GS Holistic, LLC v. Smoke and Vape

Background

GS Holistic, LLC brought claims under the federal trademark law known as the Lanham Act. It alleged trademark infringement under 15 U.S.C. § 1114 and false designation of origin and unfair competition under 15 U.S.C. § 1125(a) against Gokul Pudasaini, doing business as Smoke and Vape, and against Smoke and Vape. The defendants failed to appear, and the clerk entered default against each of them.

GS Holistic alleged that an undercover investigator bought a glass infuser from Smoke and Vape for $492.21 on October 11, 2022, and that the product bore a counterfeit Stüdenglass trademark. GS Holistic did not identify which of its three registered trademarks appeared on the product. It also did not specify whether its agent physically inspected the product or reviewed only images when determining that the product was counterfeit.

Jurisdiction and Service

The court concluded that it had subject-matter jurisdiction because the claims arose under federal trademark law. It also concluded that personal jurisdiction over Pudasaini was established because he was personally served in San Jose, California. The court found a sufficient basis for personal jurisdiction over Smoke and Vape based on GS Holistic’s allegation that Smoke and Vape was incorporated and had its principal place of business in California, although a search of the California Secretary of State’s business records produced no listing for Smoke and Vape or Pudasaini doing business as Smoke and Vape.

The court found service on Pudasaini adequate. It also found service on Smoke and Vape adequate based on the sworn proof of service and the allegations that Pudasaini owned, managed, or operated Smoke and Vape and controlled its finances and operations.

Default-Judgment Analysis

The court applied the seven factors used in the Ninth Circuit to decide whether to enter default judgment. These factors consider possible prejudice to the plaintiff, the merits and sufficiency of the claims, the amount at stake, the possibility of a dispute over important facts, whether the default resulted from excusable neglect, and the federal policy favoring decisions on the merits.

The court found GS Holistic’s analysis of these factors conclusory and lacking detail. In particular, it concluded that the allegations were insufficient to establish that the defendants willfully infringed GS Holistic’s trademarks. The complaint described only one purchase of one product, did not identify the trademark allegedly reproduced, did not explain how the product was inspected, and did not provide other details about when or how the defendants allegedly sold counterfeit products.

The court also found the allegations against Pudasaini insufficiently detailed. The complaint stated that he authorized, directed, or participated in the sale of counterfeit goods, but did not provide facts explaining how he participated in the alleged wrongful conduct. Because the false-designation claim relied on the same allegations and legal analysis, the court found that claim insufficient for the same reasons.

Requested Relief

The court separately found that GS Holistic had not adequately supported the relief it requested. GS Holistic sought $150,000 in statutory damages—$50,000 for each of its three trademarks—but its allegations described only one sale of one product bearing one allegedly counterfeit trademark. The court found the damages evidence conclusory and focused on counterfeit sales generally, rather than losses caused by these defendants’ alleged conduct.

GS Holistic requested $1,089.21 in costs. The court stated that filing and service costs could be recoverable, but that the requested pre-suit investigation costs were not appropriate costs of the action. The court therefore concluded that GS Holistic would be entitled to at most $532 in costs if it otherwise established a trademark violation.

The court found the request for a permanent injunction unsupported because GS Holistic offered no developed argument addressing the required factors, and the proposed injunction was broader than the allegations. The court also found the request to require destruction of products unsupported by argument or evidence and broader than the complaint’s allegations. GS Holistic did not request some other equitable remedies in its motion and offered no argument or evidence supporting them.

Recommendation and Procedure

The court recommends that GS Holistic’s motion for default judgment be denied. This is a report and recommendation rather than a final district-court ruling stated in the opinion text. The opinion directs GS Holistic to serve the report and recommendation on the defendants within three business days and permits any party to file specific written objections within 14 days after service.