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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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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UBIQUITI NETWORKS, INC.,
Plaintiff,
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United States District Court
For the Northern District of California
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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.
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KOZUMI USA CORPORATION, SHAO WEI
HSU, and LILIA KUNG,
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Defendants.
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________________________________/
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On May 18, 2012, Plaintiff Ubiquiti Networks, Inc. filed an
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ex parte application for a temporary restraining order (TRO)
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against Defendants Kozumi USA Corporation, Shao Wei Hsu and Lilia
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Kung based upon its claims for trademark infringement under the
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Lanham Act.
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On May 25, 2012, the Court denied the ex parte
application for a TRO, ordered Ubiquiti to serve Defendants and
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set an expedited briefing schedule.
Ubiquiti has served
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Defendants, who have filed an opposition, and Ubiquiti has filed a
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reply.
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reply and Ubiquiti has filed a further reply.
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filed a motion to submit separate objections to Ubiquiti's
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evidence and Ubiquiti opposes this motion.
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With leave of Court, Defendants have also filed a surDefendants have
The motions were taken
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under submission and decided on the papers.
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of the papers filed by the parties, the Court grants Defendants'
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motion to file objections to evidence and grants, in part, the
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application for a TRO.
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Having considered all
BACKGROUND
In the May 25, 2012 Order, the Court stated Ubiquiti's
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version of the facts because Defendants had not yet been served.
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The Court adopts the facts from its previous order with the
United States District Court
For the Northern District of California
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following changes and additions that are taken from both parties'
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submissions.
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The facts are undisputed, except as noted.
Ubiquiti is incorporated in Delaware with its principal place
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of business in San Jose, California.
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thirty products to the global Wireless Internet Service Provider
It currently offers over
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(WISP) market in the United States and in over sixty-five
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countries around the world.
Ubiquiti does not have its own sales
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force, but relies on the Ubiquiti Community, a large community of
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network operators, service providers and distributors, to market
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its products.
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distribute its products in specified regions throughout the world
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and to provide its products to local re-sellers.
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Distributors enter into contracts with Ubiquiti to
sell the products to end-users.
The re-sellers
Ubiquiti actively protects its
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corporate name, product names, and proprietary software.
It
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currently holds registrations in the United States for seven
marks.
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Defendant Kozumi, a Florida corporation with its principal
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place of business in Florida, has been in the business of
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distributing networking hardware since September 2006.
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distributes multiple suppliers' networking hardware in South
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America and parts of Eastern Europe.
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Kozumi
Since its inception, the
vast majority of Kozumi's sales have been outside the United
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States and it has never sold any product in the State of
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California.
Hsu, whom Defendants refer to as Wu, is the owner and
United States District Court
For the Northern District of California
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sole director of Kozumi.
Kung was married to Hsu and they have
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three minor children.
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2012.
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ownership or other interest in Kozumi and no involvement with any
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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
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that, in 2011, she applied to register the word "UBIQUITI" as a
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trademark in the United States.
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In May 2008, Kozumi became an official distributor of
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Ubiquiti products in Latin America, including Argentina.
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understanding was that the distributorship agreement did not bar
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Kozumi from developing its own products and, in 2009, Kozumi began
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to develop its own line of networking hardware, as an alternative
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to Ubiquiti hardware.
Hsu Dec. ¶¶ 9, 10.
Hsu's
In mid-September 2009,
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Ben Moore, Ubiquiti's Vice President of Business Development,
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visited the Kozumi website and discovered that Kozumi was offering
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products under its own brand, with packaging and graphics very
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similar to the Ubiquiti products that Kozumi was selling.
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Moore
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Dec. ¶ 48.
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products that directly competed with Ubiquiti products and, for
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that reason, terminated Kozumi's distributorship agreement.
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Dec. ¶ 48.
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Ubiquiti distributor, Hsu would use the strength of the Ubiquiti
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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
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them Kozumi-branded products.
Moore Dec. ¶ 48.
On November 9,
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2009, Kozumi received an email from Moore indicating that Ubiquiti
United States District Court
For the Northern District of California
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was terminating Kozumi's distributorship due to "pushback from
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existing distributors with pricing and some of the new products
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released by Kozumi."
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email.
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Hsu Dec., Ex. A, November 9, 2009 Moore
After Kozumi's distributorship was terminated, it purchased
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Ubiquiti products from other authorized Ubiquiti distributors "for
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redistribution through partnered companies in Argentina."
Hsu
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Dec. ¶ 11.
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purchased thousands of units of Ubiquiti products through Ubiquiti
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distributors and resellers, nearly 100% of which were imported
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into Argentina.
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its distributors to stop selling to Kozumi.
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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
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resellers and Kozumi continued to ship Ubiquiti products to South
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America.
Hsu Dec. ¶ 12.
Moore declares that, because Hsu was
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attempting to "covertly and improperly acquire Ubiquiti products
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through authorized Ubiquiti Distributors, I contacted some of our
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Ubiquiti Distributors and asked them not to do business with
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Kozumi."
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email from a Ubiquiti distributor in Argentina indicating that
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Kozumi was selling Ubiquiti products in Argentina at a much lower
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price than he was able to offer for his Ubiquiti products.
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Moore Dec. ¶ 55.
Dec. ¶ 57.
On March 24, 2011, Moore received an
Moore
Moore replied that "Ubiquiti was going to do
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everything it could to stop the sale of Kozumi's knockoff
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products."
Meanwhile, in August 2010, Kozumi was threatened in Argentina
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United States District Court
For the Northern District of California
Moore Dec. ¶ 57.
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with legal action by Ditelco, a former distributor of Ubiquiti
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hardware, which owned a trademark of the words "UBIQUITI NETWORKS"
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and of the Ubiquiti logo, in Argentina.
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this trademark and logo from Ditelco.
In 2011, Kozumi acquired
In his declaration, Hsu
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states that he paid $250,000 for the trademark and logo.
Hsu Dec.
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¶ 15.
In an email to Robert Pera, Ubiquiti's Chief Executive
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Officer (CEO), Hsu stated that he paid $350,000 for them.
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Dec., Ex. 5 at 2.
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fifty dollars, for them.
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registration fee, not the price he paid for the trademark itself.
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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
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sold and was referred to Kenny Deng at Hoky Technologies in
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Shenzhen, China.
Deng said that he could procure Ubiquiti
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products from the Ubiquiti factory in China and sell them to Hsu.
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Hsu also contracted with Hoky to produce a new brand of networking
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products "in the same genre as Ubiquiti's hardware, called
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'ZoneWave,' but which used different designs from that of
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Ubiquiti."
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Kozumi placed orders with Hoky for about two million dollars'
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worth of Ubiquiti and ZoneWave products.
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Hsu Dec. ¶ 17.
Between July 2011 and December 2011,
According to Hsu, Hoky
shipped products to Kozumi directly from China to Argentina,
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without going through the United States.
Hsu Dec. ¶ 18.
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In summer 2011, Moore learned that the Hoky facility was
United States District Court
For the Northern District of California
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manufacturing counterfeit Ubiquiti products.
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Moore worked with authorized Ubiquiti distributors in Argentina to
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acquire "fake" Ubiquiti products manufactured by Hoky and sent
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them to Mike Taylor, Ubiquiti's Senior Software Engineer, for
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analysis.
Moore Dec. ¶ 62.
Moore Dec. ¶¶ 58-61.
Taylor determined that the Hoky
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product appeared almost identical to the real Ubiquiti products,
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including Ubiquiti's name, domain name, logo and AIRMAX trademark.
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Taylor Dec. ¶ 2(a).
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manufactured by Hoky and sold by Kozumi were near duplicates of
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actual Ubiquiti products, Ubiquiti contacted a law firm in China
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which worked with the Public Security Bureau in China to shut down
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the Hoky facility.
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Once Taylor confirmed that the products
Moore Dec. ¶ 63.
Yu Cheng Lin, a Ubiquiti employee in Taiwan, went with the
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Chinese authorities on November 17, 2011, when they shut down the
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Hoky facility and took photographs and videos of the
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counterfeiting manufacturing line and products ready for shipment.
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Moore Dec. ¶ 64; Lin Dec. ¶ 10.
Lin saw and photographed
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"thousands of counterfeit products labeled with the Ubiquiti,
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Nanostation and Airos trademarks."
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police confiscated Hoky's shipping records.
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obtained a copy of a shipping document that showed that, on
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November 16, 2011, 6,000 units of counterfeit Ubiquiti NanoStation
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Lin Dec. ¶ 11.
The Chinese
Lin Dec. ¶ 11.
Lin
Loco M5 products were shipped from the Hoky facility to Kozumi
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with a final destination in Paraguay.
Lin Dec. ¶ 11, Ex. D.
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The Chinese police closed the Hoky factory and took Deng into
United States District Court
For the Northern District of California
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custody.
In December 2011, Deng was released from custody because
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his production of Ubiquiti-branded products, even if using
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Ubiquiti's hardware designs, was apparently legal in China in that
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the products were sold, for export to Argentina, to Kozumi, which
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owned the Ubiquiti trademark in Argentina.
Hsu Dec. ¶¶ 20-21.
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Hsu declares that, although the Hoky factory reopened, Kozumi
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has not purchased any Ubiquiti-branded products from Hoky since
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December 15, 2011, but has continued to purchase Ubiquiti products
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on the secondary market from Ubiquiti-recognized distributors and
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re-sellers.
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2012, he received, as attachments to two emails from a Ubiquiti
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distributor in Argentina, Argentinean customs forms indicating
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Hsu Dec. ¶ 22.
Moore declares that, on April 4,
that Kozumi sent three shipments of Ubiquiti products to Tech
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Depot, a company owned by Hsu in Argentina, that were "priced
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suspiciously low."
Moore Dec. ¶ 67, Ex. Y.
Moore also states
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that one of the shipments was routed through the Everglades Port
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in Fort Lauderdale, Florida.
Moore Dec. ¶ 67, Ex. Y.
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However,
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the exhibit is in Spanish and the claim that the shipment was
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routed through Florida is not confirmed.
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On December 22, 2011, Hsu received an email from Ubiquiti CEO
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Pera stating that he did not think Kozumi was aware of Hoky's
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counterfeiting, and asking that Kozumi surrender the Argentinean
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Ubiquiti trademark to Ubiquiti as a gesture of good faith.
Hsu
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responded that he would consider selling the Argentinean trademark
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for a certain price and with certain conditions.
A series of
United States District Court
For the Northern District of California
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email exchanges followed which appear to constitute negotiation of
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the terms and conditions of Kozumi's sale of the Argentinean
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trademark to Ubiquiti.
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characterizes these emails as Hsu's and Kozumi's attempt to extort
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Ubiquiti by purporting to sell the trademark and logo to Ubiquiti
Hsu Dec., Ex. ¶¶ 25-30, Ex. 5.
Ubiquiti
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even though Ubiquiti is the rightful owner.
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On April 2, 2012, Ubiquiti filed a trademark lawsuit in
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Argentina against Hsu seeking (1) nullification of Hsu's
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trademarks of the words "UBIQUITI NETWORKS" and the Ubiquiti logo
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on the basis that they were obtained in bad faith; (2) dismissal
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of Hsu's opposition to Ubiquiti's own trademark application in
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Argentina; (3) sustaining of Ubiquiti's oppositions to Hsu's
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recently filed Argentinean trademark applications on the ground
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that they were fraudulent; (4) an injunction preventing further
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use of any Ubiquiti trademarks; and (5) damages.
3.
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8
McCollum Dec. ¶
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Ubiquiti's application for a trademark for the words
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"UBIQUITI NETWORKS" in the United States had been rejected on
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December 1, 2005.
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and Trademark Office (PTO) office action.
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Ubiquiti filed another trademark application with the PTO for the
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See Shang Dec., Ex. A., United States Patent
words "UBIQUITI NETWORKS."
On April 6, 2012,
See Shang Dec., Ex. B.
In its
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complaint, Ubiquiti alleges that "consumers and competitors alike
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throughout the world have come to recognize Ubiquiti marks,
United States District Court
For the Northern District of California
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including UBIQUITI [and] UBIQUITI NETWORKS . . . as symbols of
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Ubiquiti's excellence in wireless communications products."
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¶ 38.
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AIROS, AIRMAX, UBNT, AIRGRID, AIRCONTROL, AIRVIEW and UNIFI.
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Comp. ¶¶ 26-32.
Comp.
Ubiquiti owns in the United States the trademarks for
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In its reply, Ubiquiti states that, since it filed its
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original TRO request, it has established that Kozumi's new
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product, ZoneWave, incorporates intellectual property stolen from
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Ubiquiti.
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has obtained a ZoneWave product from an employee at the Hoky
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plant, analyzed it and determined that the product uses Ubiquiti
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software, firmware, and circuit board layouts.
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In supplemental declarations, Ubiquiti states that it
Michael Taylor ¶ 2(a)-(g).
Supp. Dec. of
Taylor states that "much of the
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internal make-up of the ZoneWave product is identical to the
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counterfeit Ubiquiti products--Defendants just changed the
packaging."
Id.
Ubiquiti's AIROS trademark displays on the
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screen when a user logs in on a ZoneWave product.
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¶ 20.
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Id. ¶ 2, Comp.
In Hsu's supplemental declaration, he states that, although
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he contracted with Hoky to produce ZoneWave products in mid-2011,
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before the Hoky factory was closed by the Chinese authorities, he
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has not received any final ZoneWave products, he has not sold any
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ZoneWave products and, due to Hoky's financial troubles resulting
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from the December 2011 shut-down of its factory, he does not know
United States District Court
For the Northern District of California
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if Hoky will be able to fulfill its obligation to provide ZoneWave
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products.
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Ubiquiti acquired and analyzed is not a ZoneWave product, because
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final ZoneWave products are still in the development phase and,
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when they are complete, they will not use any Ubiquiti copyrighted
Hsu Supp. Dec. ¶ 2.
Hsu states that the product
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software and will have a design different from Ubiquiti products.
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Hsu Supp. Dec. ¶ 3.
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In its further reply to Defendants' sur-reply, Ubiquiti cites
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a May 7, 2012 email from Hsu to a former Ubiquiti distributor in
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Dubai, in which Hsu stated, "I have many customers that contacted
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me that wanted to become my distributors in middle east.
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now one in Iraq/Dubai and other [sic] in Lebanon.
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you if you want to try our solution . . ."
I have
I can sell to
Doc. No. 8, McCollum
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Dec., Ex. I.
In the email, Hsu also stated:
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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. . . .
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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.
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Id.
LEGAL STANDARD
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United States District Court
For the Northern District of California
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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.
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65(b).
To obtain a temporary restraining order, the moving party
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must establish either: (1) a combination of probable success on
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the merits and the possibility of irreparable harm, or (2) that
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serious questions regarding the merits exist and the balance of
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hardships tips sharply in the moving party's favor.
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Co. v. City of Las Vegas, 154 F.3d 1097, 1100 (9th Cir. 1998);
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Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1217 (9th
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Baby Tam &
Cir. 1987).
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The test for granting a temporary restraining order, like
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that for granting a preliminary injunction, is a "continuum in
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which the required showing of harm varies inversely with the
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required showing of meritoriousness."
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the elements of the preliminary injunction test are balanced, so
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that a stronger showing of one element may offset a weaker showing
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of another.
Id.
"Under this approach,
For example, a stronger showing of irreparable harm
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to plaintiff might offset a lesser showing of likelihood of
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success on the merits."
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Cottrell, 632 F.3 1127, 1131 (9th Cir. 2011).
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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
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relied on any inadmissible evidence.
The Court will not discuss
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each objection individually.
To the extent that the Court relies
United States District Court
For the Northern District of California
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on evidence to which Defendants object, such evidence has been
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found admissible and the objections are overruled.
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DISCUSSION
In the May 25, 2012 Order, the Court found that Ubiquiti had
submitted prima facie evidence of federal subject matter
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jurisdiction and personal jurisdiction over Defendants in this
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forum.
Defendants dispute both.
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I. Subject Matter Jurisdiction
Subject matter jurisdiction is a threshold issue which goes
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to the power of the court to hear the case.
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matter jurisdiction must exist at the time the action is
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commenced.
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Federal subject
Morongo Band of Mission Indians v. Cal. State Bd. of
Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988).
A federal
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court is presumed to lack subject matter jurisdiction until the
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contrary affirmatively appears.
Stock W., Inc. v. Confederated
Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989).
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12
1
Citing Reebok Int'l, Ltd. v. Marnatech Ents., Inc., 970 F.2d
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552, 554 (9th Cir. 1992), Ubiquiti argues that, although it
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alleges only extraterritorial activities, this Court has
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jurisdiction over this case pursuant to the Lanham Act.
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Lanham Act provides a broad jurisdictional grant that extends to
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The
all commerce which may lawfully be regulated by Congress.
Id.
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"Congress has the power to prevent unfair trade practices in
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foreign commerce by citizens of the United States, although some
United States District Court
For the Northern District of California
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of the acts are done outside the territorial limits of the United
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States."
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(1952); Van Doren Rubber Co. Inc. v. Marnatech Ents., Inc., 1989
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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
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the Lanham Act:
(1) there must be some effect on American foreign
16
commerce; (2) the effect must be sufficient to present a
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cognizable injury to the plaintiffs; and (3) the interests of and
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links to American foreign commerce must be strong enough in
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relation to those of other nations' commerce to justify an
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assertion of extraterritorial authority.
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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
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where injury seems to be limited to the deception of consumers
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26
abroad, as long as there is monetary injury in United States to an
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American plaintiff").
Love v. Associated Newspapers, Ltd., 611
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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
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balancing of the following seven factors: (1) the degree of
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conflict with foreign law or policy; (2) the nationality or
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allegiance of the parties and the locations or principal places of
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business of corporations; (3) the extent to which enforcement by
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either state can be expected to achieve compliance; (4) the
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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
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purpose to harm or affect American commerce; (6) the
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foreseeability of such effect; and (7) the relative importance to
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the violations charged of conduct within the United States as
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compared with conduct abroad.
Id. at 555.
15
The Court reaffirms its finding in the May 25, 2012 Order
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that the facts alleged here appear to meet the first two prongs
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for jurisdiction under the Lanham Act.
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addresses the seven factors composing the third prong for
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extraterritoriality jurisdiction--how the interests of and links
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to American foreign commerce compare to those of other nations'
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commerce.
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The Court now further
A. Conflict with Foreign Law or Policy
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On April 2, 2012, Ubiquiti filed a trademark lawsuit in
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Argentina seeking nullification of Hsu's trademark of the words
"UBIQUITI NETWORKS" and of the Ubiquiti logo.
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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
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"UBIQUITI NETWORKS" and the Ubiquiti logo in that country.
In
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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
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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.
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trademark.
Id.
16
Similarly, "[t]he Ninth Circuit has held that the existence
17
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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
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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
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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
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insignificant compared to the effect on Philippine commerce with
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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.
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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
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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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