Gentle Giant Moving Co., Inc. v. Gentle Giant Moving and Storage, Inc. et al
Filing
44
ORDER by Chief Judge Philip A. Brimmer on 9/4/2019, re: 42 plaintiff's Motion for Sanctions and Application for Default Judgment Against Defendants Jose M. Esquivel, and Itamar Friedman, Sr. is GRANTED IN PART, and DENIED WITHOUT P REJUDICE IN PART as follows: It is (1) GRANTED to the extent it seeks entry of a default judgment pursuant to Federal Rules of Civil Procedure 16(f) and 37(b)(2); (2) GRANTED to the extent it seeks an award of disgorgement of de fendants profits and attorney's fees under 15 U.S.C. § 1117(a); and (3) DENIED WITHOUT PREJUDICE to the extent it seeks entry of a permanent injunction against defendants. ORDERED that the Order and Recommendation of the ma gistrate judge [Docket No. 36] is not accepted as MOOT. ORDERED that any additional motion for default judgment on the issue of injunctive relief shall be filed on or before September 20, 2019. ORDERED that defendants shall be liable for disgorgement of $63,903.47, representing profits gained as a result of the conduct alleged in the Complaint [Docket No. 1]..(sphil, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Philip A. Brimmer
Civil Action No. 17-cv-02762-PAB-NRN
GENTLE GIANT MOVING CO., INC.,
Plaintiff,
v.
GENTLE GIANT MOVING AND STORAGE INC.,
JOSE M. ESQUIVEL,
ITAMAR FRIEDMAN, SR., and
EMPIER MOVING AND STORAGE SERVICES CO.,
Defendants.
ORDER
This matter is before the Court on plaintiff Gentle Giant Moving Co., Inc.’s Motion
for Sanctions and Application for Default Judgment Against Defendants Jose M.
Esquivel, and Itamar Friedman, Sr. [Docket No. 42]. The Court has jurisdiction
pursuant to 28 U.S.C. §§ 1331 and 1338 and 15 U.S.C. § 1121.
I. BACKGROUND
On November 11, 2017, plaintiff filed this lawsuit against defendants Gentle
Giant Moving and Storage Inc., Empier Moving and Storage Services Co. (collectively,
“the corporate defendants”), Jose M. Esquivel, and Itamar Friedman, Sr. (collectively,
“individual defendants”) (collectively, “defendants”). Docket No. 1. In its complaint,
plaintiff alleges the following:
Plaintiff is a professional moving services business that has used its company
name, Gentle Giant Moving Co., Inc., since its founding in 1980. Id. at 5, ¶ 12. It owns
multiple trademark registrations for the marks “GENTLE GIANT,” “GENTLE GIANT
MOVING COMPANY,” and the company’s logo, each registered for the uses related to
moving and relocation services. Id., ¶ 13. Plaintiff’s trademark application for
“GENTLE GIANT MOVING & STORAGE,” which was filed with the U.S. Patent and
Trademark Office in 2013, is pending. Id. at 6-7, ¶ 14.
Plaintiff alleges it became aware that a competing company was using its
GENTLE GIANT and GENTLE GIANT MOVING AND STORAGE trademarks. Id. at 7,
¶ 16. Defendants had registered a domain name at gentlegiantservices.com, which
was used in connection with defendants’ packing, moving, and storage services. Id.,
¶ 17. Defendant Gentle Giant Moving and Storage Inc. incorporated in the state of
Colorado under the name “Gentle giant moving and storage inc” and registered to do
business in the state under the name “jose m esquivel.” Id., ¶ 18. Defendant Empier
Moving and Storage Services Co. incorporated in Colorado under the name “empier
moving & storage services co” and subsequently registered to do business in the state
under the assumed names “empire moving and storage inc” and “gentle giant moving
and storage inc.” Id. at 8, ¶ 20.
In 2016, plaintiff’s counsel sent cease and desist letters to the corporate
defendants,1 demanding they stop using the trademarks GENTLE GIANT, GENTLE
GIANT MOVING AND STORAGE, and any other trademark similar to the GENTLE
1
Plaintiffs allege defendants Esquivel and Friedman are the principal officers of
the Gentle Giant Moving and Storage Inc. and Empier Moving and Storage Services
Co. Docket No. 1 at 7-8, ¶¶ 16, 22.
2
GIANT mark. Id., ¶ 23. Neither corporate defendant responded. Id., ¶ 24. A second
set of letters similarly went unanswered. Id., ¶ 25.
Plaintiff initiated a Uniform Domain-Name Dispute-Resolution Policy (“UDRP”)
proceeding in 2017 regarding defendants’ use of the domain gentlegiantservices.com.
Id. at 9, ¶ 28. Defendants did not respond to the complaint. Id., ¶ 29. While the action
was pending, defendants registered two new domains – ggmovingservices.com and
ggmovingreservations.com – and established a website at ggmovingservices.com.
Id., ¶ 31. The domain arbitrator issued a decision ordering the domain
gentlegiantservices.com to be transferred from defendants to plaintiff. Id., ¶ 29.
Defendants continued to use that domain until the transfer took place. Id., ¶ 30.
Plaintiff alleges that it has received complaints from multiple individuals who
believed they had hired plaintiff but, in reality, had hired defendants and were
unsatisfied with defendants’ services. Id. at 11, ¶ 38. Plaintiff asserts that defendants’
actions have harmed its business reputation and goodwill and have led to lost sales and
profits. Id., ¶ 37.
After plaintiff initiated this lawsuit, defendants were properly served, Docket
No. 7, and filed an answer on December 26, 2017. Docket No. 11. One month later,
defendants’ counsel moved for leave to withdraw from representation. Docket No. 19;
Docket No. 22. The magistrate judge granted the motions. Docket No. 23; Docket No.
29.
The magistrate ordered the corporate defendants to retain new counsel by
3
March 30, 2018. 2 Docket No. 29 at 2. Despite the magistrate judge’s order, no attorney
entered an appearance for the corporate defendants. Docket No. 34 at 2. The
magistrate judge ordered the corporate defendants to appear at a show cause hearing
on May 1, 2018 and show cause why default judgment should not be entered against
them pursuant to Fed. R. Civ. P. 16(f). Id. at 3.
The corporate defendants failed to appear at the show cause hearing. Docket
No. 35 at 1. On May 1, 2018, the magistrate judge recommended that the Court enter
default against the corporate defendants and allow plaintiff to file a motion for default
judgment against those defendants. Docket No. 36 at 3. No party filed an objection to
the Recommendation.
Meanwhile, on April 4, 2018, plaintiff filed a Motion to Compel Responses to
Discovery Requests Propounded Upon Defendants [Docket No. 32], alleging
defendants had failed to respond to its discovery requests. Docket No. 32 at 2-3. On
May 1, 2018, the magistrate judge ordered defendants to respond to plaintiff’s
discovery requests by May 15, 2018. Docket No. 37 at 1. The Order stated:
Defendants shall respond to Plaintiff’s written discovery requests on or
before May 15, 2018. Failure to do so may result in sanctions.
Specifically, Fed. R. Civ. P. 37 lists a variety of sanctions available when a
party must file a motion compelling compliance with discovery obligations,
which includes ‘rendering a default judgment’ or treating the behavior as
contempt of court.
Id. at 1-2 (emphasis in original).
2
“As a general matter, a corporation or other business entity can only appear in
court through an attorney and not through a non-attorney corporate officer appearing
pro se.” Harrison v. Wahatoyas, L.L.C., 253 F.3d 552, 556 (10th Cir. 2001).
4
Defendants failed to respond to plaintiff’s discovery requests or the Court’s order.
On October 23, 2018, plaintiff filed this Motion for Sanctions and Application for Default
Judgment Against Defendants Jose M. Esquivel and Itamar Friedman, Sr. Docket No.
42.3 Plaintiff asks the Court to enter an order granting default judgment against all
defendants under Rules 16(f) and 37(b)(2). Docket No. 42 at 3, 7. It further requests
the Court to award plaintiff damages in the amount of $63,903.47, to award plaintiff
reasonable attorney’s fees, and to enter a permanent injunction enjoining defendants
from infringing on plaintiff’s trademarks. Id. at 8.
II. LEGAL STANDARD
“On motion or on its own, the court may issue any just orders, including those
authorized by Rule 37(b)(2)(A)(ii)-(vii), if a party or its attorney . . . fails to obey a
scheduling or other pretrial order.” Fed. R. Civ. P. 16(f). The Federal Rules of Civil
Procedure further permit a court to sanction a party if the party “fails to obey an order to
provide or permit discovery.” Fed. R. Civ. P. 37(b)(2). Sanctions for either violation
may include “rendering a default judgment against the disobedient party.” Fed. R. Civ.
P. 37(b)(2)(A)(vi).
“Determination of the correct sanction for a discovery violation is a fact-specific
inquiry, . . . and in making such a determination trial courts are accorded broad
discretion.” Gates Rubber Co. v. Bando Chemical Indus., Ltd., 167 F.R.D. 90, 102 (D.
Colo. 1996). “Default judgment is generally considered a harsh sanction that should be
3
Although the motion’s title references just the two individual defendants, the
motion seeks sanctions against all defendants. Docket No. 42 at 1, 7.
5
used only when a party’s noncompliance is due to willfulness, bad faith, or any fault of
the disobedient party, and not when a party is unable to comply with a discovery order.”
Power Places Tours, Inc. v. Free Spirit, No. 16-cv-02725-CMA-KMT, 2017 WL
2718473, at *2 (D. Colo. June 23, 2017). A willful failure to comply is “any intentional
failure as distinguished from involuntary noncompliance. No wrongful intent need be
shown.” Id. (quoting In re Standard Metals Corp., 817 F.2d 625, 628-29 (10th Cir.
1987). Before imposing a default judgment as a sanction, a court should consider
“(1) the degree of actual prejudice to the opposing party; (2) the amount of interference
with the judicial process; (3) the culpability of the litigant; (4) whether the court warned
the party in advance that [default judgment] would be a likely sanction for
noncompliance; and (5) the efficacy of lesser sanctions.” Id. (citing Ehrenhaus v.
Reynolds, 965 F.2d 916, 920-21 (10th Cir. 1992)).
III. ANALYSIS
A. Sanctions Under Rules 16(f) and 37(b)(2)
Plaintiff seeks an entry of default judgment against the corporate defendants
under Rule 16(f) due to their failure to comply with the Court’s order to retain counsel
[Docket No. 29] and against the individual defendants under Rule 37(b)(2) for their
failure to comply with the magistrate judge’s order directing them to respond to plaintiff’s
discovery requests [Docket No. 37]. The Court finds each Ehrenhaus factor favors
entry of default judgment against defendants.
The Court determines plaintiff has been prejudiced by defendants’ failures to
comply with the Court’s orders. Defendants have failed to participate in the litigation for
6
over a year, which has hindered plaintiff’s ability to conduct discovery or otherwise
proceed with the case. Moreover, defendants’ unresponsiveness has caused plaintiff to
file additional motions, and thereby incur additional fees, in an attempt to obtain
discovery. This supports a finding of prejudice to plaintiff. Armstrong v. Swanson, No.
08-cv-00194-MSK-MEH, 2009 WL1938793, at *4 (D. Colo. July 2, 2009).
The Court also concludes that defendants’ conduct has interfered with the
judicial process. After the corporate defendants failed to obey the Court’s order to
retain counsel, the magistrate judge held a hearing on its order to show cause, which
defendants failed to attend. The additional time spent by the magistrate judge on this
case resulting from the defendants’ failure to comply with court orders “reflects time that
could otherwise have been used to advance other cases.” Id. Further, leaving this
unresolved case – which shows no signs of progressing in the near future – on the
docket will continue to interfere with the Court’s management of its docket.
The Court finds that defendants are culpable for their conduct. Defendants were
served and filed an answer, evidencing their awareness of the existence of this case.
Docket No. 7; Docket No. 11. After their attorneys withdrew, defendants failed to
defend the action, despite numerous warnings from the Court that default judgment was
a potential result of their continued inaction – both for the corporate defendants’ failure
to retain counsel and for the individual defendants’ failure to respond to plaintiff’s
discovery request. Docket No. 29 at 2; Docket No. 37 at 2. T he defendants cannot
claim surprise at a default judgment entered as a sanction. Finally, due to defendants’
failure to participate in this case, any lesser sanction would have little to no effect on
7
defendants. Therefore, entry of a default judgment in favor of plaintiff and against
defendants is warranted.4
B. Damages
Plaintiff contends that the Court, should it determine default judgment is
warranted, “must follow the procedures delineated in Fed. R. Civ. P. 55.” Docket No.
42 at 4. Plaintiff argues that, for the purposes of determining damages, defendants are
deemed to have admitted the well-pleaded facts set out in the complaint, citing Olcott v.
Del. Flood Co., 327 F.3d 1115, 1125 (10th Cir. 2003). Olcott stands for the proposition
that a defendant in default admits the plaintiff’s well-pleaded allegations of fact. Id.
Here, default has not been entered, and the Court’s basis f or entering default judgment
is not defendants’ failure to answer or otherwise defend under Rule 55. In fact,
defendants did file an answer and denied plaintiff’s allegations of trademark
infringement. See, e.g., Docket No. 11 at 4, ¶¶ 37, 41; at 5, ¶¶ 48-49, 57, 63; at 6,
¶ 72. The basis for the Court’s entry of default judgment is to sanction defendants for
failure to comply with court orders. Accordingly, the Court does not take plaintiff’s wellpleaded complaint as true for the purpose of determining damages. See Supragenix
LLC v. Garrity, 2016 WL 1171525, at *1 (D. Utah Mar. 24, 2016) (declining to accept
plaintiff’s well-pleaded facts as true when default judgment was warranted for discovery
abuses, as opposed to failure to answer the complaint).
4
Because this default judgment is entered pursuant to Rules 16(f) and 37(b)(2)
rather than Rule 55, “it is not necessary to direct an entry of default prior to the default
judgment.” Colo. Satellite Broadcasting, Inc. v. Ciphermax, Inc., No. 07-cv-01285-REBMJW, 2008 WL 4080041, at *2 (D. Colo. Sept. 2, 2008).
8
1. Injunctive Relief
Plaintiff asks the Court to enter a permanent injunction preventing defendants
from engaging in “any further infringement of [plaintiff’s] trademarks.” Docket No. 42 at
7. The Court has “power to grant injunctions, according to the principles of equity and
upon such terms as the court may deem reasonable, to prevent the violation of any
right of the registrant” of a trademark. 15 U.S.C. § 1116(a). See also Mya Saray, LLC
v. Al-Amir, 831 F. Supp. 2d 922, 943 (E.D. Va. 2011) (court f inding an injunction to be
“the best means to prevent the defendants from future infringement” because
defendants’ failure to comply with discovery orders demonstrated they were unlikely to
cooperate in future suit for damages).
The Lanham Act prohibits the unauthorized use of “any reproduction, counterfeit,
copy, or colorable imitation of a registered mark in connection with the sale, offering for
sale, distribution, or advertising of any goods or services on or in connection with which
such use is likely to cause confusion, or to cause mistake, or to deceive.” 15 U.S.C.
§ 1114(a). To prove trademark infringement, “the moving party must show: (1) the
mark is validly registered; (2) defendants’ use of the mark was unauthorized; and
(3) defendants’ use is likely to cause confusion in the market place concerning the
source or quality of” the service. Big O Tires, Inc. v. Bigfoot 4X4, Inc., 167 F. Supp. 2d
1216, 1222 (D. Colo. 2001).
Plaintiff has established that it owns the registered mark and that defendants’
unauthorized use of its mark was in the course of advertising its moving services.
Docket No. 42-1 at 16-22. It must also demonstrate that defendants’ use of the
9
GENTLE GIANT marks is likely to cause confusion. “[T]he central inquiry in a
trademark infringement case is the likelihood of customer confusion.” Beltronics USA,
Inc. v. Midwest Inventory Distribution, LLC, 562 F. 3d 1067, 1071 (10th Cir. 2009).
“The party alleging infringement has the burden of providing likelihood of confusion.”
Id.
The court considers the following factors when determining whether a likelihood
of confusion exists: (1) “evidence of actual confusion”; (2) “the strength of the
contesting mark”; (3) “the degree of similarity between the competing marks”; (4) “the
intent of the alleged infringer in adopting the contested mark”; (5) the degree of care
that consumers are likely to exercise in purchasing the parties’ products”; and (6) “the
similarity of the parties’ products and the manner in which they market them.” Water
Pik, Inc. v. Med-Systems, Inc., 726 F.3d 1136, 1143 (10th Cir. 2013). No one f actor is
dispositive, and “the final determination of likelihood of confusion must be based on
consideration of all relevant factors.” John Allan Co. v. Craig Allen Co. L.L.C., 540 F.3d
1133, 1138 (10th Cir. 2008).
a. Likelihood of confusion
“Although evidence of actual confusion is not necessary to Lanham Act liability,
actual confusion is persuasive reinforcement of an assertion that confusion is likely.”
Durango Herald, Inc. v. Riddle, 719 F. Supp. 941, 948 (D. Colo. 1988). However, “[d]e
minimis evidence of actual confusion does not establish the existence of . . . [a]
likelihood of confusion.” King of the Mountain Sports, Inc. v. Chrysler Corp., 185 F.3d
1084, 1092 (10th Cir. 1999) (citing Universal Money Ctrs., Inc. v. Am. Tel. & Tel. Co.,
10
22 F.3d 1527, 1535 (10th Cir. 1994) (determining that plaintiff’s evidence of seven
examples of actual confusion did not create a genuine issue of material fact as to
likelihood of confusion); but see Univ. of Ga. Athletic Ass’n v. Laite, 756 F.2d 1535,
1546 (11th Cir. 1985) (finding evidence of ten to fifteen instances of confusion in a oneweek span to be “persuasive evidence of actual confusion”).
“Probable confusion cannot be shown by pointing out that at someplace, at some
time, someone made a false identification.” King of the Mountain Sports, 185 F.3d at
1092 (citing 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition
§ 23:14 (4th ed. 1996)). Evidence of actual confusion, however, “must be put in proper
context.” Overstock.com, Inc. v. Nomorerack.com, Inc., 2014 WL 2946646, at *5 (D.
Utah June 30, 2014). “Evidence of the number of instances of actual confusion must
be placed against the background of the number of opportunities for confusion before
one can make an informed decision as to the weight to be given the evidence.”
HealthONE of Denver, Inc., v. UnitedHealth Grp. Inc., 872 F. Supp. 2d 1154, 1185 (D.
Colo. 2012) (quoting 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair
Competition § 23.14 (4th ed. 2011)). Plaintiff has presented evidence that, over a fourmonth span, at least ten of defendants’ customers made complaints about defendants’
business on plaintiff’s website, by calling plaintiff’s telephone number, and through
other webpages associated with plaintiff’s business. Docket No. 42-1 at 29.
Although this number of confused consumers is small, the context from which
this evidence arose should be considered. These confused customers consist of the
group of people who had hired defendants between late 2017 and early 2018, narrowed
11
to customers who had received poor service, and then further narrowed to only
customers who had elected to complain about that poor service. As the Third Circuit
has recognized, because “many instances [of confusion] are unreported,” it may be
“difficult to find evidence of actual confusion.” Checkpoint Sys., Inc. v. Check Point
Software Tech., Inc., 269 F.3d 270, 291 (3d Cir. 2001). “The ultimate question is
whether” the use of the mark is “likely to cause consumers to believe there is an
affiliation” between the parties. First Sav. Bank F.S.B. v. First Bank Sys., Inc., 101 F.3d
645, 652 (10th Cir. 1996). Here, the fact that customers who had hired defendants
were confused as to which company they hired weighs slightly in favor of finding a
likelihood of confusion.
b. Degree of similarity between the marks
In evaluating similarity of marks, courts “test the degree of similarity between
marks on three levels: sight, sound, and meaning” and will “consider the marks as a
whole as they are encountered by consumers in the marketplace.” Water Pik, 726 F.3d
at 1155 (internal quotation omitted). “The similarities of the marks are given more
weight than the differences.” HealthONE, 872 F. Supp. 2d at 1174. Here, the m arks
are either almost identical or actually identical. Defendants’ company name, “Gentle
Giant Moving and Storage Inc.,” subsumes plaintiff’s existing text mark, “GENTLE
GIANT.” Further, defendants’ company name is identical to plaintiff’s pending
trademark, “GENTLE GIANT MOVING AND STORAGE,” but for defendants’ addition of
the word “Inc.” Docket No. 1 at 12, ¶ 45. “Courts have repeatedly held that the
confusion created by use of the same word as a primary element in a trademark is not
12
counteracted by the addition of another term.” Marker Int’l v. deBruler, 635 F. Supp.
986, 999 (D. Utah 1986), aff’d, 844 F.2d 763 (10th Cir. 1988). See also Coherent, Inc.
v. Coherent Tech., Inc., 736 F. Supp. 1055, 1064 (D. Colo. 1990) (def endant’s addition
of one word to plaintiff’s mark found to be visually similar). The Court finds the high
degree of similarity between the marks weighs in favor of finding a likelihood of
confusion.
c. Degree of similarity between the parties’ businesses
Moreover, the similarity of the parties’ businesses also favors finding a likelihood
of confusion. “The greater the similarity between the products and services, the greater
the likelihood of confusion.” Universal Money Ctrs., 22 F.3d at 1532. The parties offer
identical services, as both are in the business of providing moving, relocation, and
storage services. Docket No. 1 at 4, ¶ 9 and at 7, ¶ 17. Moreov er, both companies
conduct or conducted business in the state of Colorado. Docket No. 1 at 7-8, ¶¶ 18-21
and 11, ¶ 39; Docket No. 42-1 at 16. T hat the parties provide the same services in the
same place supports a finding of a likelihood of confusion between the marks.
d. Other factors
Although the above factors favor a finding of likelihood of confusion, there is no
evidence in the record as to the strength of plaintiff’s mark, nor does plaintiff present
any evidence as to defendants’ intent in choosing its mark or as to consumers’ degree
of care in selecting the parties’ services. Because plaintiff bears the burden of showing
likelihood of confusion, Beltronics USA, 562 F. 3d at 1071, the Court finds these three
factors weigh against a finding of likelihood of confusion.
13
e. Injunctive relief is appropriate
“[T]he determination of a likelihood of confusion requires more than counting the
number of factors in favor of each side.” Water Pik, Inc. v. Med-Systems, Inc., 848 F.
Supp. 2d 1262, 1279 (D. Colo. 2012), aff’d, 726 F.3d 1136, 1143 (10th Cir. 2013). “It
requires the Court to take into account the proper weight that each factor should be
assigned.” Id. The similarity between the marks and any evidence of actual confusion
are “given great weight.” Id.; see also King of the Mountain Sports, 185 F.3d at 1091
(noting that similarity of the marks is the most important factor); Hi-Tech Pharm., Inc. v.
Herbal Health Prod., Inc., 132 F. App’x. 348, 350 (11th Cir. 2005) (per curiam)
(unpublished) (type of mark and actual confusion are “most weighty” considerations)
(citation omitted).
Although plaintiff has not presented evidence of three of the six factors used to
determine likelihood of confusion, the Court gives greater weight to those factors for
which there is evidence and finds that plaintiff has met its burden of establishing a
likelihood of confusion between the marks. The marks at issue are essentially identical,
which provides strong evidence of a likelihood of customer confusion. Further, the
parties provide identical services, which also heavily weighs towards a likelihood of
confusion. Finally, plaintiff presented evidence of that confusion in the form of
customers, although not many, who were confused as to which of the two companies
they had hired. The Court finds a likelihood of confusion between the marks and finds
injunctive relief appropriate.
When entering an injunction, the Court is required to “describe in reasonable
14
detail – and not by referring to the complaint or other document – the act or acts
restrained or required.” Fed. R. Civ. P. 65(d)(1)(C). Plaintiff has not set out with
specificity the scope of the injunctive relief it is requesting. It seeks an injunction
permanently enjoining defendants from infringing upon the GENTLE GIANT marks by
“directly or indirectly engaging in any activity constituting an infringement of the
GENTLE GIANT Marks, or of Gentle Giant Moving Co., Inc.’s rights in, or right to use or
exploit, the GENTLE GIANT Marks,” or by “directly or indirectly using any false
designation of origin or false or misleading representation that can or is likely to lead the
trade or public or individuals erroneously to believe that any service, and/or other item
has been manufactured, assembled, produced, distributed, displayed, sponsored,
approved or authorized by . . . Gentle Giant Moving Co., Inc., when such is not true in
fact,” or “assisting, aiding or abetting any other person or business entity in engaging in
or performing any of the activities listed above.” Docket No. 42 at 8, ¶ 3.
“To satisfy Rule 65(d), the party enjoined must be able to ascertain from the four
corners of the order precisely what acts are forbidden.” IDG USA, LLC v. Schupp, 416
F. App’x. 86, 88 (2d Cir. 2011) (unpublished). Plaintiff’s request that defendants be
enjoined from “directly or indirectly engaging in any activity constituting an infringement”
of its marks does not give defendants reasonable notice as to which specific acts would
prohibited. Because plaintiff does not request sufficiently specific injunctive relief, this
request is presently too general for the Court to enter a permanent injunction under
Rule 65(d)(1).
15
2. Disgorgement of Profits
Plaintiff also seeks disgorgement of defendants’ profits, generated as a result of
their trademark infringement, in the amount of $63,903.47. Docket No. 42 at 8. W hen
a trademark violation has been established, plaintiffs are entitled to recover “(1)
defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the
action.” 15 U.S.C. § 1117(a). Disgorgement of profits “is truly an extraordinary remedy
and should be tightly cabined by principles of equity.” Western Diversified Serv., Inc. v.
Hyundai Motor Am., Inc., 427 F.3d 1269, 1274 (10th Cir. 2005). T o recover
disgorgement of profits under the Lanham Act, “plaintiffs must show either actual
damages or willful action on the part of the defendant.” Klein-Becker USA, LLC v.
Englert, 711 F.3d 1153, 1161 (10th Cir. 2013). Further, “because disg orgement of
profits is an equitable remedy, the district court must weigh principles of equity before
awarding disgorged profits.” Id. (internal quotation omitted).
Plaintiff does not seek recovery of actual damages. Accordingly, to recover
disgorgement of defendants’ profits, plaintiff must show willful action on the part of
defendants. “[T]he willfulness required to support an award of profits in the absence of
actual damages is the intent to benefit from the goodwill or reputation of another.”
Western Diversified Serv., 427 F.3d at 1274. “[D]eliberate adoption of a similar mark
may lead to an inference of an intent to pass off goods as those of another.” Id. at
1275. But intent “requires something more than ‘indifference’ or a mere ‘connection.’ It
is a conscious desire.” Id. at 1274.
Plaintiff alleges that its counsel sent Gentle Giant Moving & Storage Inc. and
16
Esquivel a cease and desist letter demanding that they cease use of the GENTLE
GIANT trademarks, but that defendants were unresponsive. Docket No. 1 at 8, ¶¶ 2324. Plaintiff further alleges that it then instituted a UDRP proceeding and, thereafter,
defendants registered two new domains and a website at ggmovingservices.com. Id. at
9-10, ¶ 31. Despite the new website’s more general domain, the new website located
at ggmovingservices.com was substantially identical to defendants’ old
gentlegiantservices.com website, shifting only from operating under the name “Gentle
Giant Services” to “Gentle Giant Moving and Storage.” See Docket No. 42-1 at 16-22.
Otherwise, it appears that defendants, in response to the UDRP proceeding, continued
to operate the same website and offer the same services merely under a different
domain name.
The Court is satisfied that defendants’ actions demonstrate a willful intent to
benefit from the goodwill or reputation of plaintiff’s business. That defendants – after
learning of plaintiff’s infringement allegations – moved their website to a more generic
domain name, but continued to use the Gentle Giant nam e, coupled with their
unresponsiveness to the cease and desist letters and the UDRP proceeding , suggests
an intent to conceal their actions or to otherwise deceive. Further, as stated above, the
marks in question are essentially identical, and the fact that defendant used these
identical marks in connection with the same type of services that plaintiff offers and was
targeting the same market as plaintiff targets also supports an inference of willful action.
See Western Diversified, 427 F.3d at 1277 (finding inference of intent to benefit from
plaintiff’s goodwill where defendant appropriated two of plaintiff’s identical marks that
17
referred to substantially similar products aimed at the same group of consumers); see
also Klein-Becker, 711 F.3d at 1162 (finding that disgorgement of profits was warranted
based on inference of willfulness arising from defendant’s appropriation of plaintiff’s
identical registered mark). Plaintiff has demonstrated that defendants acted willfully in
their infringement.
The Court also finds that equitable considerations support an award of
disgorgement of profits. In determining whether disgorgement of profits is warranted,
the Tenth Circuit has considered whether the plaintiff lost sales due to the trademark
infringement, whether the defendant benefitted from any goodwill associated with the
trademark, and whether there was consumer confusion or deception caused by the
infringement. Estate of Bishop v. Equinox Int’l Corp., 256 F.3d 1050, 1055 (10th Cir.
2001). As set out above, plaintiff has produced evidence demonstrating customer
confusion resulting from defendants’ infringement. Further, such customer confusion
evidences potential lost sales of plaintiffs. Cf. Klein-Becker USA, LLC v. Englert, 2011
WL 147893, at *11 (D. Utah Jan. 18, 2011) aff’d, 711 F.3d 1153 (10th Cir. 2013)
(“While it is not certain that [plaintiff] would have sold products to every one of the
[defendant’s] customers through [plaintiff’s] authorized resellers, the infringement likely
diverted some customers away from authorized resellers, causing [plaintiff] to lose
sales.”). And while it is unclear from the record whether defendants benefitted from
plaintiff’s goodwill, defendants at least intended to receive such benefit from their
infringement. The Court also considers defendants’ repeated failure to respond to
plaintiff’s cease and desist letters, the UDRP proceeding, and this lawsuit, which
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demonstrates that plaintiff’s ability to otherwise recover from defendants as a result of
their infringement may be limited. In sum, the Court finds that equitable considerations
support disgorgement of defendants’ profits here.
In determining the appropriate amount of the award, the plaintiff “shall be
required to prove defendant’s sales only; defendant must prove all elements of cost or
deduction claimed.” 15 U.S.C. § 1117(a). “Once the plaintiff demonstrates gross
profits, they are presumed to be the result of the infringing activity.” Klein-Becker, 2011
WL 147893, at *11 (quotation marks omitted). “While the amount of defendant’s sales
must be established with ‘reasonable certainty,’ ‘courts may engage in some degree of
speculation in computing the amount of damages, particularly when the inability to
computer them is attributable to the defendant’s wrongdoing.’” Id. (quoting Australian
Gold, Inc. v. Hatfield, 436 F.3d 1228, 1241 (10th Cir. 2006)).
Plaintiff seeks $63,903.47 of defendants’ profits. Docket No. 42 at 5. This total
was computed based on “56 pages of documents Defendants sent to [plaintiff] along
with Defendants’ initial disclosures,” Docket No. 42-1 at 2-3, ¶ 10, and is based on
payments made for defendants’ services from 21 customers. Id. at 23. Plaintiff’s
counsel submitted an affidavit stating that, “[b]ecause Defendants have not otherwise
cooperated with discovery, [plaintiff does] not know whether these disclosures are
complete.” Id. at 2-3, ¶ 10. Plaintiff has also submitted two relocation estimates it
received from defendants as proof of two of the 21 customer payments it seeks in its
request, id. at 24, 27, and plaintiff’s counsel has declared under penalty of perjury that
“the documents disclosed by Defendants . . . reflect payments from customers to
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Defendants operating under the trademark GENTLE GIANT, in the amount of
$63,903.47.” Id. at 3, ¶ 11.
The Court finds that plaintiff has met its burden of showing defendants’ sales
with reasonable certainty. Plaintiff has attested to the fact that it has received evidence
of customer payments received by defendants operating under the infringed trademark
and has provided documentation of two of those payments. Id. at 24, 27. Defendants,
having failed to respond to plaintiff’s motion or participate meaningfully in discovery,
have not proved any costs or deductions to be taken from plaintiff’s proposed total. As
a result, plaintiff is entitled to disgorgement of defendants’ profits in the amount of
$63,903.47.
3. Attorney’s Fees
Finally, plaintiff also requests the Court enter an award of attorney’s fees in favor
of plaintiff on the grounds that this is an exceptional case under 15 U.S.C. § 1117(a).
Section 1117(a) provides that “[t]he court in exceptional cases may award reasonable
attorney fees to the prevailing party.” An “exceptional case” occurs “when a trademark
infringement is malicious, fraudulent, deliberate, or willful.” United Phosphorus, Ltd. v.
Midland Fumigant, Inc., 205 F. 3d 1219, 1232 (10th Cir. 2000). Because plaintif f has
established that defendants’ infringement was willful, plaintiff is entitled to recover its
reasonable attorney’s fees accrued in this action.
IV. CONCLUSION
At present, although the Court finds plaintiff is entitled to entry of a default
judgment under Rules 16(f) and 37(b)(2) and to injunctive relief, the Court is unable to
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determine the appropriate scope of that injunctive relief. It is therefore
ORDERED that plaintiff’s Motion for Sanctions and Application for Default
Judgment Against Defendants Jose M. Esquivel, and Itamar Friedman, Sr. [Docket No.
42] is GRANTED IN PART, and DENIED WITHOUT PREJUDICE IN PART as follows:
It is (1) GRANTED to the extent it seeks entry of a default judgment pursuant to
Federal Rules of Civil Procedure 16(f) and 37(b)(2); (2) GRANTED to the extent it
seeks an award of disgorgement of defendants’ profits and attorney’s fees under 15
U.S.C. § 1117(a); and (3) DENIED WITHOUT PREJUDICE to the extent it seeks entry
of a permanent injunction against defendants. It is further
ORDERED that any additional motion for default judgment on the issue of
injunctive relief shall be filed on or before September 20, 2019. If no additional motion
is filed, default judgment as to liability shall enter in favor of plaintiff Gentle Giant
Moving Co., Inc. and against defendants Gentle Giant Moving and Storage, Inc., Jose
M. Esquivel, Itamar Friedman, Sr., and Empier Moving and Storage Services Co. It is
further
ORDERED that defendants shall be liable for disgorgement of $63,903.47,
representing profits gained as a result of the conduct alleged in the Complaint [Docket
No. 1]. It is further
ORDERED that the Order and Recommendation of the magistrate judge [Docket
No. 36] is not accepted as MOOT.
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DATED September 4, 2019.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
Chief United States District Judge
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