GS Holistic, LLC v. MSA-Bossy Inc

Background

GS Holistic, LLC alleged that MSA-Bossy Inc., doing business as High Life Smoke Shop, and its owner, Athar Abbasi, infringed three registered Stündenglass trademarks. According to the complaint, the defendants manufactured or sold counterfeit Stündenglass glass infusers. An investigator allegedly purchased one such infuser from the defendants on October 14, 2022, for $514.

The complaint asserted trademark counterfeiting and infringement under 15 U.S.C. § 1114 and false designation of origin and unfair competition under 15 U.S.C. § 1125(a). GS Holistic sought statutory damages, costs, and injunctive relief. The defendants failed to appear or otherwise defend, so the clerk entered default. GS Holistic then moved for default judgment under Federal Rule of Civil Procedure 55(b)(2).

Jurisdiction and Service

The court found federal-question jurisdiction because the complaint asserted claims under the Lanham Act, the federal trademark statute. It also found personal jurisdiction over MSA-Bossy based on the complaint’s allegation that the company had its principal place of business in the Northern District of California. The court found personal jurisdiction over Abbasi based on the complaint’s allegation that he resided in California.

The court determined that service was adequate. MSA-Bossy’s registered agent, Abbasi, was personally served with the summons and complaint on February 10, 2023, and Abbasi was personally served as an individual on the same date.

Default Judgment

The court applied the seven factors used in the Ninth Circuit to decide whether to enter default judgment. Six factors favored default judgment, while the policy favoring decisions on the merits weighed against it. Because the defendants did not respond, the court treated the well-pleaded liability allegations as admitted, but it did not automatically accept the allegations concerning damages.

For trademark infringement, the court found that GS Holistic adequately alleged ownership of valid marks through its three trademark registrations. The court also found that consumers would likely be confused about the origin of the glass infuser sold by the defendants. But the complaint plausibly alleged only one product with only one infringing mark. The court therefore found the infringement claim adequate as to only one of the three trademarks. Because the false-designation claim generally rises or falls with the infringement claim, the court found that claim adequate as well.

Remedies

GS Holistic requested $150,000 in statutory damages—$50,000 for each of three trademarks—and $1,111 in costs. The court found that the requested damages were disproportionate to the evidence, which established only one sale for $514. The court also found that the evidence offered to support greater actual damages consisted of unsupported conclusions about companywide sales and losses from counterfeit products made by other retailers.

The court awarded $5,000 in statutory damages. It explained that this amount exceeded the statutory minimum, was nearly ten times the price of the one sale at issue, served a deterrent purpose, and avoided an unjustified windfall.

The court awarded $532 in costs: the $402 filing fee and the $130 process-server fee. It denied the unexplained $579 investigation expense as part of the costs award because the statute covered costs incurred after the court case began.

The court did not enter a permanent injunction at that time. GS Holistic’s motion did not address why an injunction was appropriate, particularly the requirement to show actual irreparable harm. The court allowed GS Holistic to file a supplemental memorandum by May 25, 2023, and deferred final judgment until after that date. The order states that, if no memorandum was filed, the court would enter final judgment for the statutory damages and costs.

Disposition

The court vacated the scheduled May 31, 2023 hearing and granted GS Holistic’s motion for default judgment in part. It awarded $5,000 in statutory damages and $532 in costs, deferred the permanent-injunction request, and stated that the order disposed of Docket No. 16.