676 F.Supp.3d 827
C.D. Cal.2023Background
- JUUL Labs owns federally registered JUUL-formative trademarks (word and design marks) used on e-cigarette devices, pods, charging docks and related accessories.
- CJDropshipping (CJ), founded and controlled by Andy Chou, operated an online marketplace that advertised and sold products labeled as JUUL (starter kits, pods, USB chargers, charging boxes, portable chargers, magnetic cables, and a “JUUL Mobile Phone Case”).
- JUUL’s investigator purchased numerous suspected counterfeit JUUL Starter Kits and chargers from CJ between 2019–2020; independent testing and JUUL’s evidence specialist found the items counterfeit.
- DHS visited CJ’s New Jersey warehouse in Oct. 2020; CJ delisted JUUL Starter Kits immediately, but continued listing other JUUL-branded items until sued in April 2021. CJ failed to preserve many listing screenshots (spoliation).
- CJ had multiple prior trademark suits (several resulting in willful-infringement findings). The court found CJ’s anti-infringement systems inadequate, CJ’s conduct willful, and CJ engaged in discovery abuses.
- The court held CJ liable for trademark infringement, counterfeiting, false designation of origin, and false advertising for six product types, awarded $2,000,000 in statutory damages, entered a permanent injunction, and awarded attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of JUUL marks | JUUL’s registrations are valid and protectable | CJ did not contest protectability with admissible evidence | Marks (including ’614) are valid and protectable (federal registration prima facie) |
| Use & likelihood of confusion for accessories (phone case, portable charger, magnetic cable) | CJ advertised accessories using JUUL marks, causing likelihood of confusion | CJ: some items bore other branding (OVNS), some listings did not show JUUL on product; "universal" language negates confusion | Phone case listing infringed ’614; portable chargers and magnetic cables did not (branding/description avoided confusion) |
| Spoliation (failure to preserve listings) | CJ removed/did not preserve listings after notice and litigation began | CJ blamed warehouse/worker issues and partial preservation | Court found spoliation and applied adverse presumption (missing evidence presumed unfavorable to CJ) |
| Willfulness of infringement | CJ had prior adverse rulings, weak anti-infringement systems, DHS visit; conduct shows willful blindness/recklessness | CJ argued alleged belief the DHS visit concerned e-cigarette regulation, not IP; argued de-listing after notice | Court found CJ’s infringement willful (actual or constructive knowledge; reckless disregard) |
| Appropriate remedy and statutory damages amount | JUUL elected statutory damages under 15 U.S.C. §1117(c); sought deterrent award given willfulness and public-safety risks | CJ argued low profits and small actual damages; urged lower award | Court awarded $2,000,000 total: $500,000 each for JUUL Device and JUULpods (doubled for consumable/regulated items) and $250,000 each for the four accessory product-types (deterrence and willfulness justified award) |
| Injunctive relief & fees | Injunction and fees necessary to prevent future confusion and deter counterfeiting; case is exceptional | CJ opposed scope/cost | Permanent injunction issued; attorneys’ fees awarded as case was exceptional (willful conduct); parties to meet/confer on fee amount or use special master |
Key Cases Cited
- United States v. Kitsap Physicians Serv., 314 F.3d 995 (9th Cir. 2002) (spoliation notice standard).
- Med. Lab’y Mgmt. Consultants v. Am. Broad. Cos., 306 F.3d 806 (9th Cir. 2002) (district court’s inherent power to sanction for spoliation).
- Applied Info. Scis. Corp. v. eBay, Inc., 511 F.3d 966 (9th Cir. 2007) (remedies for confusing uses not strictly limited to registered goods).
- AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) (Sleekcraft eight-factor likelihood-of-confusion framework).
- Brookfield Commc’ns, Inc. v. W. Coast Ent. Corp., 174 F.3d 1036 (9th Cir. 1999) (trademark infringement standard and confusion analysis).
- Zobmondo Ent., LLC v. Falls Media, LLC, 602 F.3d 1108 (9th Cir. 2010) (prima facie effect of federal trademark registration).
- Tie Tech, Inc. v. Kinedyne Corp., 296 F.3d 778 (9th Cir. 2002) (burden shift once registration shown).
- Bosley Med. Inst., Inc. v. Kremer, 403 F.3d 672 (9th Cir. 2005) (use-in-commerce requirement under Lanham Act).
- Arcona, Inc. v. Farmacy Beauty, LLC, 976 F.3d 1074 (9th Cir. 2020) (counterfeit claim still requires showing likelihood of confusion).
- Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d 426 (9th Cir. 2017) (evaluating mark strength: commercial and conceptual strength).
- Rearden LLC v. Rearden Commerce, Inc., 683 F.3d 1190 (9th Cir. 2012) (Sleekcraft factors applied flexibly).
- Philip Morris USA Inc. v. Liu, 489 F. Supp. 2d 1119 (C.D. Cal. 2007) (willfulness standard: knowing conduct or reckless disregard).
- Washington Shoe Co. v. A–Z Sporting Goods Inc., 704 F.3d 668 (9th Cir. 2012) (willfulness analysis parallels in copyright/trademark contexts).
- Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175 (9th Cir. 1988) (injunction as the remedy of choice in trademark cases).
- Love v. Associated Newspapers, Ltd., 611 F.3d 601 (9th Cir. 2010) (attorney-fee award in exceptional trademark cases).