Amazon.com, Inc. v. Sleja, Inc.

Background

Amazon alleged that nine defendants participated in a fraudulent scheme involving Amazon’s trademarks. The scheme allegedly used websites and social-media pages featuring the words “Amazon,” “Alexa,” and “Echo” to attract people seeking help setting up Alexa-enabled devices. Visitors were asked for contact information, shown an error message, and directed to call or await a call from purported technicians. Those technicians allegedly took remote control of computers, claimed that technical problems prevented device setup, and sold fake services.

Amazon’s investigators made three test purchases: $99.99 for “network security lifetime protection,” $49.99 for a one-year “Alexa software account,” and $149.99 for a “lifetime update.” Amazon represented that the services were fake and that no genuine services were provided after payment. Amazon brought claims for trademark infringement, false designation of origin and false advertising, trademark dilution, and cybersquatting under federal trademark law.

The Clerk entered default against Swatanter Gupta and Expert Tech Rogers Pvt. Ltd. after they failed to appear or defend the case. Amazon moved for default judgment against those two defendants. The motion was unopposed. Amazon had settled with four other defendants and said it intended to dismiss the remaining three after the default-judgment motion was resolved.

Jurisdiction and service

The court concluded that federal-question jurisdiction existed because Amazon’s claims arose under federal trademark laws. It also concluded that it could exercise nationwide personal jurisdiction over Gupta and Expert Tech Rogers under Federal Rule of Civil Procedure 4(k)(2). The court reasoned that the defendants were based in India, were not shown to be subject to general jurisdiction in any state, and had directed activity toward the United States by working with California residents and using U.S. bank accounts and other infrastructure.

The court also found service adequate. The district judge had authorized service by email, conditioned on Amazon obtaining a delivery receipt. Amazon provided a receipt confirming delivery to the email address of record.

Default judgment analysis

A default judgment is a judgment entered when a defendant fails to respond or defend. The court applied the seven factors used in the Ninth Circuit to evaluate such requests. It found that six factors favored default judgment: Amazon would otherwise lack a remedy against these defendants; the complaint adequately supported the claims; the requested amount was related to the alleged misconduct; the material facts did not appear to be disputed; the defendants had been properly served; and their failure to respond was not shown to be excusable. The policy favoring decisions on the merits weighed against default judgment, but the court concluded that deciding the case on the merits was impractical because the defendants had not appeared.

For trademark infringement, the court found that Amazon had shown ownership of four registered marks—the AMAZON mark, the Amazon smiling-arrow logo, the ALEXA mark, and the ECHO mark—and that the defendants’ use of those marks was likely to confuse consumers about the source of the services. The court treated Amazon’s false-designation claim similarly because the claims generally rise or fall together. It construed Amazon’s motion as seeking default judgment on false designation of origin, rather than separately on false advertising.

For cybersquatting, the court addressed three domain names: downloadalexaappechosetup.com, downloadappalexaecho.com, and downloadalexaappecho.com. It concluded that the allegations supported the elements of cybersquatting, including use of domain names confusingly similar to Amazon’s protected marks and an intent to profit from those marks.

Recommended remedies

Amazon requested $4,150,000 in statutory damages: $1,000,000 for each of four trademark infringements and $50,000 for each of three cybersquatting violations. The court concluded that the requested $4,000,000 for trademark infringement would be a windfall because the evidence showed only three test sales, the defendants’ profits were about $712,000, and Amazon provided its own Alexa support and setup services for free. The court therefore recommended $200,000 for each of the four trademark infringements, totaling $800,000.

For cybersquatting, the court recommended $25,000 for each of the three domain names, totaling $75,000. The court noted that the allegations supported willful conduct but that there was no evidence the defendants used false registration information or had engaged in serial cybersquatting against other parties.

The court also recommended a permanent injunction against Gupta, Expert Tech Rogers, and specified associated persons. The proposed injunction would bar them from using counterfeit Amazon trademarks, making misleading statements suggesting Amazon authorization, defrauding people into paying for Amazon services, registering or using domain names involving Amazon’s trademarks, and materially assisting others in those activities. The court recommended removing the reference to trademark dilution from the injunction because Amazon did not seek default judgment on that claim.

Recommendation and status

The magistrate judge recommended that Judge Phyllis J. Hamilton grant Amazon’s motion for default judgment against Gupta and Expert Tech Rogers and award $875,000 in statutory damages, together with the permanent injunction described above. The provided opinion is a report and recommendation; it does not include a later order by Judge Hamilton adopting or rejecting it.