Talavera Hair Products, Inc. v. Taizhou Yunsung Electrical Appliance Co., LTD.

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 TALAVERA HAIR PRODUCTS, INC., Case No.: 18-cv-00823-RBM-JLB 12 Plaintiff, ORDER GRANTING IN PART AND 13 v. DENYING IN PART PLAINTIFF’S MOTION FOR MONTETARY AND 14 TAIZHOU YUNSUNG ELECTRICAL INJUNCTIVE RELIEF AGAINST APPLIANCE CO., LTD. et al., 15 DEFAULTED DEFENDANTS Defendants. 16 [Doc. 125] 17 18 Presently before the Court is Plaintiff Talavera Hair Products, Inc.’s (“Plaintiff”) 19 motion for monetary and injunctive relief against the Defaulted Defendants1 (“Motion”). 20 21 1 The “Defaulted Defendants” are those against whom Plaintiff secured an entry of default 22 on February 21, 2019, minus those who have since been dismissed, namely: 23 allforyoushopper.usa (3), ANIMON (4), anothercloud (5), Aosend (6), AoStyle (7), AuPolus (8), Beisirui Hair Store (11), Cai ming zhil (12), Ciao Fashion (14), Enjoy&Life 24 (19), Fosen Man (20), Georgy’s Store (22), Hairsmile (24), Judi Shop (26), Kosmasl (27), 25 Lanmpu Creative (31), MKLOPED (32), Mokshee Mokshee/Donop (34), MyBeautyCC (35), NewPollar (37), Olungts US (39), Puck Du/SmartGo (40), PUTOS (41), 26 SunNatural/SunNature (44), Turritopsis nutricula (45), Ukliss Beauty (46), Wsduos (47), 27 Yara-Yarn (48), Noledo (51), nantongaotaiguoji Trading Co Ltd (52), Beskol (53), Chunhet (54), Funny Fala (55), Huixin Economic (56), NeSexy (57), Samantha Bowen 28 1 (Doc. 125.) No Defaulted Defendant has filed a response to Plaintiff’s Motion. The Court 2 took the matter under submission without oral argument pursuant to Civil Local Rule 3 7.1(d)(1). (See Doc. 126.) For the reasons discussed below, the Court GRANTS IN 4 PART AND DENIES IN PART Plaintiff’s Motion. 5 I. BACKGROUND 6 A. Plaintiff’s Claims 7 Plaintiff is the seller of “a unique and revolutionary patented product under the 8 federally registered trademark Split-Ender® that quickly and easily trims split ends from 9 hair.” (Doc. 1, Compl. ¶ 13.) “Plaintiff owns copyrights, trademark rights[,] and patent 10 rights regarding its Split-Ender® product.” (Id. ¶ 16; see also Docs. 1-4, 1-5, 1-6, 1-7.) 11 On April 30, 2018, Plaintiff filed this action against dozens of entities and 12 individuals alleging: (1) copyright infringement pursuant to 17 U.S.C. §§ 101 et seq.; (2) 13 unfair competition pursuant the Lanham Act, 15 U.S.C. § 1125(a); (3) trademark 14 infringement pursuant to 15 U.S.C. § 1114; and (4) infringement of Plaintiff’s U.S. Patent 15 Nos. 6,588,108, 7,040,021, and 9,587,811 (collectively, the “U.S. Patents”) pursuant to 35 16 U.S.C. § 271(a). (Doc. 1 ¶¶ 40–84.) Plaintiff alleges that Defendants, with “full knowledge 17 of Plaintiff’s copyrights, trademark rights and/or patent rights,” (id. ¶ 20), “are promoting, 18 advertising, distributing, selling, and/or offering for sale cheap copies of Plaintiff’s Split- 19 Ender® hair trimmers in interstate commerce that infringe Plaintiff’s copyrights, trademark 20 rights, and patent rights” on Amazon and/or eBay. (Id. ¶ 21.) 21 B. Procedural History 22 On May 3, 2018, Plaintiff filed a motion for a temporary restraining order (“TRO”). 23 (Doc. 9.) On May 10, 2018, the Court granted Plaintiff’s motion. (Doc. 10.) The Court 24 enjoined “[e]ach Defendant, its officers, directors, employees, agents, subsidiaries, 25 distributors, and all persons in active concert or participation with any Defendant having 26 27 generally Doc. 111.) The number in parentheses after each Defendant’s name is the 28 1 notice of this Order . . . from making, manufacturing, or causing to be manufactured, 2 importing, using, advertising or promoting, distributing, selling or offering to sell split end 3 hair trimmer products . . . that infringe” the U.S. Patents; “from infringing any of the 4 exclusive rights in 17 U.S.C. § 106 with respect to Plaintiff’s copyrighted packaging or 5 from using Plaintiff’s distinctive trade dress packaging on Defendants’ packaging;” from 6 infringing Plaintiff’s copyrighted manual; and “from infringing, counterfeiting, or diluting 7 Plaintiff’s registered Split-Ender® trademark.” (Id. at 9–10.) The TRO was subsequently 8 extended on September 18, 2018 and remains in place. (Doc. 57 at 2.) 9 On May 23, 2018, Plaintiff filed a motion requesting authorization for alternative 10 service on Defendants. (Doc. 18.) On May 24, 2018, the Court granted Plaintiff’s motion 11 and authorized service on Defendants by e-mail and website publication. (Doc. 19.) On 12 May 31, 2018, Plaintiff filed a Proof of Service of Summons and Complaint on Defendants 13 1, 2, 3, 4, 5, 6, 7, 8, 11, 12, 14, 15, 16, 19, 20, 21, 22, 24, 25, 26, 27, 29, 31, 32, 33, 34, 35, 14 36, 37, 38, 39, 40, 41, 43, 44, 45, 46, 47, 48, 75, 76, 77, and 78. (Doc. 25.) On September 15 27, 2018, Plaintiff filed a Proof of Service of Summons and Complaint on Defendants 51, 16 52, 53, 54, 55, 56, 57, 58, 59, 60, and 61. (Doc. 60.) Plaintiff then filed a request for 17 Clerk’s entry of default as to the Defaulted Defendants (Doc. 63), which the Clerk entered 18 on February 21, 2019. (Doc. 65.) 19 On March 16, 2020, Plaintiff filed a motion for default judgment and/or summary 20 judgment against the Defaulted Defendants. (Doc. 98.) On July 17, 2020, Plaintiff filed a 21 motion for partial summary judgment against the only non-Defaulted Defendant, Taizhou 22 Yungsung Electrical Appliance Co., Ltd. (“Defendant Taizhou”). (Doc. 107.) 23 On November 5, 2020, the Court denied the motion for default judgment without 24 prejudice and requested supplemental briefing from Plaintiff regarding the Court’s 25 personal jurisdiction over the Defaulted Defendants. (Doc. 110.) Plaintiff filed its revised 26 motion for default judgment on December 4, 2020 (Doc. 111), along with supplemental 27 briefing on the Court’s personal jurisdiction over the Defaulted Defendants. (Doc. 112.) 28 On March 4, 2021, the Court granted in part and denied in part Plaintiff’s motion for partial 1 summary judgment as to Defendant Taizhou. (Doc. 118.) 2 C. August 6, 2021 Order on Plaintiff’s Motion for Default Judgment 3 On August 6, 2021, the Court issued an Order granting in part and denying in part 4 Plaintiff’s motion for default judgment and/or summary judgment against the Defaulted 5 Defendants (the “August 6 Order”). (Doc. 120.) Specifically, the Court granted default 6 judgment in favor of Plaintiff against the Defaulted Defendants, finding that all seven 7 factors set out by the Ninth Circuit in Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986) 8 weighed in favor of entering a default judgment against the Defaulted Defendants. (Id. at 9 28.) Having granted Plaintiff’s motion for default judgment against the Defaulted 10 Defendants, the Court next considered the appropriateness of Plaintiff’s requested relief, 11 including: (1) Plaintiff’s lost profits; (2) the Defaulted Defendants’ sales; (3) a permanent 12 injunction; and (4) entry of final judgment against the Defaulted Defendants pursuant to 13 Federal Rule of Civil Procedure 54(b). (Id. at 28–32.) 14 The Court first considered Plaintiff’s request for monetary relief. (Id. at 28–31.) 15 The Court found several issues with Plaintiff’s request, including: 16 1. Plaintiff appeared to seek an award of both $19,539,731.79 calculated from 17 Plaintiff’s lost profits and $6,627,814.94 calculated from the Defaulted 18 Defendants’ sales, but failed to indicate how Plaintiff calculated its damages to 19 prevent an impermissible double recovery. (Id. at 29); see also 17 U.S.C. § 20 504(b); 15 U.S.C. § 1117(a); Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 21 1007, 1010–11 (9th Cir. 1994) (“[T]he recovery of both plaintiff’s lost profits 22 and disgorgement of defendant’s profits is generally considered a double 23 recovery under the Lanham Act.”). 24 2. The Court found that Plaintiff failed to provide sufficient evidence to support its 25 request for lost profits, because “Plaintiff conclusorily claims that its incremental 26 costs are ‘less than $30 a unit,’ but provides no evidence to support its assertion 27 that it makes a rather incredible profit of approximately $220 per unit.” (Doc. 28 120 at 29–30.) The Court also expressed its concern “that a consumer who pays 1 $30 for a hair trimmer might never pay $250 for a product of similar function.” 2 (Id. at 30.) The Court held that, “[u]nless Plaintiff can provide specific evidence 3 to support these foundational, but presently only conclusorily alleged, facts, those 4 facts cannot be established on default.” (Id.) (citing Cripps v. Life Ins. Co. of N. 5 America, 980 F.2d 1261, 1267 (9th Cir. 1992)). 6 3. Finally, the Court found that Plaintiff failed to “apportion[] the damages 7 calculated from the Defaulted Defendants’ sales among the different types of 8 infringement alleged.” (Id.) The Court explained that, “[b]ecause Plaintiff 9 cannot recover the Defaulted Defendants’ sales as a remedy for the Defaulted 10 Defendants’ patent infringement, Plaintiff needs to provide evidence as to what 11 percentage of the Defaulted Defendants’ sales are due to each type of intellectual 12 property infringement.” (Id.) 13 Next, the Court considered Plaintiff’s request for a permanent injunction against the 14 Defaulted Defendants. (Id. at 31.) The Court found that, although Plaintiff “may be 15 entitled to permanent injunctive relief against the Defaulted Defendants,” “Plaintiff has 16 failed to prove up adequately its entitlement to said relief.” (Id.) Specifically, the Court 17 found Plaintiff failed to analyze the factors under eBay, Inc. v. MercExchange, LLC, 547 18 U.S. 388, 392–93 (2006). (Id.) 19 The Court also declined to enter a final judgment under Federal Rule of Civil 20 Procedure 54(b) given Plaintiff’s insufficient evidence in support of its request for 21 monetary and injunctive relief. (Id. at 32.) Accordingly, the Court denied without 22 prejudice Plaintiff’s requested relief, and granted Plaintiff leave to file a “motion for 23 monetary and injunctive relief against the Defaulted Defendants supported by adequate 24 evidence” within 30 days of the Court’s order. (Id.) 25 / / / 26 / / / 27 / / / 28 / / / 1 D. Plaintiff’s Motion for Monetary and Injunctive Relief Against the Defaulted 2 Defendants 3 Plaintiff filed the instant Motion on October 8, 2021.2 (Doc. 125.) With its Motion, 4 Plaintiff filed: (1) a declaration from Plaintiff’s President Victor Talavera (Doc. 125-2); 5 (2) an amended declaration from Plaintiff’s damages expert, Certified Public Accountant 6 Richard Holstrom (Doc. 127-7); and (3) various exhibits. (See Docs. 125-3, 125-4, 125-5, 7 125-6.) Plaintiff also filed two documents under seal to support its claim that Plaintiff’s 8 incremental costs total $15 per unit: (1) a Confidential Declaration of Victor Talavera; and 9 (2) an invoice and shipping document attached as Exhibit 1 to the Confidential Talavera 10 Declaration. (See Docs. 122, 123.) On October 8, 2021, the Court took the matter under 11 submission without oral argument pursuant to Civil Local Rule 7.1(d)(1). (Doc. 126.) On 12 June 3, 2022, the Court ordered Plaintiff to file a copy of the Excel spreadsheet titled 13 “Talavera - Sales (Highly Confidential.xls)” which was produced by non-party 14 Amazon.com Services Inc., which Plaintiff and its expert rely on in calculating Plaintiff’s 15 monetary damages. (Doc. 131.) Plaintiff lodged the requested information with the Court 16 that same day. (Doc. 132.) 17 II. DISCUSSION 18 “The general rule of law is that upon default the factual allegations of the complaint, 19 except those relating to the amount of damages, will be taken as true.” Geddes v. United 20 Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). “Plaintiff is required to prove all damages 21 sought in the complaint.” Phillip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 22 494, 498 (C.D. Cal. 2003). “To prove damages, a plaintiff may submit declarations, or the 23 24 25 2 Plaintiff initially filed the instant Motion on September 8, 2021, complying with the Court’s August 6 Order requiring Plaintiff to file a motion within 30 days. (Doc. 121.) 26 On October 8, 2021, Plaintiff filed a notice of withdrawal of its motion for monetary and 27 injunctive relief against the Defaulted Defendants on the grounds that Plaintiff’s filing was incomplete, noting that Plaintiff was refiling a complete version of the motion the 28 1 Court may hold an evidentiary hearing.” Spikes v. Mann, No. 19-CV-633-JLS-RBB, 2020 2 WL 5408942, at *2 (S.D. Cal. Sept. 9, 2020). “Plaintiff’s burden in ‘proving up’ damages 3 is relatively lenient.” Phillip Morris, 219 F.R.D. at 498. Additionally, the remedies sought 4 by “[a] default judgment must not differ in kind from, or exceed in amount, what is 5 demanded in the [complaint].” FED. R. CIV. PRO. 54(c). 6 Here, Plaintiff’s Complaint included a prayer for lost profits, the Defaulted 7 Defendants’ sales, and a permanent injunction enjoining further infringement. (See Doc. 8 1 at 27–31.) In the instant Motion, Plaintiff seeks the same relief as in its Complaint: lost 9 profit damages (or, in the alternative, Defendants’ lost profits) and a permanent injunction 10 enjoining the Defaulted Defendants’ infringing conduct. (See Doc. 125-1.) Plaintiff also 11 seeks entry of final judgment against the Defaulted Defendants. (Doc. 125-1 at 14–16.) 12 The Court will address each of Plaintiff’s requests for relief in turn. 13 A. Damages 14 Plaintiff seeks “lost profit damages in the total amount of $5,280,155.94 on 15 plaintiff’s patent, copyright and trademark claims based upon each Defaulted Defendants’ 16 actual selling prices.” (Doc. 125-1 at 9 (emphasis omitted).) In support of its request for 17 lost profits, Plaintiff filed: (1) an amended declaration from Plaintiff’s damages expert, 18 Richard Holstrom (Doc. 125-7); (2) a declaration from Plaintiff’s President Victor Talavera 19 (Doc. 125-2); and (3) a confidential declaration from Victor Talavera, which Plaintiff filed 20 under seal (Doc. 123). Upon the Court’s request, Plaintiff also filed a copy of the business 21 records obtained from Amazon.com Services Inc. (Doc. 132.) 22 The Copyright Act provides that a “copyright owner is entitled to recover the actual 23 damages suffered by him or her as a result of the infringement, and any profits of the 24 infringer that are attributable to the infringement and are not taken into account in 25 computing the actual damages.” 17 U.S.C. § 504(b). “In establishing the infringer’s 26 profits, the copyright owner is required to present proof only of the infringer’s gross 27 revenue.” Id. Similarly, for trademark infringement, a plaintiff is entitled “to recover (1) 28 defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the 1 action.” 15 U.S.C. § 1117(a). The Ninth Circuit has held, however, that damages 2 calculated from both the plaintiff’s lost profits and the infringer’s sales are generally 3 considered an impermissible double recovery. See Nintendo, 40 F.3d at 1010. Like the 4 Copyright Act, the Lanham Act requires the plaintiff to prove only the defendant’s sales. 5 15 U.S.C. § 1117(a). Upon a finding of patent infringement, “the court shall award the 6 claimant damages adequate to compensate for the infringement, but in no event less than a 7 reasonable royalty for the use made of the invention by the infringer, together with interest 8 and costs as fixed by the court.” 35 U.S.C. § 284. “Two alternative methods exist for 9 calculating damages in a patent case; they ‘are the patentee’s lost profits and the reasonable 10 royalty he would have received through arms-length bargaining.’” DataQuill Ltd. v. High 11 Tech Comput. Corp., 887 F. Supp. 2d 999, 1020 (S.D. Cal. 2011) (quoting Lucent Techs., 12 Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009)). 13 Plaintiff first attempts to address two of the concerns raised by the Court in its 14 August 6 Order. See supra Section I.C. In response to the Court’s concern that Plaintiff 15 appeared to seek a double recovery of both $19,539,731.79 calculated from Plaintiff’s lost 16 profits and $6,627,814.94 calculated from the Defaulted Defendants’ sales (see Doc. 120 17 at 29), Plaintiff and its expert clarify that Plaintiff seeks only lost profits in the amount of 18 $5,280,155.94, based on the Defaulted Defendants’ sales of 88,406 infringing units. (Doc. 19 125-1 at 3–4; Doc. 125-7 ¶¶ 14–17, 30; Doc. 125-9.) Because Plaintiff seeks only lost 20 profits damages, which are available on Plaintiff’s patent, copyright, and trademark claims, 21 Plaintiff argues that any potential allocation issues identified by the Court are 22 circumvented. (See Doc. 125-1 at 5–6; Doc. 125–7 ¶¶ 10–17.) The Court finds Plaintiff’s 23 clarification sufficient and will examine only Plaintiff’s request for lost profit damages on 24 its copyright, trademark, and patent claims. 25 Plaintiff bases its lost profits calculation on the Defaulted Defendants’ sales of 26 88,406 infringing units. (Doc. 125-7 at 3–6.) For each of the 38 Defaulted Defendants 27 who made sales on Amazon, Plaintiff’s damages expert, Holstrom, reviewed the sales 28 records Plaintiff subpoenaed from Amazon, “from which [Holstrom’s] attached summary 1 of the 88,358 units sold that generated sales of $6,603,512.42 was derived.” (Doc. 125-7 2 ¶ 7; see also Doc. 111-26.) Regarding the two Defaulted Defendants who Plaintiff claims 3 made infringing sales on eBay (BEAUTYDESIGN and S*SHOME), Holstrom reviewed 4 the eBay screenshots provided by Plaintiff, which Plaintiff and Holstrom allege show “that 5 two (2) other Defaulted Defendants collectively sold 48 units of infringing product at a 6 total selling value of $2,733.52.” (Doc. 125-7 ¶ 8.) Holstrom has summarized the Amazon 7 and eBay sales made by each of the 40 Defaulted Defendants in Exhibit 2 to the Holstrom 8 Declaration. (See Doc. 125-9). He concludes that “the 40 Defaulted Defendants 9 collectively sold a total of 88,406 units that generated sales of $6,606,245.94 for an average 10 selling price per unit of $74.73 ($6,606,245.94/88,406 units).” (Doc. 125-7 ¶ 9.) 11 The Court finds that Plaintiff has adequately proven, based on the Amazon records 12 and analysis by Plaintiff’s expert, the number of units sold and selling price per unit for 13 each of the 38 Defaulted Defendants who sold units on Amazon. (See Docs. 125-9, 132.) 14 However, the Court finds that Plaintiff has failed to adequately prove sales made on eBay 15 by two of the Defaulted Defendants. Regarding Defaulted Defendant No. 75 16 (BEAUTYDESIGN), Plaintiff provided “a March 2, 2018 notice to eBay [which] shows 17 that Defaulted Defendant had 28 units available, so it is likely 28 infringing unites [sic] 18 were sold at the ‘Buy it Now’ price of $36.99/unit.” (Docs. 125-2 ¶ 10; 125-6.)3 Because 19 Plaintiff fails to provide anything beyond mere conjecture that BEAUTYDESIGN sold the 20 28 units that it advertised on eBay, the Court does not find that damages for these 28 units 21 are warranted. Phillip Morris, 219 F.R.D. at 498 (“Plaintiff is required to prove all 22 23 3 Although Plaintiff writes that Defaulted Defendant No. 75 BEAUTYDESIGN “sold 16 24 units and had four available, so it is likely 20 infringing units were sold at $84.89/unit,” 25 and Defaulted Defendant No. 78 S*SHOME “had 28 units available,” Doc. 125-2 ¶ 10, the Court finds that these figures are misplaced. The eBay screenshots provided by Plaintiff 26 show that Defaulted Defendant No. 78 S*SHOME sold 16 units at a price of $84.99 per 27 unit (see Doc. 125-5 at 1), and Defaulted Defendant No. 75 BEAUTYDESIGN advertised 28 units available (see Doc. 125-6 at 1–2). The Court will review Plaintiff’s lost profits 28 1 damages sought in the complaint.”). Regarding Defaulted Defendant No. 78 (S*SHOME), 2 Plaintiff argues that “an eBay screen shot dated March 21, 2018 shows that Defaulted 3 Defendant [S*SHOME] sold 16 units and had four available, so it is likely 20 infringing 4 units were sold at $84.89/unit.” (Docs. 125-2 ¶ 10(b); 125-5.) The Court finds this 5 evidence insufficient to prove that Defaulted Defendant No. 78 (S*SHOME) made 20 6 infringing sales. Unlike the evidence that Plaintiff has provided for each of the infringing 7 sales made on Amazon (i.e., records from Amazon itself), Plaintiff offers only a screenshot 8 of an eBay webpage. Plaintiff has not provided any additional information in support of 9 his claim that these sales were completed at the advertised price. See Elektra Ent. Grp., 10 Inc. v. Bryant, No. CV 03-6381GAF-JTLX, 2004 WL 783123, at *5 (C.D. Cal. Feb. 13, 11 2004) (“Plaintiffs must ‘prove up’ the amount of damages that they are claiming.”). 12 Accordingly, Plaintiff’s request for lost profits should be reduced by: (1) 28 unit sales from 13 Defaulted Defendant No. 75 (BEAUTYDESIGN); and (2) 20 unit sales from Defaulted 14 Defendant No. 78 (S*SHOME). 15 Because Plaintiff has presented adequate proof of the Defaulted Defendants’ sales 16 (subject to the reductions with respect to BEAUTYDESIGN and S*SHOME discussed 17 above), the Court finds that lost profit damages are appropriate on Plaintiff’s copyright and 18 trademark claims. See 17 U.S.C. § 504(b) (“In establishing the infringer’s profits, the 19 copyright owner is required to present proof only of the infringer’s gross revenue.”); 15 20 U.S.C. § 1117(a) (“In assessing profits the plaintiff shall be required to prove defendant’s 21 sales only.”). The Court will next address whether lost profit damages are appropriate for 22 the Defaulted Defendants’ infringement of Plaintiff’s patents. 23 In the patent context, lost profit damages are recoverable if the patent holder can 24 demonstrate that there is a reasonable probability that, but for the infringement, the patent 25 holder would have made the infringer’s sales. DSU Med. Corp. v. JMS Co., Ltd., 296 F. 26 Supp. 2d 1140, 1148 (N.D. Cal. 2003); see also Micro Chem., Inc. v. Lextron, Inc., 318 27 F.3d 1119, 1122 (Fed. Cir. 2003) (citing King Instruments Corp. v. Perego, 65 F.3d 941, 28 952 (Fed. Cir. 1995)). “The methodology of assessing and computing damages is 1 committed to the sound discretion of the district court.” Perego, 65 F.3d at 952 (quoting 2 State Indus., Inc. v. Mor–Flo Indus., Inc., 883 F.2d 1573, 1576–77 (Fed. Cir. 1989), cert. 3 denied, 493 U.S. 1022 (1990)). 4 “To determine whether a plaintiff has established what profits it would have made 5 absent the infringement, courts typically rely on the test set out in Panduit Corp. v. Stahlin 6 Bros. Fibre Works, Inc., 575 F.2d 1152, 1156 (6th Cir. 1978).” Viasat, Inc. v. Space 7 Sys./Loral, Inc., No. 3:12-CV-00260-MLH-WVG, 2014 WL 3896073, at *11 (S.D. Cal. 8 Aug. 8, 2014). Under Panduit, “a patent owner must prove: (1) demand for the patented 9 product, (2) absence of acceptable noninfringing substitutes, (3) his manufacturing and 10 marketing capability to exploit the demand, and (4) the amount of the profit he would have 11 made.” Panduit, 575 F.2d at 1156. 12 Applying the four Panduit factors, the Court finds “that there is a reasonable 13 probability that [Plaintiff] would have made the infringer’s infringing sales ‘but for’ the 14 infringement.” Illinois Tool Works, Inc. v. MOC Prod. Co., No. 09CV1887-JLS-MDD, 15 2012 WL 3561984, at *5 (S.D. Cal. Aug. 17, 2012). First, Plaintiff has adequately proven 16 demand for its Split-Ender product. Panduit, 575 F.2d at 1156. Plaintiff has shown that 17 over 88,000 infringing units have been sold by the Defaulted Defendants on Amazon and 18 eBay. (Docs. 125-5; 125-6; 125-7 ¶ 26; 125-8.) Regarding the second Panduit factor— 19 absence of non-infringing alternatives—Plaintiff’s President alleged that “Plaintiff’s 20 patented split-end trimmer on the market was the first and only product on the market to 21 quickly and easily cut split-end hairs. There were and are no acceptable non-infringing 22 alternatives.” (Doc. 125-2 ¶ 2.) Third, Plaintiff has adequately alleged that it had the 23 “manufacturing and marketing capability to produce the 88,406 united sold by the 40 24 Defaulted Defendants on Amazon and eBay.” (Doc. 125-2 ¶ 11.) 25 The fourth factor in the Panduit test asks whether the plaintiff has adequately proven 26 “the amount of the profit he would have made.” Panduit, 575 F.2d at 1156. In evaluating 27 Plaintiff’s first motion for default judgment, the Court found that Plaintiff failed to provide 28 sufficient evidence to support its request for its lost profits. (See Doc. 120 at 29–30.) 1 Specifically, the Court found that “Plaintiff conclusorily claims that its incremental costs 2 are ‘less than $30 a unit,’ but provides no evidence to support its assertion that it makes a 3 rather incredible profit of approximately $220 per unit.” (Id. at 30 (quoting Doc. 111-27 ¶ 4 16).) The Court also expressed its concern “that a consumer who pays $30 for a hair 5 trimmer might never pay $250 for a product of similar function.” (Id.) In response, 6 Plaintiff filed two documents under seal which it says supports its claim that Plaintiff’s 7 incremental costs total $15 per unit: (1) the Confidential Declaration of Victor Talavera in 8 Support of Monetary Relief Against Defaulted Defendants (the “Talavera Declaration”); 9 and (2) an invoice and shipping document attached as Exhibit 1 to the Talavera Declaration. 10 (See Docs. 125-1 at 4–5, 122, 123.) 11 Plaintiff’s expert, Holstrom, argues that Plaintiff can seek lost profit damages based 12 on Plaintiff’s lost profits on the Defaulted Defendants’ sales of 88,406 infringing units. 13 (Doc. 125-7 ¶ 18.) Holstrom calculates lost profits as the difference between Plaintiff’s 14 selling price and Plaintiff’s cost. (Doc. 125-7 ¶ 19.) Regarding Plaintiff’s selling price, 15 Plaintiff claims that its original selling price was $249.99 per unit, which eroded to 16 $195.99. (Doc. 125-2 ¶¶5–6; Doc. 125-7 ¶ 20.) Plaintiff alleges that, “[f]rom at least 2014 17 to 2016, Plaintiff’s authentic Split-Ender Pro product was sold for about $249.99 plus 18 shipping.” (Doc. 125–2 ¶ 5 (emphasis omitted); see also Doc. 125-3 at 1.) Plaintiff further 19 alleges that due “in substantial part” to “Defaulted Defendants’ infringing items, Plaintiff’s 20 authentic Split-Ender Pro product now sells on Amazon for $195.99 including shipping.” 21 (Doc. 125–2 ¶ 6 (emphasis omitted); see also Doc. 125-4.) Although “plaintiff’s lost profit 22 based on the Defaulted Defendants’ actual sales would normally be calculated as $234.99 23 per unit ($249.99 - $15 cost),” (Doc. 125-7 ¶ 2), Holstrom instead “very conservatively 24 calculated plaintiff’s lost profits based upon the Defaulted Defendants’ actual selling prices 25 (average selling price of $74.73) instead of plaintiff’s selling price ($249.99).” (Doc. 125- 26 7 ¶ 24.) Holstrom alleges “[s]ince the Defaulted Defendants collectively sold 88,406 units 27 at an average selling price of $74.73 on Amazon and eBay, it is reasonable to assume that 28 [P]laintiff could have easily also sold 88,406 units at an average selling price of $74.73 on 1 Amazon and eBay.” (Id.) Holstrom relies on Plaintiff’s costs representation in calculating 2 Plaintiff’s lost profits. (See Doc. 125-7 ¶ 21 (“Talavera has represented that it[s] 3 incremental costs, including cost-of-goods sold and all other variable costs was $15 per 4 unit.”).) 5 Having carefully reviewed the evidence provided by Plaintiff, the Court finds that 6 Plaintiff has adequately proven, for each of the sales made on Amazon, the amount of profit 7 Plaintiff would have made but for the Defaulted Defendants’ infringement. Panduit, 575 8 F.2d at 1156. First, the Court finds that the invoice and shipping document Plaintiff filed 9 under seal does appear to show that, for each Split-Ender unit, Plaintiff’s costs include $13 10 per unit purchase price and approximately $2 per unit shipping price, for a total cost per 11 unit of approximately $15. (See Doc. 123 at 3–6.) Plaintiff has also adequately addressed 12 the Court’s concern that the Defaulted Defendants may not have sold over 88,000 units if 13 their selling price had been $249.99 per unit (Plaintiff’s selling price from approximately 14 2014 to 2016) or even $195.99 (Plaintiff’s current selling price on Amazon) by choosing 15 to use each Defendant’s actual selling price as a benchmark for Plaintiff’s lost profits. The 16 Court finds Plaintiff’s calculation of lost profits based upon the Defaulted Defendants’ 17 actual selling prices (for an average selling price of $74.73 per unit) to be a reasonable 18 estimate of Plaintiff’s profits lost to the Defaulted Defendants’ infringement. (See Doc. 19 125-7 ¶¶ 23–25.) 20 Accordingly, the Court finds that Plaintiff had adequately proven its lost profit 21 damages for the Defaulted Defendants’ copyright, trademark, and patent infringement 22 reflected in Doc. 125-9, aside from sales made by Defaulted Defendant No. 75 23 (BEAUTYDESIGN) and Defaulted Defendant No. 78 (S*SHOME). Plaintiff is not 24 entitled to recover lost profit damages from Defaulted Defendant No. 75 25 (BEAUTYDESIGN) or Defaulted Defendant No. 78 (S*SHOME), given the insufficient 26 evidence of eBay sales that Plaintiff attached to its Motion. In total, Plaintiff is entitled to 27 lost profit damages in the amount of $5,278,142.42 from the Defaulted Defendants who 28 sold on Amazon. 1 B. Injunctive Relief 2 Plaintiff also seeks to permanently enjoin the Defaulted Defendants’ copyright, trade 3 dress, and patent infringement. (Doc. 125-1 at 6–11.) Under 17 U.S.C. § 502, “any court 4 having jurisdiction of a civil action arising under this title may, subject to the provisions of 5 section 1498 of title 28, grant temporary and final injunctions on such terms as it may deem 6 reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C. § 502(a). “As a 7 general rule, a permanent injunction will be granted when liability has been established 8 and there is a threat of continuing violations.” MAI Sys. Corp. v. Peak Comput., Inc., 991 9 F.2d 511, 520 (9th Cir. 1993). The Lanham Act also “vests the district court with the 10 ‘power to grant injunctions according to principles of equity and upon such terms as the 11 court may deem reasonable, to prevent the violation of any right’ of the trademark owner.” 12 Reno Air Racing Ass’n, Inc. v. McCord, 452 F.3d 1126, 1137 (9th Cir. 2006) (quoting 15 13 U.S.C. § 1116(a)). Indeed, injunctive relief is considered “the remedy of choice for 14 trademark and unfair competition cases, since there is no adequate remedy at law for the 15 injury caused by a defendant’s continuing infringement.” Century 21 Real Estate Corp. v. 16 Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988). Similarly, under the Patent Act, a court 17 “may grant injunctions in accordance with the principles of equity to prevent the violation 18 of any right secured by patent, on such terms as the court deems reasonable.” 35 U.S.C. 19 § 283. 20 Parties seeking a permanent injunction must satisfy a four-factor test under the 21 principles of equity: “(1) that it has suffered an irreparable injury; (2) that remedies 22 available at law, such as monetary damages, are inadequate to compensate for that injury; 23 (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy 24 in equity is warranted; and (4) that the public interest would not be disserved by a 25 permanent injunction.” eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006). 26 Ultimately, “the decision whether to grant or deny injunctive relief rests within the 27 equitable discretion of the district courts.” Id. at 394. 28 / / / 1 1. Irreparable Harm 2 “[W]hen a plaintiff establishes in a trademark infringement or unfair competition 3 action a likelihood of confusion, it is generally presumed that the plaintiff will suffer 4 irreparable harm if an injunction is not granted.” Otter Prods., LLC v. Berrios, No. 13– 5 cv–4384–RSWL–AGRX, 2013 WL 5575070, *11 (C.D. Cal. Oct. 10, 2013) (citing 6 Abercrombie & Fitch Co. v. Moose Creek, Inc., 486 F.3d 629, 633 (9th Cir. 2007); Vision 7 Sports, Inc. v. Melville Corp., 888 F.2d 609, 612 n.3 (9th Cir. 1989)). In the patent context, 8 “[w]here two companies are in competition against one another, the patentee suffers the 9 harm—often irreparable—of being forced to compete against products that incorporate and 10 infringe its own patented inventions.” Douglas Dynamics, LLC v. Buyers Products Co., 11 717 F.3d 1336, 1345 (Fed. Cir. 2013). Furthermore, “[e]vidence of threatened loss of 12 prospective customers or goodwill certainly supports a finding of the possibility of 13 irreparable harm.” Stuhlbarg Int’l Sales Co., Inc. v. John D. Brush and Co., Inc., 240 F.3d 14 832, 841 (9th Cir. 2001). 15 Plaintiff has shown a likelihood of confusion as to the origin of the infringing 16 products, and thus a potential loss of prospective customers, as well as harm to Plaintiff’s 17 reputation if the infringing products are inferior to Plaintiff’s Split-Ender product. (See 18 Doc. 1 ¶¶ 30, 35; see also Doc. 111-3 ¶ 12.) For example, Plaintiff has alleged that 19 “[c]onsumers have contacted Plaintiff regarding warranty claims (e.g. missing battery) for 20 Defaulted Defendants’ products,” including a consumer who sent a photograph of a unit 21 missing a battery with evidence from the unit’s packaging that the infringing unit was not 22 sold by Plaintiff. (Doc. 111-3 ¶ 12.) Plaintiff also directly competes with the Defaulted 23 Defendants, including the 38 Defaulted Defendants who, like Plaintiff, sell products on 24 Amazon. If the Defaulted Defendants continue to sell inferior products on Amazon and 25 eBay, there is a reasonable chance that Plaintiff will lose prospective customers or current 26 customers dissatisfied with the product quality. The Court finds that Plaintiff will be 27 irreparably harmed by the Defaulted Defendants’ infringement of Plaintiff’s product. 28 / / / 1 2. Inadequate Remedies at Law 2 “[T]he requisite analysis for the second factor of the four-factor test inevitably 3 overlaps with that of the first.” eBay Inc., 500 F. Supp. 2d at 582. Inadequacy can be 4 shown where the harmed party will have trouble collecting damages or where a legal 5 remedy would require a multiplicity of suits. Metro–Goldwin–Mayer Studios, Inc. v. 6 Grokster, Ltd., 518 F.Supp.2d 1197, 1219–20 (C.D. Cal. 2007). “Damage to reputation 7 and loss of customers are intangible harms not adequately compensable through monetary 8 damages.” Car–Freshner Corp. v. Valio, LLC, No. 2:14–cv–01471–RFB–GWF, 2016 WL 9 7246073, *8 (D. Nev. Dec. 15, 2016). Loss of sales and loss of business opportunities due 10 to a defendant’s infringement can support a finding of inadequate remedies at law. See, 11 e.g., Apple Inc. v. Samsung Elecs. Co., 809 F.3d 633, 645 (Fed. Cir. 2015); ActiveVideo 12 Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312, 1340 (Fed. Cir. 2012). “Finally, 13 this factor favors an injunction where ‘[t]here is no reason to believe that [the defendant] 14 will stop infringing, or that the irreparable harms resulting from its infringement will 15 otherwise cease, absent an injunction.’” Presidio Components, Inc. v. Am. Tech. Ceramics 16 Corp., No. 14-CV-02061-MLH-BGS, 2018 WL 9903323, at *9 (S.D. Cal. Aug. 13, 2018), 17 aff’d, 784 F. App’x 786 (Fed. Cir. 2019), and order dissolved, No. 14-CV-02061-MLH- 18 BGS, 2020 WL 6561431 (S.D. Cal. Nov. 9, 2020) (citation omitted). 19 First, Plaintiff alleges that it has an inadequate remedy at law because “[a]ny 20 judgment against the Defaulted Defendants is likely effectively uncollectible against the 21 Defaulted Defendants in China” and “Plaintiff will only recover the monies frozen by 22 Amazon pursuant to the TRO [Dkt[.] 10] with respect to the Defaulted Defendants.” (Doc. 23 125-2 ¶ 17.) Because 38 of the Defaulted Defendants sold items on Amazon, the Court 24 finds that Plaintiff will likely recover most of its lost profits from those funds frozen by 25 Amazon. However, Plaintiff has also shown a risk of ongoing damage to its reputation, 26 including due to consumers’ warranty claims for the Defaulted Defendants’ products. (See 27 Doc. 111-3 ¶ 12.) See Wecosign, Inc. v. IFT Holdings, Inc., 845 F. Supp. 2d 1072, 1084 28 (C.D. Cal. 2012) (“if an injunction were not granted, plaintiff would suffer irreparable 1 injury from the ongoing damages to its goodwill and diversion of customers to counterfeit 2 services”). Plaintiff also alleges that it lost business opportunities due to the Defaulted 3 Defendants’ infringement. (See Doc. 125-2 ¶ 8.) Specifically, Plaintiff alleges that 4 “[n]egotiations [with Sally Beauty Supply and Salon Centric] fell through because 5 Plaintiff’s wholesale price of $125 per unit was higher than the $75 average retail price of 6 the Defaulted Defendants selling on Amazon and eBay.” (Id.) Plaintiff also alleges that 7 unless enjoined, the Defaulted Defendants will continue to infringe upon Plaintiff’s 8 copyrights, trademarks, and patents. (Doc. 125-2 ¶¶ 13–18.) For these reasons, the Court 9 finds that Plaintiff has no adequate remedy at law. 10 3. Balance of Hardships 11 Furthermore, the balance of hardships favors Plaintiff as it will lose profits and 12 goodwill if the Defaulted Defendants’ infringement continues, while an injunction will 13 only prohibit the Defaulted Defendants from further infringement. Wescosign, 845 F. 14 Supp. 2d. at 1084. There is no indication that any of the Defaulted Defendants will suffer 15 hardship if a permanent injunction is entered. Rather, an injunction will merely assure the 16 Defaulted Defendants’ compliance with federal copyright, trademark, and patent law. 17 Sennheiser Elec. Corp. v. Eichler, No. CV 12-10809 MMM-PLAX, 2013 WL 3811775, at 18 *11 (C.D. Cal. July 19, 2013). 19 4. Interest of the Public 20 Finally, the Court concludes that granting Plaintiff’s Motion for a permanent 21 injunction will serve the public interest. The “public has an interest in avoiding confusion 22 between two companies’ products.” Internet Specialties West, Inc. v. Milon–DiGiorgio 23 Enters., Inc., 559 F.3d 985, 993 n.5 (9th Cir. 2009); see also Suntech Power Holdings Co. 24 v. Shenzhen Xintian Solar Tech. Co., No. 08-cv-01582-MLH-NLS, 2009 WL 10671910, at 25 *3 (S.D. Cal. Jan. 29, 2009) (“The removal of infringing products from the market serves 26 the public interest—as does an injunction preventing their reappearance.”). “As a result, 27 the public interest nearly always weighs in favor of protecting property rights in the 28 absence of countervailing factors.” Apple, 809 F.3d at 647. 1 Here, the Court finds that a permanent injunction preventing the Defaulted 2 Defendants from selling infringing products will serve the public interest, and there are no 3 “countervailing factors” weighing against issuing an injunction. Accordingly, the Court 4 finds that Plaintiff has met the statutory and equitable requirements for permanent 5 injunctive relief as to the copyright, trademark, and patent violations asserted in the 6 Complaint. See Adobe Sys., Inc. v. Tilley, No. 09–cv–1085–PJH, 2010 WL 309249, at *6 7 (N.D. Cal. Jan. 19, 2010) (“In light of Defendants’ past infringement and their failure to 8 appear in this action, injunctive relief is warranted.”). 9 C. Final Judgment 10 Finally, Plaintiff has moved for entry of final judgment against the Defaulted 11 Defendants under Federal Rule of Civil Procedure 54(b). (Doc. 125-1 at 11–13.) Rule 12 54(b) provides that, “[w]hen an action presents more than one claim for relief—whether as 13 a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are 14 involved, the court may direct entry of a final judgment as to one or more, but fewer than 15 all, claims or parties only if the court expressly determines that there is no just reason for 16 delay.” FED. R. CIV. PRO. 54(b). The power to enter separate final judgment on any claim 17 “is largely discretionary” and is “to be exercised in light of judicial administrative interests 18 as well as the equities involved, and giving due weight to the historic federal policy against 19 piecemeal appeals.” Reiter v. Cooper, 507 U.S. 258, 265 (1993) (citations and internal 20 quotation marks omitted). 21 The general common law rule is that where defendants are jointly liable, final 22 judgment cannot be entered against one of them until the matter is resolved as to the other 23 defendants. Frow v. De La Vega, 82 U.S. 552, 554 (1872). The Ninth Circuit has expanded 24 this rule to include defendants who are similarly situated, even if not jointly liable. In re 25 First T.D. & Inv., Inc., 253 F.3d 520, 532 (9th Cir. 2001). Courts “should not enter a 26 default judgment against one or more defendants which is, or likely to be, inconsistent with 27 judgment on the merits in favor of the remaining answering defendants.” Shanghai 28 Automation Instrument Co., Ltd. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal. 2001). The 1 “key question” is “whether under the theory of the complaint, liability of all the defendants 2 must be uniform.” Id. at 1008. 3 Here, “the risk of inconsistent judgments is not sufficiently extreme to bar entry of 4 default judgment as a matter of law.” Id. at 1008–1009. Plaintiff’s Complaint alleges that 5 Defendant Taizhou—the only defendant who has yet to default—“manufactures items that 6 infringe Plaintiff’s copyrights, trademark rights and patent rights and then the infringing 7 items are sold or distributed in the United States on Amazon and eBay through the 8 established distribution channels of the [Defaulted] Defendants.” (Doc. 1 ¶ 4.) On March 9 4, 2021, the Court granted Plaintiff’s motion for summary judgment as to Defendant 10 Taizhou’s copyright and patent infringement, and denied Plaintiff’s motion with respect to 11 trade dress infringement. (Id. at 14.) With respect to the Defaulted Defendants, Plaintiff 12 alleges that the Defaulted Defendants “promoted, offered for sale, sold, and distributed 13 goods infringing Plaintiff’s copyrights, trademark rights and patent rights, within this 14 district, through Amazon.com or eBay.com.” (Id. ¶ 3.) In the August 6 Order, the Court 15 granted Plaintiff’s motion for default judgment in favor of the Defaulted Defendants, 16 denying without prejudice Plaintiff’s requested relief. (Doc. 120 at 32.) 17 The Court finds that entering default judgment against the Defaulted Defendants is 18 not logically inconsistent with any judgment against Defendant Taizhou. Defendant 19 Taizhou can successfully defend itself at trial on the issues not otherwise resolved by the 20 Court’s summary judgment order (see Doc. 118). Additionally, the Court finds final 21 judgment appropriate here, as the Defaulted Defendants have not appeared in this case and 22 the Court previously found that the Eitel factors weigh in Plaintiff’s favor (see Doc. 120). 23 See Tattersalls Ltd. v. Wiener, No. 17-CV-1125-BTM, 2019 WL 2209400, at *6 (S.D. Cal. 24 May 21, 2019) (granting default judgment as to fewer than all parties where potentially 25 differing judgment “would not necessarily be illogical, the Eitel factors weigh in Plaintiff’s 26 favor, and there is no just reason for delay”) (citation omitted); Shanghai Automation, 194 27 F. Supp. 2d at 1010 (granting default judgment as to fewer than all parties where “differing 28 judgments against defendant Tsai and the defaulting defendants would not necessarily be 1 |/illogical” and where “[n]early all the factors enumerated in Eite/ . . . militate in □□□□□□□□□□□ 2 || favor’). Because liability of all the Defendants need not be uniform, id. at 1008, the Court 3 || finds there is no “just reason for delay” in entering final judgment against the Defaulted 4 || Defendants. 5 Hl. CONCLUSION 6 Accordingly, Plaintiff's motion for monetary and injunctive relief against the 7 Defaulted Defendants (Doc. 125) is hereby GRANTED IN PART AND DENIED IN 8 ||PART. Plaintiff is ORDERED to file with the Court a proposed final judgment against 9 || the Defaulted Defendants in accordance with the terms of this order. Plaintiff shall file the 10 || proposed final judgment on or before June 28, 2022. 11 IT IS SO ORDERED. 12 ||DATE: June 14, 2022 13 _ A Banrnids, Mitac 14 HON. RUTH BERMUDEZ MONTENEGRO UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20