World Chess Museum, Inc. v. World Chess Federation, Inc. et al

Filing 91

DEFAULT JUDGMENT in favor of World Chess Museum, Inc. against World Chess Federation, Inc.. Signed by Judge Robert C. Jones on 9/24/15. (Copies have been distributed pursuant to the NEF - TR)

Case 2:13-cv-00345-RCJ-GWF Document 86-1 Filed 08/07/15 Page 1 of 11

UNITED STATES DISTRICT COURT
DISTRICT OF NEVADA

WORLD CHESS MUSEUM, INC. d/b/a
WORLD CHESS HALL OF FAME
Plaintiff,
vs.
WORLD CHESS FEDERATION, INC.,
and
STAN VAUGHAN, Individually
Defendants.

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Case No. 2:13-CV-00345-RCJ-GWF

JUDGMENT BY DEFAULT
The Court, following entry of default by the Clerk of Court in light of the Court’s Order
(Doc. 84) granting Plaintiff’s Motion for Entry of Default (Doc. 82), and upon consideration of
Plaintiff’s Motion for Entry of Default Judgment, enters the following judgment by default in favor
of Plaintiff World Chess Museum d/b/a World Chess Hall of Fame (“WCHOF”), and against
Defendant World Chess Federation, Inc. (“WCF”):
A.

The Court finds the following well-pleaded facts established on account of WCF’s default:
1.

WCHOF is the owner of all right, title and interest in, to, and under the WORLD

CHESS HALL OF FAME® mark, which Plaintiff’s predecessor in interest first began
using at least as early as April 2001. Plaintiff uses the WORLD CHESS HALL OF
FAME® mark on and in connection with a variety of non-profit services and goods,

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including, but not limited to, exhibition services, retail services, and promotional
merchandise such as home goods and glassware.
2.

U.S. Chess Trust, Plaintiff’s predecessor in interest, filed with the U.S. Patent and

Trademark Office an application for the WORLD CHESS HALL OF FAME® mark on
August 13, 1999, and the WORLD CHESS HALL OF FAME® mark was registered on
March 19, 2002 (U.S. Registration No. 2,551,246). Plaintiff World Chess Hall of Fame is
the record owner of that mark and the attendant registration. Plaintiff World Chess Hall
of Fame also owns a registration for the U.S. CHESS HALL OF FAME AND
MUSEUM® mark (U.S. Registration No. 2,472,756).
3.

Plaintiff and its predecessor in interest have continuously used the WORLD CHESS

HALL OF FAME® mark and registration in interstate commerce on and in connection
with the provision of exhibition services and related services for over ten years, since at
least as early as April 2001.
4.

The WORLD CHESS HALL OF FAME® mark has been used, and continues to be

used, by World Chess Hall of Fame among the relevant consuming public and consumers,
to identify the source or origin of World Chess Hall of Fame’s high-quality non-profit
services and, further, to distinguish such high-quality non-profit services from products
and services offered by its competitors and others.
5.

WCHOF has expended, and continues to expend, a substantial amount of resources,

money, time and effort promoting, marketing, advertising and building consumer
recognition and goodwill in its valuable non-profit services and operations under and in
connection with its valuable and well-known service marks, including, but not limited to,
its WORLD CHESS HALL OF FAME® mark. As a result, the WORLD CHESS HALL
OF FAME® mark has become well-known, associated with Plaintiff’s services and those
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of its predecessor in interest, and has acquired substantial distinctiveness, goodwill, and
secondary meaning among the relevant consuming public and consumers.
6.

WCHOF and its predecessor in interest are the senior users of the WORLD CHESS

HALL OF FAME® mark, and have long and established priority over any rights that
WCF may allege in or to Plaintiff’s WORLD CHESS HALL OF FAME® mark.
WCHOF’s continued use of the long-established WORLD CHESS HALL OF FAME®
mark does not infringe any of the actual or imagined rights of WCF, including as to the
“World Chess Federation” and “World Chess Federation Hall of Fame” phrases/marks
and “all goodwill appurtenant thereto,” as alleged in WCF’s counterclaim.
7.

Despite bare assertions of prior rights, and demonstrably false

representations, WCF has failed to provide any evidence showing trademark rights in
WORLD CHESS FEDERATION HALL OF FAME that may be superior to Plaintiff’s
rights in its WORLD CHESS HALL OF FAME® mark.
8.

Consumers, potential customers, and the relevant public are likely to be confused,

and likely have already been actually confused, between Plaintiff’s WORLD CHESS
HALL OF FAME® mark and WCF’s use of WORLD CHESS FEDERATION HALL
OF FAME, and are also confused as to the existing rights of WCHOF in view of false
and misleading statements of Defendants referenced in the Amended Complaint.
9.

These wrongful acts have been knowing and willful.

10. WCF’s course of conduct with respect to the trademarks at issue constitute, at least,
trademark infringement, unfair competition, and false advertising.
11.

Cancellation of the registration for “World Chess Federation”, Reg. No. 3695083,

registration date October 13, 2009, owned by “World Chess Federation, Inc.” as shown in
the records of the U.S. Patent and Trademark Office (“WCF Registration”/ “the WCF
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Registered Mark”) which WCF has asserted against WCHOF, is warranted on the grounds
that: the WCF Registered Mark is likely to cause confusion with WORLD CHESS
FEDERATION, previously used extensively in this country, which has acquired
distinctiveness as a source indicator for FIDE, and which mark WCHOF is entitled to use
in reference to its WORLD CHESS HALL OF FAME® services and FIDE’s activities in
connection with those services; (b) the WCF Registered Mark is merely descriptive and
has not acquired distinctiveness as a source indicator for WCF; (c) the WCF Registered
Mark has not been used in rendering services in interstate commerce; and (d) upon
information and belief, the applicant well knew of the prior use by FIDE of WORLD
CHESS FEDERATION, but nonetheless falsely and fraudulently claimed to be the
owner of the WORLD CHESS FEDERATION mark, to have the right to use the mark
in commerce, and that no other entity had the right to use the mark of any confusingly
similar variation thereof in commerce.
12. The signatory of the declaration in support of the WCF Registration (Stan Vaughan)
has stated that he was himself a member of the United States Chess Federation as of
December 15, 1997, and therefore could not have been ignorant of that entity’s
membership in FIDE and FIDE’s use of WORLD CHESS FEDERATION long prior to
WCF’s purported adoption of the mark in 1992 and WCF’s application to register it in
December 2008.
13. That the signatory of the declaration in support of the WCF Registration knew of
FIDE’s rights in WORLD CHESS FEDERATION at the time of seeking registration is
further established by Defendants’ statement showing that WCF was created to compete
with FIDE.

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14. Cancellation of the Nevada State Registration for “World Chess Federation Hall of
Fame,” Nevada No. E0215832012-6, filed on April 12, 2012 and registered on April 25,
2012 (the “Nevada Registration”/the “Nevada Registered Mark”) , which is asserted in
WCF’s counterclaim to be owned by it, is warranted on the grounds that (a) the Nevada
Registered Mark is likely to cause confusion with WORLD CHESS HALL OF FAME®,
previously used in commerce and registered with the U.S. Patent and Trademark Office
and which has acquired distinctiveness as a source indicator for WCHOF; (b) the Nevada
Registered Mark is likely to cause confusion with WORLD CHESS FEDERATION,
previously used extensively in this country and which has acquired distinctiveness as a
source indicator for FIDE, and which mark WCHOF is entitled to use in reference to its
WORLD CHESS HALL OF FAME® services and FIDE’s activities in connection with
those services; (c) the Nevada Registered Mark has been abandoned; (d) the Nevada
Registered Mark was granted improperly; and (e) the Nevada Registration was obtained
fraudulently.
B.

The established facts constitute:
a.

Trademark infringement by WCF under Section 32 of the Lanham Act

(Count I of the Complaint);
b.

Unfair competition and false designation of origin by WCF under Section

43(a) of the Lanham Act (Count II of the Complaint);
c.

State statutory and common law trademark infringement and unfair

competition by WCF (Count III of the Complaint);
d.

State statutory and common law trademark dilution by WCF (Count IV of

the Complaint);

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e.

Grounds for cancellation of the federal registration for “World Chess

Federation,” as set forth above;
f.

Grounds for cancellation of the Nevada registration for “World Chess

Federation Hall of Fame,” as set forth above;
g.

False advertising by WCF under the Lanham Act (Count IX of the

Complaint); and
g.
C.

Grounds for entry of declaratory relief.

There exists between the WCHOF and WCF an actual case or controversy of sufficient

immediacy and reality to warrant declaratory relief.
D.

Entry of a default judgment is committed to the sound discretion of the district court.

Madsen v. Bumb, 419 F.2d 4, 6 (9th Cir. 1969). The case law provides seven factors for a court to
consider in exercising its discretion to enter default judgment: (a) the possibility of prejudice to the
plaintiff, (b) the merits of the plaintiff’s substantive claim, (c) the sufficiency of the complaint, (d)
the sum of money at stake in the action, (e) the possibility of dispute concerning material facts, (f)
whether the default was due to excusable neglect, and (g) the strong policy underlying the Federal
Rules of Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir.
1986). The court takes the well-pleaded factual allegations in the non-defaulting party’s complaint as
true, except as to the amount of damages. Televideo Sys., Inc. v. Heidenthal, 862 F.2d 915, 917-18 (9th
Cir. 1987).
a. Possibility of Prejudice to the Plaintiff
The first factor favors default judgment where the plaintiff will suffer prejudice if default
judgment is not entered. Carpet Cops, Inc. v. The Carpet Cops, LLC, Case No. 3:11-cv-561-RCJ-VPC,
2012 WL 3929783, at *2 (D. Nev. Sept. 6, 2012). A plaintiff will suffer prejudice if its ability to
pursue its claim will be hindered. Id.; Falk v. Allen, 739 F.2d 461, 462 (9th Cir. 1984). Here, WCF
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has not retained counsel as ordered by the Court (and it has failed to timely respond to the
Amended Complaint). WCHOF therefore cannot pursue its claims unless default judgment is
entered.
b. Merits of the Claims and Sufficiency of the Complaint
The second and third factors favor default judgment if the complaint alleges sufficient facts
to state a claim upon which relief may be granted, in accordance with Fed. R. Civ. P. 8(a). Carpet
Cops, Inc., 2012 WL 3929783, at *3. The complaint need only plead sufficient facts to state a claim to
relief that is plausible on its face. Id. (and cases cited therein). The facts set forth above, established
on account of WCF’s default, establish that WCHOF is entitled to the relief sought.
c. Sum of Money at Stake
The fourth factor weighs against default judgment when there is a substantial amount of
money involved. Eitel, 782 F.2d at 1471. Here, WCHOF does not seek monetary damages by its
motion for default judgment. Inasmuch as there is no money at stake, this factor favors default
judgment.
d. Possibility of a Dispute Concerning Material Facts
As shown above, WCHOF has alleged sufficient facts to establish its claims. Well-pleaded
allegations are admitted by WCF’s failure to respond to the Amended Complaint, and its failure to
retain counsel to continue to defend this matter. Lagos v. Monster Painting, Inc., Case No. 2:11-cv-331LRH-GWF, 2013 WL 5937661, at *4 (D. Nev. Nov. 5, 2013). Defendant WCF has had ample
opportunity to contest the facts alleged in the Amended Complaint, and has failed to do so. See id.
e. Excusable Neglect
The sixth factor favors default judgment where the nonresponsive party’s default was not
due to excusable neglect. Carpet Cops, Inc., 2012 WL 3929783, at *6. Here, Defendant WCF was
served with the Amended Complaint on October 21, 2013, and with the Order granting leave to
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amend on December 17, 2013. Furthermore, on May 20, 2015, Defendant WCF was served with
the Court’s order directing it to retain new counsel by June 22, 2015 or face default. WCF failed to
retain counsel by that date, and the Clerk entered default against it on July 29, 2015. Defendant
WCF has still not retained new counsel to appear in this case, and has still not responded to the
Amended Complaint. This factor favors granting default judgment. See id.
f. Policy Favoring Decision on the Merits
Cases should be decided on the merits when reasonably possible. Id. “However, the mere
existence of Fed. R. Civ. P. 55(b) indicates that this preference, standing alone, is not dispositive.”
Pepsico, Inc. v. California Security Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002) (internal quotations
omitted). Moreover, a defendant’s failure to answer a complaint or to otherwise defend the action
“makes a decision on the merits impractical, if not impossible.” Id. “Under Fed. R. Civ. P. 55(a),
termination of a case before hearing the merits is allowed whenever a defendant fails to defend an
action.” Id. Accordingly, default judgment will be entered against Defendant WCF.
E.

The Court does hereby:
1. Enter a permanent injunction restraining Defendant WCF and its employees,
partners, officers, directors, agents, representatives, attorneys, successors, and assigns, and all
persons in active concert or participation with any of them, from using the WORLD
CHESS HALL OF FAME® mark and/or any confusingly similar variations thereof
(including but not limited to “WORLD CHESS FEDERATION HALL OF FAME”), in
any manner or form, or any other reproduction, counterfeit, copy or colorable imitation of
such mark, either alone or in combination with any other designation, on or in connection
with any advertising, marketing, promotion, business, manufacture, distribution, offer for
sale, sale, and provision of Defendant WCF’s services or goods, including filing applications
with the U.S. Patent and Trademark Office or other governmental entities to register such
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marks and/or registering domain names incorporating such marks; from otherwise
infringing and/or diluting the distinctive nature of Plaintiff’s WORLD CHESS HALL OF
FAME® mark; and from otherwise competing unfairly with WCHOF.
2. Order Defendant WCF to destroy and/or obliterate from any and all labels, signs,
brochures, advertisements, stationery, leaflets, and other items in its possession, or under its
control, upon which appear or reflect the WORLD CHESS HALL OF FAME® mark,
and/or any confusingly similar variations thereof (including but not limited to “WORLD
CHESS FEDERATION HALL OF FAME”), in any manner or form, or any other
reproduction, counterfeit, copy, or colorable imitation of Plaintiff’s WORLD CHESS HALL
OF FAME® mark, either alone or in combination with any designation, and all plates,
molds, matrices and other means of making the same;
3. Adjudge that Defendant WCF has infringed and willfully infringed Plaintiff’s
WORLD CHESS HALL OF FAME® mark;
4. Adjudge that Defendant WCF has committed unfair competition and false
designation of origin by using Plaintiff’s WORLD CHESS HALL OF FAME® mark, and
that such acts are willful;
5. Adjudge that Defendant WCF has diluted and willfully diluted Plaintiff’s
WORLD CHESS HALL OF FAME® mark;
6. Order Defendant WCF to cease further diluting and infringing the WORLD
CHESS HALL OF FAME® mark and damaging Plaintiff’s goodwill;
7. Declare that WCHOF’s use of the WORLD CHESS HALL OF FAME® mark
does not infringe the purported rights of WCF including as to the “World Chess Federation”
and “World Chess Federation Hall of Fame” phrases/marks and “all goodwill appurtenant

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thereto” and does not constitute trademark infringement, false designation of origin, false
advertising, or unfair competition, or otherwise violate 15 U.S.C. §§ 1114 or 1125;
8. Declare that, because Plaintiff’s predecessor’s earlier use of the WORLD CHESS
HALL OF FAME® mark establishes that Plaintiff has priority over Defendant WCF’s later
alleged use of the mark WORLD CHESS FEDERATION HALL OF FAME, Defendant
WCF is violating and infringing Plaintiff’s rights in, to, and under its WORLD CHESS
HALL OF FAME® mark;
9. Declare that World Chess Hall of Fame has the right to continue use of its
WORLD CHESS HALL OF FAME® mark in connection with exhibition services, retail
services, promotional merchandise, and any zones of natural expansion for related goods
and/or services, throughout the United States;
10.

Cancel the registration for “World Chess Federation”, Reg. No. 3695083,

registration date October 13, 2009;
11.

Cancel the Nevada State Registration for “World Chess Federation Hall of

Fame,” Nevada No. E0215832012-6, filed on April 12, 2012 and registered on April 25,
2012;
12.

Dismiss all claims against Defendant Stan Vaughan, without prejudice,

pursuant to Fed. R. Civ. P. 41(a)(2);
13.

Find that there is no just reason to delay in entering this judgment as to fewer

than all defendants, as instant relief is directed to WCF, largely as to allegations made also by
it in its counterclaim; and no monetary relief is requested by WCHOF, or awarded through
this judgment; and
14.

Retain jurisdiction over this cause as pertains to WCF for the purpose of

enforcing the terms of this Judgment, if and as necessary.
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SO ORDERED:

_____________________________________
United States District Judge

September 24, 2015
DATE: _________________________

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