ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT
Before the Court is a Motion for Default Judgment filed by Plaintiff Wecosign, Inc. (“Plaintiff’). (Mot., Doc. 76.) Plaintiff seeks the entry of default judgment against seven Defendants: IFG Holdings, Inc. (“IFG”), Associated Concents Group LLC (“ACG”), Michael Adams (“Adams”), Ted Williams (“Williams”), Mark Avila (“Avila”), Stan Jones (“Jones”), and Robert Miller (“Miller”) (collectively, “Defendants”). (Mot. at 1.) Plaintiff is not seeking entry of default judgment against the eighth and final Defendant, Tara Walker (“Walker”). (Id.) Instead, Plaintiff and Walker separately entered into a “Stipulation for Consent Judgment with Respect to Plaintiff Wecosign, Inc. and Defendant Walker.” (Consent Judgment, Doc. 84.) Plaintiff seeks permanent injunctive relief, monetary damages, attorneys’ fees, and costs. (Mem. of P. & A. at 1, Doc. 77.) Having taken Plaintiffs Motion under submission and read and considered the papers, the Court GRANTS IN PART and DENIES IN PART Plaintiffs Motion, and defers ruling on Plaintiffs claim for “lost profits” damages to allow for submission of additional evidence.
I. Factual Background
Plaintiff is the owner of the service mark “Wecosign” (“the Mark”). (Compl. ¶ 5, Doc. 1.) Since at least 2005, Plaintiff “has continuously and extensively adver
Defendant IFG is a Nevada corporation with its principal place of business in Los Angeles, California. (Id. ¶ 6.) Defendant IFG has done business, under various names, including We Cosign USA. (Id.) Defendant Adams purports to be the CEO and President of We Cosign USA, and also a Director of Defendant IFG. (Id. ¶ 8.) Defendant Williams purports to be .the CEO and President of We Cosign USA and Defendant Avila is the purported Vice President and Finance Director of We Cosign USA. (Id. ¶¶ 9-10.) Defendants Jones and Miller, both Nevada residents, are respectively the Secretary and . President of Defendant IFG. (Id. ¶¶ 11-12.) Defendant ACG is an organization engaged in commercial activity in California. (Id. ¶ 7.) Furthermore, Defendants engaged in all relevant acts jointly, and there is a unity of interest and ownership among the corporations and individuals. (Id. ¶¶ 14, 41.)
Sometime prior to July 21, 2010, Defendants arranged for virtual office services at two locations in Los Angeles, California and one location in New York, New York, and arranged for the use of post office boxes in Woodland Hills, California and in La Jolla, Californiа. (Id. -¶ 19.) Defendants also registered several domain names, including <inseorefunding.com> (“the Inscore Domain”), <ifgexec.com> (“the IFG Domain”), <weeosignusa.com> (“the Wecosign USA Domain”), and <cosignusa.com > (“the Cosign USA Domain”). (Id. ¶¶ 20, 22, 24, 26.) When registering each of these domains, Defendants provided materially false contact information to the domain name registrar. (Id.) At the Inscore Domain and the IFG Domain, Defendants operated commercial websites advertising and soliciting their financial services under the mark “We Co-Sing [sic].” (Id. ¶¶ 21, 23.) . Defendants also began operating a commercial website at the Wecosign USA Domain, advertising and soliciting their financial services under the mark “WE COSIGN USA.” (Id. ¶ 25.) Defendants diverted traffic from the Cosign USA Domain to the Wecosign USA Domain. (Id. ¶ 27.)
Beginning in June or July 2010, Defendants began advertising and solicitation of their financial services on the Internet under various marks confusingly similar to the Mark, including ■ on Craigslist.org, Twitter.com, Corkin.com, ListOwn.com, Daype.com, and AdsInUSA.com. (Id. ¶ 28.) These advertisements either directed potential consumers to the Wecosign USA Domain or to contact Defendants directly. (Id.) Defendants undertook this advertising without Plaintiffs permission or authorization, and intended to cause consumers and potential consumers to believe that Defendants’ financial services are associated with Plaintiff when they are not. (Id. ¶¶ 30, 34.) Furthermore, Defendants had actual knowledge of Plaintiffs prior use of and rights in the Mаrk. (Id. ¶ 39.)
H. Procedural Background
On August 9, 2010, Plaintiff filed a Complaint asserting seven claims: (1) federal trademark infringement under 15 U.S.C. § 1114; (2) federal false designation of
Despite filing an Answer, Defendants IFG and Adams failed to mount a defense, or participate in discovery. (Mem. of P & A at 3.) Accordingly, on July 22, 2011, Plaintiff filed a Motion for Entry of Default of IFG and Adams. (Motion for Entry of Default, Doc. 56.) On August 10, 2011, the Court granted Plaintiffs Motion for Entry of Default of Defendants IFG and Adams. (Order Granting Plaintiffs Motion for Entry of Default, Doc. 67.) In the same Order, the Court also set forth a procedure for Plaintiff to provide notice to Defendants of Plaintiffs Motion for Entry of Default Judgment. (Id. at 2-3.) Specifically, the Court required Plaintiff to transmit, via United States Certified Mail, its motion and all supporting papers to Defendants at the addressed listed in the Order at leаst three Court days before filing the motion. (Id.) The Court also required that, at least three Court days before filing the motion, Plaintiff publish notice of its motion to Defendants for one-day in The Los Angeles Times and one day in The Las Vegas Review-Journal. (Id.)
III. Legal Standard
Under Rule 55 of the Federal Rules of Civil Procedure, default judgment is a two-step process. See Fed.R.Civ.P. 55; see also Eitel v. McCool,
A district court has discretion to grant or deny a motion for default judgment. Aldabe v. Aldabe,
“If the court determines that the allegations in the complaint are sufficient to establish liability, it must then determine the ‘amount and character’ of the relief that should be awarded.” Landstar
Accordingly, the Court may hold a hearing to determine the amount of damages. Fed.R.Civ.P. 55(b)(2)(B). Under Ninth Circuit law, “[i]t is well settled that a default judgment for money may not be entered without a hearing unless the amount claimed is a liquidated sum or capable of mathematical calculation.” Davis v. Fendler,
IV. Discussion
a. Allegations and Substantive Merits of Claims
i. Trademark Infringement, False Designation of Origin, and Unfair Competition
To assert a claim for trademark infringement, Plaintiff must show that Defendants are using: (1) any reproduction, counterfeit, copy or colorable imitation of a mark; (2) without Plaintiffs consent; (3) in commerce; (4) in connection with the sale, offering for sale, distribution or advertising of any goods or services; (5) where such use is likely to cause confusion, or to cause a mistake or to deceive. 15 U.S.C. § 1114(l)(a); Century 21 Real Estate Corp. v. Sandlin,
The key inquiry under a trademark infringement claim is “whether an alleged trademark infringer’s use of a mark creates a likelihood that the consuming public will be confused as to who makes what product.” Jada Toys, Inc. v. Mattel, Inc.,
Overall, the application of the Sleekcraft factors to the allegations in Plaintiffs Complaint, taken as true, suggest a high likelihood of confusion. The marks used by Defendants in connection with their services, including “WE CO-SING [sic]” and “WECOSIGNUSA” are nearly identical to the Mark. In fact, the former appears to be a typo of the Mark, and the latter simply appends “USA” to the Mark. Both Plaintiff and Defendants use the internet as their primary marketing channel, and both offer financial services under their respective marks. Furthermore, Defendants use the marks in an attempt to cause consumers to believe that Defendants’ financial services are associated with Plaintiff. Based only on the allegations of the Complaint, the three most important Sleekcraft factors in the context of internet infringement, together with Defendants’ intent to cause confusion, suggest a high likelihood of confusion. Therefore, the Court concludes that Plaintiff has adequately pled its trademark infringement claim, and is likely to succeed on the merits.
ii. Cyberpiracy
To prevail on a claim for cyberpiracy, Plaintiff must prove that “(1) the [D]efendant[s] registered, trafficked in, or used a domain name; (2) the domain name is identical or confusingly similar to a protected mark owned by the plaintiff; and (3) the defendant acts with ‘bad faith intent to profit from that mark.’ ” DSPT Int’l, Inc. v. Nahum,
iii. Civil RICO
“Liability under RICO ... requires (1) the conduct (2) of an enterprise
The main allegation underlying Plaintiffs assertion of wire fraud by Defendants is that “Defendants devised a scheme or artifice to solicit payment from others for counterfeit services through Defendants’ infringing use of a counterfeit mark, which created confusion or mistake or deceived others regarding the source or origin of Defendants’ purported services.” (ComplA 77.) This is simply a restyling, if not purely a reiteration, of Plaintiffs trademark infringement and false designation of origin claims. However, trademark infringement and falsе designation of origin are not cognizable RICO predicates. See Smith,
b. Remaining Eitel Factors
i. Prejudice to the Plaintiff
Plaintiff would suffer prejudice if the Court does not grant its motion for the entry of default judgment because it has no other means of recourse. Five of the Defendants have failed to appear in or otherwise defend this action at all, and two of the Defendants initially appeared but then withdrew their participation in this action. Therefore, this factor weighs in favor of the entry of default judgment.
“[This] Eitel factor examines the amount of money at stake in relation to the seriousness of a defendant’s conduct.” Craigslist, Inc. v. Naturemarket, Inc.,
iii. Dispute Concerning Material Facts
“[This] Eitel factor examines the likelihood of dispute between the parties regarding the material facts surrounding the case.” Craigslist,
Additionally, Walker reached out to Plaintiffs counsel in an attempt to exonerate herself because she had been unaware of the unlawful activities of Defendants Adams and IFG alleged in the Complaint. (Walkеr Deck ¶ 7, Doc. 79.) While this suggests that other individual Defendants may have been similarly unaware of the activities of Defendants Adams and IFG, no other Defendant has made any attempt to defend itself. Therefore, the Court concludes that while not entirely remote, the possibility of a dispute concerning material fact with respect to Defendants ACG, Williams, Jones, Avila, and Miller is low. Accordingly, this factor weighs in favor of the entry of default.
iv. Excusable Neglect
This “factor considers whether defendant’s default may have been the product of excusable neglect.” Landstar Ranger,
v. Policy Favoring Decision on the Merits
“The final Eitel factor examines whether the strong policy favoring deciding cases on the merits prevents a court from entering default judgment.” Craigslist,
V. Remedies
a. Permanent Injunction
Plaintiff seeks to permanently enjoin Defendants from the following:
i. using the Mark or any mark confusingly similar thereto to promote, offer, render, advertise, or identify any financial services or related goods or services in such a way that would be likely to cause confusion, to cause mistake, or to deceive, or otherwisе to create the impression that Defendants’ goods or services originate from Plaintiff, are endorsed by Plaintiff, or are connected in any way with Plaintiff;
ii. otherwise infringing the Mark;
iii. registering any domain name or names identical or confusingly similar to the Mark;
iv. falsely designating the origin of Defendants’ services;
v. using in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact that is likely to cause confusion, to cause mistake, or to deceive regarding the origin, sponsorship, or approval of Defendants’ services or falsely to imply a connection or affiliation with Plaintiff or Plaintiffs WECOSIGN services;
vi. unfairly competing with Plaintiff in any manner whatsoever;
vii. causing likelihood of confusion or injuring Plaintiffs business reputation; and
viii. associating together to offer financial guaranty services or to engage in the same type of endeavor as the Enterprise has engaged in.
(Compl. at 20-21, ¶ H.)
Under the Lanham Act, “the district court [has] the ‘power to grant injunctions according to principles of equity and upon such terms as the court may deem reasonable, to prevent the violation of any right’ of the trademark owner.” Reno Air Racing Ass’n v. McCord,
Here, Plaintiff has demonstrated actual success on the merits of its trademark infringement and cyberpiracy claims. If an injunction were not granted, Plaintiff would suffer irreparable injury from the ongoing damages to its goodwill and diversion of customers to counterfeit services. Furthermore, the balance of hardships favors Plaintiff because without an injunction, Plaintiff will lose profits and goodwill, while an injunction will only proscribe Defendants’ infringing activities. Finally, an injunction is in the public interest because “[t]he public has an interest in avoiding confusion between two companies’ products.” Internet Specialties West, Inc. v. Milon-DiGiorgio Enters., Inc.,
Accordingly, the Court concludes that Plaintiff is entitled to a preliminary injunction as requested, with the exception that the last term (viii) referring to “the Enterprise” is excluded. The inclusion of this term is dependent on the Court’s entering default judgment as to Plaintiffs RICO claims, which it declined to do.
b. Damages
The Lanham Act provides that, subject to the principles of equity, a trademark owner may “recover (1) defendant’s profits, (2) any damages sustained by plaintiff, and (3) the costs of the action.” 15 U.S.C. § 1117(a). Additionally, the Court may enter judgment for any sum up to three times the amount found as actual damages. Id. Here, Plaintiff seeks to recover actual damages in the amount of $229,000, including $25,000 in Defendants’ profits and $204,000 in lost profits, which it asserts should be trebled. (Mem. of P. & A. at 20.) However, “recovery of both plaintiffs lost profits and disgorgement of defendant’s profits is generally considered a double recovery under the Lanham Act.” Nintendo of Am., Inc. v. Dragon Pac. Int’l,
“As a general rule, damages which result from a tort must be established with reasonable certainty.... Damages are not rendered uncertain because they cannot be calculated with absolute exactness, yet, a reasonable basis for computation must exist.” Lindy Pen Co. v. Bic Pen Corp.,
With respect to Defendants’ profits, Plaintiff is required to prove only sales; had Defendants mounted a defense, they would have carried the burden of showing deductions. 15 U.S.C. § 1117(a). In her declaration, Walker stated that Defendants Adams and IFG received at least $25,000 in revenue from at least four customers. (Walker Deck ¶¶ 5-6.) Given the fact that Defendants have frustrated Plaintiffs ability to determine with any precision the amount of their sales and considering the circumstances of Defendants’ operation, the Court concludes that Plaintiff has established $25,000 as an appropriate measure of Defendants’ profits.
As a measure of its lost profits, Plaintiff submits the declarаtion of its General
While the Court recognizes that “[Defendants’] wrong made it impossible to know with any precision what [Plaintiffs] sales would have been had [Defendants’] not committed their wrong,” DSPT Int’l,
As discussed above, Plaintiff may not rеcover its own lost profits in addition to the disgorgement of Defendants’ profits. Plaintiff has established the appropriate measure of Defendants’ profits, but has failed to show a reasonable measure of its lost profits. The Court will give Plaintiff the opportunity to submit further evidence of the basis for its “lost profits” damages no later than February 13, 2012. Failure to do so will result in denial of that request. Furthermore, the Court will determine the reasonableness of trebling or otherwise increasing damages based on either Defendants’ profits or Plaintiffs lost profits once it is in receipt of all of the lost profits evidence.
c. Statutory Damages
The Lanham Act provides for statutory damages for cyberpiracy violations under 15 U.S.C. § 1125(d)(1) in an amount of $1,000 to $100,000 per domain name. 15 U.S.C. § 1117(d). A prevailing plaintiff may recover statutory damages under this provision in addition to actual damages for infringement of its trademark. See St. Luke’s Cataract and Laser Inst., PA v. Sanderson,
To determine a reasonable amount of statutory damages, “courts generally consider a number of factors ..., including the egregiousness or willfulness of the defendant’s cybersquatting, the defendant’s use of false contact information to conceal its infringing activities, the defendant’s status as a ‘serial’ cybersquatter ... and other behavior by the defendant evidencing an attitude of contempt towards the court of the proceedings.” Verizon California, Inc. v. Onlinenic, Inc., No. C 08-2832 JF (RS),
d. Attorneys’ Fees
“An award of reasonable attorneys’ fees and costs is expressly provided for in ‘exceptional cases’ of trademark infringement.” Derek Andrew, Inc. v. Poof Apparel Corp.,
Having reviewed the invoices provided by Plaintiff, the Court finds that the time spent was reasonable. The Court also finds the rates charged by Plaintiffs counsel to be reasonable, partiсularly in light of the complexity of this case and the fact that Defendants Adams and IFG initially appeared in the case. Therefore, Plaintiffs request for $222, 946 in attorneys’ fees is granted.
e. Costs
Because Plaintiff prevailed on its false designation of origin claim, it is entitled to the costs of the action. 15 U.S.C. § 1117(a). In accordance with Local Rule 54-3, Plaintiff may submit a Bill of Costs and a Notice of Application to the Clerk to Tax Costs to recover the costs of this action. C.D. Cal. R. 54-3.
VI. Conclusion
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART Plaintiffs Motion for Default Judgment. Accordingly:
i. The Judgment is GRANTED as to all Defendants with respect to the following claims: (1) federal trademark infringement under 15 U.S.C. § 1114; (2) federal false designation of origin under 15 U.S.C. § 1125(a); (3) federal cyberpiracy under 15 U.S.C. § 1125(d)(1)(A); (4) unfair competition under Cal. Bus. & Prof. Code §§ 17200, et seq.; (5) common law unfair competition under California law.
ii. The Judgment is DENIED as to all Defendants with respect to the following claims: (1) federal racketeering activity under 18 U.S.C. § 1962(c); and (2) conspiracy to commit federal racketeering activity under 18 U.S.C. § 1962(d).
iii. Defendants are permanently enjoined from the activities enumerated in Plaintiffs requested injunction, with the exception of the last term (viii), as set forth in this Order.
iv. The Court defers a ruling on Plaintiffs request for actual damages, as set forth in this Order.
v. Plaintiff is awarded $50,000 in statutory damages under § 1117(d).
vi. Plaintiffs is entitled to attorneys’ fees in the amоunt of $222,946.
vii. Plaintiff may submit a Bill of Costs and a Notice of Application to the Clerk to Tax Costs to recover the costs of this action.
Notes
. Plaintiff also provides additional evidence of its likelihood of success on the merits. For example, Walker stated that Defendant Adams was aware of Plaintiff and its use of the Mark from "[p]retty much the beginning” and had visited Plaintiff's website prior to using the various marks. (Walker Deck, Ex. F at 13:24, Doc. 79-1; Holcomb Deck ISO Default J., Ex. O at RFA 181, Doc. 80.) Additionally, Plaintiff submits evidence of actual consumer confusion based on the receipt by Plaintiff of calls from potential customers confused about the connection between Plaintiff and Defendants. (Jakubaitis Deck ¶¶ 12-14, Doc. 78.)
. The Court notes that Plaintiff submits evidence that Defendant Adams intended to divert traffic from Plaintiffs website. (Holcomb Decl. ISO Default J., Ex. O at RFA 47.) Plaintiff also submits evidence that Adams "agreed with another person to collect application fees and payment for financial services offered under the mark WE COSIGN USA while intending that no financial services would actually be rendered.” (Id. at RFA 253.) However, allegations as to these facts were not included in the Complaint, and therefore, Plaintiff fails to state a claim for mail fraud. Furthermore, Plaintiff asserts RICO claims against all Defendants, but provides evidence of this sort only as to Defendant Adams.