Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-01150/USCOURTS-cand-3_06-cv-01150-0/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1114 Trademark Infringement

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

LEVI STRAUSS & CO.,

Plaintiff,

 v.

U.S. COLIN'S, INC.,

Defendant. 

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No. C-06-01150 SC

ORDER GRANTING

PLAINTIFF'S MOTION

FOR ENTRY OF DEFAULT

JUDGMENT 

I. INTRODUCTION

Plaintiff Levi Strauss & Co. ("Plaintiff" or "LS&CO") brought

this action against U.S. Colin's, Inc. ("Defendant") asserting

causes of action for trademark infringement and dilution under

federal and California law. Defendant was properly served with a

summons and the Complaint on April 19, 2006, but failed to

respond. Docket No. 4. As a result, on June 22, 2006, the Clerk

of the Court entered default against Defendant. Docket No. 8. 

Presently before the Court is Plaintiff's Motion for Entry of

Default Judgment. For the reasons stated herein, the Court GRANTS

Plaintiff's motion for entry of default and AWARDS Plaintiff

$1,932.76 for attorneys' fees and costs. The Court further

ENJOINS Defendant from manufacturing, distributing, or selling any

goods that infringe LS&CO's Arcuate Stitching Design and 501

trademarks. 

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II. BACKGROUND

Plaintiff Levi Strauss & Co. is a large apparel company which

manufactures a variety of products, including traditional denim

blue jeans. Defendant U.S. Colin's also manufactures clothing,

including blue jeans, in the United States. Plaintiff alleges

that Defendant has been manufacturing and selling jeans which use

stitching designs and the 501 style designation in a way that is

confusingly similar to LS&CO's trademarks. Compl. ¶¶ 17-18. 

Plaintiff brought this case asserting causes of action for (1)

federal trademark infringement under 15 U.S.C. §§ 1114-1117, (2)

federal unfair competition under 15 U.S.C. § 1125, (3) federal

dilution of a famous mark under 15 U.S.C. § 1125(c), (4)

California trademark infringement and dilution under Cal. Bus. &

Prof. Code §§ 14320, 14330, 14335, 14340, and (5) California

unfair competition under Cal. Bus. & Prof. Code § 17200. See

Compl. at ¶¶ 22-42.

Plaintiff notes that Defendant, who is neither an infant nor

an incompetent person, was properly served with a summons and the

Complaint and has not filed any response. See Pl.'s Mot. for

Default J. ¶¶ 8-9; Proof of Service, Docket No. 4. The Clerk of

the Court entered default against Defendant on June 22, 2006. 

Docket No. 8. Plaintiff filed the present motion on Sept. 27,

2006. 

Plaintiff contends it is owed a total of $1,932.76. See

Gilchrist Decl. ¶ 6. This amount is the sum of attorneys' fees

and court costs in connection with preparing and serving the

complaint, writing letters, and requesting entry of default. Id. 

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Plaintiff also seeks a permanent injunction to prevent Defendant

from making further commercial use of its trademarks. See Pl.'s

Mot. for Default J. at ¶ 2. 

III. LEGAL STANDARD

After entry of default, the Court may enter a default

judgment. Fed. R. Civ. P. 55(b). "However, entry of default does

not automatically entitle the non-defaulting party to entry of a

default judgment regardless of the fact that the effect of entry

of a default is to deem allegations admitted." In re Villegas,

132 B.R. 742, 746 (9th Cir. BAP 1991). Rather, "the decision to

enter a default judgment is discretionary." Alan Neuman Prods.,

Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988).

First, the Court must "access the adequacy of service of

process on the party against whom default is requested." Board of

Trustees of the N. Cal. Sheet Metal Workers v. Peters, No. C-00-

0395 VRW, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D. Cal. Jan. 2,

2001). Once the Court determines that service was sufficient, it

may consider the following factors when exercising its discretion

to enter 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 decisions on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). "The

general rule of law is that upon default the factual allegations

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of the complaint, except those relating to the amount of damages,

will be taken as true." Geddes v. United Fin. Group, 559 F.2d

557, 560 (9th Cir. 1977). Therefore, for purposes of this Motion,

the Court accepts as true the facts as portrayed in the Complaint.

IV. DISCUSSION

A. Service of Process

Service of process was adequate. Federal Rule 4(e) allows

service upon an individual by personally delivering the summons

and complaint. Fed. R. Civ. P. 4(e)(2). Rule 4(h) allows service

upon a corporation by personally delivering the summons and

complaint to the corporation's authorized agent. Fed. R. Civ. P.

4(h)(2). On April 19, 2006, a copy of the Complaint, Summons, and

other related documents were personally delivered to Mr. Freddy

Acosta who was authorized to accept the documents. See Proof of

Service, Docket No. 4. 

B. Merits of the Motion

Accepting the allegations in the Complaint as true, as it

must, the Court finds that the Eitel factors weigh in favor of

entering default judgment.

1. Prejudice to the Plaintiff

Plaintiff would suffer prejudice without entry of default

judgment. If Defendant is allowed to continue manufacturing

products that infringe upon Plaintiff's trademarks, Plaintiff will

face irreparable harm from trademark infringement and dilution. 

See Compl. at ¶ 20.

//

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2. Merits of Plaintiff's Substantive Claims

a. Trademark Infringement

In order to prevail on a trademark infringement claim,

Plaintiff must establish "that it has a protected interest (or

trademark right)" and that Defendant's usage is "likely to cause

consumer confusion and thus infringe upon that interest." Levi

Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1354 (9th Cir.

1985). Both California and federal law focus on "the likelihood

of confusion as to source or sponsorship." Toho Co. v. Sears,

Roebuck & Co., 645 F.2d 788, 791 (9th Cir. 1981). 

As alleged in the Complaint, Plaintiff has valid trademarks

for Arcuate stitching and the 501 style designation. See Compl.

at ¶¶ 8-10, Exh. B. Defendant has infringed on the trademarks by

producing jeans confusingly similar to those produced by LS&CO. 

Id. at ¶¶ 15-19, Exh. C. 

b. Unfair Competition

Plaintiff also alleged that Defendant competed unfairly in

violation of 15 U.S.C. § 1125(a) by using LS&CO's designs and

marks in a way that is likely to cause public confusion or mistake

as to their connection or origin. Compl. at ¶ 28. “The test for

false designation under the Lanham Act, as well as the common-law

and statutory unfair competition claims, is whether there was a

‘likelihood of confusion.’” Walter v. Mattel, Inc., 210 F.3d

1108, 1111 (9th Cir. 2000). As discussed in the previous section,

Plaintiff has established that Defendant's blue jean products

created a likelihood of confusion. 

//

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c. Trademark Dilution

Section 1125(c) of Title 15 was recently amended by the

Trademark Dilution Revision Act of 2006. Pub. L. No. 109-312, 120

Stat. 1730 (2006). The statute provides a remedy for dilution by

blurring and by tarnishment. Dilution by blurring is defined as

"association arising from the similarity between a mark or trade

name and a famous mark that impairs the distinctiveness of the

famous mark." Id. at (c)(2)(B). Dilution by tarnishment is

"association arising from the similarity between a mark or trade

name and a famous mark that harms the reputation of the famous

mark." Id. at (c)(2)(C). The statute requires that an owner

prove the non-owner's use "is likely to cause dilution by blurring

or dilution by tarnishment, regardless of the presence or absence

of actual or likely confusion." Id. at (c)(1). 

Section 1125(c) no longer requires the owner to demonstrate

actual harm, a standard established by the Supreme Court in

Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 433-34 (2003). 

The revision changes the law to the pre-Moseley standard. Under

that test, injunctive relief is available if a plaintiff can

establish that (1) its mark is famous; (2) the defendant is making

commercial use of the mark in commerce; (3) the defendant's use

began after the plaintiff's mark became famous; and (4) the

defendant's use presents a likelihood of dilution of the

distinctive value of the mark. Panavision Int'l, L.P. v. Toeppen,

141 F.3d 1316, 1324 (9th Cir. 1998). Plaintiff has shown that its

trademarks are famous, Compl. at ¶ 6; Defendant is using the marks

in commerce, Compl. at ¶ 15 and Exh. C; Defendant's use began

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after the mark became famous, Compl. at ¶ 6; and the use is likely

to cause dilution, Compl. at ¶ 20. Furthermore, Defendant's

trademark infringement was willful. See Compl. at ¶ 16, 26. 

Defendant had prior knowledge of Plaintiff's trademarks and the

similarity between both companies' products, but nonetheless

continued to use the offending designs. See id.

3. Sufficiency of the Complaint

Plaintiff's Complaint properly alleges the elements for the

above causes of action. The Complaint sets forth the identity of

LS&CO's marks, the extent to which LS&CO has used the marks, and

the fame of the marks. See Compl. at ¶¶ 6-14. The Complaint

alleges that Defendant used Plaintiff's marks in connection with

the sale of blue jeans without LS&CO's consent. Id. at ¶¶ 15-19. 

The Complaint further asserts that Defendant's use of LS&CO's

marks is likely to confuse and deceive customers. Id. at ¶ 20.

The Complaint also alleges that LS&CO's goodwill has been damaged

and its trademarks diluted by Defendant's products. Id. 

Accordingly, Plaintiff's Complaint is sufficient.

4. Other Factors

The other factors from Eitel weigh in favor of entering a

default judgment. First, the amount of money at stake in this

case is under two thousand dollars, which is low in relation to

the gravity of Defendant's conduct. Second, there is relatively

little possibility of a dispute concerning material facts. 

Plaintiff has provided evidence of its valid trademarks and

Defendant's use of confusingly similar stitching and designs. 

Third, there is no indication that Defendant failed to respond due

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to excusable neglect. Though Defendant never answered the

Complaint, a representative of Defendant discussed the matter with

Plaintiff's counsel. See Gilchrist Decl. at ¶¶ 3-5. Finally, the

policy underlying the Federal Rules of Civil Procedure favoring

decisions on the merits does not preclude entry of default

judgment. Rule 55 authorizes the Court to enter default in

situations such as this. See Fed. R. Civ. P. 55; Kloepping v.

Fireman's Fund, 1996 WL 75314 at *3 (N.D. Cal. Feb. 13, 1996). In

light of the Eitel factors, this Court finds that entry of default

judgment is appropriate.

C. Remedies

Plaintiff has requested monetary relief for attorneys' fees

and costs as well as equitable relief in the form of a permanent

injunction. 

1. Attorneys' Fees

Subject to 15 U.S.C. § 1117(a), Plaintiff is entitled to

recover attorney's fees and costs for Defendant's willful

trademark infringement, which qualifies as an "exceptional case." 

See Earthquake Sound Corp. v. Bumper Indus., 352 F.3d 1210, 1216

(9th Cir. 2003). To determine a reasonable attorney fee award

under section 1117(a), courts employ the lodestar method. See

id.; Yahoo!, Inc. v. Net Games, Inc., 329 F.Supp.2d 1179, 1181

(N.D. Cal. 2004); Winterstein v. Stryker Corp. Group Life Ins.

Plan, 2006 WL 1889901 (N.D. Cal. July 10, 2006). This method

determines the reasonable attorney fee by "multiplying the number

of hours the prevailing party reasonably expended on the

litigation by a reasonable hourly rate." Morales v. City of San

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Rafael, 96 F.3d 359, 363 (9th Cir. 1996). 

Plaintiff has accounted for $1,308.93 in attorneys' fees and

$623.83 in costs for a total of $1,932.76. The amount for costs

is reasonable in light of the funds Plaintiff expended for court

filings, service of process, and collecting evidence. The amount

for attorneys' fees is comprised of 2.1 hours of attorney time and

7.1 hours of legal assistant time. The attorney, an associate,

was billed at approximately $276 per hour, and the legal

assistant, a paralegal, was billed at approximately $104 per hour. 

While these rates are higher than those set in Yahoo!, other cases

in this District have set significantly higher rates based on an

attorney's skill, experience, and reputation. See e.g., Cancio v.

Financial Credit Network, Inc., 2005 WL 1629808 (N.D. Cal. July 6,

2005). In this case, Plaintiff's law firm kept the attorneys'

fees admirably low by using a paralegal to do the majority of the

work and completing the task in only 9.2 hours. By contrast, in

Yahoo!, another case where the trademark holder received default

judgment, the court found over 111 hours to be reasonable. An

above average rate is warranted because counsel was remarkably

efficient in handling the case. See Yahoo!, 329 F.Supp.2d at

1186. This Court finds the sum of attorneys' fees and costs

reasonable in light of the circumstances. 

2. Injunctive relief

Plaintiff has demonstrated that its trademark rights are

being violated by Defendant. Under the Lanham Act, the Court may

grant an injunction. See 15 U.S.C. § 1116(a); Century 21 Real

Estate Corp. v. Sandlin, 846 F.2d 1175, 1180-81 (9th Cir. 1988)

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("Injunctive relief is the remedy of choice for trademark and

unfair competition cases"). Furthermore, injunctive relief is

available in the default judgment setting. See e.g., Philip

Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494 (C.D.

Cal. 2003). This Court finds that an injunction is appropriate

because it will best serve to protect Plaintiff from the risk of

continuing irreparable harm.

V. CONCLUSION

The Court GRANTS Plaintiff's motion for the entry of default

judgment. As a consequence, the Court AWARDS Plaintiff $1,932.76

for attorneys' fees and costs. The Court also GRANTS Plaintiff's

request for an injunction.

Defendant, U.S. Colin's, Inc., its principals, agents,

affiliates, employees, officers, directors, successors, assigns,

and all persons acting in concert or participating with it or

under its control who receive actual notice of this Order, are

permanently ENJOINED and RESTRAINED, directly or indirectly, from

doing, authorizing or procuring any persons to do any of the

following until such time as this Order is dissolved or modified

by further order:

(1) Manufacturing, licensing, selling, offering for sale,

distributing, importing, exporting, advertising, promoting, or

displaying any products that display any stitching or other design

that is substantially similar to Plaintiff's Arcuate trademark or

501 trademark;

(2) Otherwise violating the rights of Plaintiff in and to the

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Arcuate or 501 trademark; and

(3) Assisting, aiding or abetting any person or entity

engaging in or performing any act prohibited by this Order.

 IT IS SO ORDERED.

Dated: November 1, 2006 

UNITED STATES DISTRICT JUDGE

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