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

Filing 60

ORDER Granting Motion for Preliminary Injunction, Set Deadlines/Hearings, (cwlc1, COURT STAFF) (Filed on 7/5/2012)

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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.,
No. C 12-2582 CW
Plaintiff,

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v.
KOZUMI USA CORP., et al.

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ORDER GRANTING
MOTION FOR
PRELIMINARY
INJUNCTION

Defendants.
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United States District Court

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On June 20, 2012, the Court issued an Order Granting, In

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Part, Ubiquiti's Application for a Temporary Restraining Order

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(TRO) against Defendants Kozumi USA Corporation and William Hsu

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Wu1 upon its claims for trademark infringement under the Lanham

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Act and ordered that Defendants show cause as to why a preliminary

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injunction should not issue on the same terms as the TRO.2

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Defendants have filed a response to the Court's order to show

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cause (OSC), and Ubiquiti has filed an opposition to the response.

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Defendants have filed evidentiary objections to some of Ubiquiti's

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evidence.

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oral argument and all papers filed by the parties, the Court

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overrules Defendants' evidentiary objections, issues a preliminary

A hearing was held on July 5, 2012.

After considering

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The individual Defendant named in Ubiquiti's complaint as
Shao Wei Hsu indicates that his official name is William Hsu Wu.

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The TRO did not issue against the third Defendant, Lilia
Kung. On June 27, 2012, Plaintiffs voluntarily dismissed all
claims against Ms. Kung.

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injunction on the same terms as the TRO, and freezes all of

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Defendants' real estate assets located in the United States.

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BACKGROUND
The facts of this case are detailed in the Court's June 20,
2012 Order.

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leave to submit a brief in opposition to the issuance of a

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preliminary injunction containing any facts or law that they were

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unable to include in their brief opposing the TRO.

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brief, Defendants indicate that they do not take issue with the

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overall scope of the TRO because they are not engaging in any of

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United States District Court

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the activities which are forbidden by the Court.

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argue that the TRO is overbroad in that it bars Defendants from

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using Ubiquiti's trademarks "in any manner."

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should be allowed to use Ubiquiti's trademarks in comparative

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advertising for their own products because use of another's

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trademark for comparative advertising purposes is not actionable

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under the Lantham Act.

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arguments that they are not subject to personal jurisdiction in

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this forum and that Ubiquiti has failed to link any alleged

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damages to Defendants.3

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arguments and reiterates its request for a freeze on Defendants'

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assets on the basis of new evidence that shows that Defendants may

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be fraudulently transferring their assets.

In the June 20 Order, the Court granted Defendants

In their

However, they

They argue that they

Defendants also reiterate their previous

Ubiquiti counters each of Defendants'

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Defendants have filed a separate motion to dismiss based on
lack of personal jurisdiction that is set to be heard on August 2,
2012.
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LEGAL STANDARD

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For a preliminary injunction to issue, a plaintiff "must

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establish that it is likely to succeed on the merits, that it is

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likely to suffer irreparable harm in the absence of preliminary

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relief, that the balance of equities tips in its favor, and that

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an injunction is in the public interest."

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Defense Council, 555 U.S. 7, 20 (2008); Amylin Pharmaceuticals,

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Inc. v. Eli Lilly and Co., 456 F. App'x. 676, 678 (9th Cir. 2011).

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DISCUSSION

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United States District Court

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Winter v. Natural Res.

I. Comparative Advertising Exception
Ubiquiti argues that Defendants should not be allowed to use

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Ubiquiti's trademarks in their advertising because Kozumi is a

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counterfeiter and any comparison with Ubiquiti's products will

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further confuse consumers as to which are real Ubiquiti products.

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Ninth Circuit authority holds that use of another's trademark

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in comparative advertising is not wrongful or actionable under the

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Lanham Act.

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1151-54 (9th Cir. 2002); Toyota Motor Sales, U.S.A., Inc. v.

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Tabari, 610 F.3d 1171, 1182-83 (9th Cir. 2010).

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by Ubiquiti, none of the authority submitted by Defendants

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involved the situation here, where the defendant advertiser was

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also an alleged counterfeiter.

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advertisement to illustrate the way in which Ubiquiti's trademarks

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would be used.

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not further confuse consumers or harm Ubiquiti's trademarks or

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goodwill, the Court cannot permit Defendants to use Ubiquiti's

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trademarks in any manner other than the exceptions noted in the

See e.g. Cairns v. Franklin Mint Co., 292 F.3d 1139,

However, as noted

Defendants do not submit a sample

Without evidence that such advertisements would

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TRO.

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terms of the TRO is denied.

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Therefore, Defendants' request for a modification of the

However, in sixty days or thereafter, after meeting and

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conferring with Ubiquiti, Defendants may move to modify the

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preliminary injunction to allow comparative advertising.

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motion, Defendants must indicate in what country the advertisement

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will be used, the law of that country regarding comparative

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advertising, an explanation of why comparative advertising is

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needed and a copy of an English-version of the advertisement.

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United States District Court

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In the

II. Personal Jurisdiction
In regard to personal jurisdiction, Defendants do nothing

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more than note their disagreement with the Court's conclusion in

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the June 20, 2012 Order.

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motion to dismiss based on lack of personal jurisdiction, this

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issue will be decided in the context of that motion.

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the Court does not change the conclusion it reached in the June 20

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1012 Order, that Ubiquiti is likely to succeed in showing that

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Defendants are subject to personal jurisdiction in this forum.

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III. Damages

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Because Defendants have filed a separate

Therefore,

In regard to damages, Defendants argue that Ubiquiti has not

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provided any evidence to meet its burden of connecting its alleged

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six million dollar loss to Kozumi and Mr. Wu's activities.

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Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 22

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(2008), plaintiffs seeking preliminary injunctive relief must

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demonstrate that irreparable injury is likely in the absence of an

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injunction.

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result of Defendants' alleged counterfeiting, an injunction would

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be appropriate because "injunctive relief is the remedy of choice

Under

Even if Ubiquiti did not allege a loss of money as a

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for trademark and unfair competition cases, since there is no

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adequate remedy at law for the injury caused by a defendant's

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continuing infringement."

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846 F.2d 1175, 1181 (9th Cir. 1988).

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Century 21 Real Estate Corp. v. Sandlin

Ubiquiti submits emails from its distributors and articles

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from the financial press to show that Defendants' alleged

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counterfeiting and infringing acts are damaging Ubiquiti's

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reputation with its distributors and customers and in the

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financial markets in general.

This evidence more than satisfies

Ubiquiti's burden to show that irreparable injury is likely in the

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United States District Court

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absence of an injunction.

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the injunction should not issue because Ubiquiti has not shown the

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likelihood of irreparable injury is unavailing.

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Therefore, Defendants' argument that

In summary, the Court finds that Ubiquiti has shown a

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likelihood of success on the merits of its Lanham Act claims and a

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significant threat of irreparable injury or, at least, that

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serious questions regarding the merits exist and the balance of

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the hardships tips sharply in Ubiquiti's favor.

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Court will issue a preliminary injunction on the same terms as the

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TRO.

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IV. Ubiquiti's Request to Freeze Defendants' Assets

Therefore, the

See June 20, 2012 Order (Docket no. 41).

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In the June 20 2012 Order, the Court denied Ubiquiti's

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request to freeze Defendants' assets because "Ubiquiti's evidence

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submitted to show that Hsu cannot be trusted to preserve his and

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Kozumi's assets" was questionable and, thus, freezing Defendants'

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assets would be too harsh a remedy and harmful to Defendants'

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business.

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week after it filed its lawsuit against Defendants, Mr. Wu

Here, Ubiquiti submits proof that, on May 25, 2012, one

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executed quitclaim deeds for four of his properties to Angela

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Kung, a resident of Brazil, and a quitclaim deed for one of his

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properties to Cheng Hung Chen, a resident of Taiwan.

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Dec., Exs. D and E, quitclaim deed and legal property description

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and deed history reports.4

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indicating that the market value of one of the properties is over

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$364,000.

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this property to Angela Kung for $10.00.

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McCollum

Ubiquiti also submits a document

However, the quitclaim deed indicates that Mr. Wu sold

Mr. Wu explains that the five properties identified by
Ubiquiti were purchased by his ex-wife's family, who live in

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United States District Court

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Brazil, during the 2008 financial crisis in that country and, that

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except for one property, they were held on the family's behalf by

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the "Shao Wei Hsu Living Trust."

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then-pending divorce from Lilia Kung would make his continued

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management of the properties on behalf of her family awkward, Mr.

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Wu began the process of transferring the properties to the Kung

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family in Brazil.

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in May 2011, instead of in March 2011, because his attorney was

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ill in March and April and one of the properties experienced

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permitting delays by the city of Miami.

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In March 2011, because Mr. Wu's

Mr. Wu explains that the transactions occurred

Even considering Mr. Wu's explanation, the transfers of five

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properties by quit claim deeds in such close proximity to the time

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Ubiquiti filed this action, indicate that they are likely attempts

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by Mr. Wu to transfer properties against which Ubiquiti might be

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able to recover a judgment.

This shows that, absent a freeze of

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The seller of most of the properties appears to be the Hsu
Shao W. Living Trust. It appears that Mr. Wu is the trustor and
trustee of this trust and has control of its assets.
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some of Defendants' assets, there may be no security for

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Ubiquiti's recovery in the event it wins a money judgment against

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Defendants.

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they need cash flow to operate the lawful part of their business.

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However, real estate is not a liquid asset and, thus, may not be

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necessary for the operation of the business.

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grants, in part, Ubiquiti's request to freeze Defendants' assets

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and orders that all of the real estate owned or controlled by

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Defendants is frozen and cannot be sold, transferred or encumbered

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in any manner without a stipulation from Ubiquiti or, if Ubiquiti

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United States District Court

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does not so stipulate, an Order from this Court.

The Court is mindful of Defendants' argument that

Therefore, the Court

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A preliminary injunction will issue by separate order.

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Rule 65(c) of the Federal Rules of Civil Procedure requires

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that a party must post a bond "in such sum as the court deems

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proper, for the payment of such costs or damage as may be incurred

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or suffered by any party found wrongfully enjoined or restrained."

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The Court finds that a bond in the amount of $10,000 is

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sufficient.

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was limited to the temporary restraining order.

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injunction will take effect, therefore, when Ubiquiti posts or

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transfers a bond in the amount of $10,000 on account of the

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preliminary injunction.

Ubiquiti has previously posted a $10,000 bond, but it
The preliminary

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IT IS SO ORDERED.

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Dated: July 5, 2012
CLAUDIA WILKEN
United States District Judge

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