Otter Products LLC et al v. Ace Colors Fashion, Inc et al
Filing
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ORDER GRANTING APPLICATION FOR DEFAULT JUDGMENT AGAINST DEFENDANT ACE COLORS FASHION, INC. 30 by Judge Otis D. Wright, II . (lc) .Modified on 4/16/2014 (lc). Modified on 4/16/2014 (lc).
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United States District Court
Central District of California
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OTTER PRODUCTS LLC; TREEFROG
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DEVELOPMENTS, INC. d/b/a
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LIFEPROOF,
Case No. 2:14-cv-00141-ODW(ASx)
ORDER GRANTING APPLICATION
FOR DEFAULT JUDGMENT
Plaintiffs,
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AGAINST DEFENDANT ACE
v.
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COLORS FASHION, INC. [30]
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ACE COLORS FASHION, INC.;
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ELECTRONICOS; SHAYNA’S CELL
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PHONE ACCESSORIES; VANESSA
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ACCESSORIES; DOES 1–10, inclusive,
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Defendants.
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I.
INTRODUCTION
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Plaintiffs Otter Products, LLC (“OtterBox”) and Treefrog Developments, Inc.
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(“LifeProof”) discovered that Defendant Ace Colors Fashion was selling goods
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bearing Plaintiffs’ registered trademarks without their authorization. Plaintiffs filed
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suit.
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otherwise respond. The Clerk of Court accordingly entered default, and Plaintiffs
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moved for default judgment. After considering the merits of Plaintiffs’ claims, the
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Court GRANTS the Application for Default Judgment and awards OtterBox and
After being served with process, Ace Colors Fashion failed to answer or
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LifeProof a total of $35,000.00 in statutory damages along with a permanent
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injunction against Ace Colors Fashion.1
II.
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FACTUAL BACKGROUND
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Founded in 1998, OtterBox is a Colorado limited-liability company with its
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principal place of business in Colorado. (Compl. ¶¶ 1, 14.) OtterBox is a leading
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retailer of protective cases, peripherals, and accessories for electronic devices and
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computers. (Id. ¶ 15.) The company makes protective carrying cases for a wide
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variety of electronic products, including cell phones and tablet computers. (Id. ¶ 16.)
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OtterBox has earned several local and national consumer awards and has been
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featured in media reports about consumer electronics products. (Id. ¶¶ 18–19.)
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OtterBox owns federally registered and common-law trademarks, including
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those listed in Figure 1. (Id. ¶ 20.) It has spent significant resources developing its
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products and marketing them in print and Internet advertising. (Id. ¶¶ 21–22.)
Figure 1
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After carefully considering the papers filed with respect to this Motion, the Court deems the matter
appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.
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Treefrog Developments, Inc. is a Delaware corporation doing business as
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LifeProof. (Id. ¶ 2.) LifeProof is a designer, manufacturer, distributor, and seller of
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all-protective cases and related accessories for mobile devices. (Id. ¶ 23.) Its products
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provide protection against water, dirt, snow, and shock. (Id. ¶¶ 23–24.) The company
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has spent substantial time, money, and effort developing consumer recognition and
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awareness of the LifeProof brand, including through national and international
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advertising.
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Registration No. 4,057,201 for “LIFEPROOF.” (Id. ¶ 26.)
(Id. ¶ 25.)
LifeProof is the exclusive owner federal trademark
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On October 17, 2013, Plaintiffs’ investigator visited Defendant Ace Colors
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Fashion at 1001 Maple Avenue, Suite 107, Los Angeles, California 90015. (Perez
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Decl. ¶ 2.) The investigator inquired about LifeProof cases for an iPhone 5, and a
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store associate retrieved five samples from the display wall. (Perez Decl. Ex. 1.) The
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investigator also observed six OtterBox Defender Series cases for the iPhone 5 on
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display next to the LifeProof cases. (Id.) He purchased one of each case for $35.00
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apiece. (Id.; see also Ex. 2 (depicting photographs of the purchased cases).) Plaintiffs
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inspected the products and determined that they were not authentic. (Compl. ¶ 13.)
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On January 7, 2014, OtterBox and LifeProof filed suit against, among others,
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Ace Colors Fashion alleging eight federal and state trademark-infringement related
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claims. (ECF No. 1.) Plaintiffs served Ace Colors Fashion on January 20, 2014.
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(ECF No. 10.) Hearing no response from Defendant, the Clerk of Court entered
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default on March 14, 2014, per Plaintiffs’ request. (ECF No. 25.) Plaintiffs thereafter
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moved for entry of default judgment. That Application is now before the Court for
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decision.
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III.
LEGAL STANDARD
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Federal Rule of Civil Procedure 55(b) authorizes a district court to grant default
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judgment after the Clerk enters default under Rule 55(a). Local Rule 55-1 requires
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that the movant submit a declaration establishing (1) when and against which party
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default was entered; (2) identification of the pleading to which default was entered;
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(3) whether the defaulting party is a minor, incompetent person, or active
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servicemember; and (4) that the defaulting party was properly served with notice.
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A district court has discretion whether to enter default judgment. Aldabe v.
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Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Upon default, the defendant’s liability
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generally is conclusively established, and the well-pleaded factual allegations in the
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complaint are accepted as true. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–
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19 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560
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(9th Cir. 1977)).
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In exercising its discretion, a court must consider several factors, including
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(1) the possibility of prejudice to plaintiff; (2) the merits of plaintiff’s substantive
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claim; (3) the sufficiency of the complaint; (4) the sum of money at stake; (5) the
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possibility of a dispute concerning material facts; (6) whether the defendant’s default
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was due to excusable neglect; and (7) the strong policy underlying the Federal Rules
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of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470,
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1471–72 (9th Cir. 1986).
IV.
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DISCUSSION
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OtterBox and LifeProof move for entry of default judgment against Ace Colors
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Fashion on their trademark-infringement claim. The Court finds that Plaintiffs have
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established that Ace Colors Fashion willfully infringed Plaintiffs’ registered
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trademarks, thus entitling them to $35,000.00 in statutory damages and a permanent
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injunction.
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A.
Notice
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On January 20, 2014, Plaintiffs’ process server delivered a copy of the
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summons and Complaint to Jian Maharti, the person in charge at Ace Colors Fashion.
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(ECF No. 10.) The Court therefore finds that Plaintiffs properly served Defendant
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under Rule 4(e)(2)(C).
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B.
Eitel factors
OtterBox and LifeProof only move for entry of default judgment against Ace
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Colors Fashion on their federal trademark-infringement claim.
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trademark-infringement claim, a plaintiff must establish that the defendant is using a
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mark “confusing similar” to a valid, protectable trademark owned by the plaintiff.
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Brookfield Commc’ns, Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1046 (9th Cir.
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1999). In AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979), abrogated on
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other grounds by Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir.
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2003), the Ninth Circuit set forth eight factors a court should consider in determining
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To establish a
whether two marks are confusingly similar.
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But the Court need not wade through the Sleekcraft thicket, because “in cases
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involving counterfeit marks, it is unnecessary to perform the step-by-step examination
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. . . because counterfeit marks are inherently confusing.” Phillip Morris USA Inc. v.
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Shalabi, 352 F. Supp. 2d 1067, 1073 (C.D. Cal. 2004) (internal quotation marks
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omitted); see also Brookfield Commc’ns, 174 F.3d at 1056 (noting that virtually
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identical marks are inherently confusingly similar).
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There is no question that the goods at issue here are “counterfeit” in the sense
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that they masquerade as genuine OtterBox and LifeProof products but were not made
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or authorized by Plaintiffs. This is not a case where a defendant has employed a mark
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that is similar but not identical to the plaintiff’s registered mark; rather, Ace Color
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Fashions has wholly appropriated Plaintiffs’ trademarks without permission, thereby
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rendering them liable for trademark infringement.
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C.
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Remedies
Plaintiffs request $100,000.00 in statutory damages against Ace Colors Fashion
and a permanent injunction.
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1.
Statutory damages
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Under 15 U.S.C. § 1117(c), a court may award statutory damages between
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$1,000 and $200,000 per counterfeit mark per type of goods or services sold or
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offered for sale in the case of trademark infringement. But if the court finds that the
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infringement was “willful,” the court may award up to $2,000,000 per counterfeit
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mark per type of goods or services sold or offered. Id. § 1117(c)(2). The Ninth
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Circuit has held that on default, a district court must accept a plaintiff’s willful-
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infringement allegations as true. Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d
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696, 702 (9th Cir. 2008).
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In determining what amount of statutory damages to award, the Ninth Circuit
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has repeatedly expressed a deterrence policy, that is, the damages award should make
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“deliberate acts of trade-mark infringement unprofitable.” Maier Brewing Co. v.
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Fleischmann Distilling Corp., 390 F.2d 117, 123 (9th Cir. 1968); see also Lindy Pen
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Co., Inc. v. Bic Pen Corp., 982 F.2d 1400, 1406 (9th Cir. 1993); Playboy Enters., Inc.
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v. Baccarat Clothing Co., Inc., 692 F.2d 1272, 1275 (9th Cir. 1982).
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Plaintiffs argue that one cannot determine the profits Ace Colors Fashion
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reaped or the losses Plaintiffs incurred as the result of the infringement, because Ace
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Colors Fashion failed to appear and present its sales data. But Plaintiffs’ investigator
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observed 11 counterfeit units for sale at the business.
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Where there’s smoke there’s fire. While Plaintiffs’ investigator only observed
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11 infringing units for sale, it is likely that Ace Colors Fashion has sold, is selling, and
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will sell many more units that infringe upon Plaintiffs’ registered marks.
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impossible for the Court to assign a statutory-damages award with precision. But that
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is not what Congress has asked. Rather, the award is left up to the Court’s sound
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discretion after considering all relevant factors—including the willfulness allegation
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which the Court must accept as true at this stage.
It is
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The Court finds that the $100,000 award Plaintiffs request is excessive in light
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of the limited scope of circumstances presented to the Court. But the Court does find
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that given the demonstrated strength of the OtterBox and LifeProof marks along with
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the Ninth Circuit’s deterrence policy, the Court must award statutory damages that
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will adequately discourage Ace Colors Fashion and other businesses like it from
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future infringement. The Court accordingly awards Plaintiffs a total of $35,000.00 in
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statutory damages for willful trademark infringement as authorized by 15 U.S.C.
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§ 1117(c)(2).
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2.
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Plaintiffs also request that the Court issue a permanent injunction against Ace
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Permanent injunction
Colors Fashion.
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The Lanham Act empowers a court to grant injunctions “according to the
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principles of equity and upon such terms as the court may deem reasonable” to
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prevent further trademark infringement. 15 U.S.C. § 1116(a); Philip Morris USA, Inc.
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v. Castworld Prods., Inc., 219 F.R.D. 494, 502 (C.D. Cal. 2003); PepsiCo, Inc. v. Cal.
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Sec. Cans, 238 F. Supp. 2d 1172, 1178 (C.D. Cal. 2002). For a court to issue a
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permanent injunction, a plaintiff must demonstrate “(1) actual success on the merits;
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(2) a likelihood of irreparable injury if injunctive relief is not granted; (3) a balance of
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hardships favoring Plaintiff; and (4) that an injunction will advance the public
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interest.” Wecosign, Inc. v. IFG Holdings, Inc., 845 F. Supp. 2d 1072, 1084 (C.D.
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Cal. 2012) (granting a permanent injunction in a trademark-infringement action).
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The Court has already determined that OtterBox and LifeProof succeeded on
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the merits of their infringement claim. Plaintiffs will also suffer irreparable harm if
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the Court does not issue an injunction, as Ace Colors Fashion is likely to continue to
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sell infringing goods and consequently benefit from the goodwill Plaintiffs have spent
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substantial money establishing for their marks. Neither is there any indication that
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Defendant will suffer any prejudice; it simply must stop selling infringing goods.
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Finally, the public will benefit from the Court enjoining Ace Colors Fashion. As the
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Ninth Circuit stated,
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In addition to the harm caused the trademark owner, the consuming
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public is equally injured by an inadequate judicial response to trademark
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infringement. Many consumers are willing to pay substantial premiums
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for particular items which bear famous trademarks based on their belief
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that such items are of the same high quality as is traditionally associated
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with the trademark owner. As a result of this trademark infringement the
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consuming public is denied the benefit of their bargains and the
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reputation and goodwill of the trademark owner is accordingly harmed.
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Playboy Enters., 692 F.2d at 1275.
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The Court has also reviewed the language of the proposed permanent injunction
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submitted by Plaintiffs and finds it appropriately tailored to this case’s circumstances.
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(See ECF No. 30-5.) The Court will therefore issue the proposed injunction along
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with the default judgment.
V.
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CONCLUSION
For the reasons discussed above, the Court GRANTS OtterBox and LifeProof’s
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Application for Default Judgment against Defendant Ace Colors Fashion.
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No. 30.) The Court thus awards Plaintiffs a total of $35,000.00 in statutory damages
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and grants Plaintiffs a permanent injunction. A default judgment and injunction will
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issue.
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IT IS SO ORDERED.
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April 15, 2014
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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE
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(ECF
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