Ideavillage Products Corp. v. Liuzhou Weimao Mobile Accessory Co., Ltd.

Background

Ideavillage Products Corp. and IDVC, LLC sued Liuzhou Weimao Mobile Accessory Co., Ltd., doing business as Sports Bracers Shop, www.copperfitonlineshop.com, and www.eryon.life. The plaintiffs asserted claims for trademark counterfeiting, trademark infringement, federal unfair competition, copyright infringement, and cybersquatting. They alleged that the defendants sold counterfeit products bearing the plaintiffs’ Copper Fit marks and copied protected website and packaging content.

The defendants did not formally appear, answer the complaint, respond to the request for a preliminary injunction, attend later telephone conferences, or oppose the default-judgment motion. The Clerk entered a certificate of default, and the plaintiffs moved for default judgment under Federal Rule of Civil Procedure 55(b)(2). The court found that the defendants’ failure to participate was willful, that the court had no identified meritorious defense to consider, and that the plaintiffs would be prejudiced if default judgment were denied.

Merits

The court found that IDVC owned valid registered Copper Fit trademarks and that Ideavillage was their exclusive licensee. The court compared the plaintiffs’ marks with the defendants’ marks and found them substantially indistinguishable in font, design, and layout. The test purchases from the defendants’ websites showed use of the marks in commerce. The court therefore found liability for trademark counterfeiting, trademark infringement, and federal unfair competition.

For cybersquatting, the court found that the Copper Fit marks were inherently distinctive, that copperfitonlineshop.com was confusingly similar to those marks, and that the defendants acted in bad faith by using the mark in the domain name and selling goods bearing counterfeit marks. The court entered default judgment on that claim.

For copyright infringement, the court found that the plaintiffs owned valid copyrights covering their website and packaging. It found substantial similarities between the plaintiffs’ website and the defendants’ website, including placement of the Copper Fit mark, wording, an image of Brett Favre, prices, color scheme, and a “Features and Benefits” section. It also found little difference between the plaintiffs’ protected packaging and the defendants’ packaging. The court therefore found copyright infringement involving the website and packaging. However, the court stated that the plaintiffs had not provided evidence of a commercial used by the defendants that copied original elements, so it did not establish liability for that aspect of the copyright claim.

Relief

The court granted a permanent injunction barring the defendants and covered persons who receive actual notice from manufacturing, selling, advertising, distributing, or otherwise dealing in counterfeit products or products infringing the Copper Fit marks and works. The injunction also barred use of the marks in connection with the defendants’ websites and prohibited continued use of copperfitonlineshop.com or registration of additional domain names incorporating the Copper Fit marks. The defendants were ordered to deliver infringing products, packaging, labels, advertising, and related materials for destruction.

The court ordered the defendants to transfer www.copperfitonlineshop.com to IDVC’s control immediately. It declined to issue the requested injunctions against third-party service providers and financial institutions because the plaintiffs had not shown that those nonparties fell within the persons who may be bound by an injunction under Federal Rule of Civil Procedure 65(d)(2).

Damages and Asset Requests

The court awarded the plaintiffs $600,000 in statutory damages under the Lanham Act, jointly and severally against the defendants, plus post-judgment interest at the legal rate under 28 U.S.C. § 1961. In selecting that amount, the court considered the defendants’ default, the value of the plaintiffs’ marks, the need for deterrence, the lack of sales and profit information, and the defendants’ willful counterfeiting.

The court denied the plaintiffs’ request to restrain and transfer defendants’ assets held by third parties, without prejudice to the plaintiffs’ use of state-law procedures for restraining notices and judgment enforcement. The court explained that the nonparty asset holders had not received notice and an opportunity to be heard. The court also relieved the plaintiffs from the usual 30-day stay on enforcing a judgment, allowing immediate execution. Judge Laura Taylor Swain directed the Clerk to enter judgment and close the case.