Bestway Inflatables & Material Corp. v. Doe

Background

Bestway alleged that John/Jane Doe 1-10 operated four websites—bestway-outlet.store, bestwaypools.vip, bestwayusa.store, and bestwaypools.store—that purported to sell genuine Bestway products. According to the complaint, the sites used copied Bestway product images and 20 registered Bestway trademarks, advertised products at deeply discounted prices, and caused customer confusion. The defendants were identified only through email addresses associated with the websites and PayPal accounts.

Bestway filed the lawsuit on July 1, 2021. The court authorized service by email, issued a temporary restraining order, later issued an amended order, and granted a preliminary injunction after the defendants failed to appear. The clerk entered default on October 21, 2021. Bestway later withdrew its common-law trademark-infringement and unfair-competition claim.

Jurisdiction and Service

The court concluded that it had subject-matter jurisdiction because the complaint raised federal trademark claims. It also concluded that it could exercise nationwide personal jurisdiction under Federal Rule of Civil Procedure 4(k)(2). The court reasoned that the defendants’ claims arose under federal law, that the allegations did not show the defendants were subject to general jurisdiction in any state, and that the defendants had directed activity toward the United States by marketing goods to U.S. customers and using a registrar and domain-name system host located in the district.

The court had authorized alternative service by email because the defendants’ identities and physical locations were unknown. It concluded that the email service was adequate.

Default Judgment

A default judgment is a judgment entered when a defendant fails to respond or participate in the case. Applying the factors identified in Eitel v. McCool, the court found that six of the seven factors favored default judgment. Bestway would otherwise lack a remedy because the defendants had not responded; the complaint adequately alleged trademark infringement, false designation of origin, and cybersquatting; the requested statutory damages were tied to the alleged conduct; there was no indication of a dispute over material facts; the defendants had been properly served; and their failure to answer made a decision after a contested trial impractical. The policy favoring decisions on the merits weighed against default judgment, but the court found that factor outweighed by the defendants’ nonparticipation.

For trademark infringement, the court found that Bestway had established ownership of valid registered marks and that the defendants’ use was likely to confuse consumers. The copied logos, product images, and marketing materials, along with evidence of actual customer confusion, supported that conclusion. The court treated the false-designation claim as rising and falling with the trademark-infringement claim. It also found that the defendants’ use of confusingly similar domain names with a bad-faith intent to profit supported the cybersquatting claim.

Relief

Bestway requested $20 million in statutory damages—$1 million for each of 20 trademark infringements. The court found that amount appropriate, explaining that it was half the statutory maximum available for a willful violation of each mark, reflected plausible harm to Bestway’s goodwill, and was sufficient to deter the conduct. The opinion’s conclusion section, as provided, omits a numbered item between the motion ruling and the injunction ruling, but the damages discussion states that $20 million was appropriate.

The court also granted a permanent injunction. The injunction prohibits the defendants and persons acting with them from using Bestway’s trademarks, passing off non-genuine products as genuine Bestway products, interfering with Bestway’s trademark rights, or operating the identified infringing websites or similar sites containing infringing content. It also directs the registrar to lock the domains, remove domain-name-system entries, and prevent domain transfers, and prohibits Dynadot from registering websites containing “bestway” in the domain name until further court order.

Finally, the court ordered PayPal to release funds frozen under the earlier preliminary injunction to Bestway as partial satisfaction of the default judgment, 30 days after entry of judgment. Bestway was ordered to submit a revised proposed judgment and injunction within seven days.

Disposition

The court granted Bestway’s motion for default judgment, granted the injunction described in the opinion, and ordered release of the frozen PayPal funds as partial satisfaction of the judgment.