DealerX v. Kahlon

Filing 20

FINDINGS and RECOMMENDATIONS signed by Magistrate Judge Allison Claire on 11/22/2017 RECOMMENDING that plaintiff's 13 Motion for Default Judgment be granted. The court enter judgment against the defendant on the complaint's claims of tra demark infringement (15 U.S.C. § 1114(1)), false advertising (15 U.S.C. § 1125(a)), common law trademark infringement, and cyberpiracy (15 U.S.C. § 1117(d)). The court enjoin defendant, and all persons acting by, through, or in conc ert with the defendant, from using plaintiff's trademarks in any manner. The court order defendant to transfer the "" domain name to plaintiff within three days of judgment. The court grant plaintiff's request for attorney's fees in the amount of $23,650 and costs in the amount of $455.40. This case be closed. Motion referred to Judge Morrison C. England, Jr. Objections to F&R due within 21 days. (Zignago, K.)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 DEALERX, a New Jersey Corporation, 12 13 14 15 No. 2:17-cv-1444-MCE-AC Plaintiff, v. FINDINGS AND RECOMMENDATIONS GURRI KAHLON, Defendant. 16 17 This matter is before the court on plaintiff’s motion for default judgment. ECF No. 13. 18 The motion was referred to the undersigned pursuant to E.D. Cal. R. 302(c)(19). This motion was 19 set for hearing on November 1, 2017 at 10:00 a.m. ECF No. 18. Plaintiff appeared 20 telephonically, and defendant did not appear. Id. For the reasons set forth below, the 21 recommends plaintiff’s motion be GRANTED, and that judgment be entered in favor of plaintiff. 22 23 I. Relevant Background Plaintiff, DealerX, brought its complaint on July 12, 2017 raising allegations of trademark 24 infringement (15 U.S.C. § 1114(1)), false advertising (15 U.S.C. § 1125(a)), common law 25 trademark infringement, and cyberpiracy. ECF No. 1 at 2. Plaintiff alleges that it owns 26 registered trademark “ROIQ.” Id. Plaintiff developed a customer relations management 27 (“CRM”) business around the brand ROIQ and, after observing that the “static and undeveloped 28 website” to which “” resolved had not been changed or updated over an extended period 1 1 of time, a DealerX representative contacted the “” owner, defendant Kahlon. Id. 2 Plaintiff alleges that defendant elicited specific information about the nature of plaintiff’s 3 business and immediately thereafter created a website on the “” domain advertising 4 exactly the same services offered by plaintiff. Id. Plaintiff alleges that defendant specifically 5 designed his website to falsely convey the impression that the “” site had been 6 previously used for a CRM business. Id. 7 Plaintiff alleges defendant created a fraudulent webpage on “” in order to 8 dramatically increase the asking price for the purchase of the domain, and to harm DealerX, 9 which currently uses a similar domain (“”) to host its business. Id. Plaintiff initiated an 10 administrative proceeding pursuant to the Uniform Domain-Name Dispute Resolution Policy 11 (“UDRP”) on May 4, 2017, in which the panelist appointed found that DealerX had not shown 12 that Kahlon acted in bad faith at the time it registered the “” domain.1 Id. at 3. Plaintiff 13 alleges that prior to the receipt of the UDRP decision, it provided defendant a copy of the 14 complainant in this case and informed defendant of its intent to file suit in federal court. 15 A summons in this case was issued to defendant on July 12, 2017. ECF No. 2. Defendant 16 did not appear, and plaintiff moved for entry of default on August 21, 2017. ECF No. 10. The 17 clerk entered default on August 22, 2017. ECF No. 13. Plaintiff moved for default judgment on 18 September 30, 2017. Defendant did not respond to the motion for entry of default judgment, and 19 has not otherwise appeared in this case. 20 II. Motion 21 Defendant moves for default judgment on all counts, seeking the following relief: 22 A. That Defendant, and all of his agents, servants, employees, and attorneys, and all other persons in active concert or participation with him who receive actual notice of this judgment, be temporarily, preliminarily, and permanently enjoined from, without permission from DEALERX: 23 24 25 1 26 27 28 “Involvement in a UDRP process does not prevent the disputing parties from submitting the dispute to a court of competent jurisdiction before, during or after the dispute resolution process. . . . Most U.S. courts will give no weight to a UDRP panel decision.” § 25A:37.ICANN Uniform Dispute Resolution Policy (UDRP)—Judicial review after UDRP decision, 5 McCarthy on Trademarks and Unfair Competition § 25A:37 (5th ed.) 2 1 2 3 4 5 6 7 8 (1) using ROIQ, any colorable imitations thereof, or any marks confusingly similar thereto, other than non-prominently, in purely informational statements; (2) transferring to anyone other than to DEALERX the domain name or any other domain name that uses names, words, designations, or other symbols confusingly similar to ROIQ; (3) registering, maintaining registrations for, using, offering for sale, claiming ownership of, or in any other way using, or any other domain name that uses names, words, designations, or other symbols confusingly similar to ROIQ; and (4) otherwise deceptively or unfairly competing with DealerX; B. That Defendant be DIRECTED pursuant to 15 U.S.C. 1125(d)(2)(D)(i) to transfer registration of the domain name to DEALERX within three days; 9 10 11 12 13 14 C. That DEALERX be awarded statutory damages in the amount equivalent to its attorney’s fees pursuant to 15 U.S.C. § 1117(a), or, alternatively, pursuant to 15 U.S.C. §1117(c)(1) or 15 U.S.C. § 1117(d); and D. That DEALERX be awarded such other and further relief as the Court may deem just and proper. ECF No. 13 at 2-3. Defendant has not appeared or filed any response. III. Analysis 15 16 17 A. Legal Standard Pursuant to Federal Rule of Civil Procedure 55, default may be entered against a party 18 against whom a judgment for affirmative relief is sought who fails to plead or otherwise defend 19 against the action. See Fed. R. Civ. P. 55(a). However, “[a] defendant’s default does not 20 automatically entitle the plaintiff to a court-ordered judgment.” PepsiCo, Inc. v. Cal. Sec. Cans, 21 238 F.Supp.2d 1172, 1174 (C.D. Cal. 2002) (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th 22 Cir. 1986)); see Fed. R. Civ. P. 55(b) (governing the entry of default judgments). Instead, the 23 decision to grant or deny an application for default judgment lies within the district court’s sound 24 discretion. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In making this 25 determination, the court may consider the following factors: 26 27 (1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff's substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) 28 3 1 2 whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 3 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Default judgments are ordinarily 4 disfavored. Id. at 1472. 5 As a general rule, once default is entered, well-pleaded factual allegations in the operative 6 complaint are taken as true, except for those allegations relating to damages. TeleVideo Sys., Inc. 7 v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. 8 Group, 559 F.2d 557, 560 (9th Cir. 1977) (per curiam)); see also Fair Housing of Marin v. 9 Combs, 285 F.3d 899, 906 (9th Cir. 2002). Although well-pleaded allegations in the complaint 10 are admitted by a defendant’s failure to respond, “necessary facts not contained in the pleadings, 11 and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. 12 of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 13 (9th Cir. 1978)); accord DIRECTV, Inc. v. Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (“[A] 14 defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law”) 15 (citation and quotation marks omitted); Abney v. Alameida, 334 F.Supp.2d 1221, 1235 (S.D. Cal. 16 2004) (“[A] default judgment may not be entered on a legally insufficient claim.”). A party’s 17 default conclusively establishes that party’s liability, although it does not establish the amount of 18 damages. Geddes, 559 F.2d at 560; cf. Adriana Int’l Corp. v. Thoeren, 913 F.2d 1406, 1414 (9th 19 Cir. 1990) (stating in the context of a default entered pursuant to Federal Rule of Civil Procedure 20 37 that the default conclusively established the liability of the defaulting party). 21 22 23 B. The Eitel Factors 1. Factor One: Possibility of Prejudice to Plaintiff The first Eitel factor considers whether the plaintiff would suffer prejudice if default 24 judgment is not entered, and such potential prejudice to the plaintiff weighs in favor of granting a 25 default judgment. See PepsiCo, Inc., 238 F.Supp.2d at 1177. Here, plaintiff would suffer 26 prejudice if the court did not enter a default judgment because it would be without recourse for 27 recovery. Accordingly, the first Eitel factor favors the entry of default judgment. 28 4 1 2. Factors Two and Three: Merits of Claims and Sufficiency of Complaint 2 The merits of plaintiff’s substantive claims and the sufficiency of the complaint are 3 considered here together because of the relatedness of the two inquiries. The court must consider 4 whether the allegations in the complaint are sufficient to state a claim that supports the relief 5 sought. See Danning, 572 F.2d at 1388; PepsiCo, Inc., 238 F.Supp.2d at 1175. Here, the merits 6 of the claims and sufficiency of the complaint favor entry of default judgment. 7 Plaintiff brings four causes of action: (1) trademark infringement (15 U.S.C. § 1114(1)), (2) false 8 advertising (15 U.S.C. § 1125(a)), (3) common law trademark infringement, and (4) cyberpiracy 9 (15 U.S.C. § 1117(d)). Although plaintiff has alleged four distinct claims, “the essential 10 elements of the federal claims [with the exception of plaintiff’s cyberpiracy claim] are identical 11 and if met with adequate evidence are sufficient to establish liability under the state law claim as 12 well.” Phillip Morris USA Inc. v. Shalabi, 352 F.Supp.2d 1067, 1072 (C.D. Cal. 2004) (citing 13 Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036, 1046 n.6, 1047 n.8 14 (9th Cir. 1999)). 15 16 a. Trademark infringement To state a claim for trademark infringement, the complaint must allege that the plaintiff: 17 “(1) ...has a protectable ownership interest in the mark; and (2) that the defendant’s use of the 18 mark is likely to cause consumer confusion, thereby infringing upon the [plaintiff’s] rights to the 19 mark.” Department of Parks and Recreation for State of California v. Bazaar Del Mundo Inc., 20 448 F.3d 1118, 1124 (9th Cir. 2006); see also Multi Time Machine, Inc. v., Inc., 21 804 F.3d 930, 935 (9th Cir. 2015) (“To prevail on a claim of trademark infringement under the 22 Lanham Act, a trademark holder must show that the defendant's use of its trademark is likely to 23 cause confusion, or to cause mistake, or to deceive.”). “The test for likelihood of confusion is 24 whether a ‘reasonably prudent consumer’ in the marketplace is likely to be confused as to the 25 origin of the good or service bearing one of the marks.” Dreamwerks Production Group, Inc. v. 26 SKG Studio, 142 F.3d 1127, 1129 (9th Cir. 1998). In evaluating the likelihood of confusion, the 27 court employs an eight factor test. See AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th 28 Cir. 1979), abrogated on other grounds by Mattel, Inc. v. Walking Mountain Prod., 353 F.3d 792, 5 1 2 810 n.19 (9th Cir. 2003). Here, plaintiff has made the requisite allegation of protectable ownership in its complaint 3 and supported the allegation with sufficient evidence. ECF No. 1 at ¶¶ 28-33. Plaintiff submitted 4 a copy of its federal registration for “ROIQ” with its motion for summary judgment. ECF No. 14 5 (“Tognetti Decl.”) at Exhibit A. Plaintiff submitted testimony that the “ROIQ” mark is and has 6 been used in connection with a CRM and digital marketing business. Tognetti Decl. at ¶¶ 1-3. 7 Plaintiff also successfully addresses each factor of the Sleekcraft test for likelihood of confusion: 8 (i) strength of the mark; (ii) proximity of the goods; (iii) similarity of the marks; (iv) evidence of 9 actual confusion; (v) marketing channels used; (vi) type of goods and degree of care likely to be 10 exercised by the purchaser; (vii) defendant’s intent in selecting the mark; and (viii) likelihood of 11 expansion of the product lines. See Sleekcraft, 599 F.3d at 348-49. The court now addresses 12 these factors in turn. 13 14 (i) Strength of the mark A “strong,” or distinctive, mark is afforded greater protection under trademark law than a 15 mark that is not strong. See, e.g., Sutter Home Winery, Inc. v. Madrona Vineyards, L.P., No. C 16 05-0587 MHP, 2005 WL 701599, *8 (N.D. Cal. Mar. 23, 2005) (“The strength of protection 17 afforded to a trademark is proportionate to the likelihood that the public will remember the mark 18 and associate it with the source of the trademarked goods” (citations omitted)). When evaluating 19 the strength of a mark, courts consider both conceptual and commercial strength. Id. 20 The conceptual strength of a mark “is determined by its placement on a continuum of 21 marks from ‘generic,’ afforded no protection; through ‘descriptive’ or ‘suggestive,’ given 22 moderate protection; to ‘arbitrary’ or ‘fanciful’ awarded maximum protection.” E. & J. Gallo 23 Winery, 967 F.2d at 1291 (quoting Nutri/System, Inc. v. Con-Stan Industries, Inc., 809 F.2d 601, 24 605 (9th Cir. 1987) (quotation marks omitted)). The nature of a mark is determined by the 25 “imagination test” and a “need test.” Id. (citing Earthquake Sound Corp. v. Bumper Industries, 26 352 F.3d 1210, 1221 n. 4 (9th Cir. 2003)). Using the “imagination test” the court asks how much 27 imagination a consumer must use to associate a given mark with the goods or services it 28 identifies, and using the “need test” the court examines the extent to which competitors need a 6 1 mark to identify their goods or services. Earthquake Sound Corp., 352 F.3d at 1221 n. 4 (quoting 2 Miss World (UK) Ltd. v. Mrs. America Pageants, Inc., 856 F.2d 1445, 1449 (9th Cir. 1988)). 3 Applying these tests, the court finds that the ROIQ mark is best classified as a 4 “suggestive” mark. ROIQ is a mark that combines the abbreviations “ROI” and “IQ,” with “I” 5 simultaneously standing for both “investment” in “return on investment” and “intelligence” in 6 “intelligence quotient.” ECF No. 13 at 15. The mark “ROIQ,” while consisting of an 7 amalgamation of abbreviations, nonetheless “suggests, rather than describes, an ingredient, 8 quality or characteristic” of the product by indicating that the company assists in providing 9 customers “intelligence” to ensure the best “return on investment.” Nutri/Sys., Inc., 809 F.2d at 10 605. Thus, the ROIQ mark is entitled to moderate protection. E. & J. Gallo Winery, 967 F.2d at 11 1291. 12 Finally, taking plaintiff’s allegations as true, the ROIQ mark has commercial strength. 13 According to plaintiff, the ROIQ business has gained a significant share of its market. Tognetti 14 Decl. ¶ 3. Because the “ROIQ” mark is entitled to moderate rather than maximum protection, but 15 nonetheless has commercial strength, this factor weighs slightly in favor of finding a likelihood of 16 confusion. 17 18 (ii) Proximity of the goods While defendant is apparently not actually selling any goods, he is marketing a product 19 that is identical to plaintiff’s product. Tognetti Decl. at 4. “Where goods are related or 20 complementary, the danger of consumer confusion is heightened.” E.&J. Gallo Winery, 967 at 21 1291. That defendant does not actually sell or provide the services advertised on is 22 immaterial, as “merely advertising an infringing mark itself is an act of infringement, apart from 23 any manufacturing or sale.” See MCCARTHY § 25:26; Levi Strauss & Co. v. Shilon, 121 F.3d 24 1309, 1313 (9th Cir. 1997) (“An offer to sell without more will suffice to establish liability.”). 25 Plaintiff submitted a screenshot of defendant’s website, demonstrating defendant’s use of the 26 name “ROiQ” and defendant’s statement that “ROiQ” is preparing to “re-launch” an improved 27 CRM and digital marketing platform. Tognetti Decl. at Exhibit D. Plaintiff has submitted 28 testimony that the business defendant is purporting to offer under the “ROiQ” name is the same 7 1 as the type of business plaintiff offers under their “ROIQ” trademark. Tognetti Decl. at ¶ 13. 2 This factor weighs strongly in favor of finding a likelihood of confusion. 3 4 (iii) Similarity of the marks The “similarity of the marks” portion of the Sleekcraft test “is the most crucial factor in 5 determining the likelihood of confusion.” Sutter Home Winery, Inc., 2005 WL 701599 at *5. 6 Here, plaintiff’s mark (“ROIQ”) is essentially identical to defendant’s infringing use 7 (“”). This factor weighs strongly in favor of finding a likelihood of confusion. 8 9 (iv) Evidence of actual confusion While evidence of actual confusion is not necessary to prevail on an infringement claim or 10 to secure injunctive relief, it can provide persuasive evidence that future confusion is likely. See 11 Academy of Motion Picture Arts & Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 12 1456 (9th Cir. 1991). Plaintiff submitted testimony of actual consumer confusion. ECF No. 16. 13 This factor weighs in favor of finding a likelihood of confusion. 14 (v) Marketing channels used 15 An analysis of marketing channels accounts for overlapping advertising streams. Because 16 both plaintiff and defendant advertise and apparently conduct their business largely online, there 17 is significant marketing channel overlap in this case. “In the Internet context, in particular, 18 entering a web site takes little effort—usually one click from a linked site or a search engine’s 19 list; thus, Web surfers are more likely to be confused as to the ownership of a web site than 20 traditional patrons of a brick-and-mortar store would be of a store's ownership.” Brookfield 21 Commc’ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1057 (9th Cir. 1999). This factor 22 weighs in favor of finding a likelihood of confusion. 23 24 (vi) Type of goods and degree of care likely to be exercised by the purchase The fact that this dispute centers on the name of a website increases the likelihood of 25 confusion. “Navigating amongst web sites involves practically no effort whatsoever, 26 and arguments that Web users exercise a great deal of care . . . are unconvincing.”, 27 Inc. v. Walt Disney Co., 202 F.3d 1199, 1209 (9th Cir. 2000). This factor weighs in favor of 28 finding a likelihood of confusion. 8 1 (vii) Defendant’s intent in selecting the mark 2 Although plaintiff demonstrated that defendant intentionally altered his website to mirror 3 plaintiff’s business and create a conflict, plaintiff has not demonstrated that defendant was aware 4 of plaintiff’s business when he actually selected the mark. This factor weighs against finding a 5 likelihood of confusion. 6 (viii) Likelihood of expansion of product lines 7 This factor evaluates whether a parties’ product line is likely to expand to create 8 competition; where the parties are already in direct competition with one another, this factor is 9 not relevant. See, e.g., Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062, 10 1078 n. 12 (9th Cir. 2006) (“The final factor, ‘[a] likelihood of expansion in product lines,’ 11 warrants no discussion as it is ‘relatively unimportant where two companies already compete to a 12 significant extent,’ ” quoting Brookfield Communications, 174 F.3d at 1060). 13 Based on a review of the entire record, plaintiff has demonstrated protectable ownership 14 in the ROIQ mark and a likelihood of confusion stemming from defendant’s unauthorized use. 15 Accordingly, the second and third Eitel factors are satisfied as to the claims related to trademarl 16 infringement. 17 b. Cyberpiracy 18 To prevail on a claim for cyberpiracy, plaintiff must prove that “(1) the defendant 19 registered, trafficked in, or used a domain name; (2) the domain name is identical or confusingly 20 similar to a protected mark owned by the plaintiff; and (3) the defendant acts with ‘bad faith 21 intent to profit from that mark.’” DSPT Int’l, Inc. v. Nahum, 624 F.3d 1213, 1218–19 (9th 22 Cir.2010) (quoting 15 U.S.C. § 1125(d)(1)(A)). As discussed above, plaintiff has alleged and 23 produced evidence that defendant’s domain name is identical to a protected mark owned by the 24 plaintiff. 25 The issue of “bad faith” is slightly more complex. While the court notes that it does not 26 have to credit the findings of the UDRP decision2, the undersigned is in agreement that the facts 27 28 2 See 5 McCarthy on Trademarks and Unfair Competition § 25A:37 (5th ed.) 9 1 do not support a finding of bad faith in relation to defendant’s initial acquisition of the “roiq” 2 domain name. However, defendant did demonstrate bad faith upon learning of plaintiff’s mark 3 and attempting to improperly extract profit from plaintiff. Plaintiff has demonstrated defendant’s 4 bad faith attempt to profit by submission of an e-mail chain between plaintiff and defendant 5 showing defendant attempting to extract a high price from the plaintiff for purchase of the domain 6 name. Tognetti Decl. at Exhibit C. Defendant further demonstrated bad faith by asserting that he 7 tried to create consumer confusion by placing content on the website associated with his 8 infringing domain that mirrored plaintiff’s business model. Tognetti Decl. at ¶12-14. 9 Defendant’s actions after being made aware of his infringement are relevant to the bad faith 10 analysis. In Sleekcraft Boats, the Ninth Circuit found no bad faith where the defendant had 11 adopted the infringing mark unwittingly and, after notification, “designed a distinctive logo” to 12 prevent consumer confusion. 599 F.2d at 354. The defendant in this case did the opposite. 13 According to the complaint, upon learning of his infringement defendant amplified the 14 infringement in an attempt to essentially extort money from the plaintiff. Taking plaintiff’s 15 allegations as true, defendant’s behavior following notification of infringement demonstrates bad 16 faith. The merits of this claim favor entry of default judgment. 17 18 3. Factor Four: The Sum of Money at Stake in the Action Under the fourth Eitel factor, the court considers the amount of money at stake in relation 19 to the seriousness of defendant’s conduct. Courts have held that where a plaintiff seeks only 20 injunctive relief from the continued use of their trademarks, this factor favors entry of default 21 judgment. PepsiCo, Inc., 238 F. Supp. 2d at 1176–77. Here, plaintiff seeks attorney’s fees (or, in 22 the alternative, equivalent statutory damages) and injunctive relief. The amount at issue is 23 proportionate to the seriousness of defendant’s conduct and this factor favors entry of default 24 judgment. 25 26 4. Factor Five: Possibility of Dispute Concerning Material Facts The facts of this case are relatively straightforward, and plaintiff has provided the court 27 with well-pleaded allegations supporting its claims and affidavits in support of its allegations. 28 Here, the court may assume the truth of well-pleaded facts in the complaint (except as to 10 1 damages) following the clerk’s entry of default and, thus, there is no likelihood that any genuine 2 issue of material fact exists. See, e.g., Elektra Entm't Group Inc. v. Crawford, 226 F.R.D. 388, 3 393 (C.D. Cal. 2005) (“Because all allegations in a well-pleaded complaint are taken as true after 4 the court clerk enters default judgment, there is no likelihood that any genuine issue of material 5 fact exists.”); accord Philip Morris USA, Inc., 219 F.R.D. at 500; PepsiCo, Inc., 238 F.Supp.2d at 6 1177. 7 8 5. Factor Six: Whether Default Was Due to Excusable Neglect Upon review of the record before the court, there is no indication that the default was the 9 result of excusable neglect. See PepsiCo, Inc., 238 F.Supp.2d at 1177. Plaintiff served the 10 defendant with the summons and complaint. ECF Nos. 1 and 2. Moreover, plaintiff served 11 defendant by mail with notice of its application for default judgment. ECF No. 13 at 30. Despite 12 ample notice of this lawsuit and plaintiff’s intention to seek a default judgment, defendant failed 13 to defend himself in this action. Thus, the record supports a conclusion that the defendant has 14 chosen not to defend this action, and not that the default resulted from any excusable neglect. 15 Accordingly, this Eitel factor favors the entry of a default judgment. 16 17 6. Factor Seven: Policy Favoring Decisions on the Merits “Cases should be decided upon their merits whenever reasonably possible.” Eitel, 782 18 F.2d at 1472. However, district courts have concluded with regularity that this policy, standing 19 alone, is not dispositive, especially where a defendant fails to appear or defend itself in an action. 20 PepsiCo, Inc., 238 F.Supp.2d at 1177; see also Craigslist, Inc. v. Naturemarket, Inc., 694 21 F.Supp.2d 1039, 1061 (N.D. Cal. Mar. 5, 2010). Accordingly, although the court is cognizant of 22 the policy favoring decisions on the merits – and consistent with existing policy would prefer that 23 this case be resolved on the merits – that policy does not, by itself, preclude the entry of default 24 judgment. 25 26 7. Conclusion: Propriety of Default Judgment Upon consideration of all the Eitel factors, the court concludes that plaintiff is entitled to 27 the entry of default judgment against defendant. What remains is the determination of the amount 28 of damages to which plaintiff is entitled. 11 1 2 C. Terms of Judgment Plaintiff’s motion for default judgment includes a request for a permanent injunction 3 enjoining defendant from using the “ROIQ” mark, including the “” domain name. ECF 4 No. 13 at 28. 15 U.S.C. § 1116(a) provides that a district court has the “power to grant 5 injunctions, according to the principles of equity and upon such terms as the court deems 6 reasonable, to prevent the violation of any right of the registrant of a mark registered in the Patent 7 and Trademark Office.” A permanent junction may be granted where the plaintiff demonstrates: 8 “(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary 9 damages, are inadequate to compensate for that injury; (3) that, considering the balance of 10 hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the 11 public interest would not be disserved by a permanent injunction.” eBay Inc. v. MercExchange, 12 L.L.C., 547 U.S. 388, 391 (2006). 13 “Injunctive relief is the remedy of choice for trademark and unfair competition cases, 14 since there is no adequate remedy at law for the injury caused by a defendant’s continuing 15 infringement.” Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir. 1988). 16 Moreover, “once the plaintiff establishes a likelihood of confusion, it is ordinarily presumed that 17 the plaintiff will suffer irreparable harm if injunctive relief is not granted.” Vision Sports, Inc. v. 18 Melville Corp., 888 F.2d 609, 612 n.3 (9th Cir. 1989). And “the public has an interest in the 19 enforcement of federal statutes.” CoxCom, Inc. v. Chaffee, 536 F.3d 101, 112 (1st Cir. 2008). In 20 light of the fact that there is no hardship to the defendant in enjoining defendant from using an 21 identical mark to plaintiff’s registered mark, the court recommends that plaintiff be awarded a 22 permanent injunction. 23 Plaintiff’s motion also seeks transfer of the domain name within three days. 24 ECF No. 13 at 28. For the same reasons supporting plaintiff’s request for injunctive relief, 25 including defendant’s bad faith, transfer of the infringing domain name is warranted. See 26 Facebook, Inc. v. Banana Ads LLC, No. CV 11-03619-YGR KAW, 2013 WL 1873289, at *20 27 (N.D. Cal. Apr. 30, 2013), 15 U.S.C. § 1125(d)(i)(C). The court recommends that defendant be 28 ordered to transfer the “” domain name to plaintiff within three days of judgment. 12 1 Finally, plaintiff’s motion for default judgment also seeks an award of attorney’s fees and 2 costs, or alternatively, statutory damages in an amount equivalent to plaintiff’s attorneys fees 3 pursuant to 15 U.S.C. § 1117(c)(1) or 15 U.S.C. § 1117(d). ECF No. 13 at 29. “An award of 4 reasonable attorneys’ fees and costs is expressly provided for in ‘exceptional cases’ of trademark 5 infringement.” Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008) 6 (quoting 15 U.S.C. § 1117(a)). The term “exceptional cases” is generally accepted to mean cases 7 in which trademark infringement is “deliberate and willful.” See Lindy Pen Co. v. Bic Pen Corp., 8 982 F.2d 1400, 1409 (9th Cir. 1993) (interpreting the term “exceptional” to apply when “the 9 infringement is malicious, fraudulent, deliberate, or willful.”). An entitlement to reasonable 10 attorney’s fees may be found where the complaint alleges that the defendants conduct was willful 11 and the defendant’s default has been entered. See Derek, 528 F.3d at 702 (“Thus, all factual 12 allegations in the complaint are deemed true, including the allegation of Poof’s willful 13 infringement of Andrew’s trademarks. This default sufficiently establishes Andrew’s entitlement 14 to attorneys’ fees under the Lanham Act.”). 15 As noted above, however, the award of attorney’s fees must be reasonable. See Intel 16 Corp. v. Terabyte Intern., Inc., 6 F.3d 614, 622 (9th Cir. 1993) (“the district court must first 17 determine the presumptive lodestar figure by multiplying the number of hours reasonably 18 expended on the litigation by the reasonable hourly rate”). In this regard, Local Rule 293 requires 19 a party seeking an award of attorney’s fees to submit an affidavit addressing certain criteria that 20 the court will consider in determining whether an award of attorney’s fees is appropriate. 21 Plaintiff has submitted an acceptable affidavit indicating that it accrued attorney’s fees in 22 the amount of $23,650 and costs in the amount of $455.40. ECF No. 19. Counsel’s billing rate 23 of $320 per hour is an acceptable billing rate for the Sacramento region. Id. at ¶ 7. The court 24 finds that the costs and fees are reasonable in light of the complexity of the type of litigation, the 25 need for local counsel, and the credentials of the attorneys involved. ECF No. 19. An award of 26 the reasonable requested attorney’s fees and costs is appropriate. 27 //// 28 //// 13 1 IV. Conclusion 2 It should be RECOMMENDED THAT: 3 1. Plaintiff’s August 21, 2015 motion for default judgment, (ECF No. 13) be granted; 4 2. The court enter judgment against the defendant on the complaint’s claims of trademark 5 infringement (15 U.S.C. § 1114(1)), false advertising (15 U.S.C. § 1125(a)), common law 6 trademark infringement, and cyberpiracy (15 U.S.C. § 1117(d)); 7 8 9 10 11 12 3. The court enjoin defendant, and all persons acting by, through, or in concert with the defendant, from using plaintiff’s trademarks in any manner; 4. The court order defendant to transfer the “” domain name to plaintiff within three days of judgment; 5. The court grant plaintiff’s request for attorney’s fees in the amount of $23,650 and costs in the amount of $455.40; and 13 6. This case be closed. 14 These findings and recommendations are submitted to the United States District Judge 15 assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(1). Within twenty one days 16 after being served with these findings and recommendations, any party may file written 17 objections with the court and serve a copy on all parties. Id.; see also Local Rule 304(b). Such a 18 document should be captioned “Objections to Magistrate Judge’s Findings and 19 Recommendations.” Any response to the objections shall be filed with the court and served on all 20 parties within fourteen days after service of the objections. Local Rule 304(d). Failure to file 21 objections within the specified time may waive the right to appeal the District Court’s order. 22 Turner v. Duncan, 158 F.3d 449, 455 (9th Cir. 1998); Martinez v. Ylst, 951 F.2d 1153, 1156-57 23 (9th Cir. 1991). 24 DATED: November 22, 2017 25 26 27 28 14

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