product “appears to be a counterfeit of the UGG® Bailey Bow II,” the Care 25 Card and Label identify the Accused Product, instead, as the UGG® Classic Clear 26 Mini. (Id. ¶ 23). Plaintiff has not granted a license to Defendants, collaborated with 27 Defendants, or provided permission to use Plaintiff’s trademarks, trade dresses, or 28 patents. (Id. ¶ 29). 1 Plaintiff filed a Complaint against Defendants on April 16, 2024 (Compl., 2 Docket. No 1), and properly served Defendants on May 22, 2024. (Proof of Serv. 3 upon Quaneisha Hill, Docket No. 12; Proof of Serv. upon Quknhiya Hill, Docket No. 4 13; Am. Proof of Serv. Upon Pinkcoboutique, Docket No. 21). Defendants failed to 5 answer the Complaint, and the Clerk entered default on June 13, 2024, as to 6 Quaneisha and Quknhiya (Default by Clerk, Docket No. 17) and on June 20, 2024, as 7 to Pinkcoboutique. (Default by Clerk, Docket No. 23). Plaintiff moved for default 8 judgment on July 12, 2024. (Mot. for Default J., Docket No. 24). Defendants have 9 yet to file any responsive pleadings, nor have they requested the entry of defaults be 10 set aside. (Id. ¶ 5). 11 II. DISCUSSION 12 A. Legal Standard 13 A court may enter default judgment upon a party’s application when the 14 defendant fails to defend itself and the clerk has entered default. Fed. R. Civ. P. 55. 15 Generally, once the court clerk enters default, all factual allegations in the 16 complaint—except those relating to the damages amount—are taken as true. Geddes 17 v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). 18 A party moving for default judgment in this district must comply with the 19 procedural requirements of Federal Rule of Civil Procedure 55(b)(2) and Local Rule 20 55-1. Local Rule 55-1 requires that an application for default judgment be 21 accompanied by a declaration that states, inter alia, (1) “[w]hether the defaulting party 22 is an infant or incompetent person” and (2) “[t]hat the Servicemembers Civil Relief 23 Act (50 U.S.C. App. § 521) does not apply.” L.R. 55-1. 24 If the procedural requirements are met, as they are here,1 the court must 25 determine whether default judgment should be granted by considering: (1) the 26 possibility of prejudice to plaintiff; (2) the merits of plaintiff’s substantive claim; (3) 27 1 See Declaration of Jamie Fountain in Supp. of Mot. (“Fountain Decl.”), Docket No. 28 24-2 ¶ 10. 1 the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the 2 possibility of dispute as to any material facts; (6) whether default resulted from 3 excusable neglect; and (7) the strong policy of the Federal Rules of Civil Procedure 4 favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471−72 (9th Cir. 5 1986). “A default judgment must not differ in kind from, or exceed in amount, what 6 is demanded in the pleadings.” Fed. R. Civ. P. 54(c). 7 B. Analysis 8 As set forth below, Plaintiff has satisfied the Eitel factors, such that granting 9 default judgment is proper. 10 First, Plaintiff will suffer prejudice absent default. Without default judgment, 11 Plaintiff will likely be denied a course of recovery due to Defendants’ failure to 12 appear. A lack of available recourse is sufficient to demonstrate prejudice to Plaintiff. 13 Simple Design Ltd. v. Enerjoy Ltd., 710 F.Supp.3d 817, 823 (C.D. Cal. 2024); see also 14 PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002) (granting 15 default judgment and permanent injunction because plaintiffs otherwise likely to be 16 “without other recourse for recovery”). Thus, the first Eitel factor weighs in favor of 17 granting the default judgment. 18 With respect to the second and third factors – the merits of Plaintiff’s 19 substantive claims and the sufficiency of the Complaint – the Ninth Circuit suggests 20 district courts should examine whether a plaintiff has “state[d] a claim on which the 21 [plaintiff] may recover.” Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). 22 Plaintiff’s brought claims for trademark infringement under the Lanham Act, false 23 designation of origin / false advertising under the Lanham Act, and the equivalent 24 causes of action under California statutory and common law. (Compl. ¶ 1). Given 25 that the standards for trademark infringement under the Lanham Act, as compared to 26 comparable claims under California statutory and common law are substantially the 27 same, the Court’s analysis will focus on the claims under the Lanham Act. see 28 Conversive, Inc. v. Conversagent, Inc., 433 F.Supp.2d 1079, 1093-94 (C.D. Cal. 1 2006). Furthermore, Plaintiff’s analysis was limited to the claims under the Lanham 2 Act. (Memo of P. & A. in Supp. of Mot. for Default J. at 12). 3 To state a claim for trademark infringement, a plaintiff must establish “(i) a 4 protected ownership interest in its trademark; and (ii) that [Defendants’] use of its 5 competing trademark is likely to cause consumer confusion.” Simple Design Ltd., 710 6 F.Supp.3d at 823; see also Pom Wonderful LLC v. Hubbard, 775 F.3d 1118, 1124-25 7 (9th Cir. 2014); 15 U.S.C. § 1114(a)(1). The underlying question is whether “the 8 public is likely to be deceived about the source of good or services” by Defendants’ 9 product. Simple Design Ltd., 710 F.Supp.3d at 823. 10 Here, Plaintiff has sufficiently demonstrated the merits of this claim through its 11 well-pleaded Complaint. Plaintiff has “registered U.S. trademarks for the UGG Mark 12 and stylized versions thereof[.]” (Compl. ¶ 15). This demonstrates a protected 13 ownership interest. Defendants sold footwear bearing marks “identical with, 14 substantially indistinguishable from, or confusingly similar to . . . the UGG Mark.” 15 (Compl. ¶ 19). As Plaintiff notes, “…by defaulting, Defendants have admitted that its 16 use of the UGG Mark is likely to cause confusion among consumers regarding the 17 origin and quality of the goods used in commerce by Defendants.” (Memo of P. & A. 18 in Supp. of Mot. for Default J., Docket No. 24-1, at 9). Accordingly, with respect to 19 the trademark infringement claim, the second and third Eitel factors are satisfied. 20 With respect to the claim for false designation of origin and false advertising, 21 the Lanham Act prohibits “‘passing off’” or “selling . . . a good or service of one’s 22 own creation under the name or mark of another.” Smith v. Montoro, 648 F.2d 602, 23 604 (1981); 15 U.S.C. § 1125(a). Here, the allegation is that Defendants created 24 counterfeit versions of Plaintiff’s product. (Compl. ¶¶ 19, 25-26). The use of the 25 UGG Mark on products not created by Plaintiff provides a “false designation of origin 26 and a false representation that the goods are manufactured, offered, sponsored, 27 authorized, licensed by or otherwise connected with Plaintiff[] or come from Plaintiff 28 when in fact they do not.” (Mem. of P. & A. in Supp. of Mot. for Default J. at 12). 1 This is demonstrated by the fact that the Accused Product, which “appears to be a 2 counterfeit of the UGG® Bailey Bow II” is visually distinct from the authentic 3 version produced by Plaintiff. (Compl. ¶ 26). This is further supported by the fact 4 that, while appearing to most resemble Plaintiff’s UGG® Bailey Bow II, the Accused 5 Product contained the Care Card and Label indicating it was a different product 6 produced by Plaintiff, the UGG® Classic Clear Mini. In sum, this amounts to 7 Defendants’ “passing off” Plaintiff’s goods as their own. Accordingly, Plaintiff has 8 satisfied the second and third Eitel factor with respect to their claim of false 9 designation of origin and false advertising. 10 Fourth, the sum of money at stake does not prevent entry of default judgment. 11 Evaluating the sum of money at stake “requires a comparison of the recovery sought 12 and the nature of defendant's conduct to determine whether the remedy is 13 appropriate.” United States v. Broaster Kitchen, Inc., No. CV1409421MMMPJWX, 14 2015 WL 4545360, at *6 (C.D. Cal. May 27, 2015). Here, the Lanham Act provides 15 for statutory damages. 15 U.S.C. § 1117(c). It provides for “(1) not less than $1,000 16 or more than $200,000 per counterfeit mark per type of goods or services sold, offered 17 for sale, or distributed, as the court considers just; or (2) if the court finds that the use 18 of the counterfeit mark was willful, not more than $2,000,000 per counterfeit mark.” 19 Id. Notably, though Plaintiff alleges “willful” infringement, entitling it to up to 20 $2,000,000, it only requests $200,000 in statutory damages. (Mem. of P. & A. in 21 Supp. of Mot. for Default J. at 17). Given Plaintiff has established that at least one 22 counterfeit mark per type of good was utilized for goods sold, offered for sale, or 23 distributed, the recovery sought is comparable to the nature of Defendant’s conduct. 24 It falls squarely within the applicable statutory range given the conduct alleged. This 25 is particularly where, given Defendants’ alleged willfulness, Plaintiff could 26 theoretically request a higher award of damages. (Id. at 10). Accordingly, the fourth 27 Eitel factor weighs in favor of granting default judgment. 28 1 Fifth, the possibility of disputed material facts is improbable as Defendants 2 were served with the Complaint more than four months ago and still have not 3 appeared in the case. (See Proof of Serv. upon Quaneisha, Docket No. 12; Proof of 4 Serv. upon Quknhiya, Docket No. 13; Am. Proof of Serv. upon Pinkcoboutique, 5 Docket No. 21). Moreover, as discussed above, the Court must take the facts of the 6 Complaint as true in evaluating a default judgment motion. 7 Sixth, it is unlikely that the default resulted from excusable neglect. Defendant 8 Quaneisha was properly served the Complaint by substituted service upon her 9 daughter, Quknhiya (Docket No. 12); Defendant Quknhiya was properly served the 10 Complaint by personal service (Docket No. 13); and Defendant Pinkcoboutique was 11 properly served the Complaint through Quknhiya, its Agent of Service (Docket No. 12 21). Thus, the sixth Eitel factor weighs in favor of granting the default judgment. 13 Seventh, though cases should be decided on their merits where possible, such 14 preference must give way when it is not reasonably possible to reach such a decision. 15 See, e.g., Truong Giang Corp. v. Twinstar Tea Corp., No. 06-03594 JSW, 2007 WL 16 1545173, at *13 (N.D. Cal. May 29, 2007). Because Defendants have declined to 17 engage in the judicial process, as discussed above, default judgment is appropriate. 18 III. REMEDIES 19 Plaintiff requests damages under the Lanham Act, legal costs and fees, and a 20 Permanent Injunction. 21 A. Damages for Violations of the Lanham Act 22 Section 1117(c) of the Lanham Act provides for statutory damages of “(1) not 23 less than $1,000 or more than $200,000 per counterfeit mark per type of goods or 24 services sold, offered for sale, or distributed, as the court considers just; or (2) if the 25 court finds that the use of the counterfeit mark was willful, not more than $2,000,000 26 per counterfeit mark.” Given Plaintiff has established that at least one counterfeit 27 mark per type of good was utilized for goods sold, offered for sale, or distributed, it is 28 appropriate to award $200,000 in damages, as requested. See, e.g., Koninklijke 1 Philips Electronics, N.V. v. KXD Technology, Inc., 347 Fed.Appx 275, 276 (9th Cir. 2 2009) (upholding district court’s default judgment award of $1,000,000 as statutory 3 damages under the Lanham Act, where defendant had willfully sold counterfeit goods 4 bearing plaintiff’s trademark). Accordingly, the Court GRANTS damages in the 5 amount of $200,000. 6 B. Legal Costs and Fees 7 Section 35(a) of the Lanham Act provides that “[t]he court in exceptional cases 8 may award reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117(a). 9 The Ninth Circuit instructs district courts to “examine ‘the totality of the 10 circumstances’ to determine if the case was exceptional . . . exercising equitable 11 discretion in light of the nonexclusive factors identified in Octane Fitness and 12 Fogerty, and using a preponderance of the evidence standard.” SunEarth, Inc. v. Sun 13 Earth Solar Power Co., Ltd., 839 F.3d 1179, 1181 (9th Cir. 2016). Such nonexclusive 14 factors include “‘frivolousness, motivation, objective unreasonableness (both in the 15 factual and legal components of the case) and the need in particular circumstances to 16 advance considerations of compensation and deterrence.’” Id. (quoting Octane 17 Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 fn. 6 (2014)). Here, 18 though it is important to deter the sale of counterfeit goods that infringe on 19 trademarks, the Court struggles to conclude the case is exceptional. Merely alleging 20 willfulness is not sufficient to demonstrate an exceptional case. See, e.g., SunEarth, 21 Inc., 839 F.3d at 1180 (highlighting the Supreme Court’s clarification regarding the 22 need to examine the ‘totality of the circumstances.’). Accordingly, Plaintiff’s request 23 for attorneys’ fees is DENIED. 24 Though Plaintiff has identified its costs as $705, it has not provided a basis for 25 such an award. (Mem. of P. & A. in Supp. of Mot. for Default J. at 18). Accordingly, 26 the request for costs is DENIED. 27 28 1 C. Permanent Injunction 2 Injunctive relief is available under the Lanham Act. 17 U.S.C. § 502(a); 15 3 U.S.C. § 1116(a). “The Lanham Act gives the court ‘power to grant injunctions 4 according to the rules of equity and upon such terms as the court may deem 5 reasonable, to prevent the violation’ of a mark holder’s rights. 15 U.S.C. § 1116(a).” 6 PepsiCo, Inc., 238 F.Supp.2d at 1177. 7 To obtain injunctive relief, a plaintiff must show irreparable harm and 8 inadequacy of legal remedies. Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 506- 9 07 (1959). In the context of a trademark infringement case, upon a finding of 10 infringement, Plaintiff is “entitled to a rebuttable presumption of irreparable harm.” 11 Id. § 1116(a); see also Simple Design Ltd., 710 F.Supp.3d at 827. The question often 12 becomes whether “[d]enying injunctive relief would force a plaintiff to endure 13 continuing infringement and to bring successive suits for money damages.” Foxtrap, 14 Inc. v. Foxtrap, Inc., 671 F.2d 636, 639 (1982). 15 Here, it seems that Plaintiff will suffer irreparable harm, should a permanent 16 injunction not issue. The sale of counterfeit goods may irreparably harm Plaintiff’s 17 “brand and reputation as Defendant’s infringing conduct” may otherwise continue. 18 (Mem. of P. & A. in Supp. of Mot. for Default J. at 19); see Phillip Morris USA, Inc. 19 v. Shalabi, 352 F.Supp.2d 1067, 1075 (C.D. Cal. 2004) (highlighting plaintiff’s 20 investment in advertising and promoting, reputation, and goodwill in finding 21 irreparable harm); see also Chanel Inc. v. Lin., 2010 WL 2557503, *11 (N.D. Cal. 22 2010) (establishing the likelihood of confusion due to the defendants’ use of 23 counterfeit Chanel Marks supported the contention that plaintiff would suffer 24 irreparable harm were injunction not granted.). Furthermore, it is not clear that legal 25 remedies would be adequate where the behavior would simply continue. Given the 26 “non-appearing Defendant[s], it cannot be said that it is ‘absolutely clear’ that 27 Defendant[s’] allegedly wrongful behavior has ceased and will not begin again.” 28 PespiCo, Inc., 238 F.Supp.2d at 1178 (granting a motion for default judgment and 1 | request permanent injunction enjoining defendant from using plaintiffs’ trademarks on 2 | counterfeit products). Accordingly, the court GRANTS a Permanent Injunction, 3 | enjoining the Defendants’ further manufacture, distribution, sale, advertisement, or 4 | offering for sale “products featuring designs that infringe upon Deckers’ UGG Mark 5 | or [Plaintiff's] product.” (Mem. of P. & A. in Supp. of Mot. for Default J. at 19). 6 | IV. CONCLUSION 7 For the foregoing reasons, Plaintiff's Motion for Default Judgment is 8 | GRANTED as follows: 9 1. Judgment shall be entered in favor of Plaintiff Deckers Outdoor Corporation 10 against Defendants Quaneisha Hill, Quknhiya Hill, and Pinkcoboutique in 11 the amount $200,000 which represents statutory damages under the Lanham 12 Act; 13 2. The Court issues a Permanent Injunction, enjoining Defendants from further 14 infringement of Plaintiff's UGG Mark; 15 3. All pretrial and trial dates and deadlines are VACATED. 16 17 IT IS SO ORDERED. 18 _ 19 | Dated: October 21, 2024 tbe Aj!——_ HON. WESLEY L. HSU 20 UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 10