Harman International Industries, Inc. v. Pro Sound Gear et al

Filing 21

ORDER GRANTING PLAINTIFF'S APPLICATION FOR DEFAULT JUDGMENT 18 by Judge Otis D. Wright, II granting 18 APPLICATION for Default Judgment: For the reasons discussed above, the Court GRANTS Plaintiff's Motion for Default Judgment. (ECF No. 18.) The Court will issue a judgment. (see document for further details) (bm)

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O JS-6 1 2 3 4 5 6 7 8 United States District Court Central District of California 9 10 11 12 Plaintiff, 13 16 17 ORDER GRANTING PLAINTIFF’S APPLICATION FOR DEFAULT JUDGMENT [18] v. 14 15 Case No. 2:17-cv-06650-ODW (FFMx) HARMAN INTERNATIONAL INDUSTRIES, INC, PRO SOUND GEAR, INC. dba PROSOUNDGEAR.COM; PRO AUDIO DISTRIBUTION; PRO AUDIO WHOLESALE; AUTO SHIPPING SOLUTIONS, INC., 18 Defendant(s). 19 I. INTRODUCTION 20 On September 8, 2017, Plaintiff Harman International Industries, Inc. 21 (“Harman”) filed this action against Defendants Pro Sound Gear, Inc., Pro Audio 22 Wholesale, and Auto Shipping Solutions, Inc. 1 (collectively, “Defendants” or “Pro 23 Sound”) for trademark infringement, trademark counterfeiting, and violation of 24 California Business & Professional Code section 17200. (Compl., ECF No. 1.) On 25 December 19, 2017, the Clerk entered default against Defendants. (ECF No. 17.) On 26 March 7, 2018 Harman moved for entry of default judgment. (Mot., ECF No. 18.) For 27 28 1 On December 18, 2017, Harman dismissed Defendant Pro Audio Distribution from this lawsuit. (ECF No. 16.) 1 the reasons discussed below, the Court GRANTS the Motion.2 II. 2 FACTUAL BACKGROUND 3 Harman brings three claims against Pro Sound: (1) false designation of origin 4 under 15 U.S.C. § 1125(a), (2) trademark counterfeiting under 15 U.S.C. § 1114(1)(b), 5 and (3) unfair trade practices under California Business and Professions Code sections 6 17200 et seq. (See generally Compl.) Harman asserts twenty-six valid, registered 7 trademarks (the “Harman Marks”), which remain in full force and effect, the majority 8 of which are incontestable, and through which Harman has established recognition as 9 being associated with its products. (Compl. ¶¶ 11–18.) 10 Pro Sound is not an authorized dealer of Harman products, and Harman’s 11 authorized dealers are prohibited by contract to sell Harman products bearing the 12 Harman Marks to unauthorized dealers. (Compl. ¶¶ 20–21; Declaration of Helen E. 13 Omapas (“Omapas Decl.”) ¶ 7, ECF No. 18-2.) Pro Sound advertised and sold Harman 14 products bearing, at a minimum, the DBX, JBL, and SOUNDCRAFT marks, through 15 its website www.prosoundgear.com (the “Pro Sound Website”) at discounted prices, 16 with serial numbers that were removed and/or altered, and without a Harman consumer 17 warranty. (Compl. ¶¶ 22–25; Omapas Decl. ¶¶ 8–10, Exs. C–D.) Harman alleges that 18 the removal and/or altering of the serial numbers and/or packaging of Harman products 19 and selling Harman products without a Harman consumer warranty has caused, and 20 likely will continue to cause, confusion among consumers regarding the origin and 21 sponsorship by Harman of its products sold by Pro Sound. (Mot. 2.) III. 22 LEGAL STANDARD 23 Rule of Civil Procedure 55(b) authorizes a district court to enter a default 24 judgment after the Clerk enters a default under Rule 55(a). Before a court can enter a 25 default judgment against a defendant, the plaintiff must satisfy the procedural 26 requirements set forth in Federal Rules of Civil Procedure 54(c) and 55, as well as Local 27 28 2 After carefully considering the papers filed in support of the Motion, the Court deemed the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. 2 1 Rule 55-1 and 55-2. Local Rule 55-1 requires the movant to submit a declaration 2 establishing: (1) when and against what party the default was entered; 3 (2) the pleading to which the default was entered; (3) whether the defaulting party is an 4 infant or incompetent person; (4) that the Servicemembers Civil Relief Act, 50 U.S.C. 5 § 3931, does not apply; and (5) that the notice has been served on the defaulting party, 6 if required under Rule 55(b)(2). C.D. Cal. L.R. 55-1. 7 If these procedural requirements are satisfied, a district court has discretion 8 whether to grant a default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 9 1980). In exercising its discretion, a court must consider several factors (the “Eitel 10 Factors”), including: (1) the possibility of prejudice to plaintiff; (2) the merits of 11 plaintiff’s substantive claim; (3) the sufficiency of the complaint; (4) the sum of money 12 at stake; (5) the possibility of a dispute concerning material facts; (6) whether the 13 defendant’s default was due to excusable neglect; and (7) the strong policy underlying 14 the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 15 782 F.2d 1470, 1471–72 (9th Cir. 1986). Upon entry of default, the defendant’s liability 16 generally is conclusively established, and the court accepts the well-pleaded factual 17 allegations in the complaint as true. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 18 917–19 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 19 560 (9th Cir. 1977)). IV. 20 21 A. DISCUSSION Procedural Requirements 22 Harman satisfied the procedural requirements. The Clerk entered default against 23 Pro Sound on December 19, 2017. (ECF No. 17.) Pro Sound is not a minor, an 24 incompetent person, in military service, or otherwise exempted under the Soldiers’ and 25 Sailors’ Civil Relief Act of 1940. (See Declaration of Sherrie M. Flynn (“Flynn Decl.”) 26 ¶¶ 1–3, ECF No. 18-3.) Harman served Pro Sound with notice of this Motion on March 27 7, 2018. (Flynn Decl. ¶ 10.) Thus Harman complied with the procedural prerequisites 28 for entry of default judgment. See PepsiCo Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 3 1 1172, 1175 (C.D. Cal. 2002) (finding that the procedural requirements of Rule 55 and 2 Local Rule 55-1 have been met where plaintiffs address each required factor in their 3 application for default judgment). 4 B. The Eitel Factors 5 1. 6 The first Eitel factor asks whether the plaintiff will suffer prejudice if a default 7 judgment is not entered. PepsiCo, Inc., 238 F. Supp. 2d at 1177. When a defendant 8 has failed to appear and defend the claims, a plaintiff will be without recourse and suffer 9 prejudice unless default judgment is entered. Accordingly, this factor weighs in favor 10 Prejudice of granting default judgment. 11 2. Sufficiently Pleaded and Meritorious Claims 12 The second and third Eitel factors “require that a plaintiff ‘state a claim on which 13 [it] may recover.’” PepsiCo, 238 F. Supp. 2d. at 1175 (citations omitted); Philip Morris 14 USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494, 499 (C.D. Cal. 2003). 15 Harman has sufficiently pleaded meritorious claims of trademark infringement 16 for false designation of origin, trademark counterfeiting, and unfair trade practices 17 under California Business & Professional Code section 17200. 18 Trademark Infringement—False Designation of Origin 19 In order to prevail on a trademark infringement, false designation of origin claim 20 under the Lanham Act, Harman must establish two elements: (1) ownership of a valid, 21 protectable trademark; and (2) Pro Sound’s use of the mark is likely to cause confusion. 22 Lanham Act § 43(a), 15 U.S.C. § 1125(a); see also Southern California Darts Ass’n v. 23 Zaffina, 762 F.3d 921, 929 (9th Cir. 2014). The first element is comprised of two sub- 24 parts: (a) the mark must be protectable; and (b) plaintiff must own the mark. Zaffina, 25 762 F.3d at 929. 26 a. 27 Section 33 of the Lanham Act provides, in pertinent part: 28 Ownership of a Valid, Protectable Mark Any registration . . . of a mark registered on the principal 4 register . . . and owned by a party to an action shall be admissible in evidence and shall be prima facie evidence of the validity of the registered mark and of the registration of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark in commerce or in connection with the goods or services specified in the registration[.] To the extent that the right to use the registered mark has become incontestable . . . the registration shall be conclusive evidence of the validity of the registered mark, of the registrant’s ownership of the mark, and the registrant’s exclusive right to use the registered mark in commerce. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 U.S.C. § 1115(a). Harman has sufficiently alleged that it is the owner of registered and/or incontestable trademarks for its AKG, AMX, BSS, CROWN, DBX, DIGITECH, JBL, LEXICON, MARTIN, SOUNDCRAFT, STUDER and SVSI products. (See Compl. ¶¶ 11–18, Ex. 1; Omapas Decl. ¶¶ 4–5, Exs. A & B.) Pro Sound has not asserted any equitable or legal defenses to Harman’s ownership or the validity of the Harman Marks. Thus, the Harman Marks are deemed valid, protectable trademarks. b. Likelihood of Confusion “The test of likelihood of confusion is whether a ‘reasonably prudent consumer’ in the marketplace is likely to be confused as to the origin of the good or service bearing one of the marks.” Dreamwerks Prod. Grp., Inc. v. SKG Studio, dba Dreamworks SKG, 142 F.3d 1127, 1129 (9th Cir. 1998). Courts generally apply the first sale doctrine to the resale of trademarked goods. See Sebastian Int’l, Inc. v. Longs Drug Stores Corp., 53 F.3d 1073, 1076 (9th Cir. 1995). As a general rule, this doctrine limits the trademark owner’s right under the Lanham Act to control distribution of its own products after the product’s first sale. Enesco Corp. v. Price/Costco Inc., 146 F.3d 1083, 1085 (9th Cir. 1998). Under this doctrine, a purchaser may “stock, display, and resell a producer’s product under the producer’s trademark” without infringing on the producer’s trademark. Sebastian Int’l, 53 F.3d at 5 1 1076. “After the first sale, however, the trademark holder may establish infringement 2 only if he demonstrates that the goods are materially different.” Grateful Palate, Inc. 3 v. Joshua Tree Imports, LLC, 220 F. App’x 635, 637 (9th Cir. 2007); see also SoftMan 4 Prods. Co., LLC v. Adobe Sys., Inc., 171 F. Supp. 2d 1075, 1092 (C.D. Cal. 2001). The 5 resale of a materially different product constitutes trademark infringement because the 6 product is not genuine and may cause confusion regarding the product’s source, quality, 7 or sponsorship. See Enesco, 146 F.3d at 1087; see also Davidoff & CIE, S.A. v. PLD 8 Int’l Corp., 263 F.3d 1297, 1302 (11th Cir. 2001) (“[M]aterially different products that 9 have the same trademark may confuse consumers and erode consumer goodwill toward 10 the mark.”). “A guiding principle in evaluating whether a difference between two 11 products bearing the same trademark is material is whether the difference confuses 12 consumers and impinges on the trademark holder’s goodwill.” Beltronics USA, Inc. v. 13 Midwest Inventory Distribution, LLC, 562 F.3d 1067, 1073 (10th Cir. 2009) (alteration 14 and internal quotation marks omitted); see also Davidoff, 263 F.3d at 1302 (“A material 15 difference is one that consumers consider relevant to a decision about whether to 16 purchase a product.”); Iberia Foods Corp. v. Romeo, 150 F.3d 298, 303 (3d Cir. 1998) 17 (distinguishing a material difference from a difference in which the customer still “gets 18 precisely what they believed they were purchasing.”). 19 Although Pro Sound is not an authorized Harman dealer, it sells products bearing 20 the Harman Marks through the Pro Sound Website. (Compl. ¶¶ 22–25; Omapas Decl. 21 ¶¶ 7, 11.) Harman alleges that, within the past year, Pro Sound has sold Harman 22 products bearing, at a minimum the DBX, JBL, and SOUNDCRAFT marks that Pro 23 Sound advertised as being genuine Harman products. (Compl. ¶ 25.) Harman asserts 24 that Pro Sound has been selling Harman products with serial numbers that have been 25 removed and/or altered. (Omapas Decl., Exs. C & D.) Removal and/or altering of the 26 serial numbers on the Harman products may make a consumer believe the product has 27 been tampered with and degrades the appearance and value of the product. Davidoff, 28 263 F.3d at 1302–03 (deferring to the district court’s finding that etching off of batch 6 1 codes degrades the value of the product and creates a likelihood of confusion). The 2 removal and/or altering of the serial numbers, therefore, materially alters the Harman 3 products. 4 In addition, Harman asserts that all warranties that a consumer would have 5 received had the product been purchased from an authorized Harman dealer were void 6 because the serial numbers on the Harman products were removed and/or altered. 7 (Compl. ¶ 28.) This firmly establishes that Pro Sound was selling Harman products 8 without authentic Harman consumer warranties. “[T]he fact that a manufacturer’s 9 warranty comes with Plaintiff’s sale but not Defendant’s resale of [the] products is 10 likely to confuse consumers.” HM Elecs., Inc. v. R.F. Techs., Inc., No. 12-CV-2884- 11 MMA (WMC), 2013 WL 12074966, *3 (S.D. Cal. Oct. 3, 2013). Further, the fact that 12 Pro Sound does not disclose that its products do not come with the Harman consumer 13 warranty may exacerbate the potential for customer confusion. (See generally Compl.; 14 Omapas Decl., Exs. C–E); see Beltronics, 562 F.3d at 1074 (“So long as resellers of 15 materially different products take the necessary steps to adequately alleviate this 16 confusion and prevent injury to the trademark’s goodwill—by, for example, sufficiently 17 disclosing that the product differs from the originally sold product—those differences 18 will be unlikely to trigger . . . liability . . . .”); see, e.g., Enesco, 146 F.3d at 1086 (holding 19 a purchaser could repackage and sell trademarked figurines as long as the purchaser 20 disclosed to the public that it repackaged the original product). Thus, Harman has 21 sufficiently established that the sale by Pro Sound of Harman products with removed 22 and/or altered serial numbers, and without the Harman consumer warranty, has caused 23 confusion among consumers regarding the Harman products they are purchasing and 24 Harman’s sponsorship of Pro Sound’s sale of Harman products. 25 For the foregoing reasons, the Court finds that Harman has stated a false 26 designation of origin claim under the Lanham Act. 27 Trademark Counterfeiting 28 Section 1114 of the Lanham Act established a cause of action for trademark 7 1 counterfeiting by prohibiting the use of “any reproduction, counterfeit copy, or 2 colorable imitation of a registered mark in connection with the sale . . . of any goods . . 3 . [where] such use is likely to cause confusion . . . or deceive.” 15 U.S.C. § 1114(a)(1). 4 The object of section 1114 is broader than the prohibition of counterfeiting and was 5 intended “to protect consumers against deceptive designations of the origin of goods,” 6 not just to prevent the duplication of trademarks. Int’l Order of Job’s Daughters v. 7 Lindeburg & Co., 633 F.2d 912, 918 (9th Cir. 1980), cert. denied, 452 U.S. 941 (1981). 8 “In fact, the public is more likely to be deceived by an original mark because it serves 9 as a perfect imitation. In short, the distinction between using a duplication versus using 10 an original has no relevance to the purposes of trademark law.” Westinghouse Elec. 11 Corp. v. Gen. Circuit Breaker & Elec. Supply, Inc., 106 F.3d 894, 900 (9th Cir. 1997); 12 see also El Greco Leather Prod. Co. v. Shoe World, Inc., 806 F.2d 392, 296 (2d Cir. 13 1968) (holding shoe manufacturer liable for selling shoes bearing the genuine Candie’s 14 trademark after its contract with Candie’s had been cancelled), cert. denied, 484 U.S. 15 817 (1987). “We can see no difference, so far as the objectives of section 1114(1)(a) 16 are concerned, between [unauthorized use of plaintiff’s original trademark] and making 17 a reproduction of [plaintiff’s] trademark.” Id. (citing General Elec. Co. v. Speicher, 18 877 F.2d 531 (7th Cir. 1989)). 19 Although Harman does not assert Pro Sound has sold imitation or duplicate 20 copies of the Harman Marks, in the literal sense, Harman does assert Pro Sound’s 21 unauthorized use of the DBX, JBL, and SOUNDCRAFT marks on products that have 22 removed and/or altered serial numbers and sold without a Harman consumer warranty 23 cause consumer confusion. (Compl. ¶¶ 23–25; Omapas Decl. ¶¶ 7, 9–11.) The Court 24 determined that Harman sufficiently established a likelihood of consumer confusion 25 under a false designation of origin claim, so it necessarily follows that Harman has also 26 established likelihood of consumer confusion under its trademark counterfeiting claim. 27 Because “the distinction between using a duplication verses using an original has no 28 relevance[,]” where, as here, there is deceptive practices so as to create consumer 8 1 confusion, the product itself becomes a “counterfeit.” Westinghouse, 106 F.3d at 899– 2 900. 3 For the foregoing reasons, the Court finds that Harman has stated a trademark 4 counterfeiting claim under the Lanham Act. 5 Unfair Trade Practices 6 California Business and Professions Code § 17200 prohibits “any unlawful, 7 unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading 8 advertising . . . .” Cal. Bus. & Prof. Code § 17200. In order to prevail on a claim under 9 section 17200, a plaintiff must prove “either an (1) unlawful, unfair, or fraudulent 10 business act or practice, or (2) unfair, deceptive, untrue or misleading advertising.” 11 Lippitt v. Raymond James Fin. Servs., Inc., 340 F.3d 1033, 1043 (9th Cir. 2003). 12 Harman has sufficiently pleaded that Pro Sound’s actions in removing and/or 13 altering the serial numbers and/or packaging of products containing the Harman Marks 14 is unfair and deceptive, in violation of section 17200. (Compl. ¶¶ 22–23, 47–51; 15 Omapas Decl. ¶¶ 9–10, Exs. C–D; see also Mot. 4–13.) Thus, the Court finds that 16 Harman has stated an Unfair Trade Practices claim under the California Business and 17 Professions Code § 17200. 18 3. Amount at Stake 19 The fourth Eitel factor balances “the amount of money at stake in relation to the 20 seriousness of the [d]efendant’s conduct.” PepsiCo, 238 F. Supp. 2d at 1176. “This 21 determination requires a comparison of the recovery sought and the nature of 22 defendant’s conduct to determine whether the remedy is appropriate.” United States v. 23 Broaster Kitchen, Inc., No. 2:14-cv-09421-MMM, 2015 WL 4545360, *6 (C.D. Cal. 24 May 27, 2015). 25 Harman requests the statutory maximum of $200,000.00, for damages, for each 26 of the three marks. (Mot. 3.) Harman does not submit evidence in connection with this 27 Motion that addresses the expenses saved and profits reaped by Pro Sound, or in the 28 alternative, the revenues lost by Harman. Here, Harman merely alleges it was deprived 9 1 of substantial sales and the value of the Harman Marks. (Compl. ¶ 32.) However, 2 Harman was deprived of the opportunity to review Pro Sound’s records due to Pro 3 Sound’s failure to appear or respond to Harman’s Complaint or Motion for Default 4 Judgment. “Statutory damages are appropriate in default judgment cases because the 5 information needed to prove actual damages is within the infringers’ control and is not 6 disclosed.” Microsoft Corp. v. Nop, 549 F. Supp. 2d 1233, 1238 (E.D. Cal. 2008). 7 Therefore, although Harman seeks maximum statutory damages, this factor weighs in 8 favor of the entry of default judgment. 9 Harman also seeks non-monetary relief in the form of injunctive relief from the 10 continued use the Harman Marks by Pro Sound. That this request for relief is non- 11 monetary favors granting default judgment. PepsiCo, 238 F. Supp. 2d at 1177. 12 4. Dispute as to Material Facts 13 The next Eitel factor considers the possibility that material facts are in dispute. 14 Eitel, 782 F.2d at 1471–72. Harman has adequately alleged its claims for trademark 15 infringement and violation of the California Business & Professional Code § 17200 by 16 describing the products sold on the Pro Sound Website. Pro Sound failed to respond in 17 any way to Harman’s Compliant and forfeited any challenge to the material facts alleged 18 in Harman’s pleadings. See PepsiCo, 238 F. Supp. 2d at 1177 (“Upon entry of default, 19 all well-pleaded facts in the complaint are taken as true, except those relating to 20 damages.”). Therefore, “no factual disputes exist that would preclude the entry of 21 default judgment.” Vogel, 992 F. Supp. 2d at 1013. Accordingly, this factor weighs in 22 favor of entry to default judgment. 23 5. Default Due to Excusable Neglect 24 The sixth Eitel factor considers whether a defendant’s default may have resulted 25 from excusable neglect. Eitel, 782 F.2d at 1471–72. There is no indication that default 26 was entered due to Pro Sound’s excusable neglect. Pro Sound was properly served with 27 the Summons and Complaint (Flynn Decl., Ex. 1), and submitted Waivers of Service of 28 Summons (ECF Nos. 11–13), yet failed to show cause why a default judgment should 10 1 not be entered against it. Accordingly, this factor weighs in favor of entry of default 2 judgment. 3 /// 4 6. 5 “Cases should be decided upon their merits whenever reasonably possible.” 6 Eitel, 782 F.2d at 1472. While this factor will always disfavor the entry of judgment, it 7 alone does not outweigh the other factors that clearly favor entry of judgment. PepsiCo, 8 238 F. Supp. 2d at 1177. The Court thus concludes that the Eitel factors support the 9 Court’s entry of a default judgment. 10 C. Policy of Deciding Cases on the Merits Relief 11 “The general rule of law is that upon default the factual allegations of the 12 complaint, except those relating to the amount of damages, will be taken as true.” 13 Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). Harman seeks damages 14 and injunctive relief under the Lanham Act. (Mot. 6–9, 11–12.) 15 1. Damages 16 Under 15 U.S.C. § 1117(c), a court may award statutory damages between $1,000 17 and $200,000 per counterfeit mark per type of goods or services sold or offered for sale 18 in the case of trademark infringement. The statutory damage award should be “low 19 enough to bear some rational relationship to the amount of damage incurred . . . but 20 substantial enough to deter similarly situated businesses from engaging in similar 21 conduct in the future.” Rolex Watch U.S.A. v. Zeotec Diamonds, Inc., No. CV 02–01089 22 GAF (VBKx), 2003 WL 23705746, *5 (C.D. Cal. Mar. 7, 2003). In determining what 23 amount of statutory damages to award, the Ninth Circuit has repeatedly expressed this 24 deterrence policy, emphasizing that the damages award should make “deliberate trade- 25 mark infringement unprofitable.” Maier Brewing Co. v. Fleischmann Distilling Corp., 26 390 F.2d 117, 123 (9th Cir. 1968); see also Lindy Pen Co., Inc. v. Bic Pen Corp., 982 27 F.2d 1400, 1406 (9th Cir. 1993); Playboy Enters., Inc. v. Baccarat Clothing Co., Inc., 28 692 F.2d 1272, 1275 (9th Cir. 1982). However, there must also be a “plausible 11 1 relationship” between the damages sought by plaintiff and the defendant's infringing 2 conduct. See Beachbody, LLC v. Johannes, No. 11–cv–1148 PSG (RZx), 2011 WL 3 3565226, at *3 (C.D. Cal. Aug. 12, 2011) (finding that plaintiff's request for $2,150,000 4 in statutory damages was unreasonable where there were no figures confirming 5 defendant’s profits). “A court has wide discretion to determine the amount of statutory 6 damages between the statutory maxima and minima.” Microsoft Corp. v. Coppola, No. 7 C 06–06701 WHA, 2007 WL 1520964, *4 (N.D. Cal. May 24, 2007) (citing Harris v. 8 Emus Records Corp., 734 F.2d 1329, 1335 (9th Cir.1984)). 9 Harman requests the statutory maximum of $200,000 for each of the three 10 counterfeit marks (i.e., DBX, JBL, and SOUNDCRAFT), for a total of $600,000. (Mot. 11 11.) To justify this award, Harman notes that it was unable to provide evidence of the 12 monetary harm it may have suffered as a result of Pro Sound’s infringing activities 13 because Pro Sound has not participated in this litigation, making discovery of the extent 14 of Pro Sound’s operations and the revenues it gained from the illegal sale of Harman’s 15 product unavailable. 16 17 This Court has previously noted: 23 A default judgment situation like this one places both the plaintiff and the Court in the unenviable position of having to assign a value to a defendant’s wrongful conduct without the aid of any discovery establishing the extent and full effects of that conduct. But Congress has implicitly recognized that dilemma by empowering the Court to award damages unconnected with actual harm. The Court must therefore fall back on the Ninth Circuit’s punitive and deterrence policies undergirding a statutory-damages award. 24 Curtis v. Shinsachi Pharmaceutical Inc., 45 F. Supp. 3d 1190, 1203 (C.D. Cal. 2014). 25 Just as in Curtis, here Pro Sound’s conduct “smacks of bad faith.” Id. Pro Sound 26 knowingly sold Harman products as unauthorized dealers. (Mot. 12.) Pro Sound 27 proceeded to use the Harman Marks on its website and sold Harman products with 28 altered and/or removed serial numbers, thereby voiding Harman’s consumer warranty. 18 19 20 21 22 12 1 (Id.) The Court cannot determine the full extent of the harm stemming from Pro 2 Sound’s conduct, but its actions sound in bad faith. 3 The Court concludes that Harman is entitled to $100,000 for each of the three 4 counterfeit marks, for a total of $300,000. See Microsoft Corp. v. Nop, 549 F. Supp. at 5 1238 (after default, awarding statutory damages of $100,000 for each of seven 6 trademarks at issue and $30,000 for each of nine copyrights at issue, for a total of 7 $710,000); Curtis, 45 F. Supp. 3d at 1204 (holding that plaintiff’s request of $100,000 8 per infringement was “appropriately tailored to the particular circumstances known 9 about Defendants’ conduct”); Kirakosian v. J&L Sunset Wholesale & Tobacco, No. 10 216-cv-06097-CAS (PLAx), 2017 WL 4022365, at *8 (C.D. Cal. Sept. 11, 2017) 11 (finding “that $100,000 in statutory damages is reasonably proportionate to the willful 12 harm that defendant has caused and will deter future infringement.”). 13 2. Injunctive Relief 14 Harman also seeks a permanent injunction barring Pro Sound’s use of its 15 trademarks. (Mot. 6.) Specially, Harman requests that the Court permanently enjoin 16 Pro Sound, including all partners, offices, agents, servants, employees, attorneys, 17 subsidiaries, and successors-in-interest from: (a) using the Harman Marks or any mark 18 that is confusingly similar to the Harman Marks, whether alone or in combination with 19 any other words or symbols; (b) acquiring, or taking any steps to acquire, any Harman 20 products containing the Harman Marks including, but not limited to, AKG, AMX, BSS, 21 VROWN, DBX, DIGITECH, JBL, LEXICON, MARTIN, SOUNDCRAFT, STUDER, 22 and SVSI marks, in violation of any agreement that Harman may have with its 23 authorized dealers, or through any other improper or unlawful channels, (c) advertising, 24 selling, listing, promoting, displaying, offering for sale or shipping, or taking any steps 25 to advertise, sell, list, promote, display, offer for sale or ship, any Harman product 26 containing the Harman Marks including, but not limited to, AKG, AMX, BSS, 27 VROWN, DBX, DIGITECH, JBL, LEXICON, MARTIN, SOUNDCRAFT, STUDER, 28 and SVSI products; (d) inducing, assisting or abetting any other person or entity in 13 1 engaging in or performing any of the activities proscribed in the paragraphs above: and 2 (e) engaging in any further infringement of Harman marks. 3 The Lanham Act gives the Court the power to grant injunctions to prevent the 4 violation of any right of the registrant of a mark registered in the Patent and Trademark 5 office. 15 U.S.C. § 1116(a). “Injunctive relief is the remedy of choice for trademark 6 and unfair competition cases, since there is no adequate remedy at law for the injury 7 caused by a defendant’s continuing infringement.” Century 21 Real Estate Corp. v. 8 Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1998). A court may grant a permanent injunction 9 if the plaintiff satisfies a four-factor test. eBay, Inc. v. MercExchange, LLC, 547 U.S. 10 388, 392–93 (2006). Specifically, a plaintiff seeking a permanent injunction must 11 demonstrate that: (1) it has suffered irreparable injury; (2) there is no adequate remedy 12 at law; (3) “considering the balance of hardships between the plaintiff and defendant, a 13 remedy in equity is warranted”; and (4) it is the public’s interest to issue the injunction. 14 eBay, 547 U.S. at 391. 15 “[W]hen a plaintiff establishes in a trademark infringement or unfair competition 16 action a likelihood of confusion, it is generally presumed that the plaintiff will suffer 17 irreparable harm if an injunction is not granted.” Otter Prod., LLC v. Berrios, No. 13– 18 cv–4384–RSWL–AGRX, 2013 WL 5575070, *11 (C.D. Cal. Oct. 10, 2013). 19 Furthermore, “[e]vidence of threatened loss of prospective customers or goodwill 20 certainly supports a finding of the possibility of irreparable harm.” Stuhlbarg Int’l Sales 21 Co., Inc. v. John D. Brush and Co., Inc., 240 F.3d 832, 841 (9th Cir. 2001). Harman’s 22 pleadings have demonstrated a likelihood of confusion as to the origin of the infringing 23 products, and thus a potential loss of prospective customers, as well as harm to the 24 goodwill of the Harman products. 25 Therefore, the Court finds that Harman will be irreparably harmed by Pro Sound’s 26 continued use and infringement of Harman’s marks. (Compl. 30–33, 38; Omapas Decl. ¶ 11–17.) 27 Harman satisfies the second element concerning inadequate legal remedy. 28 “Damage to reputation and loss of customers are intangible harms not adequately 14 1 compensable through monetary damages.” Car–Freshner Corp. v. Valio, LLC, No. 2 2:14–cv–01471–RFB–GWF, 2016 WL 7246073, *8 (D. Nev. Dec. 15, 2016). Harman 3 alleges that unless enjoined, Pro Sound will likely continue to infringe upon Harman’s 4 Marks. (Mot. 7–8.) Although, post-eBay, a court may no longer presume irreparable 5 injury from the bare fact of liability in a trademark or trade dress case, the injury caused 6 by the presence of infringing products in the market—such as lost profits and customers, 7 as well as damage to goodwill and business reputation—will often constitute irreparable 8 injury. Sennheiser Elec. Corp. v. Eichler, No. CV 12-10809 MMM (PLAx), 2013 WL 9 3811775, at *10 (C.D. Cal July 19, 2013) (citations omitted). Harman adequately 10 alleges that Pro Sound used and will continue to use counterfeit products. (Omapas 11 Decl. 4–5; see generally Compl.) Furthermore, Harman contends that this use will 12 create consumer confusion and damage to their reputation and goodwill. (Compl. ¶ 32); 13 See Wecosign, Inc. v. IFT Holdings, Inc., 845 F. Supp. 2d 1072, 1084 (C.D. Cal. 2012) 14 (“If an injunction were not granted, [p]laintiff would suffer irreparable injury from the 15 ongoing damages to its goodwill and diversion of customers to counterfeit services.”). 16 Moreover, the balance of hardships favors Harman, as without an injunction 17 Harman will lose profits, goodwill, and rights to control the quality of its products, 18 whereas an injunction will only proscribe Pro Sound’s infringing activities. Wescosign, 19 Inc. v. IFG Holdings, Inc., 845 F. Supp. 2d. 1072, 1084 (C.D. Cal. Jan. 23, 2012). There 20 is no indication that Pro Sound will suffer hardship if a permanent injunction is entered. 21 Rather, an injunction will merely assure Pro Sound’s compliance with the Lanham Act 22 and other laws governing trademarks. See Sennheiser, 2013 WL 3811775, at *11. 23 Lastly, an injunction is in the interest of the public because “[t]he public has an 24 interest in avoiding confusion between two companies’ products.” Internet Specialties 25 West, Inc. v. Milon–DiGiorgio Enters., Inc., 559 F.3d 985, 993 (9th Cir. 2009). “Where 26 defendant's concurrent use of plaintiff’s trademark without authorization is likely to 27 cause confusion, the public interest is damaged by the defendant’s use.” AT&T Corp. 28 15 1 v. Vision One Sec. Sys., No. 95–0565–IEG (BTM), 1995 WL 476251, at *7 (S.D. Cal. 2 July 27, 1995). 3 Therefore, the Court finds that Harman has met the statutory and equitable 4 requirements for permanent injunctive relief prayed for in the Complaint. See Adobe 5 Sys., Inc. v. Tilley, No. 09–cv–1085–PJH, 2010 WL 309249 *6 (N.D. Cal. Jan. 19, 2010) 6 (granting a permanent injunction on a motion for default judgment because, “[i]n light 7 of Defendants’ past infringement and their failure to appear in this action, injunctive 8 relief is warranted”). V. 9 10 11 CONCLUSION For the reasons discussed above, the Court GRANTS Plaintiff’s Motion for Default Judgment. (ECF No. 18.) The Court will issue a judgment. 12 13 IT IS SO ORDERED. 14 April 24, 2018 15 16 17 18 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 16

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