Chanel, Inc. v. Cong et al
Filing
15
ORDER granting 12 Motion for Default Judgment. Signed by Judge Samuel H. Mays, Jr on 12/08/2011.
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
CHANEL, INC.,
)
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
HUANG CONG, and DOES 1-10,
Defendants.
No. 10-2086
ORDER GRANTING PLAINTIFF’S MOTION FOR ENTRY OF FINAL DEFAULT
JUDGMENT
Before
August
25,
the
Court
2011
is
Motion
Against Defendant.
Plaintiff
for
of
Final
Inc.’s
(“Chanel”)
Default
Judgment
(See Pl.’s Mot. for Entry of Final Default
J. Against Def., ECF No. 12.)
not responded.
Entry
Chanel,
Defendant Huang Cong (“Cong”) has
For the following reasons, Plaintiff’s Motion is
GRANTED.
I.
Background 1
Chanel is a New York corporation with its principal place
of business in New York, New York.
(Compl. ¶ 2, ECF No. 1.)
Chanel manufactures and distributes a wide range of high-quality
1
The facts in this Part come from the factual allegations in Chanel’s
Complaint, which are deemed admitted due to Defendant’s default. See Antoine
v. Atlas Turner, Inc., 66 F.3d 105, 110-11 (6th Cir. 1995) (citations
omitted).
luxury
goods
around
the
world.
(Id.)
In
Shelby
County,
Tennessee, Chanel operates boutiques and maintains a warehouse
used to fulfill its e-commerce orders.
Chanel
owns
a
number
of
(Id.)
federally-registered
trademarks,
including variations on the word “Chanel,” the word “J12,” and a
monogram consisting of a letter “C” interlocked with another,
opposite-facing letter “C” (collectively the “Chanel Marks” or
“Marks”). 2
(Id. ¶¶ 2, 9; Hahn Decl. ¶ 4, ECF No. 12-2.)
The
Chanel Marks are registered in International Classes 9, 14, 18,
20,
and
25
Chanel’s
and
luxury
are
used
goods,
in
manufacturing
including
its
and
handbags
distributing
and
watches.
(Compl. ¶¶ 9-10.)
The
Chanel
and goodwill.
Marks
and
has
Marks
symbolize
(Compl. ¶ 11.)
invested
Chanel’s
quality,
reputation,
Chanel has never abandoned the
substantial
time,
resources developing and promoting them.
money,
and
other
(Id. ¶¶ 11-12.)
In
the United States, Chanel has used, advertised, and promoted the
Chanel Marks in association with its luxury goods, carefully
2
Chanel owns the following federally registered trademarks at issue in this
case: CHANEL (registered May 1, 1956 as number 0,626,035), CHANEL (registered
November 10, 1970 as number 0,902,190), CHANEL (registered January 19, 1971
as number 0,906,262), CHANEL (registered June 15, 1971 as number 0,906,139),
CHANEL (registered March 13, 1973 as number 0,955,074), CHANEL (registered
March 13, 1973 as number 0,955,074), CC Monogram (registered June 7, 1983 as
numbers 1,241,264 and 1,241,265), CC Monogram (registered January 15, 1985 as
number 1,314,511), CHANEL (registered July 9, 1985 as number 1,347,677),
CHANEL (registered December 19, 1989 as number 1,571,787), CHANEL (registered
November 17, 1992 as number 1,733,051), J12 (registered April 9, 2002 as
number 2,559,772), Partial CC Monogram (registered December 13, 2005 as
number 3,025,934), CHANEL (registered August 22, 2006 as number 3,133,139).
(See Compl. ¶ 9) (collecting trademarks).
2
monitoring their uses.
(Id. ¶ 13.)
As a result, consumers
readily identify merchandise bearing the Marks as high-quality
merchandise
sponsored
Accordingly,
the
and
approved
Chanel
Marks
identifiers of high quality.
Cong
and
individuals
Does
and/or
1-10
by
have
(Id.
(Id.
secondary
¶
14.)
meaning
as
“Defendants”)
are
¶ 15.)
(collectively,
business
Chanel.
the
entities.
(Id.
¶
3.)
The
Defendants, individually and jointly, maintain fully operational
websites operating under various domain names (collectively, the
“Subject Domain Names”). 3
(Id. at 1, ¶ 4.)
The Chanel Marks
have never been assigned or licensed to the Defendants for use
on any of the websites operating under the Subject Domain Names.
(See
Compl.
Defendants
¶
10.)
Through
advertise,
offer,
the
sell,
products bearing the Chanel Marks.
Subject
and
Domain
distribute
Names,
the
counterfeit
(See id. ¶¶ 3, 4, 18, 19.)
The Defendants’ products bear exact copies of the Chanel Marks
in the same stylized fashion as genuine Chanel products, but the
quality of the Defendants’ products is substantially different.
(Id. ¶ 17.)
On February 5, 2010, Chanel brought this action against the
Defendants.
actions
(See
constitute
Compl.)
(1)
Chanel
alleges
counterfeiting
3
and
that
Defendants’
infringement
The Subject Domain Names are: cheap-chanel-shopping.com, chanel-guccilouisvuitton.com, bluestonetrade.com, knockoffnamebag.com,
sunglassesmerchant.com, replicabagsmerchant.com, and handbagsjobber.com.
(See Compl. at 1.)
3
under
Section 32 of the Lanham Act, 15 U.S.C. § 1114, (see Compl. ¶¶
30-35); (2) false designation of origin under Section 43(a) of
the Lanham Act, 15 U.S.C. § 1125(a), (see id. ¶¶ 36-41); and (3)
cyberpiracy
under
the
Anticybersquatting
Consumer
Protection
Act, 15 U.S.C. § 1125(d), (see id. ¶¶ 44-48).
Chanel filed a Motion to Authorize Alternate Service of
Process on Defendant Pursuant to Federal Rule of Civil Procedure
4(f)(3) of the Federal Rules of Civil Procedure on May 14, 2010.
(See
Chanel,
Inc.’s
Mot.
to
Process on Def., ECF No. 4.)
November 4, 2010.
Process
on
Def.
Authorize
Alternate
Services
of
The Court granted that motion on
(See Order Authorizing Alternate Service of
Pursuant
4(f)(3), ECF No. 7).
to
Federal
Rule
of
Civil
Procedure
Chanel served Cong with copies of the
Summons and Amended Complaint by e-mail on November 5, 2010.
(See Proof of Service ¶ 3, ECF No. 8-1; Morrow Decl. ¶ 3, ECF
No.
9-1.)
Over
twenty
days
have
elapsed
effective, and Cong has not responded.
since
service
was
(See Morrow Decl. ¶ 4.)
On January 7, 2011, the Clerk entered default against Cong.
Fed. R. Civ. P. 55(a); (Entry of Default, ECF No. 10).
See
Chanel
filed the Motion for Entry of Final Default Judgment now before
the Court on August 25, 2011. 4
(See Mot. for Default, ECF No.
12.)
4
Chanel’s Complaint alleges that Cong acted in concert with various unnamed
Defendants Does 1-10. (See Compl. ¶ 5.) However, only Cong has defaulted.
The other Defendants have not been identified or
(See Entry of Default.)
4
II.
Jurisdiction
A court’s default judgment is invalid unless it has proper
jurisdiction.
496,
501
See, e.g., Citizens Bank v. Parnes, 376 F. App’x
(6th
Cir.
2010)
(“Personal
jurisdiction
over
a
defendant is a threshold issue that must be present to support
any subsequent order of the district court, including entry of
the
default
judgment.”)
(citing
Kroger
Co.
v.
Malease
Foods
Corp., 437 F.3d 506, 510 (6th Cir. 2006)).
Courts
jurisdiction,
must
but
default judgment.
consider
not
subject-matter
defects
in
venue,
and
before
personal
entering
a
Compare In re Tuli, 172 F.3d 707, 712 (9th
Cir. 1999) (holding that a district court properly raised the
issue of personal jurisdiction sua sponte), and Williams v. Life
Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986) (per curiam)
(“[W]hen entry of a default judgment is sought against a party
who has failed to plead or otherwise defend, the district court
has an affirmative duty to look into its jurisdiction both over
the subject matter and the parties.”), and Columbia Pictures
Indus. v. Fysh, No. 5:06-CV-37, 2007 U.S. Dist. LEXIS 11234, 3-4
(W.D. Mich. Feb. 16, 2007) (considering and finding subjectmatter
and
personal
jurisdiction
before
entering
a
default
served. Therefore, this Order applies only to Cong. See County Sec. Agency
v. Ohio Dep’t of Commerce, 296 F.3d 477, 483 (6th Cir. 2002) (“It is
elementary that one is not bound by a judgment in personam resulting from
litigation in which he is not designated as a party or to which he has not
been made a party by service of process.”) (quoting Zenith Radio Corp. v.
Hazeltine Research, Inc., 395 U.S. 101, 110 (1969)).
5
judgment), with Rogers v. Hartford Life & Accident Ins. Co., 167
F.3d 933, 942 (5th Cir. 1999) (“The Supreme Court has made clear
that if a party defaults by failing to appear or file a timely
responsive
pleading,
the
party
waives
defects
in
venue.”)
(citations omitted), and Williams, 802 F.2d at 1202 (“[I]f a
party is in default by failing to appear or to file a responsive
pleading, defects in venue are waived, a default judgment may be
validly entered and the judgment cannot be attacked collaterally
for improper venue.” (citing Hoffman v. Blaski, 363 U.S. 335,
343 (1960)).
A. Subject-matter Jurisdiction
Congress
has
specifically
granted
federal
question
jurisdiction for claims of copyright and trademark infringement.
See 15 U.S.C. § 1121(a) (providing for jurisdiction over all
trademark claims arising under Chapter 22 of Title 15 of the
United
States
Code);
28
U.S.C.
§
1338(a)
(providing
for
jurisdiction of any action arising under a federal law relating
to
copyrights
and
trademarks).
General
federal
question
jurisdiction exists for any claims arising under the laws of the
United
States.
See
28
U.S.C.
§
1331.
Chanel
has
alleged
violations of federal statutes barring trademark infringement,
false designation of origin, and cyberpiracy.
See 15 U.S.C. §§
1114(1)(a), 1125(a), 1125(d); (Compl. ¶¶ 31-51).
6
Therefore, the
Court has subject-matter jurisdiction over Chanel’s claims.
See
15 U.S.C. § 1121(a); 28 U.S.C. §§ 1331, 1338(a).
B. Personal Jurisdiction
A
court’s
subject-matter
jurisdiction
existence of a federal question.
arises
from
the
“[P]ersonal jurisdiction over
a defendant exists ‘if the defendant is amenable to service of
process under the [forum] state’s long-arm statute and if the
exercise of personal jurisdiction would not deny the defendant[]
due process.’”
Flynn v. Greg Anthony Constr. Co., 95 F. App’x
726, 740 (6th Cir. 2003) (quoting Bird v. Parsons, 289 F.3d 865,
871 (6th Cir. 2002)).
“Where the state long-arm statute extends
to the limits of the due process clause, the two inquiries are
merged
and
personal
the
court
jurisdiction
need
only
violates
determine
whether
constitutional
exercising
due
process.”
Bridgeport Music, Inc. v. Still N the Water Publ’g, 327 F.3d
472, 477 (6th Cir. 2003) (citing Nationwide Mut. Ins. Co. v.
Tryg Int’l Ins. Co., 91 F.3d 790, 793 (6th Cir. 1996)).
“the
Tennessee
long-arm
statute
has
been
Because
interpreted
as
coterminous with the limits on personal jurisdiction imposed by
the
due
process
clause,”
federal
courts
in
Tennessee
may
exercise personal jurisdiction if doing so is consistent with
federal
due
process
requirements.
Id.
(citing
Payne
Motorists’ Mut. Ins. Cos., 4 F.3d 452, 454 (6th Cir. 1993)).
7
v.
“Personal
jurisdiction
over
an
out-of-state
defendant
arises from ‘certain minimum contacts with [the forum] such that
maintenance of the suit does not offend traditional notions of
fair play and substantial justice.’”
Air Prods. & Controls,
Inc. v. Safetech Int’l, Inc., 503 F.3d 544, 550 (6th Cir. 2007)
(quoting
Int’l
(1945)).
Shoe
Personal
Co.
v.
326
Washington,
jurisdiction
may
be
U.S.
specific
310,
or
316
general,
depending on the type of minimum contacts maintained by the outof-state
defendant.
Id.
(citing
Reynolds
v.
Int’l
Athletic Fed’n, 23 F.3d 1110, 1116 (6th Cir. 1994)).
Amateur
The Sixth
Circuit applies a three-part test to determine whether specific
personal jurisdiction exists.
First, the defendant must purposefully avail himself
of the privilege of acting in the forum state or
causing a consequence in the forum state. Second, the
cause of action must arise from the defendant’s
activities there. Finally, the acts of the defendant
or consequences caused by the defendant must have a
substantial enough connection with the forum state to
make the exercise of jurisdiction over the defendant
reasonable.
Air Prods., 503 F.3d at 550 (quoting S. Mach. Co. v. Mohasco
Indus.,
Inc.,
401
F.2d
374,
381
(6th
Cir.
1968))
(emphasis
of
specific
personal
added).
1. Purposeful Availment
To
satisfy
jurisdiction,
himself
of
the
the
‘the
first
defendant
privilege
requirement
“must
of
have
acting
8
in
purposefully
the
forum
availed
state
or
causing a consequence in the forum state.’”
Mach Co., 401 F.2d at 381).
Id. (quoting S.
Where a defendant’s contacts with
the forum state result from actions undertaken by the defendant
himself, the defendant has purposefully availed himself of the
privilege of acting in the state.
Corp.
v.
Rudzewicz,
471
U.S.
462,
Id. (quoting Burger King
475
(1985)).
Physical
presence in the forum state is not required, but a defendant’s
connection to the forum state must be “substantial,” rather than
a
result
of
circumstances.
“random,”
“fortuitous,”
or
“attenuated”
Id.
Operating a website constitutes personal availment “if the
website is interactive to a degree that reveals specifically
intended interaction with residents of the state.”
Bird, 289
F.3d at 874 (quoting Neogen Corp. v. Neo Gen Screening, Inc.,
282 F.3d 883, 890 (6th Cir. 2002)) (internal quotation marks
omitted).
constitutes
approach.
To
determine
personal
whether
availment,
a
courts
defendant’s
use
a
sliding
website
scale
Cadle Co. v. Schlichtmann, 123 F. App’x 675, 678 (6th
Cir. 2005) (citing Neogen, 282 F.3d at 890; Revell v. Lidov, 317
F.3d
467,
472
(5th
Cir.
2002)).
This
sliding
scale
“distinguishes between interactive websites, where the defendant
establishes repeated online contacts with residents of the forum
state, and websites that are passive, where the defendant merely
posts information on the site.”
Id.
9
“Interactive websites can
subject the defendant to specific personal jurisdiction, whereas
passive websites are less likely to confer such jurisdiction.”
Id.
(citing
Neogen,
282
F.3d
at
889-91).
Where,
through
a
website, a defendant sells products and services to customers in
the forum state, the defendant has purposefully availed itself
of the privilege of acting in the forum state, even if the
customers
initiate
website.
See, e.g., Neogen, 282 F.3d at 892 (holding that a
defendant’s
forum
the
shipping
state
sales
by
products
customers
placing
to
and
constituted
orders
through
accepting
personal
payment
availment);
the
from
Morel
Acoustic, Ltd. v. Morel Acoustics USA, Inc., No. 3-:04-CV-348,
2005 U.S. Dist. LEXIS 32864, at *19-20 (S.D. Ohio Sept. 7, 2005)
(concluding
that,
specifications
and
where
a
prices,
defendant’s
invite[d]
website
orders,
“provide[d]
provide[d]
order
forms for downloading and provide[d] an e-mail link for placing
orders,” the defendant had purposefully availed itself of the
forum state).
Cong
has
website[s]”
operated
operating
Compl. ¶¶ 1, 3.)
“fully
under
interactive
the
Subject
.
.
Domain
.
commercial
Names.
(See
Through these websites, Cong has advertised
and sold his products to Tennessee residents.
(See id. ¶¶ 5-6.)
For these reasons, Cong has purposefully availed himself of the
privilege of acting in Tennessee, and the first requirement for
personal jurisdiction is satisfied.
10
See See Cadle Co., 123 F.
App’x at 678; Neogen, 282 F.3d at 892; Morel Acoustic, 2005 U.S.
Dist. LEXIS 32864, at *19-20.
2. Arising From
The
second
requirement
is
that
the
plaintiff’s
claims
“arise from” the defendant’s contacts with the forum state.
Prods., 503 F.3d at 553.
Air
The Sixth Circuit has phrased the test
for this requirement in a number of ways, including “whether the
causes of action were ‘made possible by’ or ‘lie in the wake of’
the defendant’s contacts, . . . or whether the causes of action
are ‘related to’ or ‘connected with’ the defendant’s contacts
with
the
forum
Regardless
of
state.”
its
Id.
phrasing,
Bird, 289 F.3d at 875.
(internal
this
citations
standard
is
a
omitted).
lenient
one.
A cause of action need not formally
arise from a defendant’s contacts with the forum.
Id.
Rather,
this test requires only “that the cause of action, of whatever
type, have a substantial connection with the defendant’s instate activities.”
Bird, 289 F.3d at 875 (quoting Third Nat’l
Bank in Nashville v. Wedge Group, Inc., 882 F.2d 1087, 1091 (6th
Cir. 1989))(internal quotation marks omitted).
The gravamen of Chanel’s complaint is that Cong committed
trademark
infringement,
cyberpiracy
by
Chanel
Marks
domain
name
selling
though
false
products
various
confusingly
designation
bearing
websites,
similar
11
to
one
of
exact
origin,
copies
including
of
the
one
Chanel
of
and
the
with
a
Marks.
(See Comp. ¶¶ 28-48.)
his
interactive
Cong’s contacts with the forum state are
websites
and
sales
residents through those websites.
of
products
to
Tennessee
(See Compl. ¶¶ 5-7.)
There
is a “substantial connection” between Chanel’s claims and Cong’s
contacts with Tennessee.
Cf. Bird, 289 F.3d at 875 (finding
that a plaintiff’s copyright and trademark infringement claims
were
related
to
defendants’
contacts
with
the
forum
state
because the defendants’ operation of a website both created the
contacts
and
Therefore,
the
factual
Chanel’s
basis
claims
for
arise
the
plaintiff’s
from
Cong’s
claims).
contacts
in
Tennessee.
3. Reasonableness
The third requirement is that “the acts of the defendant or
consequences caused by the defendant must have a substantial
enough connection with the forum state to make the exercise of
jurisdiction over the defendant reasonable.”
Air Prods., 503
F.3d at 554 (quoting S. Mach. Co., 401 F.2d at 381).
If the
first two requirements for specific personal jurisdiction are
met,
an
inference
arises
satisfied.
Bird,
purposefully
has
289
that
F.3d
directed
the
at
his
third
875.
requirement
If
activities
“a
at
is
defendant
forum
also
who
residents
seeks to defeat jurisdiction, he must present a compelling case
that
the
presence
of
some
jurisdiction unreasonable.”
other
considerations
would
Air Prods., 289 F.3d at 554.
12
render
Because
the
first
two
requirements
for
personal
jurisdiction have been met, there is an inference that the Court
may reasonably exercise jurisdiction over Cong.
F.3d at 875; supra Sections II.B.1-2.
has
not
presented
considerations
unreasonable.
a
make
compelling
the
Cong has defaulted and
case
Court’s
See Bird, 289
that
exercise
any
of
additional
jurisdiction
See Air Prods., 289 F.3d at 554.
For the foregoing reasons, the Court’s exercise of personal
jurisdiction
over
requirements.
Cong
comports
Subject-matter
with
and
federal
personal
due
process
jurisdiction
are
proper, and the Court may enter a valid default judgment.
III. Standard of Review
Federal Rule of Civil Procedure 55(b)(2) governs default
judgment.
entered
See
Fed.
against
a
R.
Civ.
defendant,
P.
55(b).
that
“Once
party
is
a
default
deemed
to
is
have
admitted all of the well pleaded allegations in the complaint,
except
for
those
relating
to
damages.”
Microsoft
Corp.
v.
McGee, 490 F. Supp. 2d 874, 878 (S.D. Ohio 2007) (citing Antoine
v. Atlas Turner, Inc., 66 F.3d 105, 110-11 (6th Cir. 1995)); see
also Fed. R. Civ. P. 8(d) (“Averments in a pleading to which a
responsive
pleading
is
required,
other
than
those
as
to
the
amount of damage, are admitted when not denied in the responsive
pleading.”)
not
deemed
Unlike factual allegations, “legal conclusions are
admitted
as
a
result
13
of
the
entry
of
default.”
Krowtoh II, LLC v. Excelsius Int’l Ltd., No. 04-505-KSF, 2007 WL
5023591, at *4 (E.D. Ky. 2007) (citations omitted).
Because the
Clerk entered default against Cong on January 7, 2011 (see Order
of
Default),
Cong
is
deemed
to
have
admitted
the
factual
allegations in Chanel’s complaint, other than those relating to
damages.
basis,
If the factual allegations provide a sufficient legal
the
court
enters
a
default
judgment
inquiry to determine damages and other relief.
and
conducts
an
See Coach, Inc.
v. Cellular Planet, No. 2:09-cv-00241, 2010 U.S. Dist. LEXIS
45087, at *7 (S.D. Ohio May 7, 2010) (citing Arista Records,
Inc. v. Beker Enters., 298 F. Supp. 2d 1310, 1311-12 (S.D. Fla.
2003)).
IV.
Analysis
A. Liability
Chanel’s
undisputed
allegations
establish
that
Cong
committed trademark infringement, false designation of origin,
and
cyberpiracy,
in
violation
of
15
U.S.C.
§§
1114(1)(a),
1125(a), and 1125(d).
1. Trademark Infringement
The
Lanham
Act
provides
liability
for
trademark
infringement if a trademark registrant shows that (1) another
person
has
used
any
reproduction,
counterfeit,
copy,
or
colorable imitation of the registrant’s mark, (2) without the
registrant’s consent, (3) in commerce, (4) in the sale, offer,
14
distribution, or advertisement of any goods or services, (5)
where the use is likely to cause confusion or mistake or to
deceive.
See 15 U.S.C. § 1114(1)(a).
Liability often turns on
“whether the defendant’s use of the disputed mark is likely to
cause
confusion
among
consumers
goods offered by the parties.”
regarding
the
origin
of
the
Daddy’s Junky Music Stores v.
Big Daddy’s Family Music Ctr., 109 F.3d 275, 280 (6th Cir. 1997)
(citations omitted).
Chanel’s
trademark
Marks.
allegations
infringement.
(See
Compl.
¶
establish
Chanel
9.)
is
Cong’s
the
Through
owner
the
liability
of
the
internet,
for
Chanel
Cong
has
promoted, advertised, distributed, sold, and/or offered products
bearing marks that are exact copies of the Chanel Marks.
(See
id. ¶¶ 16-23.)
(See
id. ¶ 21.)
Cong has done so without Chanel’s consent.
By defaulting, Cong has admitted that his using the
Marks has likely caused confusion, deception and mistake among
members of the trade and the general consuming public as to the
origin and quality of his goods.
(See id. ¶¶ 18, 23.)
For
these reasons, Chanel is entitled to judgment on the trademark
infringement claim.
2. False Designation of Origin
Under the Lanham Act, liability for false designation of
origin may arise in a number of ways.
See 15 U.S.C. 1125(a).
The Act provides liability where a person shows that, (1) in
15
connection with any goods, services, or goods containers, (2)
another person has used any word, term, name, symbol, or device
(3) that is likely to cause confusion or mistake or to deceive
“as
to
the
affiliation,
connection,
or
association
of
such
person with another person, or as to the origin, sponsorship, or
approval of his or her goods, services, or commercial activities
by another person.”
See 15 U.S.C. 1125(a)(1)(A).
Chanel’s undisputed allegations establish Cong’s liability
for false designation of origin.
In advertising, distributing,
selling, and/or offering his goods, Cong has used marks that are
exact copies of the Chanel Marks.
(See Compl. ¶ 17.)
The “net
effect of [Cong’s] actions will be to result in the confusion of
consumers who will believe the Defendant’s Counterfeit Goods are
genuine goods originating from and approved by the Plaintiff.”
(Id. ¶ 18.)
Therefore, Chanel is entitled to judgment on the
false designation of origin claim.
3. Cyberpiracy
The
Anticybersquatting
Consumer
Protection
Act
(“ACPA”)
provides liability for cyperpiracy if a person (1) registers,
traffics
or
uses
a
domain
name
(2)
that
is
identically
or
confusingly similar to a distinctive or famous mark (3) with a
“bad faith intent to profit from that mark.”
1125(d)(1)(A).
See 15 U.S.C. §
The ACPA includes a safe harbor provision for a
person who “believed and had reasonable grounds to believe that
16
the use of the domain name was a fair use or otherwise lawful.”
Id. § 1125(d)(1)(B)(ii).
Chanel’s allegations establish that Cong’s actions meet the
first element of cyberpiracy under the ACPA.
the
domain
names
anonymously
and
for
the
Cong registered
sole
the
of
(See Compl. at
engaging in illegal counterfeiting activities.
¶¶ 7, 44.)
purpose
A famous mark is one that is “widely recognized by
general
consuming
public
of
the
United
States
as
a
designation of source of the goods or services of the mark’s
owner.”
so
15 U.S.C. § 1125(2)(A).
recognized,
a
court
To determine whether a mark is
considers
“all
relevant
factors,”
including: (1) the “duration, extent, and geographic reach of
advertising and publicity of the mark,” (2) the amount, volume,
and
geographic
extent
of
sales
of
goods
or
services
offered
under the mark, (3) actual recognition of the mark, and (4)
whether the mark is registered.
The
word
1125(2)(A).
“Chanel”
Chanel
is
a
famous
registered
the
mark
mark
under
15
“Chanel”
U.S.C.
in
§
various
forms in 1955, 1956, 1970, 1971, 1973, 1983, 1985, 1988, 1992,
and 2006.
(See Compl. ¶ 9.)
Chanel has used that mark in
advertising and promoting its goods around the world for “an
extended period of time.”
(Compl. ¶ 10.)
Due to Chanel’s
efforts, the public identifies goods bearing any of the Chanel
Marks as goods “sponsored and approved by Chanel.”
17
(Compl. ¶
14.)
Therefore, Chanel is a “famous mark” within the meaning of
the ACPA.
The
See 15 U.S.C. 1125(2)(A)(i-iv).
domain
names
gucci-louisvuitton.com
Mark J12.
cheap-chanel-shopping.com
are
confusingly
similar
and
to
chanel-
the
Chanel
“Courts generally have held that a domain name that
incorporates a trademark is ‘confusingly similar to’ [a famous]
mark if ‘consumers might think that [the domain name] is used,
approved, or permitted’ by the mark holder.”
DaimlerChrysler v.
Net Inc., 388 F.3d 201, 205 (6th Cir. 2004) (citing 15 U.S.C. §
1125(d)(1)(C))
Inc.,
177
F.
(quoting
Supp.
2d
Ford
635,
Motor
641
Co.
(E.D.
v.
Mich.
Greatdomains.Com,
2001).
Courts
consider “slight differences between domain names and registered
marks, such as the addition of minor or generic words” to be
irrelevant.
641).
Id. at 206 (quoting Ford Motor Co., 177 F. Supp. at
Although Cong has added the descriptive word “cheap” to
the Chanel Mark, the domain name cheap-chanel-shopping.com is
nonetheless confusingly similar to the Chanel Mark.
See, e.g.,
HER, Inc. v. RE/MAX First Choice, LLC, 468 F. Supp. 2d 964, 973
(S.D.
Ohio
2007)
(finding
that
domain
name
www.insiderealliving.com was confusingly similar to REALLIVING
mark
and
rejecting
argument
that
the
addition
of
the
word
“inside” eliminated confusion); Ford Motor Co., 177 F.Supp.2d at
641 (internal quotations omitted) (finding that the domain names
18
“4fordparts.com,”
“jaguarcenter.com,”
and
“volvoguy.com”
were
confusingly similar to the marks FORD, JAGUAR, and VOLVO).
Cong has registered the domain names with the bad faith
intent
to
associated
profit
the
from
Chanel
the
Chanel
Marks.
The
Marks
ACAP
and
the
provides
goodwill
nine
non-
exclusive factors for courts to consider in determining whether
there is bad faith intent to profit:
(I) the trademark or other intellectual property
rights of the person, if any, in the domain name;
(II) the extent to which the domain name consists of
the legal name of the person or a name that is
otherwise commonly used to identify that person;
(III) the person’s prior use, if any, of the domain
name in connection with the bona fide offering of any
goods or services;
(IV) the person’s bona fide noncommercial or fair use
of the mark in a site accessible under the domain
name;
(V) the person’s intent to divert consumers from the
mark owner’s online location to a site accessible
under the domain name that could harm the goodwill
represented by the mark, either for commercial gain or
with the intent to tarnish or disparage the mark, by
creating a likelihood of confusion as to the source,
sponsorship, affiliation, or endorsement of the site;
(VI) the person’s offer to transfer, sell, or
otherwise assign the domain name to the mark owner or
any third party for financial gain without having
used, or having an intent to use, the domain name in
the bona fide offering of any goods or services, or
the person’s prior conduct indicating a pattern of
such conduct;
(VII)
the
person’s
provision
of
material
and
misleading false contact information when applying for
19
the registration of the domain name, the person’s
intentional failure to maintain accurate contact
information, or the person’s prior conduct indicating
a pattern of such conduct;
(VIII) the person’s registration or acquisition of
multiple domain names which the person knows are
identical or confusingly similar to marks of others
that are distinctive at the time of registration of
such domain names, or dilutive of famous marks of
others that are famous at the time of registration of
such domain names, without regard to the goods or
services of the parties; and
(IX) the extent to which the mark incorporated in the
person’s domain name registration is or is not
distinctive
and
famous
within
the
meaning
of
subsection (c) of this section.
15 U.S.C. § 1125(d)(1)(B)(i).
Cong has no intellectual property rights in a domain name
using any of the Chanel Marks, his legal name has no relation to
the domain name, and he has not used the domain name for a bona
fide
offering
of
goods
1125(d)(1)(B)(i)(I-III).
and
services.
See
15
U.S.C.
§
By defaulting, Cong has admitted that
he has used the Chanel Marks to drive internet traffic to all of
his domain names to increase the value of his domain names at
Chanel’s expense.
¶ 8).
See 15 U.S.C. § 1125(d)(1)(B)(i)(V); (Compl.
He has also admitted that he used false or misleading
information
to
register
1125(d)(1)(B)(i)(VII);
famous
marks.
Section IV.A.3.
See
the
(Compl.
15
domain
¶
U.S.C.
7).
§
The
names.
Chanel
See
Marks
1125(d)(1)(B)(i)(IX);
§
are
supra
Therefore, Cong acted with the bad faith intent
20
to profit from the Chanel Marks.
Chanel is entitled to judgment
on its cyberpiracy claim.
B. Permanent Injunction
Chanel
seeks
a
permanent
injunction
enjoining
further violations of Chanel’s trademark rights.
49(a).)
Cong
from
(See Compl. ¶
Under 15 U.S.C. § 1116, a court may issue injunctions
“according to principles of equity and upon such terms as the
court may deem reasonable,” to prevent future violations of 15
U.S.C. § 1125.
relief
for
See 15 U.S.C. § 1116 (permitting injunctive
violations
1125(d)).
“A
of
plaintiff
15
U.S.C.
seeking
a
§§
1125(a),
permanent
1125(b),
injunction
and
must
demonstrate that it has suffered irreparable injury, there is no
adequate
remedy
at
law,
‘that
considering
the
balance
of
hardships between the plaintiff and the defendant, a remedy in
equity
is
warranted,’
and
that
interest to issue the injunction.”
534,
549
(6th
Cir.
2006)
it
is
in
the
public’s
best
Audi AG v. D’Amato, 469 F.3d
(quoting
eBay,
MercExchange, LLC, 547 U.S. 388 (2006)).
Inc.,
et
al.
v.
Although a district
court must normally hold an evidentiary hearing before issuing a
permanent
trial,’
injunction,
[a]
district
where
court’s
“‘no
factual
decision
to
issues
grant
remain
a
for
permanent
injunction without such a hearing could still be upheld....”
Gibson Guitar Corp. v. Paul Reed Smith Guitars, LP, 423 F.3d
539, 546 (6th Cir. 2005) (quoting Moltan Co. v. Eagle-Picher
21
Indus., Inc., 55 F.3d 1171, 1174 (6th Cir. 1995)).
Because Cong
has defaulted, there are no factual issues in dispute, and a
hearing is unnecessary.
A
trademark
registrant
may
be
irreparably
harmed
when
consumers purchase counterfeit products from another’s website
instead of genuine products sold from the registrant.
469 F.3d at 550.
Audi AG,
As long as the website remains online, there
is potential for future harm, and the registrant has no adequate
remedy at law.
Id.
Where consumers may be misled by a person’s
use of trademarks, it is in the public interest to issue an
injunction barring such use.
Chanel
counterfeit
is
entitled
goods
with
to
Id.
an
copies
injunction.
of
the
Cong
Chanel
has
Marks,
sold
using
Chanel’s reputation and goodwill to make a profit and causing
irreparable harm to Chanel’s goodwill and business reputation.
See Audi AG, 469 F.3d at 550; (Compl. ¶¶ 22, 25, 34, 41, 48).
Because Cong has continued to advertise and sell counterfeit
Chanel products through his websites, Chanel has no adequate
remedy at law.
48).
“faces
In
no
See Audi AG, 469 F.3d at 550; (Compl. ¶¶ 24,
balancing
the
hardship
in
hardships
between
refraining
from
the
parties,
willful
Cong
trademark
infringement,” while Chanel “faces hardship from loss of sales.”
See Audi AG, 469 F.3d at 550.
Because consumers have likely
been misled by Cong’s actions, it is in the public interest to
22
issue an injunction.
21, 26, 34, 40).
See Audi AG, 469 F.3d at 550; (Compl. ¶¶
Chanel is entitled to a permanent injunction
enjoining Cong from future actions that would violate Chanel’s
trademark rights.
C. Other Equitable Relief
Chanel seeks additional equitable relief.
Chanel requests
an order requiring that the Subject Domain Names be cancelled or
transferred to Chanel.
(See Compl. ¶ 49(d).)
the
Civil
Federal
injunction
Rules
must
specifically,
of
explain
and
its
describe
restrained or required.
Procedure,
in
Under Rule 65 of
an
order
reasoning,
state
reasonable
granting
its
detail
an
terms
the
acts
See Fed. R. Civ. P. 65(d)(1).
The
Sixth Circuit has stated that “injunctive relief should be no
broader than necessary to remedy the harm at issue.”
Banner v.
City of Flint, 99 F. App’x 29, 39 (6th Cir. 2004) (citing United
States v. Miami Univ., 294 F.3d, 797, 816 (6th Cir. 2002)).
“In
any
civil
action
involving
the
registration,
trafficking, or use of a domain name under this paragraph, a
court may order the forfeiture or cancellation of the domain
name or the transfer of the domain name to the owner of the
mark.”
15 U.S.C. § 1125(d)(1)(C).
This provision “explicitly
authorizes courts to transfer a domain name after finding an
ACPA violation.”
DaimlerChrysler, 388 F.3d at 207 n.4 (citing
15 U.S.C. § 1125(d)(1)(C)).
Courts in the Sixth Circuit have
23
generally ordered defendants to transfer ACPA-violating domain
names.
See, e.g., Specialty Vehicle Acquisition Corp. v. Am.
Sunroof Corp., No. 07-13887, 2008 U.S. Dist. LEXIS 67968, at *67 (E.D. Mich. Sept. 8, 2008) (transferring domain name where
allegations
admitted
by
default
established
ACPA
violation);
Ford Motor Co., 441 F. Supp. 2d at 843 (transferring domain name
where
allegations
violation);
see
admitted
also
by
default
DaimlerChrysler,
388
established
F.3d
at
ACPA
207
n.4
(upholding district court’s transfer of a domain name where the
defendant’s
Because
use
of
the
has
“Defendant
domain
name
created
a
violated
large
the
ACPA).
Internet-based
counterfeiting scheme using at least six (6) different websites”
in violation of the ACPA, the Court orders Defendant to transfer
to Chanel the domain names: cheap-chanel-shopping.com, chanelgucci-louisvuitton.com, bluestonetrade.com, knockoffnamebag.com,
sunglassesmerchant.com,
handbagsjobber.com.
Chanel
and
(Pl’s Mem. 12.)
requests
additional orders.
replicabagsmerchant.com,
that
the
Court’s
injunction
include
two
Chanel requests an order that the top-level
domain registry for each of the Subject Domain Names place the
Subject Domain Names on “registry hold status,” which would delink
the
Subject
Domain
Names
from
the
Internet
addresses hosting the content of Cong’s websites.
49(c).)
Protocol
(See Compl. ¶
Chanel also requests an order that anyone acting in
24
concert with Cong, “and those with notice of the injunction,
including any Internet search engines, Web hosts, domain-name
registrars
and
domain-name
registries
that
are
provided
with
notice of the injunction, cease facilitating access to any or
all websites through which the Defendants engage in the sale of
counterfeit and infringing goods using the Chanel Marks.”
id. ¶ 49(b).)
requests.
(See
Chanel has provided no legal authority for these
Nor has Chanel made a showing “as to the necessity or
the attendant burdens of enjoining non-parties such as Google
and Yahoo! from providing search engine links” to Cong’s sites.
Junying Cui, 2010 U.S. Dist. LEXIS 68689, at *6.
Chanel is not
entitled to this equitable relief.
D.
Statutory Damages
Chanel seeks statutory damages for Cong’s Lanham Act and
ACPA violations.
(See Chanel’s Mem. of Points and Authorities
in Supp. of its Mot. for Entry of Final Default J. Against Def.,
ECF No. 12-1.)
(“Pl.’s Mem.”)
1. Lanham Act
In cases where a counterfeit mark is used in the sale,
offering for sale, or distribution of goods, a plaintiff may
elect to recover statutory damages in the amount of not less
than $1,000 or more than $200,000 per counterfeit mark per type
of goods or services sold, offered for sale, or distributed.
See 15 U.S.C. § 1117(c)(1).
If the court finds that the use of
25
the counterfeit mark was willful, it may award up to $2,000,000
per counterfeit mark per type of good or services sold, offered
for sale, or distributed.
A
“counterfeit
See
mark”
is
15 U.S.C. § 1117(c)(2).
one
that
“is
registered
on
the
principal register in the United States Patent and Trademark
Office for such goods or services sold, offered for sale, or
distributed
and
that
is
in
use,
whether
or
not
the
person
against whom relief is sought knew such mark was so registered.”
15
U.S.C.
§
1116(d).
The
Chanel
Marks
used
by
Cong
are
registered by Chanel with the United States Patent and Trademark
Office for the same types of goods sold by Cong.
9.)
(See Compl. ¶
Therefore, the marks on Cong’s products are counterfeit
marks under the statute.
See 15 U.S.C. § 1116(d).
Cong has
used these counterfeit marks in selling, offering, distributing,
and/or
damages.
advertising
goods,
and
Chanel
may
elect
statutory
See 15 U.S.C. § 1117(c)(1); supra Section IV.A.I.
Courts have broad discretion in awarding statutory damages.
Ford Motor Co., 441 F. Supp. 2d at 852 (citing Peer Int’l Corp.
v. Pausa Records, Inc., 909 F.2d 1332, 1336 (9th Cir. 1990)).
Within the limits established by Congress, statutory damages are
to be awarded in an amount “the court considers just.”
U.S.C. § 1117(c).
See 15
The amount of statutory damages does not
depend on actual damages, and “statutory damages are appropriate
in
default
judgment
cases
because
26
the
information
needed
to
prove actual damages is within the infringers’ control and is
not disclosed.”
Chanel
McGee, 490 F. Supp. 2d at 882.
requests
that
the
Court
(See Pl.’s Mem. 15.)
statutory damages.
award
$1,104,000
in
Chanel starts with the
statutory minimum of $1,000 and asks the Court to treble that
amount
to
$3,000
to
reflect
Cong’s
willfulness.
(See
id.)
Chanel then asks the Court multiply $3,000 by 16, the number of
types of goods sold, and then by 23, the number of Chanel Marks
counterfeited.
“which
is
at
Chanel calculates a total award of $1,104,000,
the
very
low
end
of
the
range
prescribed
by
[statute] and should be sufficient to deter the Defendant and
others
from
trademarks.”
Statutory
continuing
to
counterfeit
.
.
.
Chanel’s
(Id.)
damages
in
the
amount
of
$1,104,000
are
appropriate.
When awarding damages for trademark infringement,
courts
award
must
treble
damages
where
a
defendant
(1)
intentionally uses a mark or designation, (2) knowing that the
mark or designation used is a counterfeit mark under 15 U.S.C. §
1116(d), (3) in the sale, offer, or distribution of goods or
services.
See 15 U.S.C. § 1117(b)(1); 15 U.S.C. § 1114(1)(a).
The marks on Cong’s goods are counterfeit marks under the Lanham
Act.
See 15 U.S.C. § 1116(d).
By defaulting, Cong has admitted
that, despite his knowledge of Chanel’s rights in the Marks, he
has
intentionally
used
the
Chanel
27
Marks
for
the
purpose
of
capitalizing on Chanel’s goodwill and reputation.
§ 1117(b)(1);(Compl. ¶¶ 16, 22).
See 15 U.S.C.
Cong used these counterfeit
marks in the sale, offer, and/or distribution of goods.
U.S.C. § 1117(b)(1); (Id. ¶¶ 20-22).
See 15
As a result, Chanel is
entitled to treble damages.
A statutory damages award of $1,104,000 is consistent with
awards by other district courts in this circuit.
See, e.g.,
McGhee, 490 F. Supp. 2d at 882 (awarding statutory damages of
$710,000
for
violations
of
five
trademarks
and
seven
copyrights); Microsoft Corp. v. Sellers, 411 F. Supp. 2d 913,
921 (E.D. Tenn. 2006) (awarding statutory damages of $460,000
for
violations
of
four
trademarks
and
two
copyrights).
The
amount sought is also well below the maximum statutory damages
that
Chanel
could
recover.
Even
without
a
showing
of
willfulness, the Court could award statutory damages of up to
$9,000,000.
See 15 U.S.C. § 1117(c)(1) (authorizing maximum
statutory damages of $200,000 “per counterfeit mark per type of
goods
or
services
sold,
offered
for
sale,
or
distributed”).
Because Chanel has shown that Cong acted willfully, the Court
See 15
could award statutory damages of up to $90,000,000.
U.S.C.
§
1117(c)(2)
(authorizing
statutory
damages
of
up
to
$2,000,000 “per counterfeit mark per type of goods or services
sold, offered for sale, or distributed.”)
For those reasons,
the Court concludes that Chanel’s requested award of $1,104,000
28
is just.
See 15. U.S.C. § 1117(c)(1); cf. McGhee, 490 F. Supp.
2d at 882; Sellers, 411 F. Supp. 2d 913 at 921.
2. ACPA
In cases of bad faith registration, trafficking or use of a
domain name confusingly similar to a famous mark, a plaintiff
may elect to recover statutory damages “in the amount of not
less than $ 1,000 and not more than $ 100,000 per domain name,
as the court considers just.”
15 U.S.C. § 1117(d).
Because
Chanel has established that Cong registered a domain name that
is confusingly similar to Chanel’s famous marks and that he did
so in bad faith, Chanel may elect statutory damages.
See supra
Section IV.A.3.
As under the Lanham Act, courts have wide discretion in
determining the amount of statutory damages.
See HER, Inc. v.
RE/MAX First Choice, LLC, No. C2-06-492, 2009 WL 4730710, at *2
(S.D. Ohio Dec. 10, 2009).
“Courts view a violation of the ACPA
as
when
particularly
flagrant
competitor of a plaintiff.”
Id.
the
defendant
is
a
direct
In such cases, courts have
awarded $100,000 per domain name, the maximum under the statute.
Id. (collecting various cases) (citations omitted).
Chanel requests that the Court award damages in the amount
of $10,000 for Cong’s use of the Subject Domain Names.
Pl.’s Mem. 19.)
(See
By selling counterfeit and infringing products
bearing the Chanel Marks, Cong has competed directly with Chanel
29
and
profited
Therefore,
at
the
Chanel’s
Court
expense.
finds
(See
$10,000
just
Compl.
and
¶¶
awards
3-8.)
Chanel
statutory damages in that amount under 15 U.S.C. § 1117(d).
E. Costs
Chanel seeks to recover its litigation costs.
19.)
(Pl.’s Mem.
Under 15 U.S.C. § 1117(a), a plaintiff whose trademark
rights
have
been
violated
is
incurred to bring the action.
entitled
to
recover
the
costs
Therefore, Chanel is entitled to
recover its $350 filing fee and $350 process server fee.
Pl.’s Mem. 19.)
(See
The Court awards costs of $700 under 15 U.S.C.
§ 1117(a).
V.
Conclusion
For the foregoing reasons, Chanel’s Motion for Entry of
Final Default Judgment is GRANTED.
It is therefore ORDERED that:
(1)
Cong
and
his
agents,
representatives,
servants,
employees, and all persons in active concert and participation
with him are hereby restrained and enjoined from:
(a)
importing,
offering
manufacturing
advertising
to
sell
or
or
causing
promoting,
counterfeit
and
to
be
manufactured,
distributing,
infringing
goods
selling
or
using
the
Chanel Marks;
(b) infringing, counterfeiting, or diluting the Chanel
Marks;
30
(c) using the Chanel Marks, or any mark or any similar
mark or trade dress, in the sale of any unauthorized goods;
(d) using any logo, trade name or trademark or trade
dress which may be calculated to falsely advertise that Cong’s
services or products are sponsored by, authorized by, endorsed
by, or in any way associated with Chanel;
(e) falsely representing themselves as connected with
Chanel, through sponsorship or association;
(f) engaging in any act which is likely to falsely
cause members of the trade and/or of the purchasing public to
believe any goods or services of Cong are in any way endorsed
by, approved by, and/or associated with Chanel;
(g)
colorable
using
imitation
promotion,
sale,
or
including,
without
any
of
reproduction,
the
Chanel
advertising
limitation,
of
counterfeit,
Marks
any
handbags,
in
goods
the
sold
watches,
copy,
or
publicity,
by
Cong,
and
other
goods;
(h) affixing, applying, annexing or using in the sale
of any goods, a false description or representation, including
words or other symbols tending to falsely describe or represent
Cong’s goods as those of Chanel, or in any way endorsed by
Chanel;
(i) offering such goods in commerce; and
(j) otherwise unfairly competing with Chanel.
31
(2)
The
domain
names
cheap-chanel-shopping.com,
chanel-
gucci-louisvuitton.com, bluestonetrade.com, knockoffnamebag.com,
sunglassesmerchant.com,
handbagsjobber.com.
be
replicabagsmerchant.com,
immediately
transferred
by
and
Cong,
his
assignees and/or successors in interest or title to Chanel’s
control.
To the extent the current Registrars do not facilitate
the transfer of the domain names to Chanel’s control within ten
(10) days of receipt of this Order, the Registries and/or their
agents shall, within thirty (30) days, transfer the domain names
to a United States based Registrar of Chanel’s choosing, and
that Registrar shall transfer the domain names to Chanel.
(3) Cong is liable to Chanel for $1,114,000 in statutory
damages.
(4) Cong is liable for $700.00 in costs.
So ordered this ___ day of December, 2011.
s/ Samuel H. Mays, Jr._______
SAMUEL H. MAYS, JR.
UNITED STATES DISTRICT JUDGE
32
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