Opinion
23-cv-00948-HSG (KAW)
08-26-2024
RESTORATION HARDWARE, INC., et al., Plaintiffs, v. ALIMIA LIGHT, et al., Defendants.
REPORT AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART MOTION FOR DEFAULT JUDGMENT
RE: DKT. NO. 44
KANDIS A. WESTMORE, United States Magistrate Judge
On March 3, 2023, Plaintiffs Restoration Hardware, Inc. and RH US, LLC (collectively, “RH”) filed the instant lawsuit against Defendants (1) Alimia Light (“Alimia Light”); (2) Zhongshan Zhuosai Lighting, Co., Ltd., dba Yami Lighting and Pop Lamps (“Zhuosai Lighting”); (3) Shanghai ZeroTai Industrial Co., dba Grand Lamps (“Grand Lamps”); (4) Zhonshan Yuyi Co. dba Wing Lighting (“Wing Lighting”); (5) Zhongshan Laiting Lighting Co., dba Oasis Lamps (“Oasis Lamps”); (6) Zhongshan Momo Lighting Co., dba Momo (“Momo Chandelier”); (7) Fanci Light; (8) Cure Lighting, LLC (“Cure Lighting”); (9) Clouds Lights; (10) Kushigo Limited, dba Eric Light and Emma Lighting (“Kushigo Limited”); (11) Lighting Forever; (12) Zhongshan Reborn Lighting Co., Ltd. (“Reborn”); (13) Showsun Lighting and Sunny Wang, dba Showsun Lighting; (14) Jinhua Sigma Industrial & Trading Co., Ltd. (“Sigma Living”); (15) Ineffable Lighting; (16) Nimo LLC (“Zenduce”); (17) Oclolli Limited, dba Mooni Lighting (“Oclolli”); and (18) Kevin Studio. (Compl., Dkt. No. 1.) RH alleges Defendants have violated RH's intellectual property rights by using RH's copyrighted photographs of its lighting products and brand names to sell knockoffs of RH's lighting products on websites targeting consumers in the United States. (Compl. ¶ 2.)
The case was also brought against other Defendant-Entities who have since entered into a stipulated consent judgment and permanent injunction with RH. (See Dkt. No. 40.) The Court does not address these entities in this order, and any reference to Defendants in this order does not include these entities.
On July 11, 2024, the Court held a hearing, but Defendants did not appear. (Dkt. No. 57.) Having reviewed the moving papers and relevant legal authorities, the Court RECOMMENDS that RH's motion for default judgment be GRANTED IN PART AND DENIED IN PART.
I. BACKGROUND
A. Factual Background
RH, a Delaware corporation whose principal place of business is located in California, is a luxury retailer in the home furnishings marketplace. (Compl. ¶¶ 1, 4-5.) RH offers a wide variety of home furnishings, including furniture and lighting products, through its retail stores, catalogs, and website. (Compl. ¶ 57.)
RH spends substantial time, money, and effort staging and photographing its products. (Compl. ¶ 58.) RH uses thousands of photographs featuring its products in RH's catalogs and website. (Compl. ¶ 58.) RH also owns copyrights in the product photographs. (Compl. ¶ 59.) RH currently owns more than 90 U.S. copyright registrations, including registrations for catalogs and websites, which collectively cover all of the photographs at issue in this case (collectively, “Copyrighted Works”). (Compl. ¶ 59.) Based on these registrations, RH owns the exclusive right to copy, distribute, and publicly display the Copyrighted Works. (Compl. ¶ 59.)
RH also owns common law rights in the product names it uses for the lighting products at issue in this case: AQUITAINE, ARCACHON, BOULE DE CRISTAL, CAMINO, CANNELE, CASCADA, ECLATANT, FULCRUM, HARLOW, MACHINIST, MARIGNAN, PAUILLAC, PEARL, RAIN, RAVELLE, RHYS, SAN MARCO, SAVILE, SPIRIDON, UTILITAIRE, and WRIGHT. (Compl. ¶ 60.) Additionally, RH owns common law and federal trademark registrations for its RESTORATION HARDWARE Mark (collectively, with the product names, “RH Marks”). (Compl. ¶ 60.)
Defendants are foreign companies operating online stores that are using RH's Copyrighted Works and RH Marks to sell knockoffs of RH products to the U.S. market. (Compl. ¶ 2.) On March 3, 2023, RH filed the instant lawsuit asserting claims for: (1) copyright infringement of the Copyrighted Works under the Copyright Act of 1976, 15 U.S.C. § 501; (2) unfair competition with respect to the RH Marks under the Lanham Act, 15 U.S.C. § 1125(a), and (3) violation of California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200. (Compl. ¶ 3.) In its complaint, RH identified the following instances of copyright infringement by Defendants:
i. Alimia Light
Defendant Alimia Light is a Chinese company which owns and operates the website, alimialight.com. (Compl. ¶ 6.) Defendant Alimia Light used the following on its website: (1) RH's photograph of its Arcachon Led Round Chandelier, infringing on Registration No. VA 2298-977; (2) RH's photograph of its Lambeth Knurled Grand Sconce, infringing on Registration No. VA 2-195-419; and (3) RH's photograph of its Fulcrum Sconce, infringing on Registration No. 2-298-977. (Compl., Exh. C at 5-6.) Defendant Alimia Light used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 32.)
ii. Zhuosai Lighting
Defendant Zhuosai Lighting is a Chinese company which owns and operates the websites, winglights.com, yami-lighting.com, and poplamps.com. (Compl. ¶¶ 7, 33.) Since the filing of the complaint, Defendant Zhuosai Lighting used the following on its website: (1) RH's photograph of its Rain Rectangular Chandelier, infringing on Registration No. VA 2-315-654; (2) RH's photograph of its Emile Round Chandelier, infringing on Registration No. VA 2-195-419; (3) RH's photograph of its Boule de Cristal Clear Glass Round Chandelier, infringing on Registration No. VA 2-315-654; (4) RH's photograph of its Pauillac Round Chandelier, infringing on Registration No. VA 2-315-654; (5) RH's photograph of its Eclatant Grand Pendant, infringing on Registration No. VA 2-315-654; and (6) RH's photograph of its Ravelle Sconce, infringing on Registration No. VA 2-195-419. (Compl., Exh. C at 17-19, 57-58.) Defendant Zhuosai Lighting used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 33.)
iii. Grand Lamps
Defendant Grand Lamps is a Chinese company which owns and operates the website grandlamps.com. (Compl. ¶¶ 8, 34.) Defendant Grand Lamps used the following on its website: (1) RH's photograph of its Crystal Halo Clear Round Led Chandelier, infringing on Registration No. VA 2-315-654; (2) RH's photograph of its Savile Rectangular Linear Sconce, infringing on Registration No. VA 2-315-654; and (3) RH's photograph of its Ravelle Sconce, infringing on Registration No. VA 2-195-419. (Compl., Exh. C at 27-29.) Defendant Grand Lamps used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 34.)
iv. Wing Lighting
Defendant Wing Lighting is a Chinese company that owns and operates the website winglightings.com. (Compl. ¶¶ 9, 35.) Defendant Wing Lighting used the following on its website: (1) RH's photograph of its Arcachon Led Round Chandelier, infringing on Registration No. VA 2-298-977; (2) RH's photograph of its Pearl Sconce, infringing on Registration No. VA 2298-977; and (3) RH's photograph of its Eclatant Grand Pendant, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 36-37.) Defendant Wing Lighting used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 35.)
v. Oasis Lamps
Defendant Oasis Lamps is a Chinese company that owns and operates the website oasislamps.com. (Compl. ¶¶ 10, 36.) Defendant Oasis Lamps used the following on its website: (1) RH's photograph of its Pearl Double Sconce, infringing on Registration No. VA 2-315-654; (2) RH's photograph of its Lambeth Hexagonal Sconce, infringing on Registration No. VA 2-195419; and (3) RH's photograph of its Fulcrum Pendant, infringing on Registration No. VA 2-315654. (Compl., Exh. C at 45-46.) Defendant Oasis Lamps used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 36.)
vi. Momo Chandelier
Defendant Momo Chandelier is a Chinese company that owns and operates the website momochandelier.com, and operates the Alibaba storefront at momolight.en.alibaba.com. (Compl. ¶¶ 11, 37.) Defendant Momo Chandelier used the following on its website: (1) RH's photograph of its Arcachon Led Round Chandelier, in violation of Registration No. VA 2-315-654; (2) RH's photograph of its Boule De Cristal Clear Glass Linear Chandelier, in violation of Registration No. VA 2-315-654; and (3) RH's photograph of its Crystal Halo Clear Round Led Chandelier, infringing on Registration No. VA 2-315-654. (Compl., Exh. C at 63-64.) Defendant Oasis Lamps used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 37.)
vii. Fanci Light
Defendant Fanci Light is allegedly a Chinese company that owns and operates the website fancilight.com. (Compl. ¶¶ 12, 38.) Defendant Fanci Light used the following on its website: (1) RH's photograph of its Rain Rectangular Chandelier, infringing on Registration No. VA 2-298977; (2) RH's photograph of its Pearl Sconce, infringing on Registration No. VA 2-298-977; and (3) RH's photograph of its Boule De Cristal Clear Glass Linear Chandelier, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 211-12.) Defendant Fanci Light used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 38.)
viii. Cure Lighting
Defendant Cure Lighting is allegedly a Chinese company that owns and operates the website curelighting.com. (Compl. ¶¶ 13, 39.) Defendant Cure Lighting used the following on its website: (1) RH's photograph of its Arcachon Led Round Two-Tier Chandelier, infringing on Registration No. VA 2-298-977; (2) RH's photograph of its Fulcrum Sconce, infringing on Registration No. VA 2-298-977; and (3) RH's photograph of its Arpege Cylinder Pendant, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 222-23.) Defendant Cure Lighting used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 39.)
ix. Clouds Lights
Defendant Clouds Lights is allegedly a Chinese company that owns and operates the website cloudslights.com. (Compl. ¶¶ 14, 40.) Defendant Clouds Lights used the following on its website: (1) RH's photograph of its Pearl Sconce, infringing on Registration No. VA 2-298-977; (2) RH's photograph of its Marbuzet Linear Sconce, infringing on Registration No. VA 2-298977; and (3) RH's photograph of its Eclatant Grand Pendant, infringing on Registration No. VA 2298-977. (Compl., Exh. C at 231-33.) Defendant Clouds Lights used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 40.)
x. Kushigo Limited
Defendant Kushigo Limited is allegedly a Chinese company that owns and operates the websites ericlightus.com and emmalighting.com. (Compl. ¶¶ 15, 41.) Defendant Kushigo Limited used the following on its website: (1) RH's photograph of its Eclatant Grand Pendant, infringing on Registration No. VA 2-315-654; (2) RH's photograph of its Arcachon Led Round Chandelier, infringing on Registration No. VA 2-315-654; (3) RH's photograph of its Pearl Triple Sconce, infringing on Registration No. VA 2-315-654; (4) RH's photograph of its Harlow Crystal Sconce, infringing on Registration No. VA 2-195-419; (5) RH's photograph of its Emile Round Chandelier, infringing on Registration No. VA 2-195-419; and (6) RH's photograph of its Eclatant Grand Pendant, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 247-49, 26364.) Defendant Kushigo Limited used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 41.)
xi. Lighting Forever
Defendant Lighting Forever is allegedly a Chinese company that owns and operates the website lighting-forever.com. (Compl. ¶¶ 16, 42.) Defendant Lighting Forever used the following on its website: (1) RH's photograph of its Lambeth Knurled Grand Sconce, infringing on Registration No. VA 2-195-419; (2) RH's photograph of its Crystal Halo Clear Round Led Chandelier, infringing on Registration No. VA 2-298-977; and (3) RH's photograph of its Arcachon Led Round Chandelier, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 257-58.) Defendant Lighting Forever used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 42.)
xii. Reborn
Defendant Reborn is a Chinese company that owns and operates the website rebornlighting.com. (Compl. ¶¶ 18, 44.) Defendant Reborn used the following on its website: (1) RH's photograph of its Boule De Cristal Clear Glass Round Chandelier, infringing on Registration No. VA 2-298-977; (2) RH's photograph of its Emile Round Chandelier, infringing on Registration No. VA 2-195-419; and (3) RH's photograph of its Crystal Halo Clear Round Led Chandelier, infringing on Registration No. VA 2-315-654. (Compl., Exh. C at 284-85.) Defendant Reborn used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 44.)
xiii. Showsun Lighting and Sunny Wang
Defendant Showsun Lighting is a Chinese company that owns and operates the website showsunlights.com, while Defendant Sunny Wang is the contact for Showsun Lighting. (Compl. ¶¶ 19, 20.) Defendant Showsun Lighting used the following on its website: (1) RH's photograph of its Crystal Halo Clear Round Led Chandelier, infringing on Registration No. VA 2-315-654; (2) RH's photograph of its Arcachon Led Round Two-Tier Chandelier, infringing on Registration No. VA 2-315-654; and (3) RH's photograph of its Emile Round Chandelier, infringing on Registration No. VA 2-195-419. (Compl., Exh. C at 294-95.) Defendant Showsun Lighting used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 45.)
xiv. Sigma Living
Defendant Sigma Living is a Chinese company that owns and operates the website jhsigmafurniture.com, as well as operates the Alibaba storefront at cnsigma.en.alibaba.com. (Compl. ¶ 21.) Defendant Sigma Living used the following on its website: (1) RH's photograph of its Rain Rectangular Chandelier, infringing on Registration No. VA 2-298-977; and (2) RH's photograph of its Rain Round Chandelier, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 310-11.) Defendant Sigma Living used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 46.)
xv. Ineffable Lighting
Defendant Ineffable Lighting is allegedly a Chinese company that owns and operates the website ineffablelighting.com. (Compl. ¶¶ 23, 48.) Defendant Ineffable Lighting used the following on its website: (1) RH's photograph of its Boule De Cristal Clear Glass Round Chandelier, infringing on Registration No. VA 2-298-977; (2) RH's photograph of its Pearl Double Sconce, infringing on Registration No. VA 2-298-977; and (3) RH's photograph of its Arcachon Led Round Two-Tier Chandelier, infringing Registration No. VA 2-298-977. (Compl., Exh. C at 563-64.) Defendant Ineffable Lighting used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 48.)
xvi. Zenduce
Zenduce is allegedly a Chinese company that owns and operates zenduce.com. (Compl. ¶¶ 25, 50.) Defendant Zenduce used the following on its website: (1) RH's photograph of its Rain Sconce, infringing on Registration No. VA 2-298-977; and (2) RH's photograph of its Fulcrum Sconce, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 576-77.) Defendant Zenduce used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 50.)
xvii. Oclolli
Defendant Oclolli is allegedly a Chinese company that owns and operates moonilighting.com. (Compl. ¶¶ 27, 52.) Defendant Oclolli used the following on its website: (1) RH's photograph of its Pearl Sconce, infringing on Registration No. VA 2-298-977; (2) RH's photograph of its Pauillac Round Chandelier, infringing on Registration No. VA 2-298-977; and (3) RH's photograph of its Arcachon Led Round Two-Tier Chandelier, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 581-82.) Defendant Oclolli used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 52.)
xviii. Kevin Studio
Finally, Defendant Kevin Studio is a Chinese company that owns and operates the website kevinstudioinc.com. (Compl. ¶¶ 28, 53.) Defendant Kevin Studios used the following on its website: (1) RH's photograph of its Pearl Sconce, infringing on Registration No. VA 2-298-977; (2) RH's photograph of its Boule De Cristal Clear Glass Round Chandelier, infringing on Registration No. VA 2-298-977; and (3) RH's photograph of its Rain Round Chandelier, infringing on Registration No. VA 2-298-977. (Compl., Exh. C at 588-89.) Defendant Kevin Studio used the specified copyrighted photographs and RH's Marks to advertise and sell knockoff RH products to consumers in California, shipped infringing products to consumers in California, and used California-based service providers such as payment providers and processors to support its infringing conduct. (Compl. ¶ 53.)
B. Procedural Background
On March 3, 2023, RH filed the instant complaint and a motion for a temporary restraining order (“TRO”). On March 6, 2023, the presiding judge issued an order requiring that RH serve the complaint and motion for a TRO on Defendants by e-mail. (Dkt. No. 9.) After RH failed to do so by the deadline set, the presiding judge denied the motion for a TRO. (Dkt. No. 11.)
On May 5, 2023, RH filed a renewed motion for a TRO, as well as a certificate of service stating that Defendants had been served by e-mail. (Dkt. Nos. 16, 16-2.) On May 8, 2023, the presiding judge acknowledged the service by e-mail, and set a deadline for Defendants' response. (Dkt. No. 17.) On May 24, 2023, the presiding judge granted the renewed motion for a TRO, which: (1) enjoined Defendants from using RH's Copyrighted Works and RH's Marks, (2) froze certain PayPal accounts, and (3) authorized RH to serve the summons, complaint, and all other pleadings or documents filed in the case on Defendants by e-mail. (TRO Order, Dkt. No. 23 at 68.) The presiding judge further ordered a bond of $10,000, and set a preliminary injunction hearing for July 7, 2023. (Id. at 5, 8.)
Defendants did not appear at the July 7, 2023 hearing. (Dkt. No. 32.) The presiding judge thus issued a preliminary injunction, again enjoining Defendants from using RH's Copyrighted Works and RH's Marks. (Prelim. Inj. Order at 7, Dkt. No. 34.) The presiding judge further ordered that Defendants' domain names be temporarily disabled. (Id. at 7-8.)
On August 24, 2023, RH filed a motion for entry of default as to Defendants, based on service by e-mail of the complaint on May 25, 2023 and the summons on May 30, 2023. (Dkt. No. 41; see Dkt. Nos. 26, 28.) On August 29, 2023, the Clerk of the Court entered default as to Defendants. (Dkt. No. 42.)
On January 2, 2024, RH filed the instant motion for default judgment. (Mot. for Default J., Dkt. No. 44.) RH originally sought statutory damages of $330,000 per Defendant, as well as the disabling of websites not listed in the complaint. (Id. at 13, 14.) After the motion for default judgment was referred to the undersigned for a report and recommendation, the Court issued an order requiring supplemental briefing based on RH's failure to address how each Defendant allegedly infringed on all 11 copyrighted works. (Dkt. No. 50.) On April 19, 2024, RH responded by reducing its damages request to the specific examples of infringement listed in the complaint. (Supp. Br., Dkt. No. 51.) On June 28, 2024, the Court issued a second order requiring supplemental briefing as to: (1) how individual Defendant Sunny Wang was liable for the alleged infringement, and (2) a demonstration that the websites not listed in the complaint were related to Defendants. (Dkt. No. 55.) On July 5, 2024, RH responded by agreeing to dismiss the claims against Defendant Wang without prejudice, and by providing side-by-side comparison of the newly created websites at issue. (Second Supp. Br., Dkt. No. 56.)
II. LEGAL STANDARD
Federal Rule of Civil Procedure 55(b)(2) permits a court to enter a final judgment in a case following a defendant's default. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 999 (N.D. Cal. 2001). Whether to enter a judgment lies within the court's discretion. Id. at 999 (citing Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986)).
Before assessing the merits of a default judgment, a court must confirm that it has subject matter jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the adequacy of service on the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). If the court finds these elements satisfied, it turns to the following factors (“the Eitel factors”) to determine whether it should grant a default judgment:
(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action[,] (5) the possibility of a dispute concerning material facts[,] (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decision on the merits.Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (citation omitted). Upon entry of default, all factual allegations within the complaint are accepted as true, except those allegations relating to the amount of damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Where a default judgment is granted, the scope of relief “must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c).
III. DISCUSSION
A. Jurisdiction and Service of Process
In considering whether to enter default judgment, a district court must first determine whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (“When entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties.”).
i. Subject Matter Jurisdiction
This is a civil action that arises under the Copyright Act, 17 U.S.C. § 101 et seq. and the Lanham Act, 15 U.S.C. § 1051 et seq. Thus, the Court has subject matter jurisdiction.
ii. Personal Jurisdiction and Venue
This Court has personal jurisdiction over Defendants purposely directed their actions to California, including this District. “Willful infringement of protected intellectual property is ordinarily sufficient to subject a defendant to the jurisdiction of the plaintiff's home state consistent with the Constitution's guarantee of due process, so long as the infringing activity targets a broad audience, is engaged in for profit, and places the infringing defendant in competition with the plaintiff.” Mode Media Corp. v. Doe, No. 16-cv-00244-RS, 2016 U.S. Dist. LEXIS 188934, at *3 (N.D. Cal. Sep. 12, 2016). Here, Defendants are infringing on the intellectual property of RH, whose principal place of business is in this district. (Compl. ¶¶ 4, 5.) Defendants' infringing activity consists of using RH's intellectual property to advertise and sell knockoffs of RH products to a broad range of consumers, including those in California. (Compl. ¶¶ 32-42, 44-46, 48, 50, 52-53.) Defendants also use California-based service, providers, including payment providers and processors, to support their infringing conduct. (Id.) Accordingly, personal jurisdiction and venue are proper in this district.
iii. Service of Process
RH was given leave to serve Defendants by e-mail, and served the complaint and summons upon them accordingly. (TRO Order at 5; Dkt. Nos. 26, 27.) After RH moved for entry of default, default was entered on August 29, 2023. (Dkt. Nos. 41, 42.)
B. Application of Eitel Factors to the Case at Bar
i. First Factor: Possibility of Prejudice to Plaintiff
The first Eitel factor considers whether the plaintiff will suffer prejudice if a default judgment is not entered. See PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d 1172, 1177 (C.D. Cal. 2002). Taking all of the factual allegations in the complaint as true, the first Eitel factor weighs in favor of granting default judgment on RH's claims because otherwise RH would be left without a remedy or means to prevent Defendants' infringement. Accordingly, the first Eitel factor weighs in favor of granting default judgment.
ii. Second and Third Factors: Merits of Plaintiff's Claims and the Sufficiency of the Complaint
The second and third Eitel factors address the merits and sufficiency of RH's claims pled in the complaint. “These two factors are often analyzed together.” Li v. A Perfect Day Franchise, Inc., Case No. 10-cv-1189-LHK, 2012 WL 2236752, at *6 (N.D. Cal. June 15, 2012). In considering the second and third factors, the Court takes all factual allegations in RH's complaint as true, except for those relating to damages. Televideo Sys., 826 F.2d at 917-18.
a. Sunny Wang
Per RH's second supplemental brief, RH consents to dismissing its claims against Defendant Wang without prejudice. (Second Supp. Br. at 1.) Accordingly, the Court recommends that default judgment against Defendant Wang be DENIED, and that the claims against Defendant Wang be dismissed without prejudice.
b. Copyright Infringement
RH's first claim is for copyright infringement. “Plaintiffs must satisfy two requirements to present a prima facie case of direct infringement: (1) they must show ownership of the allegedly infringed material and (2) they must demonstrate that the alleged infringers violate at least one exclusive right granted to copyright holders under 17 U.S.C. § 106.” A&M Records v. Napster, 239 F.3d 1004, 1013 (9th Cir. 2001).
RH satisfies both requirements. First, the Copyright Office has issued certificates of registration to RH that encompass the infringed works at issue. (See Compl., Exh. A.) Second, Defendants have reproduced and distributed RH's Copyrighted Works on their websites in order to sell knock-of products. (Compl. ¶¶ 32-42, 44-46, 48, 50, 52-53, 61-104 Exh. C.)
c. Trademark Infringement
RH's second claim is for trademark infringement. To prevail on a claim for trademark infringement under the Lanham Act, RH “must demonstrate that it owns a valid mark, and thus a protectable interest, and it must show that [Defendants'] use of the mark is likely to cause confusion, or to cause mistake, or to deceive.” Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1196 (9th Cir. 2009) (internal quotation omitted).
Here, RH owns common law rights in the product names it uses for the lighting products at issue in this case. (Compl. ¶ 60, Exh. B.) RH pleads in its complaint that Defendants are using these product names or confusingly similar variations to sell knockoffs of RH products. (Compl. ¶¶ 62, 64, 66, 68, 70, 72, 74, 76, 78, 80, 82, 86, 88, 90, 94, 98, 102, 104.) Defendants' use of these product names is likely to cause confusion, particularly when combined with the use of RH's Copyrighted Works to advertise and sell the knockoff products.
d. UCL
RH's final claim is for unfair competition under the UCL. The Ninth Circuit “has consistently held that state common law claims of unfair competition and actions pursuant to [the UCL] are substantially congruent to claims made under the Lanham Act. Cleary v. News Corp., 30 F.3d 1255, 1262-63 (9th Cir. 1994) (internal quotation omitted). Thus, because RH has demonstrated a Lanham Act claim, it has sufficiently stated a UCL claim.
Accordingly, with the exception of Defendant Wang, the Court finds that the second and third Eitel factors weigh in favor of granting RH's motion for default judgment.
iii. Fourth Factor: Sum of Money at Stake
The fourth Eitel factor addresses the amount of money at stake in relation to the seriousness of Defendants' conduct. PepsiCo, Inc., 238 F.Supp.2d at 1176. Default judgment is disfavored when the amount at stake is substantial or unreasonable in light of the allegations in the complaint. See Eitel, 782 F.2d at 1472 (affirming denial of default judgment where the plaintiff sought $3 million in damages and the parties disputed material facts in the pleadings).
Following supplemental briefing, RH now seeks the statutory maximum of $30,000 from each Defendant. With the exception of Defendant Wang (as discussed above), the Court finds that RH is entitled to recover these amounts. Thus, this factor weighs in favor of default judgment.
iv. Fifth Factor: Possibility of Dispute Concerning Material Facts
The fifth Eitel factor examines the likelihood of dispute concerning material facts in the case. Eitel, 782 F.2d at 1471-72. Upon entry of default, the defendant is “deemed to have admitted all well-pleaded factual allegations” in the complaint. DirectTV, Inc. v. Hoa Huynh, 503 F.3d 847, 851 (9th Cir. 2007) (citing to Fed.R.Civ.P. 55(a)).
Given the factual allegations in the complaint, as well as the side-by-side comparisons of the alleged infringing activity, there does not appear to be a possibility of dispute concerning material facts. Accordingly, this factor weighs in favor of default judgment.
v. Sixth Factor: Whether Default was a Result of Excusable Neglect
The sixth Eitel factor contemplates the possibility that Defendant's default was the result of excusable neglect. Under this analysis, the Court considers whether the defendant was put on adequate notice to apprise it of the pendency of the action brought against it. Phillip Morris USA, Inc. v. Castworld Prod., Inc., 219 F.R.D. 494, 500 (C.D. Cal. 2003). In addition, the Court also considers whether the circumstances surrounding Defendant's failure to answer the complaint are sufficient to excuse or justify its default. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 1005 (N.D. Cal. 2001) (default cannot be attributed to excusable neglect where defendants were properly served with the complaint, the notice of entry of default, and the papers in support thereof.).
Here, Defendants were served with the complaint and summons via the e-mail address they used to conduct business, as authorized by the presiding judge. In permitting service by e-mail, the presiding judge specifically found that such service was “reasonably calculated to give [Defendants] notice.” (TRO Order at 5.) There is nothing to suggest service was not successful and that Defendants were unaware of this action. This factor weighs in favor of default judgment.
vi. Seventh Factor: Policy Favoring a Decision on the Merits
In Eitel, the Ninth Circuit stated that “[c]ases should be decided on the merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. The courts have recognized, however, that “this preference, standing alone, is not dispositive.” PepsiCo, Inc., 238 F.Supp.2d at 1177 (internal quotation omitted). The existence of Federal Rule of Civil Procedure 55(b) indicates that the “termination of a case before hearing the merits is allowed whenever a defendant fails to defend an action.” Id. Defendant has not participated in the proceedings and so a decision on the merits would not otherwise be possible. In this situation, Rule 55(b) permits the court to grant default judgment.
After an examination of the Eitel factors in the aggregate, the Court finds that Eitel factors one through six outweigh the preference for a decision on the merits. The undersigned, therefore, recommends the entry of default judgment for all Defendants except Defendant Wang.
IV. DAMAGES
After entry of default, well-pleaded factual allegations in the complaint are taken as true, except as to the amount of damages. Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). To recover damages after securing a default judgment, a plaintiff must prove the relief it seeks through testimony or written affidavit. Bd. of Trs. of the Boilermaker Vacation Trust v. Skelly, Inc., 389 F.Supp.2d 1222, 1226 (N.D. Cal. 2005); see PepsiCo, Inc., 238 F.Supp.2d at 1175.
A. Injunctive Relief
RH seeks a permanent injunction to: (1) prohibit Defendants from using RH's Copyrighted Works and RH Marks, or any marks confusingly similar thereto; and (2) disable the websites used to infringe on RH's intellectual property rights. (Mot. for Default J. at 11-12.) A party seeking a permanent injunction must establish: (1) actual success on the merits; (2) a likelihood of irreparable injury to the moving party if injunctive relief is not granted; (3) a balance of hardships favoring the moving party; and (4) advancement of the public interest. See Winter v. Natural Res. Def. Council, 555 U.S. 7, 20 (2008); Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 546 n.12 (1987).
First, as discussed above, RH has demonstrated actual success on the merits.
Second, as previously explained by the presiding judge, RH is likely to suffer irreparable harm without injunctive relief. (TRO Order at 3-4; Prelim. Inj. Order at 3.) Specifically, RH has alleged that it has “poured substantial resources into developing their brands and products since 1980. Given the risk that consumers will believe they are purchasing authentic RH lighting products, [RH's] loss of control over business reputation and potential damage to goodwill constitutes an irreparable injury.” (Id.) Likewise, with respect to the disabling of websites, the presiding judge has already ordered Defendants to cease using the RH Copyrighted Works and RH Marks, but many Defendants have continued to do so by simply creating new websites after their original websites were shut down. (Prelim. Inj. Order at 7; Second Supp. Br. at 3-12.) Specifically, Defendants Yami Lighting, Wing Lighting, Kushigo Limited, Alimia Light, Oasis Lamps, Fanci Light, Ineffable Lighting, Kevin Studio, and Clouds Lights have new websites with almost identical links (e.g., winglightings.com vs. wing-lighting.com, alimialight.com vs. alimialighting.com); screenshot comparisons of the websites show identical logos and very similar layouts. (Second Supp. Br. at 3-11.) Defendant Sigma Living, in turn, operates new storefronts on Alibaba under the same name, using the same company contact named “Sophie King,” and the sane incorporation date. (Second Supp. Br. at 11-12.) This further demonstrates a likelihood of irreparable injury because Defendants will only continue to create new websites in order to infringe on RH's intellectual property rights.
Third, the balance of hardships favors RH. Again, as the presiding judge explained, RH risks damage to their reputation and goodwill. (TRO Order at 4; Prelim. Inj. Order at 4.) In contrast, “[w]here the only hardship that the defendant will suffer is lost profits from an activity which has been shown likely to be infringing, such an argument in defense merits little equitable consideration. Any hardship on Defendants from the imposition of a[n] injunction would be the result of their own infringement.” (Id. (internal quotation omitted).)
Finally, it is in the public interest to issue a preliminary injunction. “Public policy strongly supports stopping infringement to protect consumers where there is a likelihood of confusion.” (TRO Order at 4; Prelim. Inj. Order at 4.) Further, “[i]t is virtually axiomatic that the public interest can only be served by upholding copyright protections, and correspondingly, preventing the misappropriation of the skills, creative energies, and resources which are invested in the protected work.” CNC Software, Ltd. Liab. Co. v. Glob. Eng'g Ltd. Liab. Co., No. 22-cv-02488-EMC, 2023 U.S. Dist. LEXIS 83880, at *20-21 (N.D. Cal. May 12, 2023) (internal quotation omitted).
Accordingly, the undersigned finds that injunctive relief is warranted, and recommends that a permanent injunction be entered.
B. Statutory Damages
RH seeks an award of statutory damages under the Copyright Act. (Mot. for Default J. at 8.) 17 U.S.C. § 504(a) provides: “Except as otherwise provided by this title, an infringer of copyright is liable for either-(1) the copyright owner's actual damages and any additional profits of the infringer, as provided by subsection (b); or (2) statutory damages[.]” Under copyright law, a Plaintiff may elect to recover an award of statutory damages at any time before final judgment is rendered. 17 U.S.C. § 504(c)(1). A court, in its discretion, can award not less than $750 but not more than $30,000 per copyright infringed. Enhanced damages of up to $150,000 per copyright infringed may be granted on a finding of willful infringement. 17 U.S.C. § 504(c)(2).
Statutory damages are intended to serve as a deterrent rather than a windfall, and the court has wide discretion to determine the amount of statutory damages between the statutory maxima and minima. Harris v. Emus Recs. Corp., 734 F.2d 1329, 1335 (9th Cir. 1984). In the instant case, following supplemental briefing, RH seeks the statutory maximum of $30,000 per copyright infringed as identified in the complaint. (Supp. Br. at 1.) While RH does not seek enhanced damages based on willful infringement, the infringement likely appears to be willful given that the Copyrighted Works and RH Marks are being used together to sell knockoffs of RH's lighting products. Moreover, many Defendants have created new websites that continue to infringe on RH's Copyrighted Works in order to sell knockoffs. (See 1/2/24 Zhong Decl., Exh. A; Second Supp. Br. at 2-12.) Under such circumstances, the statutory maximum of $30,000 per copyright infringed is appropriate.
Accordingly, the Court recommends the following statutory damages:
(1) Alimia Light: $60,000, based on infringement of two registrations (VA 2-298-977 and VA 2-195-419);
(2) Zhuosai Lighting: $60,000, based on infringement of two registrations (VA 2-315-654 and VA 2-195-419);
(3) Grand Lamps: $60,000, based on infringement of two registrations (VA 2-315-654 and VA 2-195-419);
(4) Wing Lighting: $30,000, based on infringement of one registration (VA 2-298-977);
(5) Oasis Lamps: $60,000, based on infringement of two registrations (VA 2-315-654 and VA 2-195-419);
(6) Momo Chandelier: $30,000, based on infringement of one registration (VA 2-315-654);
(7) Fanci Light: $30,000, based on infringement of one registration (VA 2-298-977);
(8) Cure Lighting: $30,000, based on infringement of one registration (VA 2-298-977);
(9) Clouds Lights: $30,000, based on infringement of one registration (VA 2-298-977);
(10) Kushigo Limited: $90,000, based on infringement of three registrations (VA 2-315-654, VA 2-195-419, and VA 2-298-977);
(11) Lighting Forever: $60,000, based on infringement of two registrations (VA 2-195-419, and VA 2-298-977);
(12) Reborn Lighting: $90,000, based on infringement of three registrations (VA 2-298-977, VA 2-195-419, and VA 2-315-654);
(13) Showsun Lighting: $60,000, based on infringement of two registrations (VA 2-315-654 and VA 2-195-419);
(14) Sigma Living: $30,000, based on infringement of one registration (VA 2-298-977);
(15) Ineffable Lighting: $30,000, based on infringement of one registration (VA 2-298-977);
(16) Zenduce: $30,000, based on infringement of one registration (VA 2-298-977);
(17) Oclolli: $30,000, based on infringement of one registration (VA 2-298-977); and
(18) Kevin Studio: $30,000, based on infringement of one registration (VA 2-298-977).
V. CONCLUSION
For the reasons stated above, the undersigned RECOMMENDS that RH's motion for default judgment be DENIED as to Defendant Wang, and that the claims against Defendant Wang be DISMISSED WITHOUT PREJUDICE. The undersigned RECOMMENDS that RH's motion for default judgment be GRANTED as to the remaining Defendants as follows:
1. RH shall have and recover from Defendants statutory damages in the amounts stated above;
2. PayPal, Inc. shall release any money contained in the PayPal account previously frozen by the Court for Defendant Zenduce using the support@zenduce.com e-mail account to be paid to RH in partial satisfaction of the aforementioned judgment;
3. Defendants and their respective officers, agents, servants, employees, and all other persons acting in active concert and participation with them shall be enjoined from:
a. Copying, distributing, or publicly displaying any of the RH Copyrighted Works, including removing or disabling all website links in violation, and b. Using any of the RH marks, or any marks confusingly similar thereto, in commerce in connection with the manufacturing for sale or sale of any lighting products;
4. Within three business days of receipt of this order, the following registrars and the registry Verisign, Inc. shall disable the following domain names, through a registry hold or otherwise, and make them inactive and non-transferable pending further order:
Domain Name
Registrar
Alimialight.com
eName Technology Co., Ltd.
Puslighting.com
Hong Kong Juming Network Technology Co., Ltd.
Alimialighting.com
eName Technology Co., Ltd.
Yami-lighting.com
Alibaba Cloud Computing (Beijing) Co., Ltd.
Yamilightings.com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Grandlamps.com
eName Technology Co., Ltd.
Winglightings.com
NameSilo, LLC
Wing-lighting.com
NameCheap, Inc.
Oasislamps.com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Oasislampus.com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Momochandelier. com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Poplamps.com
GoDaddy.com, LLC
Fancilight.com
NameCheap, Inc.
Fancil ighting.com
NameCheap, Inc.
Curelighting.com
NameSilo, LLC
Cloudslights.com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Cloudslamps.com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Ericlightus.com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Ericlights.com
Alibaba Cloud Computing Ltd. d/b/a HiChina
Domain Name
Registrar
(www.net.cn)
Emmalighting.com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Emmalightings.com
Alibaba Cloud Computing Ltd. d/b/a HiChina (www.net.cn)
Lighting-forever. com
Hosting Concepts B.V. d/b/a Registrar.eu
Rebornlighting.com
FastDomain Inc.
Showsunlights.com
Xin Net Technology Corporation
JHSi gmafurniture .com
Alibaba Cloud Computing Ltd. d/b/a HiChina
Ineffablelighting.com
NameSilo, LLC
Ineffable-lighting.com
NameCheap, Inc.
Zenduce.com
IONOS SE
Moonilighting.com
Hostinger, UAB
Kevinstudioinc.com
NameCheap, Inc.
Kevinstudiolives.com
NameCheap, Inc.
5. Within three business days of receipt of this order, the following Internet store or online marketplace platforms shall remove or disable the following storefronts:
Defendants' Online Marketplace
Internet Store/Online Marketplace Platform
cnsigma.en.alibaba.com
sigm afurniture.en.alibaba.com
sigmaliving.en.alibaba.com
Alibaba.com Singapore E-Commerce Private Limited
momolight.en.alibaba.com
Alibaba.com Singapore E-Commerce Private Limited
6. RH shall serve this report and recommendation on each Defendant in accordance with the TRO order, and shall immediately file a proof of service certifying service and describing the means of service;
7. The presiding judge shall retain jurisdiction for the purpose of making any further orders necessary or proper for the construction or modification of this judgment and permanent injunction, the enforcement thereof, and/or punishment for any violations thereof; and
8. The Clerk of the Court shall release and disburse the bond previously posted by RH in the amount of $10,000, along with any accrued interest less the Court's registry fee to RH's counsel, Lewis Roca Rothgerber Christie, LLP, 100 Pine Street, Suite 1750, San Francisco, CA 94111.
IT IS SO RECOMMENDED.