GS Holistic, LLC v. Puff N Go Gift Shop LLC

Background

GS Holistic, LLC alleged that Puff N Go Gift Shop LLC, doing business as Puff N Go Smoke Shop, Mohamed Alganim, and Abdullah Kaid Alawdi sold a counterfeit glass infuser bearing one or more of GS’s three registered Stündenglass trademarks. GS asserted claims under the Lanham Act for trademark counterfeiting and infringement and for false designation of origin and unfair competition.

The defendants did not appear. The clerk entered default against each defendant. GS then moved for default judgment, seeking $150,000 in statutory damages, $993.25 in costs, a permanent injunction, and an order requiring the defendants to deliver products and materials bearing the Stündenglass marks for destruction.

Because GS consented to proceed before a magistrate judge but the defendants had not appeared and therefore had not consented, the court ordered the case reassigned to a district judge. The magistrate judge issued a report and recommendation on GS’s motion.

Service of Process

The court stated that Abdullah Kaid Alawdi appeared to have been personally served. Service on the Shop was unclear because the process server left the summons and complaint with Adam Isa and later mailed the documents to no particular person. The record did not establish whether Isa was sufficiently connected to the Shop to accept service for it.

The court also found that Alganim was personally served after the 90-day service deadline. GS had not requested an extension and had not shown good cause for the delay. The court nevertheless proceeded to explain that, even assuming service could be accepted as to all defendants, GS had not adequately shown that default judgment was warranted.

Claims and Requested Relief

For trademark infringement, the court explained that GS needed to show a valid, protectable trademark and use likely to confuse consumers. The court found GS’s allegations insufficient to support a finding of willful infringement. The complaint did not identify which of the three Stündenglass marks was infringed, while alleging only one sale of one unidentified infuser bearing an unspecified counterfeit mark. The allegations of willfulness and the allegations concerning Alganim’s and Alawdi’s ownership or control of the Shop were also described as conclusory.

The court found the false-designation claim insufficient for the same reasons. It stated that the motion’s discussion of the relevant default-judgment factors was cursory and did not specifically explain how the allegations supported the requested relief.

The court found the requested $150,000 in statutory damages disproportionate to the allegation of one sale of one product bearing one counterfeit mark at a price of $331.25. GS’s evidence concerning broader marketplace losses did not persuasively establish that these defendants should be held responsible for other retailers’ alleged violations. The court also noted that GS had not cited authority supporting all of its requested costs, particularly investigation expenses.

The proposed permanent injunction was inadequately supported, broader than the allegations, and impermissibly vague. Among other problems, it addressed all three marks even though the complaint did not specifically identify the mark involved in the alleged sale, and it referred to products and conduct without enough detail. The court therefore recommended that the request for permanent injunctive relief be denied.

Recommendation and Next Steps

The court ordered reassignment to a district judge and recommended that the newly assigned district judge deny GS’s motion for default judgment. GS was directed to serve the report and recommendation on the defendants and file proof of service. Any party could file objections within 14 days after being served. The opinion is signed by Virginia K. Demarchi, United States Magistrate Judge, while the supplied case metadata identifies Edward Davila as the judge.