Society for Human Resource Management v. Zrowth LLC

Background

The Society for Human Resource Management (SHRM) certifies human-resources professionals and owns registered trademarks that include “SHRM” and a stylized logo. Zrowth LLC operates under the name HR Growth Tools and sells bundles of human-resources templates through its website.

The website had featured SHRM’s logo and still identified the company’s apparent founder, Stella Benson, as “Certified SHRM-SCP” in two places. SHRM said it had no record of anyone named Stella Benson being certified and noted that the image used was a stock photo. SHRM sued Zrowth for trademark infringement and unfair competition, seeking damages and an injunction. For its default-judgment motion, SHRM sought only an injunction.

Jurisdiction and Service

The court found that it had personal jurisdiction over Zrowth because Zrowth’s principal place of business was in California. The website and a LinkedIn page identified an office, primary location, and headquarters in Milpitas, California. Although Zrowth is a Wyoming limited liability company, its Wyoming address was the address of a registered agent’s law firm, which provided virtual offices for many businesses. The court also noted Zrowth’s California telephone area code and found no other reason to think its principal place of business was in Wyoming.

SHRM served Zrowth by registered mail in Wyoming and by hand delivery at the Milpitas address in California. Zrowth did not appear or respond.

Court’s Analysis

The court applied the factors from Eitel v. McCool for deciding whether to enter default judgment. It found that SHRM would be prejudiced without an injunction because Zrowth continued to use SHRM’s trademark. The court also found that SHRM had sufficiently pleaded an apparently meritorious claim under the Lanham Act, the federal trademark statute. In the court’s view, Zrowth’s use of SHRM’s trademark in commerce was a false or misleading description likely to cause confusion about the origin, sponsorship, or approval of Zrowth’s products. The website’s promotion of a fake SHRM certification suggested that Zrowth’s templates were high quality and approved by SHRM. The court also described the former use of SHRM’s stylized logo as clear trademark infringement, although Zrowth had removed the logo.

The court likewise found that SHRM had sufficiently pleaded an apparently meritorious California unfair-competition claim because the public was likely to be deceived by Zrowth’s use of SHRM’s trademark. The court found that the injunction request involved no large monetary stake, that material factual disputes were unlikely, and that Zrowth’s failure to respond did not appear to result from excusable neglect. The court said the federal policy favoring decisions on the merits was the only factor weighing against default judgment, but that denying default judgment would not cause the case to be decided on the merits because Zrowth had failed to answer.

Ruling

The court granted default judgment in favor of SHRM. It permanently enjoined Zrowth from infringing SHRM’s trademarks or engaging in unfair competition through use of those trademarks. Within ten days, Zrowth was ordered to remove SHRM’s trademarks, claims that its founder was SHRM-certified, and other references misleadingly suggesting an affiliation with SHRM from its marketing, advertising, and promotional materials, including its website and social-media pages. SHRM was ordered to serve the order on Zrowth.