Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_02-cv-03792/USCOURTS-cand-5_02-cv-03792-5/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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 Formerly known as Gatechina.com, Inc.

Case No. C 05-260 JF (PVT)

ORDER GRANTING IN PART PLAINTIFF’S MOTION FOR CIVIL CONTEMPT SANCTIONS

(JFLC2)

**E-Filed 5/8/06**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

U2 HOME ENTERTAINMENT, INC., et al.,

 Plaintiffs,

 v.

GATECHINA.COM, INC., et al.,

 Defendants.

Case Number C 05-260 JF (PVT)

Related Case C 02-3792 JF (PVT)

ORDER GRANTING IN PART

PLAINTIFF’S MOTION FOR CIVIL

CONTEMPT SANCTIONS

Plaintiff’s motion for civil contempt sanctions was heard on April 28, 2006. The Court

has considered the briefing as well as the oral arguments of counsel. For the reasons discussed

below, the motion will be granted in part.

I. BACKGROUND

Plaintiff U2 Home Entertainment, Inc. (“U2”), a California corporation, owns the

copyrights and/or the exclusive United States distribution rights to certain Chinese language

videos. In August 2002, U2 sued Wayne Lin (“Lin”) and his corporation, Gatechina, Inc.1

(“Gatechina”), for copyright infringement and related claims arising out of activity on a website

Case 5:02-cv-03792-JF Document 85 Filed 05/08/06 Page 1 of 6
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Case No. C 05-260 JF (PVT)

ORDER GRANTING IN PART PLAINTIFF’S MOTION FOR CIVIL CONTEMPT SANCTIONS

(JFLC2)

known as tigercool.com. The website tigercool.com was launched by Lin and another individual,

Lei Lei (“Lei”) in 2001, and offers goods and services designed to appeal to ethnic Chinese

consumers around the world. For example, a user of tigercool.com can order flowers for delivery

in China, obtain phone cards and obtain Chinese language books and visual media. U2 alleged

that the visual media products offered by tigercool.com included works to which U2 owned the

copyrights or distribution rights. That action – Case No. C 02-3792 JF (PVT) – settled, and this

Court entered a stipulated Final Judgment, Consent Decree and Permanent Injunction (“Final

Judgment”), providing in relevant part that: 

Defendants, and their related business entities, and Defendants’ officers, directors,

shareholders, members, partners, agents, representatives, servants, employees,

successors and assigns, and any and all persons acting in concert or participation

with them who receive actual notice of this Final Judgment are permanently

enjoined and restrained from directly or indirectly engaging in importing, renting,

selling, offering to sell, distributing, marketing, advertising, promoting,

transferring, shipping, licensing, handling, aiding or abetting in any of the

foregoing, or using or exploiting in any fashion, any unauthorized copies of

Plaintiff’s Copyrighted Works [identified in Exhibit “A” to the Final Judgment] or

otherwise infringing on the copyright interests of Plaintiff’s Copyrighted Works.

Shortly thereafter, Lin transferred all ownership of the tigercool.com website to Lei. The

transfer was completed in September 2003, at which time Lin provided Lei with a list of U2's

protected works that could not be sold in the United States pursuant to the Final Judgment.

Lin and Gatechina continued to operate a separate website, wenxuecity.com, a

community website providing information about lifestyle, culture and other topics of interest to

ethnic Chinese communities worldwide. The term “wenxuecity” loosely translates to cultureknowledge-city. Lin provided advertising for tigercool.com on the wenxuecity.com website for

$2,000 per month. Specifically, there was a “banner ad” on the wenxuecity.com website

identifying tigercool.com as a marketplace for goods and services; if a user clicked on the banner,

the user would be directed to the tigercool.com home page. The banner ad did not refer to any

particular video for sale by tigercool.com, nor did it link a user to any page offering particular

videos for sale.

In October 2004, an agent for U2 purchased a copy of “Dry Wood Fierce Fire” and a

thirty-four episode set of the program “Legendary Four Aces” from tigercool.com. These works

Case 5:02-cv-03792-JF Document 85 Filed 05/08/06 Page 2 of 6
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Case No. C 05-260 JF (PVT)

ORDER GRANTING IN PART PLAINTIFF’S MOTION FOR CIVIL CONTEMPT SANCTIONS

(JFLC2)

are listed in Exhibit A to the Final Judgment entered into in Case No. C 02-3792 between U2 and

Lin/Gatechina. The works were shipped from China to an address in California. 

In January 2005, U2 filed an application for an order to show cause why Lin and

Gatechina should not be held in contempt of the Final Judgment in Case No. C 02-3792. U2 also

filed a second action, Case No. C 05-260 JF (PVT), against Lin, Gatechina, Lei, and two of Lei’s

business entities, Unitopia Corporation and Unitopia Xian Corporation. Upon being informed by

Lin’s counsel that Lin and Gatechina no longer had any association with the tigercool.com

website, U2 withdrew its application for contempt sanctions and dismissed Lin and Gatechina

from Case No. C 05-260. Neither Lei nor Unitopia Xian Corporation has appeared in that case,

and default judgment has been entered against them. Unitopia Corporation has appeared and is

litigating the action.

In November 2005, U2 noticed the deposition of Lin in Case No. C 05-260. Because Lin

is not a defendant in that action, he appeared for deposition as a third party witness. He appeared

without counsel and without an interpreter. While Lin is a United States citizen, he is ethnically

Chinese and his native language is Mandarin. During the deposition, he testified that for at least

some period of time after entry of the Final Judgment in Case No. C 02-3792, there was

advertising for the tigercool.com website on the wenxuecity.com website, and that Lei paid

$2,000 per month for that advertising. Lin requested and was entitled to review the deposition

transcript before it was finalized. See Fed. R. Civ. P. 30(e). However, Lin was not given an

opportunity to review the transcript before it was sent to U2. 

On December 30, 2005, U2 filed an application for issuance of an order to show cause

why Lin and Gatechina should not be adjudged in civil contempt of the Final Judgment entered

in Case No. C 02-3792. On January 11, 2006, Lin filed an application for an extension of time to

respond to U2’s application for an order to show cause, so that Lin could review his deposition

transcript. The Court denied U2’s application for an order to show cause without prejudice so

that Lin could review the deposition transcript. Lin did so and made corrections to the transcript. 

U2 subsequently filed the instant renewed application for issuance of an order to show cause why

Lin and Gatechina should not be adjudged in contempt of the Final Order in Case No. C 02-3792.

Case 5:02-cv-03792-JF Document 85 Filed 05/08/06 Page 3 of 6
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Case No. C 05-260 JF (PVT)

ORDER GRANTING IN PART PLAINTIFF’S MOTION FOR CIVIL CONTEMPT SANCTIONS

(JFLC2)

II. DISCUSSION

A party who fails to comply with a court order is subject to a finding of civil contempt. 

General Signal Corp. v. Donallco, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986). The failure to

comply with the court order need not be intentional. Id. However, where the language of the

order is too vague, imposing contempt sanctions would be an invalid exercise of judicial

authority. Vertex Distributing Inc., v. Falcon Foam Plastics, Inc., 689 F.2d 885, 889 (9th Cir.

1982). Therefore, if a defendant’s conduct “appears to be based on a good faith and reasonable

interpretation” of the order, the defendant should not be held in contempt. Id. (internal quotation

marks and citation omitted). 

Contempt must be established by clear and convincing evidence. Id. Once a violation of

a court order has been established, the Court may impose sanctions. Donallco, 787 F.2d at 1379-

80. Sanctions may be imposed to coerce obedience to a court order or to compensate the party

seeking a contempt finding for injuries resulting from the contemptuous behavior, or both. Id. at

1380. A monetary coercive sanction should be payable to the Court. Id. A compensatory

sanction is limited to the actual losses sustained by the party seeking a contempt finding. Id. 

The Final Judgment at issue here clearly prohibits Lin and Gatechina from “directly or

indirectly” marketing or advertising U2’s copyrighted works or aiding and abetting any

marketing, advertising or sales of U2 copyrighted works. The Court concludes that the continued

advertising of the tigercool.com website violated these prohibitions, at least after such time as

Lin and Gatechina had actual notice that U2’s copyrighted works still were being sold on the

tigercool.com website. It is undisputed that in January 2005, Lin was served with a copy of the

complaint in Case No. C 05-260 JF (PVT) and a copy of the previously withdrawn contempt

motion, both of which made clear that tigercool.com was continuing to sell the protected works

covered by the Final Judgment. Included in the papers served upon Lin were investigative

reports stating that “Dry Wood Fierce Fire” and “Legendary Four Aces” had been purchased

from tigercool.com. Under these circumstances, Lin could not reasonably have believed that he

could continue to advertise the tigercool.com website without being in violation of the Final

Judgment.

Case 5:02-cv-03792-JF Document 85 Filed 05/08/06 Page 4 of 6
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 The Court concludes that U2’s request for sanctions of $5.4 million is entirely

disproportionate to any conceivable losses suffered by U2 as a result of the contemptuous

conduct.

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Case No. C 05-260 JF (PVT)

ORDER GRANTING IN PART PLAINTIFF’S MOTION FOR CIVIL CONTEMPT SANCTIONS

(JFLC2)

As noted above, a compensatory sanction is limited to the actual losses sustained by the

party seeking a contempt finding. It is impossible to accurately quantify the losses that U2 may

have suffered from the continued advertising of tigercool.com by Lin and Gatechina. However,

Lin and Gatechina received $2,000 per month for the five months that they continued to advertise

tigercool.com after receiving notice that U2’s copyrighted works still were being sold on that

website. There is no evidence that this continued advertising led to any actual sales of the

protected works. Accordingly, the Court concludes that it is appropriate to require disgorgement

of the $10,000 that Lin and Gatechina garnered from their contemptuous conduct. The Court

further concludes that it is appropriate to require Lin and Gatechina to pay the attorneys’ fees that

U2 incurred in bringing the sanctions motion.2

ORDER

The motion for contempt sanctions is GRANTED IN PART, in the amount of $10,000

plus reasonable attorneys’ fees incurred by Plaintiff in bringing the motion. Within seven (7)

days after service of this order, Plaintiff shall file a declaration setting forth the attorneys’ fees

incurred in bringing the instant motion for contempt sanctions, and a proposed order awarding

such fees as a contempt sanction.

DATED: 5/8/06

__________________________________

JEREMY FOGEL

United States District Judge

Case 5:02-cv-03792-JF Document 85 Filed 05/08/06 Page 5 of 6
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Case No. C 05-260 JF (PVT)

ORDER GRANTING IN PART PLAINTIFF’S MOTION FOR CIVIL CONTEMPT SANCTIONS

(JFLC2)

This Order was served on the following persons:

Alfredo A. Bismonte abismonte@mount.com, bshih@mount.com; mmcmanus@mount.com

Patricia De Fonte Patricia.DeFonte@ibslaw.com, shayne.coppedge@ibslaw.com;

richard.idell@ibslaw.com; will.philp@ibslaw.com

Richard J. Idell richard.idell@ibslaw.com, patricia.defonte@ibslaw.com;

june.hight@ibslaw.com; shayne.coppedge@ibslaw.com; will.philp@ibslaw.com

Bobby T. Shih bshih@mount.com, mmcmanus@mount.com

Tiffany W. Tai tai@brtlawyers.com

Case 5:02-cv-03792-JF Document 85 Filed 05/08/06 Page 6 of 6