Ubiquiti Networks, Inc. v. Kozumi USA Corp. et al

Filing 41

ORDER GRANTING, IN PART, UBIQUITI'S APPLICATION FOR TEMPORARY RESTRAINING ORDER, GRANTING DEFENDANTS' 35 MOTION TO ACCEPT OBJECTIONS AND SETTING DATE FOR OSC HEARING. Replies due by 6/28/2012. Show Cause Response due by 6/25/2012. Order to Show Cause Hearing set for 7/5/2012 02:00 PM. Signed by Judge Claudia Wilken on 6/20/2012. (ndr, COURT STAFF) (Filed on 6/20/2012)

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1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 8 UBIQUITI NETWORKS, INC., Plaintiff, 9 United States District Court For the Northern District of California 10 No. C 12-2582 CW ORDER GRANTING, IN PART, UBIQUITI'S APPLICATION FOR TEMPORARY RESTRAINING ORDER, GRANTING DEFENDANTS' MOTION TO ACCEPT OBJECTIONS AND SETTING DATE FOR OSC HEARING v. 11 KOZUMI USA CORPORATION, SHAO WEI HSU, and LILIA KUNG, 12 Defendants. 13 ________________________________/ 14 15 On May 18, 2012, Plaintiff Ubiquiti Networks, Inc. filed an 16 ex parte application for a temporary restraining order (TRO) 17 against Defendants Kozumi USA Corporation, Shao Wei Hsu and Lilia 18 Kung based upon its claims for trademark infringement under the 19 Lanham Act. 20 On May 25, 2012, the Court denied the ex parte application for a TRO, ordered Ubiquiti to serve Defendants and 21 set an expedited briefing schedule. Ubiquiti has served 22 23 Defendants, who have filed an opposition, and Ubiquiti has filed a 24 reply. 25 reply and Ubiquiti has filed a further reply. 26 filed a motion to submit separate objections to Ubiquiti's 27 evidence and Ubiquiti opposes this motion. 28 With leave of Court, Defendants have also filed a surDefendants have The motions were taken 1 under submission and decided on the papers. 2 of the papers filed by the parties, the Court grants Defendants' 3 motion to file objections to evidence and grants, in part, the 4 application for a TRO. 5 6 Having considered all BACKGROUND In the May 25, 2012 Order, the Court stated Ubiquiti's 7 version of the facts because Defendants had not yet been served. 8 9 The Court adopts the facts from its previous order with the United States District Court For the Northern District of California 10 following changes and additions that are taken from both parties' 11 submissions. 12 The facts are undisputed, except as noted. Ubiquiti is incorporated in Delaware with its principal place 13 of business in San Jose, California. 14 thirty products to the global Wireless Internet Service Provider It currently offers over 15 (WISP) market in the United States and in over sixty-five 16 countries around the world. Ubiquiti does not have its own sales 17 18 force, but relies on the Ubiquiti Community, a large community of 19 network operators, service providers and distributors, to market 20 its products. 21 distribute its products in specified regions throughout the world 22 and to provide its products to local re-sellers. 23 Distributors enter into contracts with Ubiquiti to sell the products to end-users. The re-sellers Ubiquiti actively protects its 24 corporate name, product names, and proprietary software. It 25 26 27 currently holds registrations in the United States for seven marks. 28 2 Defendant Kozumi, a Florida corporation with its principal 1 2 place of business in Florida, has been in the business of 3 distributing networking hardware since September 2006. 4 distributes multiple suppliers' networking hardware in South 5 America and parts of Eastern Europe. 6 Kozumi Since its inception, the vast majority of Kozumi's sales have been outside the United 7 States and it has never sold any product in the State of 8 9 California. Hsu, whom Defendants refer to as Wu, is the owner and United States District Court For the Northern District of California 10 sole director of Kozumi. Kung was married to Hsu and they have 11 three minor children. 12 2012. 13 ownership or other interest in Kozumi and no involvement with any 14 of the business transactions at issue in this lawsuit, except Kung and Hsu were divorced on April 26, Kung declares that she is a stay-at-home mother with no 15 that, in 2011, she applied to register the word "UBIQUITI" as a 16 trademark in the United States. 17 18 In May 2008, Kozumi became an official distributor of 19 Ubiquiti products in Latin America, including Argentina. 20 understanding was that the distributorship agreement did not bar 21 Kozumi from developing its own products and, in 2009, Kozumi began 22 to develop its own line of networking hardware, as an alternative 23 to Ubiquiti hardware. Hsu Dec. ¶¶ 9, 10. Hsu's In mid-September 2009, 24 Ben Moore, Ubiquiti's Vice President of Business Development, 25 26 visited the Kozumi website and discovered that Kozumi was offering 27 products under its own brand, with packaging and graphics very 28 similar to the Ubiquiti products that Kozumi was selling. 3 Moore 1 Dec. ¶ 48. 2 products that directly competed with Ubiquiti products and, for 3 that reason, terminated Kozumi's distributorship agreement. 4 Dec. ¶ 48. 5 Ubiquiti distributor, Hsu would use the strength of the Ubiquiti 6 Moore determined that Kozumi was selling its own Moore Moore was concerned that, if Kozumi remained an brand to draw resellers to its product offerings, only to sell 7 them Kozumi-branded products. Moore Dec. ¶ 48. On November 9, 8 9 2009, Kozumi received an email from Moore indicating that Ubiquiti United States District Court For the Northern District of California 10 was terminating Kozumi's distributorship due to "pushback from 11 existing distributors with pricing and some of the new products 12 released by Kozumi." 13 email. 14 Hsu Dec., Ex. A, November 9, 2009 Moore After Kozumi's distributorship was terminated, it purchased 15 Ubiquiti products from other authorized Ubiquiti distributors "for 16 redistribution through partnered companies in Argentina." Hsu 17 18 Dec. ¶ 11. 19 purchased thousands of units of Ubiquiti products through Ubiquiti 20 distributors and resellers, nearly 100% of which were imported 21 into Argentina. 22 its distributors to stop selling to Kozumi. 23 Between November 2009 and December 2011, Kozumi Hsu Dec. ¶ 11. During this time, Ubiquiti told However, Kozumi was able to continue to purchase Ubiquiti products from several 24 resellers and Kozumi continued to ship Ubiquiti products to South 25 26 America. Hsu Dec. ¶ 12. Moore declares that, because Hsu was 27 attempting to "covertly and improperly acquire Ubiquiti products 28 through authorized Ubiquiti Distributors, I contacted some of our 4 1 Ubiquiti Distributors and asked them not to do business with 2 Kozumi." 3 email from a Ubiquiti distributor in Argentina indicating that 4 Kozumi was selling Ubiquiti products in Argentina at a much lower 5 price than he was able to offer for his Ubiquiti products. 6 Moore Dec. ¶ 55. Dec. ¶ 57. On March 24, 2011, Moore received an Moore Moore replied that "Ubiquiti was going to do 7 everything it could to stop the sale of Kozumi's knockoff 8 9 products." Meanwhile, in August 2010, Kozumi was threatened in Argentina 10 United States District Court For the Northern District of California Moore Dec. ¶ 57. 11 with legal action by Ditelco, a former distributor of Ubiquiti 12 hardware, which owned a trademark of the words "UBIQUITI NETWORKS" 13 and of the Ubiquiti logo, in Argentina. 14 this trademark and logo from Ditelco. In 2011, Kozumi acquired In his declaration, Hsu 15 states that he paid $250,000 for the trademark and logo. Hsu Dec. 16 ¶ 15. In an email to Robert Pera, Ubiquiti's Chief Executive 17 18 Officer (CEO), Hsu stated that he paid $350,000 for them. 19 Dec., Ex. 5 at 2. 20 fifty dollars, for them. 21 registration fee, not the price he paid for the trademark itself. 22 23 Hsu Ubiquiti claims that he paid 200 pesos, or Hsu states that fifty dollars was the In mid-2011, Hsu looked for a supplier of networking hardware with specifications similar to the Ubiquiti products Kozumi had 24 sold and was referred to Kenny Deng at Hoky Technologies in 25 26 Shenzhen, China. Deng said that he could procure Ubiquiti 27 products from the Ubiquiti factory in China and sell them to Hsu. 28 Hsu also contracted with Hoky to produce a new brand of networking 5 1 products "in the same genre as Ubiquiti's hardware, called 2 'ZoneWave,' but which used different designs from that of 3 Ubiquiti." 4 Kozumi placed orders with Hoky for about two million dollars' 5 worth of Ubiquiti and ZoneWave products. 6 Hsu Dec. ¶ 17. Between July 2011 and December 2011, According to Hsu, Hoky shipped products to Kozumi directly from China to Argentina, 7 without going through the United States. Hsu Dec. ¶ 18. 8 9 In summer 2011, Moore learned that the Hoky facility was United States District Court For the Northern District of California 10 manufacturing counterfeit Ubiquiti products. 11 Moore worked with authorized Ubiquiti distributors in Argentina to 12 acquire "fake" Ubiquiti products manufactured by Hoky and sent 13 them to Mike Taylor, Ubiquiti's Senior Software Engineer, for 14 analysis. Moore Dec. ¶ 62. Moore Dec. ¶¶ 58-61. Taylor determined that the Hoky 15 product appeared almost identical to the real Ubiquiti products, 16 including Ubiquiti's name, domain name, logo and AIRMAX trademark. 17 18 Taylor Dec. ¶ 2(a). 19 manufactured by Hoky and sold by Kozumi were near duplicates of 20 actual Ubiquiti products, Ubiquiti contacted a law firm in China 21 which worked with the Public Security Bureau in China to shut down 22 the Hoky facility. 23 Once Taylor confirmed that the products Moore Dec. ¶ 63. Yu Cheng Lin, a Ubiquiti employee in Taiwan, went with the 24 Chinese authorities on November 17, 2011, when they shut down the 25 26 Hoky facility and took photographs and videos of the 27 counterfeiting manufacturing line and products ready for shipment. 28 Moore Dec. ¶ 64; Lin Dec. ¶ 10. Lin saw and photographed 6 1 "thousands of counterfeit products labeled with the Ubiquiti, 2 Nanostation and Airos trademarks." 3 police confiscated Hoky's shipping records. 4 obtained a copy of a shipping document that showed that, on 5 November 16, 2011, 6,000 units of counterfeit Ubiquiti NanoStation 6 Lin Dec. ¶ 11. The Chinese Lin Dec. ¶ 11. Lin Loco M5 products were shipped from the Hoky facility to Kozumi 7 with a final destination in Paraguay. Lin Dec. ¶ 11, Ex. D. 8 9 The Chinese police closed the Hoky factory and took Deng into United States District Court For the Northern District of California 10 custody. In December 2011, Deng was released from custody because 11 his production of Ubiquiti-branded products, even if using 12 Ubiquiti's hardware designs, was apparently legal in China in that 13 the products were sold, for export to Argentina, to Kozumi, which 14 owned the Ubiquiti trademark in Argentina. Hsu Dec. ¶¶ 20-21. 15 Hsu declares that, although the Hoky factory reopened, Kozumi 16 has not purchased any Ubiquiti-branded products from Hoky since 17 18 December 15, 2011, but has continued to purchase Ubiquiti products 19 on the secondary market from Ubiquiti-recognized distributors and 20 re-sellers. 21 2012, he received, as attachments to two emails from a Ubiquiti 22 distributor in Argentina, Argentinean customs forms indicating 23 Hsu Dec. ¶ 22. Moore declares that, on April 4, that Kozumi sent three shipments of Ubiquiti products to Tech 24 Depot, a company owned by Hsu in Argentina, that were "priced 25 26 suspiciously low." Moore Dec. ¶ 67, Ex. Y. Moore also states 27 that one of the shipments was routed through the Everglades Port 28 in Fort Lauderdale, Florida. Moore Dec. ¶ 67, Ex. Y. 7 However, 1 the exhibit is in Spanish and the claim that the shipment was 2 routed through Florida is not confirmed. 3 On December 22, 2011, Hsu received an email from Ubiquiti CEO 4 Pera stating that he did not think Kozumi was aware of Hoky's 5 counterfeiting, and asking that Kozumi surrender the Argentinean 6 Ubiquiti trademark to Ubiquiti as a gesture of good faith. Hsu 7 responded that he would consider selling the Argentinean trademark 8 9 for a certain price and with certain conditions. A series of United States District Court For the Northern District of California 10 email exchanges followed which appear to constitute negotiation of 11 the terms and conditions of Kozumi's sale of the Argentinean 12 trademark to Ubiquiti. 13 characterizes these emails as Hsu's and Kozumi's attempt to extort 14 Ubiquiti by purporting to sell the trademark and logo to Ubiquiti Hsu Dec., Ex. ¶¶ 25-30, Ex. 5. Ubiquiti 15 even though Ubiquiti is the rightful owner. 16 On April 2, 2012, Ubiquiti filed a trademark lawsuit in 17 18 Argentina against Hsu seeking (1) nullification of Hsu's 19 trademarks of the words "UBIQUITI NETWORKS" and the Ubiquiti logo 20 on the basis that they were obtained in bad faith; (2) dismissal 21 of Hsu's opposition to Ubiquiti's own trademark application in 22 Argentina; (3) sustaining of Ubiquiti's oppositions to Hsu's 23 recently filed Argentinean trademark applications on the ground 24 that they were fraudulent; (4) an injunction preventing further 25 26 27 use of any Ubiquiti trademarks; and (5) damages. 3. 28 8 McCollum Dec. ¶ 1 Ubiquiti's application for a trademark for the words 2 "UBIQUITI NETWORKS" in the United States had been rejected on 3 December 1, 2005. 4 and Trademark Office (PTO) office action. 5 Ubiquiti filed another trademark application with the PTO for the 6 See Shang Dec., Ex. A., United States Patent words "UBIQUITI NETWORKS." On April 6, 2012, See Shang Dec., Ex. B. In its 7 complaint, Ubiquiti alleges that "consumers and competitors alike 8 9 throughout the world have come to recognize Ubiquiti marks, United States District Court For the Northern District of California 10 including UBIQUITI [and] UBIQUITI NETWORKS . . . as symbols of 11 Ubiquiti's excellence in wireless communications products." 12 ¶ 38. 13 AIROS, AIRMAX, UBNT, AIRGRID, AIRCONTROL, AIRVIEW and UNIFI. 14 Comp. ¶¶ 26-32. Comp. Ubiquiti owns in the United States the trademarks for 15 In its reply, Ubiquiti states that, since it filed its 16 original TRO request, it has established that Kozumi's new 17 18 product, ZoneWave, incorporates intellectual property stolen from 19 Ubiquiti. 20 has obtained a ZoneWave product from an employee at the Hoky 21 plant, analyzed it and determined that the product uses Ubiquiti 22 software, firmware, and circuit board layouts. 23 In supplemental declarations, Ubiquiti states that it Michael Taylor ¶ 2(a)-(g). Supp. Dec. of Taylor states that "much of the 24 internal make-up of the ZoneWave product is identical to the 25 26 27 counterfeit Ubiquiti products--Defendants just changed the packaging." Id. Ubiquiti's AIROS trademark displays on the 28 9 1 screen when a user logs in on a ZoneWave product. 2 ¶ 20. 3 Id. ¶ 2, Comp. In Hsu's supplemental declaration, he states that, although 4 he contracted with Hoky to produce ZoneWave products in mid-2011, 5 before the Hoky factory was closed by the Chinese authorities, he 6 has not received any final ZoneWave products, he has not sold any 7 ZoneWave products and, due to Hoky's financial troubles resulting 8 9 from the December 2011 shut-down of its factory, he does not know United States District Court For the Northern District of California 10 if Hoky will be able to fulfill its obligation to provide ZoneWave 11 products. 12 Ubiquiti acquired and analyzed is not a ZoneWave product, because 13 final ZoneWave products are still in the development phase and, 14 when they are complete, they will not use any Ubiquiti copyrighted Hsu Supp. Dec. ¶ 2. Hsu states that the product 15 software and will have a design different from Ubiquiti products. 16 Hsu Supp. Dec. ¶ 3. 17 18 In its further reply to Defendants' sur-reply, Ubiquiti cites 19 a May 7, 2012 email from Hsu to a former Ubiquiti distributor in 20 Dubai, in which Hsu stated, "I have many customers that contacted 21 me that wanted to become my distributors in middle east. 22 now one in Iraq/Dubai and other [sic] in Lebanon. 23 you if you want to try our solution . . ." I have I can sell to Doc. No. 8, McCollum 24 Dec., Ex. I. In the email, Hsu also stated: 25 26 27 28 The only product that can beat Ubiquiti or make a dent o [sic] Ubiquiti's market share has to be a product that can be compatible with the Airmax TDMA. . . . But Ubiquiti has been too dominant with the Airmax. We are the only company that is selling a product that works the same as theirs. . . . 10 Ubiquiti stock fell from $35.99 to $26 in 3 days. They lost around USD 800 million market cap in 3 days. And this is not over. They are doing damage control but as they committed a crime we will continue to release strong evidence that Ubiquiti sent the mafia to us. . . I certainly welcome all the allies that want to fight Ubiquiti [sic] bullying behavior. . . . If you have some evidence that we can present I think that can cause them really very big trouble. 1 2 3 4 5 6 Id. LEGAL STANDARD 7 8 9 United States District Court For the Northern District of California 10 A temporary restraining order may be issued only if "immediate and irreparable injury, loss, or damage will result to the applicant" if the order does not issue. Fed. R. Civ. P. 11 65(b). To obtain a temporary restraining order, the moving party 12 13 must establish either: (1) a combination of probable success on 14 the merits and the possibility of irreparable harm, or (2) that 15 serious questions regarding the merits exist and the balance of 16 hardships tips sharply in the moving party's favor. 17 Co. v. City of Las Vegas, 154 F.3d 1097, 1100 (9th Cir. 1998); 18 Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1217 (9th 19 Baby Tam & Cir. 1987). 20 The test for granting a temporary restraining order, like 21 22 that for granting a preliminary injunction, is a "continuum in 23 which the required showing of harm varies inversely with the 24 required showing of meritoriousness." 25 the elements of the preliminary injunction test are balanced, so 26 that a stronger showing of one element may offset a weaker showing 27 of another. Id. "Under this approach, For example, a stronger showing of irreparable harm 28 11 1 to plaintiff might offset a lesser showing of likelihood of 2 success on the merits." 3 Cottrell, 632 F.3 1127, 1131 (9th Cir. 2011). 4 5 6 Alliance for the Wild Rockies v. EVIDENTIARY OBJECTIONS Defendants object to certain evidence presented by Ubiquiti. The Court has reviewed these evidentiary objections and has not 7 relied on any inadmissible evidence. The Court will not discuss 8 9 each objection individually. To the extent that the Court relies United States District Court For the Northern District of California 10 on evidence to which Defendants object, such evidence has been 11 found admissible and the objections are overruled. 12 13 14 DISCUSSION In the May 25, 2012 Order, the Court found that Ubiquiti had submitted prima facie evidence of federal subject matter 15 jurisdiction and personal jurisdiction over Defendants in this 16 forum. Defendants dispute both. 17 18 19 I. Subject Matter Jurisdiction Subject matter jurisdiction is a threshold issue which goes 20 to the power of the court to hear the case. 21 matter jurisdiction must exist at the time the action is 22 commenced. 23 Federal subject Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988). A federal 24 court is presumed to lack subject matter jurisdiction until the 25 26 27 contrary affirmatively appears. Stock W., Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). 28 12 1 Citing Reebok Int'l, Ltd. v. Marnatech Ents., Inc., 970 F.2d 2 552, 554 (9th Cir. 1992), Ubiquiti argues that, although it 3 alleges only extraterritorial activities, this Court has 4 jurisdiction over this case pursuant to the Lanham Act. 5 Lanham Act provides a broad jurisdictional grant that extends to 6 The all commerce which may lawfully be regulated by Congress. Id. 7 "Congress has the power to prevent unfair trade practices in 8 9 foreign commerce by citizens of the United States, although some United States District Court For the Northern District of California 10 of the acts are done outside the territorial limits of the United 11 States." 12 (1952); Van Doren Rubber Co. Inc. v. Marnatech Ents., Inc., 1989 13 U.S. Dist. LEXIS 17323 *6 (S.D. Cal.). 14 to determine if a court has extraterritorial jurisdiction under Steel v. Bulova Watch Co., Inc., 344 U.S. 280, 286 A three-part test is used 15 the Lanham Act: (1) there must be some effect on American foreign 16 commerce; (2) the effect must be sufficient to present a 17 18 cognizable injury to the plaintiffs; and (3) the interests of and 19 links to American foreign commerce must be strong enough in 20 relation to those of other nations' commerce to justify an 21 assertion of extraterritorial authority. 22 The first two criteria for extraterritorial jurisdiction may be 23 Reebok, 970 F.2d at 554. met even where all "challenged transactions occurred abroad, and 24 where injury seems to be limited to the deception of consumers 25 26 abroad, as long as there is monetary injury in United States to an 27 American plaintiff"). Love v. Associated Newspapers, Ltd., 611 28 F.3d 601, 613 (9th Cir. 2010); Reebok, 970 F.2d at 554-55. 13 1 The third prong, which requires a comparison between American 2 foreign commerce and the commerce of other nations, involves the 3 balancing of the following seven factors: (1) the degree of 4 conflict with foreign law or policy; (2) the nationality or 5 allegiance of the parties and the locations or principal places of 6 business of corporations; (3) the extent to which enforcement by 7 either state can be expected to achieve compliance; (4) the 8 9 relative significance of effects on the United States as compared United States District Court For the Northern District of California 10 with those elsewhere; (5) the extent to which there is explicit 11 purpose to harm or affect American commerce; (6) the 12 foreseeability of such effect; and (7) the relative importance to 13 the violations charged of conduct within the United States as 14 compared with conduct abroad. Id. at 555. 15 The Court reaffirms its finding in the May 25, 2012 Order 16 that the facts alleged here appear to meet the first two prongs 17 18 for jurisdiction under the Lanham Act. 19 addresses the seven factors composing the third prong for 20 extraterritoriality jurisdiction--how the interests of and links 21 to American foreign commerce compare to those of other nations' 22 commerce. 23 The Court now further A. Conflict with Foreign Law or Policy 24 On April 2, 2012, Ubiquiti filed a trademark lawsuit in 25 26 27 Argentina seeking nullification of Hsu's trademark of the words "UBIQUITI NETWORKS" and of the Ubiquiti logo. 28 14 1 Relying on Vanity Fair Mills, Inc. v. T. Eaton Co., 234 F.2d 2 633 (2nd Cir. 1956), and George W. Luft Co. v. Zande Cosmetic Co., 3 142 F.2d 536, 540 (2nd Cir. 1944), Defendants argue that this 4 litigation is substantially likely to conflict with that in 5 Argentina because Hsu owns a valid trademark to the words 6 "UBIQUITI NETWORKS" and the Ubiquiti logo in that country. In 7 Vanity Fair, the Second Circuit ruled that extraterritorial 8 9 jurisdiction cannot be exercised over acts committed by a foreign United States District Court For the Northern District of California 10 national in his home country under a presumably valid trademark 11 registration in that country. 12 In Luft, 142 F.2d at 540, the Second Circuit held that it was 13 inequitable to enjoin the defendant, a New York resident, from 14 selling products in foreign countries in which it held a valid Vanity Fair, 234 F.2d at 641-42. 15 trademark. Id. 16 Similarly, "[t]he Ninth Circuit has held that the existence 17 18 of a conflict with a foreign trademark registration weighs against 19 extraterritorial application of the Lanham Act." 20 Techs., Inc. v. High Impact Design & Entertainment, 642 F. Supp. 21 2d 1228, 1236 (D. Nev. 2009) (citing Wells Fargo & Co. v. Wells 22 Fargo Exp. & Co., 556 F.2d 406, 428-29 (9th Cir. 1977)). 23 Aristocrat In Star- Kist Foods, Inc. v. P.J. Rhodes & Co., 769 F.2d 1393, 1396 (9th 24 Cir. 1985), where both parties were California corporations, the 25 26 court held that extraterritorial jurisdiction did not reach wholly 27 foreign commerce in the Philippines, consisting of the defendant's 28 purchases from Japan and sales in the Philippines, where the 15 1 defendant had a pending petition to cancel the plaintiff's 2 Philippine registration of the trademarks at issue.1 3 would application of the Lanham Act create a conflict with 4 Philippine trademark law, but also the effect of the alleged 5 Not only illegal use of the trademark on United States commerce was 6 insignificant compared to the effect on Philippine commerce with 7 8 9 other nations. Id. The court distinguished Steele v. Bulova Watch Co., 344 U.S. 280, 289 (1952), where the plaintiff had United States District Court For the Northern District of California 10 succeeded in cancelling the defendant's Mexican trademark 11 registration prior to the Court's decision, thereby avoiding a 12 conflict with established foreign rights. 13 14 Here, too, the adjudication in this country of the Argentinean UBIQUITI NETWORKS and Ubiquiti logo trademarks could 15 conflict with Argentina's trademark law and affect commerce in 16 17 18 19 Argentina more than it would affect the commerce of the United States, where no Ubiquiti products are sold by Kozumi. At least two district court cases in the Ninth Circuit have 20 followed Star-Kist and found no extraterritorial jurisdiction 21 under similar circumstances. 22 In Pinkberry, Inc. v. JEC Int'l Corp., 2011 WL 6101828, *1 23 (C.D. Cal.), the plaintiffs were California corporations, the 24 25 26 27 28 corporate defendants were headquartered in California and Japan 1 The court held that the Lanham Act did apply to infringing products sold within the United States or exported from the United States to the Philippines or any other country in which the defendant did not own the trademark. Star-Kist, 769 F.2d at 1394. 16 1 and the individual defendants were citizens of Japan but resided 2 in California. 3 United States and other countries and the defendants had an 4 identical trademark registered in Japan. 5 lawsuit filed by the plaintiffs in Japan to cancel the defendants' 6 The plaintiffs had a trademark registered in the registration of the trademark. Id. Id. There was a pending Citing Star-Kist, the court 7 found that there was no extraterritorial jurisdiction over the 8 9 plaintiffs' trademark claims because a decision by a United States United States District Court For the Northern District of California 10 court "as to how the [ ] trademark may be used in Japan creates a 11 serious potential for conflict with foreign law." 12 Id. at *5. In Aristocrat v. High Impact Design, the court found that, 13 because the defendant had a registered trademark in Venezuela, 14 that country had the right to adjudicate the use of that trademark 15 within its borders and, thus, there was a high potential for 16 conflict if American authority were asserted to resolve the 17 18 19 dispute over the Venezuelan trademark. 642 F. Supp. 2d at 1237. Reebok, upon which Ubiquiti relies, is distinguishable 20 because the plaintiff had a valid trademark in both the United 21 States and Mexico and there did not appear to be trademark 22 litigation in Mexico. 23 970 F.2d at 553. Although Ubiquiti argues that it is the rightful owner of the Argentinean UBITQUITI 24 NETWORKS and Ubiquiti logo trademarks, that is the issue the court 25 26 in Argentina will decide. Reebok is also distinguishable because 27 the court relied upon the fact that the defendant organized and 28 directed the manufacture of counterfeit shoes in Mexican border17 1 towns, knowing that many of the shoes would enter United States 2 commerce. 3 products in the United States nor are products sold in Argentina 4 being shipped to or sold in the United States. 5 of Kozumi's shipments from China to Argentina may have been routed 6 Id. at 554-55. Here, Kozumi is not selling Ubiquiti The fact that one through a port in Florida does not greatly affect United States 7 commerce. 8 9 Argentina has the right to adjudicate how a trademark issued United States District Court For the Northern District of California 10 in that country is used in that country. A ruling by this Court 11 involving that trademark would likely create a conflict with 12 Argentinean law. 13 Kozumi imports into Argentina may also display Ubiquiti's AIROS 14 and other trademarks. However, the allegedly counterfeit products that To the extent that the allegedly 15 counterfeit products Kozumi is importing into Argentina display 16 Ubiquiti's trademarks other than the UBIQUITI NETWORKS and 17 18 Ubiquiti logo trademarks that are being litigated in Argentina, 19 there is no conflict with Argentina law. 20 Furthermore, Ubiquiti presents evidence that Defendants are 21 selling either counterfeit or infringing products in countries 22 other than Argentina or planning to do so. 23 Notably, in Hsu's May 7, 2012 email, he refers to present and future distributors of 24 Kozumi products in Middle East. Defendants do not present 25 26 evidence that they have a valid trademark or pending litigation in 27 any country other than Argentina. 28 Act to conduct in those countries would not create a conflict. 18 Thus, application of the Lanham 1 See Ocean Garden, Inc. v. Marktrade Co., Inc., 953 F.2d 500, 503 2 (9th Cir. 1991) (if there are no pending proceedings abroad, it 3 would not be an affront to the foreign country's sovereignty to 4 apply the Lanham Act); Mattel, Inc. v. MCA Records, Inc., 28 F. 5 Supp. 2d 1120, 1130 (C.D. Cal. 1998) (accord). 6 Gallup, Inc. v. Business Research Bureau Ltd., 688 F. Supp. 7 2d 915 (N.D. Cal. 2010), is not to the contrary. In Gallup, the 8 9 court held that it could not apply the Lanham Act United States District Court For the Northern District of California 10 extraterritorially where a Pakistani citizen was using the Gallup 11 trademark only in Pakistan, where the plaintiff had filed suit 12 against the defendant in Pakistan and where the effect on American 13 commerce was insignificant compared to the effect on Pakistani 14 commerce. Id. at 924-25. Here, Defendants are residents of or 15 incorporated in the United States and, even though none of their 16 counterfeit products are sold in the United States, the effect of 17 18 their infringement on Ubiquiti, which is located in the United 19 States, appears to be significant. 20 Therefore, the conflict factor favors extraterritorial 21 jurisdiction over acts occurring in Argentina involving any 22 trademark other than the UBIQUITI NETWORKS and Ubiquiti logo marks 23 and over acts involving infringement of all of Ubiquiti's marks 24 occurring in any country other than Argentina. 25 26 27 28 B. Nationality of Parties and Locations of Corporations Here, both Ubiquiti and Kozumi are incorporated and have their principal places of business in the United States and Hsu 19 1 and Kung are residents of the United States. 2 factor weighs in favor of extraterritorial jurisdiction. 3 Therefore, this C. Extent That Enforcement by Either State Can Be Expected to Achieve Compliance 4 5 In Reebok, the court held that, even where Mexico could 6 enforce its own trademark laws, the United States had the superior 7 ability to enforce its own and Mexico's trademark laws because the 8 defendants had their principal place of business and the vast 9 majority of their assets in the United States. United States District Court For the Northern District of California 10 970 F.2d at 557. Similarly, here, Kozumi is incorporated in the United States, the 11 individual Defendants are residents of the United States and it 12 13 appears that they have significant assets in the United States. 14 In Reebok, it was not clear whether an infringement suit was 15 pending in Mexico. 16 Hsu has assets in Argentina because Ubiquiti has discovered that 17 Hsu is the owner of, or affiliated with, several companies in 18 Argentina. 19 Id. at 555-56. Comp. ¶ 61. And, it appears that Kozumi or This weighs in favor of leaving the litigation of the Argentinean trademark dispute to the Argentina 20 courts. However, it does not weigh against this Court's exercise 21 22 of jurisdiction over Defendants' infringement in Argentina of 23 other Ubiquiti trademarks, or infringement in other countries of 24 any Ubiquiti trademark; Defendants own no other Ubiquiti-related 25 trademark and Argentina is the only country in which there is 26 pending litigation. 27 28 20 1 2 D. Relative Significance of Effects on United States as Compared to Other Countries Ubiquiti has presented evidence of the significant economic 3 impact Defendants' alleged infringement activities in other 4 5 countries has had on Ubiquiti's finances and net worth in the 6 United States. 7 implemented import restrictions in February, 2012 and that 8 Ubiquiti's lost sales result from these restrictions. 9 Ubiquiti responds that its sales decline occurred in 2011, before United States District Court For the Northern District of California 10 Defendants have submitted evidence that Argentina the trade restrictions were enacted. However, Richie Dec. ¶¶ 5, 8. There 11 is no evidence of the effect on other countries. This factor 12 13 weighs in favor of exercising extraterritorial jurisdiction. 14 E. Explicit Purpose to Harm or Affect American Commerce 15 Ubiquiti submits evidence that Kozumi and Hsu had an explicit 16 purpose to harm or affect American commerce by harming Ubiquiti. 17 See McCollum Dec., Ex. I, May 7, 2012 Hsu email. 18 weighs in favor of exercising jurisdiction. 19 This factor F. Foreseeability of Such Effect 20 A negative effect on Ubiquiti was foreseeable, as is 21 22 23 24 evidenced by Hsu's email. This factor weighs in favor of exercising jurisdiction. G. Relative Importance to Violations Charged of Conduct in the United States as Compared with Conduct Abroad 25 26 Ubiquiti is an American corporation and alleges that it has 27 been harmed in the United States, which is sufficient for this 28 factor to weigh in favor of exercising jurisdiction. 21 See Mattel, 1 28 F. Supp. 2d at 1131 (that American corporation has been harmed 2 sufficient to fulfill factor regarding relative importance of 3 violations charged). 4 5 6 On balance, the seven factors relevant to the third prong for extraterritorial jurisdiction, together with the first two prongs which support extraterritorial jurisdiction, weigh in favor of 7 finding jurisdiction to adjudicate the Lanham Act claims as to all 8 9 infringing acts in countries other than Argentina and to United States District Court For the Northern District of California 10 infringing acts in Argentina regarding all trademarks other than 11 the UBIQUITI NETWORKS and Ubiquiti logo marks that are subject to 12 litigation pending in that country. 13 II. Personal Jurisdiction 14 A. Legal Standard 15 Specific jurisdiction is analyzed using a three-prong test: 16 (1) the non-resident defendant must purposefully direct its 17 18 activities or consummate some transaction with the forum or a 19 resident thereof, or perform some act by which it purposefully 20 avails itself of the privilege of conducting business in the 21 forum, thereby invoking the benefits and protections of its laws; 22 (2) the claim must be one which arises out of or results from the 23 defendant's forum-related activities; and (3) the exercise of 24 jurisdiction must be reasonable. Lake v. Lake, 817 F.2d 1416, 25 26 1421 (9th Cir. 1987). Each of these conditions is required for 27 asserting specific jurisdiction. Insurance Co. of N. Am. v. 28 Marina Salina Cruz, 649 F.2d 1266, 1270 (9th Cir. 1981). 22 1 In intentional tort cases, the purposeful direction or 2 availment requirement for specific jurisdiction is analyzed under 3 the "effects" test." 4 1104, 1111 (9th Cir. 2002). 5 defendant allegedly (1) committed an intentional act, 2) expressly 6 Dole Foods Co., Inc. v. Watts., 303 F.3d The "effects test" requires that the aimed at the forum state, (3) causing harm that the defendant knew 7 was likely to be suffered in the forum state. Id. 8 9 If the first two prongs for specific jurisdiction have been United States District Court For the Northern District of California 10 met, the defendant has the burden of presenting a compelling case 11 that the presence of some other considerations would render 12 jurisdiction unreasonable. 13 assessing whether the exercise of jurisdiction over a non-resident 14 defendant is unreasonable: (1) the extent of the defendant's Id. Seven factors are considered in 15 purposeful injection into the forum state's affairs, (2) the 16 burden on the defendant, (3) conflicts of law between the forum 17 18 state and the defendant's home jurisdiction, (4) the forum state's 19 interest in adjudicating the dispute, (5) the most efficient 20 judicial resolution of the dispute, (6) the plaintiff's interest 21 in convenient and effective relief, and (7) the existence of an 22 alternative forum. 23 Caruth v. Int'l Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1995); Roth v. Garcia Marquez, 942 F.2d 24 617, 623 (9th Cir. 1991). 25 26 27 28 23 1 B. Analysis 1. Effects Test--Intentional Act 2 3 Citing Panavision Int'l, LP v. Toeppen, 141 F.3d 1316, 1322 4 (9th Cir. 1998), Ubiquiti argues that the fact that Defendants 5 targeted Ubiquiti by attempting to register its trademark and 6 attempting to extort millions of dollars from it satisfies the 7 personal availment prong of the effects test for specific personal 8 9 jurisdiction. United States District Court For the Northern District of California 10 Panavision addressed claims under the Federal Trademark 11 Dilution Act and the California Anti-dilution statute, considered 12 these to be akin to tort claims, and applied the effects test in 13 analyzing specific jurisdiction. 14 defendant purposefully registered Panavision's trademarks as his 141 F.3d at 1319, 1321. The 15 domain names on the Internet to force Panavision to pay him money. 16 Id. The court held that the brunt of the harm was felt in 17 18 California, as the defendant knew it would be, because Panavision, 19 although a Delaware corporation, had its principal place of 20 business in California. 21 the purposeful availment or direction requirement for personal 22 jurisdiction was satisfied. 23 Id. Therefore, under the effects test, Id. Here, too, Kozumi and Hsu engaged in intentional acts which, 24 though not undertaken in California, appear to have injured 25 26 Ubiquiti which has its principal place of business here. Thus, 27 the purposeful availment requirement for specific jurisdiction is 28 satisfied as to these Defendants. 24 With respect to Kung, Ubiquiti alleges that an Argentinean 1 2 company, Tech Depot S.A., and other Argentinean companies are 3 owned by or associated with Hsu, and are falsely identified by 4 Defendants as distributors of Ubiquiti products. 5 63. 6 Comp. ¶¶ 61b, An individual named Jung Hsin Peng is listed as the President of Tech Depot and Kung is listed as the "Director Alternative." 7 McCollum Dec., Ex. K., Tech Depot Corporate Records. Ubiquiti 8 9 also alleges that Kung is a shareholder of Netcom, another United States District Court For the Northern District of California 10 putative distributor of Ubiquiti products in Argentina. Comp. 11 ¶ 61d. 12 filed a trademark application with the United States PTO for the 13 word, "UBIQUITI." 14 as "williamhsu@hotmail.com." Finally, Ubiquiti alleges that, on June 20, 2011, Kung The email contact on the application was listed McCollum Dec., Ex. G. The trademark 15 application was deemed abandoned because a response was not 16 received to the PTO finding that there was a likelihood of 17 18 confusion between the "UBIQUITI" mark and two other previously 19 registered trademarks. 20 Id. Kung's filing a trademark registration application for the 21 word "UBIQUITI" in the United States, allegedly knowing that the 22 mark was identified and used by Ubiquiti, is an intentional act of 23 purposeful direction sufficient to satisfy the first requirement 24 for personal jurisdiction. 25 26 27 28 2. Effects Test--Directed at the Forum The second requirement for specific jurisdiction is that the claims arise out of the defendant's forum-related activities. 25 In 1 other words, the court must determine if the plaintiff would not 2 have been injured "but for" the defendant's conduct directed at it 3 in the forum. 4 defendant's registration of the plaintiff's trademarks as his own 5 domain name had the effect of injuring the plaintiff in 6 California. Id. at 1322. Id. The court in Panavision held that the The same holds true in this case where there is 7 evidence that, but for Hsu's and Kozumi's actions, the injury to 8 9 Ubiquiti would not have occurred. United States District Court For the Northern District of California 10 The facts related to Kung--her trademark registration 11 application, her alternative directorship in Tech Depot, and her 12 ownership of shares in Netcom--provide evidence that she is a 13 participant in the overall infringement scheme. 14 requirement is satisfied in regard to Kung. Therefore, this 15 C. Reasonableness Factors 16 17 1. Extent of Defendants' Purposeful Injection Into the Forum 18 There may be circumstances in which the level of purposeful 19 injection into the forum is sufficient to support a finding of 20 purposeful availment yet not enough to bolster the reasonableness 21 22 23 of jurisdiction. Dole Food, 303 F.3d at 1115. Hsu argues that the exercise of personal jurisdiction over 24 him in this forum would be unreasonable because he owns no 25 property in California and, since moving to Florida, has been to 26 California less than ten times, excluding the times when he was in 27 a California airport on the way to another destination. 28 26 Hsu Dec. 1 ¶ 3. 2 Hsu to Pera, in which Hsu stated, "If you want to meet me or talk 3 with me let me know as I am in Bay Area these days." 4 Ex. B. 5 Ubiquiti and the email exchange between Hsu and Pera concerning 6 However, Ubiquiti produces a December 26, 2011 email from Jabbaz Dec., Also, the distributorship contract between Kozumi and the sale of the Argentinean UBITQUITI NETWORKS and Ubiquiti logo 7 trademarks to Ubiquiti, represent Hsu and Kozumi's additional 8 9 purposeful interjection into this forum. Hsu's argument that, in United States District Court For the Northern District of California 10 his individual capacity, he never did any business with Ubiquiti 11 and, therefore, only Kozumi should be subject to personal 12 jurisdiction is undercut by the fact that Hsu purchased the 13 UBIQUITI NETWORKS and Ubiquiti logo trademarks in Argentina in his 14 own name and many of his emails to Pera are sent from him 15 personally, not mentioning his role as an officer of Kozumi. 16 Therefore, this factor weighs in favor of the reasonableness 17 18 19 of personal jurisdiction over Hsu and Kozumi. Kung declares that she has no property in California, she has 20 been to California less than ten times in the last ten years and 21 never conducted business during any of those visits, she is a 22 stay-at-home mother in Florida, and she has never engaged in any 23 conversations, e-mail or other communications with Ubiquiti. As 24 indicated previously, the allegations about Kung are that, in 25 26 2011, she filed and abandoned a trademark application for the word 27 "UBIQUITI," she is an alternative director of an Argentinean 28 company that falsely advertises itself as a distributor of 27 1 Ubiquiti products and she is a shareholder in another Argentinean 2 company that may be a distributor of counterfeit Ubiquiti 3 products. 4 injection by Kung into California and, thus, this factor does not 5 support the reasonableness of jurisdiction over her. 6 These allegations show only minimal purposeful 2. Burden on Defendants 7 Kung declares that it would be a significant burden on her to 8 9 litigate in California because she is the primary caretaker of her United States District Court For the Northern District of California 10 three young children. She states that she has no alternative 11 caretaker for her children so that, if she had to litigate here, 12 she would have to bring her children with her and, because she 13 provides for her family on a fixed income, flying with them from 14 Florida to California would be financially burdensome. 15 Kung's declaration supports her argument that it would be a 16 burden on her to defend herself in this forum and, therefore, this 17 18 factor supports the unreasonableness of jurisdiction over her. 19 Hsu and Kozumi do not address this factor. 20 C. Other Factors 21 Defendants do not address the five other reasonableness 22 23 factors. Because it is Defendants' burden to present a compelling case that the exercise of jurisdiction would be unreasonable, the 24 other five factors weigh in favor of exercising jurisdiction. 25 26 Even though Kung's activities meet the first two prongs of 27 the effects test, because the first two reasonableness factors 28 weigh strongly against jurisdiction over her, the Court determines 28 1 that Ubiquiti is not likely to succeed in showing that Kung is 2 subject to personal jurisdiction in this forum. 3 will not issue against her absent a further showing by Ubiquiti. 4 Because all the factors, including the reasonableness 5 6 Therefore, a TRO factors, support jurisdiction over Hsu and Kozumi, the Court concludes that Ubiquiti is likely to succeed in showing that they 7 are subject to personal jurisdiction in this forum. 8 9 United States District Court For the Northern District of California 10 III. TRO Although Ubiquiti asserts thirteen causes of action in its 11 complaint, only the three Lanham Act claims are at issue here. 12 Ubiquiti does not seek a TRO for its copyright claims, nor could 13 it because federal copyright law does not apply to 14 extraterritorial acts of copyright infringement. Allarcom Pay 15 Television, Ltd. v. General Instrument Corp., 69 F.3d 381, 387 16 (9th Cir. 1995). The three claims under the Lanham Act are 17 18 (1) counterfeiting under 15 U.S.C. § 1114, based upon Hsu and 19 Kozumi's use of Ubiquiti's registered AIROS and AIRMAX trademarks; 20 (2) infringement under 15 U.S.C. § 1114, based upon Hsu and 21 Kozumi's infringement of Ubiquiti's registered AIROS and AIRMAX 22 trademarks; and (3) false designation of origin under 15 U.S.C. 23 § 1125(a) based upon Hsu and Kozumi's use of the UBIQUITI and 24 UBIQUITI NETWORKS trademarks knowing that Ubiquiti had valid and 25 26 27 protectable rights in these marks prior to Defendants' first use of them. 28 29 1 A claim of trademark infringement may be brought against any 2 person who, without the consent of the holder of the mark, uses in 3 commerce any reproduction, counterfeit, copy, or colorable 4 imitation of a registered mark in connection with the sale, 5 offering for sale, distribution, or advertising of any goods or 6 services on or in connection with which such use is likely to 7 cause confusion, or to cause mistake or to deceive. 15 U.S.C. 8 9 § 1114(1)(a); Century 21 Real Estate Corp. v. Sandin, 846 F.2d United States District Court For the Northern District of California 10 1175, 1178 (9th Cir. 1988). An infringing mark is one that is 11 sufficiently similar to a registered mark to cause public 12 confusion. Montres Rolex, S.A. v. Snyder, 718 F.2d 524, 530 (2nd 13 Cir. 1983). A counterfeit mark is one which is identical to, or 14 substantially indistinguishable from, a registered trademark. 15 15 U.S.C. § 1127. 16 To state a claim under 15 U.S.C. § 1125(a), the plaintiff 17 18 must show that the defendant is using a mark confusingly similar 19 to a valid, protectable trademark of the plaintiff's. 20 Communs., Inc. v. West Coast Entertainment Corp., 174 F.3d 1036, 21 1046 (9th Cir. 1999). 22 first to use it is deemed the "senior" user and has the right to 23 Brookfield Whether a mark is registered or not, the enjoin "junior" users from using confusingly similar marks in the 24 same industry and market. Id. at 1047. The Lanham Act authorizes 25 26 injunctive relief as a remedy for violations. 15 U.S.C. § 1116; 27 Penpower Tech. Ltd. v. S.P.C. Tech., 627 F. Supp. 2d 1083, 1094 28 (N.D. Cal. 2008) (injunctive relief is remedy of choice for 30 1 trademark cases, because there is no adequate remedy at law for 2 the injury caused by a defendant's continuing infringement). 3 A. Ubiquiti's Valid, Protectable Trademarks 4 Ubiquiti owns federal registrations for the AIROS and AIRMAX 5 6 trademarks and, therefore, is presumed to be the owner of these valid protectable trademarks. See 15 U.S.C. § 1115(a) 7 (certificate of registration evidence of validity of the mark and 8 9 of registrant's exclusive right to use the mark). Ubiquiti argues United States District Court For the Northern District of California 10 that, because it has been using the UBIQUITI, UBIQUITI NETWORKS 11 and Ubiquiti Logo marks since at least 2005, it has common law 12 rights in them that precede Hsu and Kozumi's counterfeiting and 13 infringing activities in 2011. 14 ownership of the UBIQUITI NETWORKS and Ubiquiti logo trademarks in As discussed previously, the 15 Argentina will be decided by the Argentina courts. Otherwise, 16 however, Ubiquiti's ownership and use of its marks precedes Hsu 17 18 and Kozumi's use of the marks. 19 that are being litigated in Argentina, it is likely that Ubiquiti 20 will succeed on the merits of proving it has valid, protectable 21 trademarks. 22 23 Therefore, except for the marks B. Counterfeit Products Likely to Deceive the Public Although the likelihood of confusion is usually a factual 24 determination made by examining eight factors, in cases involving 25 26 27 counterfeiting, it is unnecessary to perform the eight-factor evaluation because counterfeit marks are inherently confusing. 28 31 1 Phillip Morris USA Inc. v. Shalabi, 352 F. Supp. 2d 1067, 1073 2 (C.D. Cal. 2004). 3 Ubiquiti has submitted the declarations of Michael Taylor, 4 Ubiquiti Senior Software Engineer, and Gustavo Presman, an 5 Engineering Computer Forensics Specialist, who compared actual 6 Ubiquiti products with the allegedly counterfeit products Kozumi 7 imported into Argentina. Each determined that the counterfeit 8 9 product used design, hardware and software identical to the United States District Court For the Northern District of California 10 original Ubiquiti product. Notably, the counterfeit product used 11 Ubiquiti's registered AIRMAX trademark, as well as Ubiquiti's name 12 and corporate address. 13 on to the counterfeit product, Ubiquiti's AirOs trademark comes up 14 on the screen. Moore Dec. ¶ 2(a). Also, when a user logs 15 Moreover, Lin, Ubiquiti's employee who documented the 16 counterfeit Ubiquiti products found at the Hoky factory at the 17 18 time of the police raid, declares that he saw thousands of 19 products labeled with the UBIQUITI, NANOSTATION and AirOS 20 trademarks and submits photographs of some of these products. 21 Dec. ¶¶ 10-11. 22 counterfeit Ubiquiti products were shipped to Kozumi. 23 Lin He also obtained shipping records showing that Lin Dec. ¶ 11, Ex. C. 24 Defendants argue that Ubiquiti has not proved counterfeiting 25 26 because the declarations do not provide a chain of custody and the 27 products compared by Taylor and Presman could have been original 28 Ubiquiti products. 32 1 There is sufficient evidence to show that counterfeit 2 products were produced by the Hoky factory in China and shipped to 3 Kozumi for sale in South America or elsewhere and that some of 4 these products were obtained in Argentina for testing by 5 Ubiquiti's experts. 6 Furthermore, Defendants do not deny that they have purchased products from the Hoky factory; they merely claim 7 that they have stopped doing so. 8 9 United States District Court For the Northern District of California 10 Therefore, based on the evidence submitted by Ubiquiti, it is likely to prevail on the issue of likelihood of confusion. 11 C. Immediate, Irreparable Injury 12 Defendants argue that a TRO is not warranted because Ubiquiti 13 is not threatened with immediate, irreparable injury. 14 out that, since the beginning of 2012, they have not bought any They point 15 allegedly counterfeit or infringing products from Hoky, or sold 16 any, and they have not put any of their own ZoneWave products on 17 18 the market because these products are still in the development 19 stage. 20 Ubiquiti products from Ubiquiti distributors and to re-sell them. 21 22 23 Furthermore, they argue that they have a right to purchase Ubiquiti counters that emails from Hsu demonstrate that he and Kozumi are presently selling counterfeit products. In his May 7, 2012 email, Hsu stated, "The only product that 24 can beat Ubiquiti or make a dent o [sic] Ubiquiti's market share 25 26 has to be a product that can be compatible with the Airmax TDMA 27 . . . We are the only company that is selling a product that works 28 the same as theirs." Because Hsu states that he is not selling 33 1 any of his own ZoneWave products, the only product that he could 2 be selling that "works the same" as Ubiquiti's are counterfeit 3 Ubiquiti products. 4 six months, they have only sold Ubiquiti products obtained from 5 authorized distributors, they offer no proof of this. 6 Although Defendants claim that, in the past Hsu attaches to his declaration two invoices showing that, in 2011, 7 Kozumi purchased Ubiquiti products from authorized Ubiquiti 8 9 distributors.2 Hsu Dec., Ex. 2. However, Defendants do not United States District Court For the Northern District of California 10 produce invoices for purchases of Ubiquiti products in 2012 to 11 demonstrate that they have continued to purchase Ubiquiti products 12 from authorized distributors. 13 invoices for Ubiquiti products shipped by Kozumi into Argentina at 14 On the other hand, Ubiquiti submits prices lower than expected, which show, according to Ubiquiti, 15 that the products have not been purchased from an authorized 16 17 distributor. 18 Although trademark infringement by products sold in Argentina 19 with the UBIQUITI NETWORKS and Ubiquiti logo trademarks may not be 20 within the subject matter jurisdiction of this Court, sale of 21 products with the AirOS and AIRMAX trademarks are likely subject 22 to this Court's jurisdiction. Therefore, Kozumi and Hsu will be 23 enjoined from selling counterfeit Ubiquiti products with these 24 25 trademarks in Argentina and other countries. 26 27 28 2 Ubiquiti does not dispute that the sellers of these products are authorized Ubiquiti distributors. 34 1 Further, sale of the present version of the ZoneWave products 2 can be enjoined under the Lanham Act because, when a user connects 3 the ZoneWave product to a computer, Ubiquiti's software starts and 4 displays Ubiquiti's AirOS trademark on the login screen. 5 6 Ubiquiti has adequately shown that it has been and is in imminent danger of being irreparably injured by Hsu and Kozumi's 7 sale of counterfeit and infringing products in other countries. 8 9 Ubiquiti does not have an adequate remedy at law because the sale United States District Court For the Northern District of California 10 of infringing or counterfeit products is likely to damage 11 irreparably its reputation and goodwill and that of its 12 distributors. See Penpower Tech., 627 F. Supp. 2d at 1094. 13 D. Balance of Hardships 14 Defendants argue that the balance of hardships weighs in 15 favor of denying a TRO because Ubiquiti seeks to shut down 16 Kozumi's business by freezing its assets, and this will 17 18 irreparably injure Kozumi and Hsu. 19 portion of Kozumi's business is totally unrelated to Ubiquiti 20 products and, if its assets were frozen, it would be unable to 21 purchase goods for resale or pay its bills. 22 the Philippines v. Marcos, 862 F.2d 1355, 1364 (9th Cir. 1988), 23 Hsu states that a large Citing Republic of Ubiquiti responds that an injunction freezing Kozumi's assets is 24 necessary so that it may obtain the equitable remedy of an 25 26 accounting of Defendants' ill-gotten profits under 15 U.S.C. 27 28 35 1 § 1117.3 2 defendants had transferred millions of dollars' worth of cash, 3 negotiable instruments, jewelry and other property out of the 4 Philippines to other countries, including the United States. 5 However, in Marcos, the evidence established that the at 1362-63. Id. Here, the significance of Ubiquiti's evidence 6 submitted to show that Hsu cannot be trusted to preserve his and 7 8 9 Kozumi's assets is questionable. A dispute regarding the price of the Argentinean trademark does not indicate that Hsu or Kozumi United States District Court For the Northern District of California 10 will transfer assets out of the country to avoid paying a 11 judgment. 12 petition which lists as an asset only their residence, when public 13 records show they own other real estate valued at $1.6 million. 14 Although Ubiquiti points to Hsu and Kung's divorce Defendants respond that the other properties are owned by a trust 15 and are not marital assets under Florida law. The Court agrees 16 17 18 19 that freezing Defendants' assets would be too harsh a remedy and harmful to Defendants' business. However, an order enjoining Hsu and Kozumi from selling 20 counterfeit and infringing products will not harm them. 21 other hand, Ubiquiti has made a showing that Kozumi's sale of 22 counterfeit and infringing products affects Ubiquiti's goodwill On the 23 and reputation and undercuts its sales and the sales of its 24 25 26 3 27 28 Section 1117 provides that a prevailing plaintiff in an infringement action may recover the defendant's profits, damages and the costs of the action. 36 1 authorized distributors, all of which affect Ubiquiti's stock 2 price and market capitalization. 3 Therefore, the Court finds that Ubiquiti has shown a 4 likelihood of success on the merits of its Lanham Act claims and a 5 significant threat of irreparable injury or, at least, that 6 serious questions regarding the merits exist and the balance of 7 the hardships tips sharply in Ubiquiti's favor. Therefore, the 8 9 Court enjoins Hsu and Kozumi and their agents, officers, servants, United States District Court For the Northern District of California 10 employees, owners and representatives and all other persons, firms 11 or corporations in active concert or participation with them from: 12 (1) using in any manner any registered trademark owned by 13 Ubiquiti, and the UBIQUITI, UBIQUITI NETWORKS, and Ubiquiti logo 14 mark, or any name or mark that wholly incorporates or is 15 confusingly similar to the aforementioned trademarks; (2) moving, 16 destroying, or otherwise disposing of any items confusingly or 17 18 deceptively similar to Ubiquiti's products and that bear any of 19 the aforementioned trademarks that belong to Ubiquiti; (3) moving, 20 destroying or otherwise disposing of any records or documents 21 containing information related to the manufacturing, distributing, 22 delivering, shipping, importing, exporting, marketing, promoting, 23 selling or otherwise offering for sale of items that bear any of 24 the aforementioned trademarks that belong to Ubiquiti; 25 26 (4) assisting, aiding or abetting any other person or business 27 entity in engaging in or performing any of the above-mentioned 28 activities. Excepted from this injunction is the selling, 37 1 manufacturing, distributing, delivering, shipping, importing, 2 marketing and promoting of products in Argentina bearing the 3 UBIQUITI NETWORKS or Ubiquiti logo trademark, which do not use any 4 other Ubiquiti-owned trademark. 5 injunction is the re-sale of genuine Ubiquiti products. 6 Also excepted from this Rule 65(c) of the Federal Rules of Civil Procedure requires 7 that a party must post a bond "in such sum as the court deems 8 9 proper, for the payment of such costs or damage as may be incurred United States District Court For the Northern District of California 10 or suffered by any party found wrongfully enjoined or restrained." 11 The Court finds that a bond in the amount of $10,000 is 12 sufficient. 13 upon Ubiquiti's posting of a bond in the amount of $10,000. This restraining order will take effect, therefore, 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 38 CONCLUSION 1 2 For the foregoing reasons, the Court grants in part 3 Ubiquiti's application for a TRO against Defendants Hsu and 4 Kozumi, as described above. 5 Kozumi show cause as to why a preliminary injunction should not 6 It is ordered that Defendants Hsu and issue on the same terms as the TRO. A hearing on the Order to 7 Show cause is set for Thursday, July 5, 2012 at 2 p.m. Defendants 8 9 may file an opposition brief, of no greater than ten pages, United States District Court For the Northern District of California 10 containing any facts or law that they were unable to include in 11 their briefs to date, no later than June 25, 2012. 12 file a reply brief, no greater than five pages, addressing the new 13 facts and law in Defendants' opposition brief, no later than June 14 28, 2012. Ubiquiti may 15 16 IT IS SO ORDERED. 17 18 19 Dated: 6/20/2012 CLAUDIA WILKEN United States District Judge 20 21 22 23 24 25 26 27 28 39

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