Faizi v. Temori

Background

Ahmad Mukhtar Faizi previously sought default judgment on behalf of Falafel Flame, Inc. against Falafel Flame Hayward, Falafel Flame Sunnyvale, and Falafel Flame San Jose on the Company’s claim for trademark infringement under the Lanham Act. In an earlier order, the court granted default judgment as to liability but denied the requested remedies without prejudice because the record did not sufficiently support them.

Faizi’s renewed motion sought modified remedies on Falafel Flame’s behalf. He no longer requested a permanent injunction, an accounting and disgorgement of profits, attorneys’ fees, or costs. Instead, he requested payment of $1,000, plus interest, for each month that each defendant operated under the FALAFEL FLAME mark. The proposed $1,000 amount was based on the monthly license fee that Falafel Flame would have charged for use of its trademark and recipes.

Court’s analysis

The court found that the $1,000 monthly license fee was an appropriate measure of Falafel Flame’s claimed actual damages for unauthorized use of its registered service mark. The court relied in part on Faizi’s prior statement that Falafel Flame was designed to be a parent holding company that would grant intellectual-property licenses to individual FALAFEL FLAME locations. The court also noted that defendants had previously maintained that the Company’s $1,000 monthly license fee was the appropriate measure of damages.

The court approved the requested payment periods: from February 23, 2021, for Falafel Flame Hayward; and from March 31, 2021, for both Falafel Flame Sunnyvale and Falafel Flame San Jose. Each period runs through the date the applicable defendant ceases using the Company’s FALAFEL FLAME mark. The order states that, absent evidence that the defendants had ceased using the mark, the total damages were $40,800 for Hayward, $39,000 for Sunnyvale, and $39,000 for San Jose.

The defendants had changed their name to “Falafel Flare,” but the court said it was unclear whether those were merely changed names or different entities and, if different, whether they were successors to the defendants. The court also observed that the trademark claim was based on more than use of the “Falafel Flame” name and that defendants had not refuted evidence that the registered marks continued to appear on their websites and other materials.

The defendants argued that some entities were closed and lacked money and that Baktash Temori and the Rustakhis lacked money to pay a judgment. They submitted no supporting evidence. Temori and the Rustakhis also argued that default judgment was unwarranted because they said they were majority owners of Falafel Flame, but they likewise submitted no supporting evidence. The court concluded that they had not shown that their asserted ownership interests should prevent default judgment, particularly because Faizi brought the motion on behalf of the Company rather than personally.

Ruling

Judge Virginia K. DeMarchi granted in part and denied in part the renewed motion for default judgment. The court awarded Falafel Flame damages based on the $1,000 monthly license fee and set the three damages totals described above. It denied the request for prejudgment interest because Faizi provided no argument or authority showing that such an award was fair or necessary to make the Company whole, especially for periods before the lawsuit was filed.

The court ruled that post-judgment interest must be calculated under 28 U.S.C. § 1961, using the weekly average one-year constant-maturity Treasury yield for the calendar week preceding the date of judgment. The court also stated that, because the case involved multiple claims and parties, final judgment generally would not be entered until all claims, rights, and liabilities were resolved. It directed Faizi to clarify whether he sought partial judgment under Federal Rule of Civil Procedure 54(b) and, if so, to file an appropriate motion and proposed judgment consistent with the order.