Adobe Systems Incorporated v. Nwubah

Background

Adobe alleged that Bernard Nwubah sold counterfeit Adobe software through eBay, Bonanza, dealsCube, Toucan Deal, and other online platforms. Adobe alleged that Nwubah used multiple seller names and sold counterfeit versions of Adobe Acrobat software bearing Adobe’s trademarks and copyrighted material. Adobe conducted eight investigative purchases between 2016 and 2019 and reported that the products, software files, packaging, and serial numbers were counterfeit. Adobe also sent multiple cease-and-desist letters, to which it said Nwubah did not respond.

Adobe’s complaint asserted five claims: federal trademark infringement; false designation of origin and unfair competition under the Lanham Act; trademark dilution; federal copyright infringement; and violation of California’s Unfair Competition Law. Adobe sought an injunction and statutory damages.

Procedural History and Jurisdiction

Nwubah was personally served on December 3, 2018. He and Adobe stipulated that he would have until January 23, 2019, to answer, but he did not do so. The Clerk entered default on March 7, 2019. Nwubah signed the stipulation as a self-represented litigant but took no further action in the case.

The court previously denied Adobe’s first motion for default judgment without prejudice because Adobe had not shown personal jurisdiction over Nwubah. In the renewed motion, Adobe submitted third-party sales records showing that Nwubah made 863 sales to California consumers from December 2016 through July 2018, totaling $36,251.28, or about 18 percent of his 4,795 sales during that period.

The court held that these sales were systematic and continuous rather than random or isolated. It concluded that Nwubah purposefully directed the relevant conduct toward California, that Adobe’s claims arose from those activities, and that exercising specific personal jurisdiction was reasonable. The court also found that service was proper and that it had federal subject-matter jurisdiction over the federal claims, along with supplemental jurisdiction over the related California claim.

Default Judgment Analysis

Under Federal Rule of Civil Procedure 55, a court may enter default judgment after the Clerk has entered a defendant’s default. The court applied the seven factors identified in Eitel v. McCool. It found that six factors favored default judgment: potential prejudice to Adobe, the merits of Adobe’s claims, the sufficiency of the complaint, the amount at stake, the lack of a likely dispute over material facts, and the absence of evidence that Nwubah’s failure to participate resulted from excusable neglect. The policy favoring decisions on the merits weighed slightly against default judgment, but the court found that this factor was outweighed by the other six.

Because Nwubah defaulted, the court treated the well-pleaded liability allegations as true, but damages still had to be supported. The court found that Adobe adequately pleaded trademark infringement, false designation of origin and unfair competition, and violation of the California Unfair Competition Law. It also found that Adobe adequately pleaded copyright infringement by alleging ownership of valid copyrights and unauthorized copying of protected software.

Adobe’s motion did not request default judgment on the trademark-dilution claim, so the court analyzed only the first, second, fourth, and fifth claims.

Remedies

The court granted permanent injunctive relief. The injunction bars Nwubah from copying, importing, advertising, offering for sale, selling, or distributing counterfeit Adobe software; using Adobe’s registered marks or confusingly similar versions in connection with software; and continuing specified promotions, advertisements, and merchandise. The order also requires him to deliver for destruction certain Adobe software in his possession or control that was not lawfully licensed by Adobe.

The court awarded $214,845.31 in statutory damages for willful trademark and copyright infringement. It found that this amount represented Nwubah’s known total revenue from the counterfeiting activity, had a plausible relationship to Adobe’s actual damages, would deter infringement, and would not provide Adobe a windfall.

Disposition

Judge Koh granted Adobe’s motion for default judgment, awarded the permanent injunctive relief described in the order, and awarded Adobe $214,845.31 in statutory damages.