Restoration Hardware v. Sichuan Wei Li Tian Xia Network Technology Co.

Background

Restoration Hardware, Inc. and RH US LLC, together referred to as RH, sued four groups of defendants for intellectual-property violations and unfair competition. RH alleged that the defendants used RH’s copyrighted product photographs and product descriptions, used RH’s registered and unregistered trademarks, and sold lighting products that infringed RH’s design patent No. D892,385 S.

The four groups were: (1) the “Rain & Light” group—Sichuan Wei Li Tian Xia Network Technology Co., Ltd., Hefei Gengzong Trading Co., Ltd., and Chengdu Weiqi Digital Technology Co.; (2) the “Yiosi” group—Zhongshan Tuxiang Lighting Co., Ltd., Zhongshan Yiosi Lighting Co., Ltd., Wang Xurui, and “Xie”; (3) the “Koko Lights” group—Jamya Limited, Koko Light LTD, and Alfred Chen; and (4) Emilya Limited doing business as Herman Lighting and Hurd Light.

RH alleged that these defendants operated online stores selling lighting products that copied or closely resembled RH products. The allegations included the use of approximately 200 RH photographs by Rain & Light, repeated use of RH marks and photographs by Yiosi and Koko Lights, and sales through the Herman Lighting and Hurd Light websites. RH also made test purchases and alleged that some products were supplied by Yiosi.

The defendants never appeared or opposed RH’s requested relief. The court had previously issued temporary restraining orders and preliminary injunctions, including orders restricting use of RH’s works and marks, freezing certain financial accounts, and placing domain names on registry hold. The Clerk entered default against the defendants on February 24, 2023.

Jurisdiction and service

The court found federal-question jurisdiction over RH’s copyright, trademark, and patent claims and supplemental jurisdiction over the California Unfair Competition claim. It also found personal jurisdiction because the defendants sold products through interactive websites to California residents, including RH, and the alleged harm occurred in California.

The court held that service by email complied with Federal Rule of Civil Procedure 4(f)(3), based on the defendants’ use of the email addresses during test purchases and the court’s earlier orders authorizing that method of service.

Default judgment analysis

Under Federal Rule of Civil Procedure 55, a court may enter judgment when a properly served defendant fails to appear. The court applied the factors commonly used in the Ninth Circuit for deciding whether default judgment is appropriate. It concluded that the factors favored judgment because RH would otherwise lack a remedy, the complaint adequately alleged viable claims, the requested damages were tied to the alleged conduct, no material factual dispute was apparent, and the defendants’ failure to respond was not likely excusable. Although decisions on the merits are generally preferred, the court found such a decision impractical because the defendants did not answer.

For copyright infringement, the court found that RH adequately alleged ownership of the copyrights and violations of RH’s exclusive rights. For trademark infringement and related unfair competition, the court found that RH adequately alleged ownership of its marks and a likelihood that consumers would be confused. The court emphasized that the defendants often used marks identical to RH’s marks alongside RH’s copyrighted photographs, which strongly suggested an intent to confuse consumers. For design-patent infringement, the court applied the ordinary-observer test and found that the side-by-side comparisons adequately alleged that an ordinary purchaser could mistake the accused products for RH’s patented design.

Remedies and disposition

The court granted RH’s motion for default judgment. It awarded $330,000 in statutory copyright damages against each defendant group. The amount represented $30,000 for each of 11 infringed works. The court rejected RH’s request for a separate $330,000 award against every individual defendant because the allegations grouped the defendants into four instances of joint infringement. Instead, each group was jointly and severally liable for one $330,000 award, meaning the members of each group were collectively responsible for that group’s award.

The court converted the earlier preliminary injunctions into permanent injunctions. The injunction bars the defendants and specified persons acting with them from copying, distributing, or publicly displaying RH’s copyrighted works or copyrighted lighting; using RH’s marks or confusingly similar marks in connection with manufacturing or selling lighting products; and making, selling, offering to sell, or importing products that infringe RH’s design patent.

The court also ordered the registrars and Verisign, Inc. to disable these domain names: <rainandlight.com>, <rainandlights.com>, <rainandlighting.com>, <kokolights.com>, <hermanlighting.com>, and <hurdlight.com>. The court retained jurisdiction to enforce the permanent injunction.

Finally, the court ordered that funds held in the “Keysyes” PayPal account associated with the email address identified in the order, and in the account associated with Emilya Limited, be transferred to RH as partial satisfaction of the judgment. The funds were to be released 30 days after entry of the default judgment. The scheduled hearing was vacated, and the order disposed of RH’s default-judgment motion.