Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-02828/USCOURTS-caed-2_06-cv-02828-1/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1051 Trademark Infringement

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

1

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

NIKE, INC.,

Plaintiff, No. CIV S-06-2828 GEB DAD

v.

B & B CLOTHING COMPANY, et al., FINDINGS AND RECOMMENDATIONS

Defendants.

 /

This matter came before the court on May 18, 2007, for hearing on plaintiff’s

motion for entry of default judgment against defendants B & B Clothing Company and Calvin

Powell a/k/a Kelvin Powell. J. Andrew Coombs and Annie S. Wang appeared telephonically on

behalf of plaintiff. There was no appearance by or on behalf of defendants.

Having considered all written materials submitted with respect to the motion, and

after hearing oral argument, for the reasons set forth below, the undersigned recommends that

plaintiff’s motion for entry of default judgment be granted.

PROCEDURAL BACKGROUND

Plaintiff Nike, Inc. initiated this action for damages and injunctive relief by filing

a complaint on December 13, 2006, alleging trademark infringement, unfair competition, and

dilution of famous mark in violation of the Lanham Act and alleging unfair competition and

Case 2:06-cv-02828-GEB-DAD Document 26 Filed 05/22/07 Page 1 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

2

dilution under California law. Despite being served with process, defendants B & B Clothing

Company and Calvin Powell failed to appear. The Clerk of the Court has entered default against

the defendants pursuant to plaintiff’s request. On April 13, 2007, plaintiff filed the instant

motion, noticing it to be heard before the undersigned pursuant to Local Rule 72-302(c)(19). 

Despite being served with all moving papers, defendants have not responded to the motion.

LEGAL STANDARD

Federal Rule of Civil Procedure 55(b)(2) governs applications to the court for

entry of default judgment. Upon entry of default, the complaint’s factual allegations regarding

liability are taken as true, while allegations regarding the amount of damages must be proven. 

Dundee Cement Co. v. Howard Pipe & Concrete Prods., 722 F.2d 1319, 1323 (7th Cir. 1983)

(citing Geddes v. United Fin. Group, 559 F.2d 557 (9th Cir. 1977)); see also TeleVideo Sys., Inc.

v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Where damages are liquidated or otherwise

capable of ascertainment from definite figures contained in the documentary evidence or in

detailed affidavits, judgment by default may be entered without a damages hearing. See Dundee,

722 F.2d at 1323. Unliquidated and punitive damages, however, require “proving up” at an

evidentiary hearing or through other means. Dundee, 722 F.2d at 1323-24; see also James v.

Frame, 6 F.3d 307, 310 (5th Cir. 1993).

Granting or denying default judgment is within the court’s sound discretion, see

Draper v. Coombs, 792 F.2d 915, 924-25 (9th Cir. 1986), and the court is free to consider a

variety of factors in exercising that discretion, see Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th

Cir. 1986). The court may consider such factors as:

(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, 782 F.2d at 1471-72 (citing 6 Moore’s Federal Practice ¶ 55-05[2], at 55-24 to 55-26).

Case 2:06-cv-02828-GEB-DAD Document 26 Filed 05/22/07 Page 2 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Specifically, the complaint asserts claims for trademark infringement under 15 U.S.C. 1

§§ 1114 and 1125 for infringement of registered and unregistered marks; unfair competition

under 15 U.S.C. § 1125(a) and (d) for false designation of origin and false descriptions and

representations in interstate commerce; dilution of famous mark under 15 U.S.C. § 1125(c) by

trading on Nike’s reputation and causing dilution of the distinctive quality of the marks; unfair

competition in violation of the California Unfair Business Practices Act, California Business and

Professional Code § 17200, et seq.; and dilution in violation of the trademark laws of California,

California Business and Professional Code § 14330.

3

ANALYSIS

The complaint in this case alleges trademark infringement, unfair competition,

and dilution of famous mark under the Lanham Act, as well as unfair competition and dilution

under California law. The detailed allegations of the complaint allege that defendants B & B 1

Clothing Company and Calvin Powell have manufactured, purchased, distributed, offered for

sale, and/or sold counterfeit or infringing footwear bearing Nike trademarks to the general public

in Sacramento, California. Plaintiff is in the business of manufacturing, designing, and selling

footwear, apparel, and related accessories bearing the NIKE trademark, the trademark known as

the Swoosh Design, or a composite trademark consisting of the word NIKE and the Swoosh

Design. Plaintiff has footwear registrations for word marks incorporating the word “air,”

including AIR JORDAN, AIR MAX, and AIR TRAINER, as well as the “Jump Man device,”

consisting of the silhouette of a man jumping in mid-air.

Plaintiff seeks an award of $100,000.00 against the defendants, as well as

permanent injunctive relief. The award of $100,000.00 is permitted by the Lanham Act and is

within the amount requested in the prayer for relief in plaintiff’s complaint. 

Weighing the factors outlined in Eitel v. McCool, 782 F.2d at 1471-72, the

undersigned has determined that default judgment against defendants B & B Clothing Company

and Calvin Powell is appropriate. These defendants have made no showing that their failure to

respond to the complaint was due to excusable neglect. The complaint is sufficient, and the

amount of money at stake is relatively small, particularly because plaintiff seeks only statutory

damages, not the recovery of lost profits or actual damages. There is no reason to doubt the

Case 2:06-cv-02828-GEB-DAD Document 26 Filed 05/22/07 Page 3 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

4

merits of plaintiff’s substantive claim, nor is there any apparent possibility of a dispute

concerning the material facts underlying the action. As these factors weigh in plaintiff’s favor,

the undersigned, while recognizing the public policy favoring decisions on the merits, will

recommend that default judgment be entered.

After determining that entry of default judgment is warranted, the court must next

determine the terms of the judgment. As indicated above, plaintiff seeks an award of

$100,000.00 against the defendants. The Lanham Act provides for the election of statutory

damages in a counterfeiting case in an amount “not less than $500 or more than $100,000 per

counterfeit mark per type of goods or services sold, offered for sale, or distributed, as the court

considers just.” 15 U.S.C. 1117(c)(1).

The plain language of 15 U.S.C. 1117(c) “affords plaintiffs the right to pursue

statutory damages without proving actual damages; however, the statute does not provide

guidelines for courts to use in determining an appropriate award.” Louis Vuitton Malletier &

Oakley, Inc. v. Veit, 211 F. Supp. 2d 567, 583 (E.D. Pa. 2002). See also Tiffany (NJ) Inc. v.

Luban, 282 F. Supp. 2d 123, 124-25 (S.D.N.Y. 2003) (“The statute ‘does not provide guidelines

for courts to use in determining an appropriate award’ and is only limited by what ‘the court

considers just.’”) (citation omitted). Some courts have found guidance in this regard in the case

law for an analogous provision of the Copyright Act, 17 U.S.C. § 504(c). See Tiffany, 282 F.

Supp. 2d at 125; Louis Vuitton, 211 F. Supp. 2d at 583; Sara Lee Corp. v. Bags of N.Y., Inc., 36

F. Supp. 2d 161, 166 (S.D.N.Y. 1999).

Under the Copyright Act, courts consider factors such as:

(1) “the expenses saved and the profits reaped;” (2) “the revenues

lost by the plaintiff;” (3) “the value of the copyright;” (4) “the

deterrent effect on others besides the defendant;” (5) “whether the

defendant’s conduct was innocent or willful;” (6) “whether a

defendant has cooperated in providing particular records from

which to assess the value of the infringing material produced;” and

(7) “the potential for discouraging the defendant.”

Tiffany, 282 F. Supp. 2d at 125 (quoting Fitzgerald Pub. Co., Inc. v. Baylor Pub. Co., 807 F.2d

Case 2:06-cv-02828-GEB-DAD Document 26 Filed 05/22/07 Page 4 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

 Plaintiff seeks $25,000.00 for one infringement of each of the following marks: NIKE, 2

Swoosh Design, composite NIKE and Swoosh Design, and NIKE AIR. (Pl.’s Mot. for Entry of

Default Judgment at 15 & Decl. of David W. Simpson ¶¶ 2, 3, 5 & 6.) Thus, plaintiff could seek

an award of $400,000 (i.e., $100,000 for one infringement of each mark). 

 An award of $100,000 is also reasonable in light of the amount of damages awarded in 3

other similar counterfeit cases. See Louis Vuitton, 211 F. Supp. 2d at 583-84 (collecting cases). 

5

1110, 1117 (2d Cir. 1986)). See also Microsoft Corp. v. PC Express, 183 F. Supp. 2d 448, 454

(D.P.R. 2001) (listing same factors).

Applying the relevant factors, the undersigned finds that no evidence submitted in

connection with the instant motion addresses the expenses saved and profits reaped by

defendants or the revenues lost by plaintiff. However, such calculations are difficult, if not

impossible, in light of defendants’ failure to respond to plaintiff’s complaint or the instant

motion. As one court has recognized, “[t]he statutory damages provision was added in 1995

because ‘counterfeiters’ records are frequently nonexistent, inadequate, or deceptively kept . . . ,

making proving actual damages in these cases extremely difficult if not impossible.’” Tiffany,

282 F. Supp. 2d at 124 (citation omitted).

With respect to the other factors, the undersigned finds that an award of $100,000

will likely serve to deter defendants and others. While the court has discretion to award up to

$100,000 per counterfeit mark per type of goods or services sold, the record reflects that the 2

defendant Calvin Powell is a small business owner who operates the business B & B Clothing

Company. An award of $100,000 for four counterfeit marks is at least commensurate with the

value of plaintiff’s famous marks and also in line with defendants’ “willful sale of unlicensed

and counterfeit products” and defendants’ persistence in the unlawful sale of counterfeit

merchandise “despite prior notice to them in the form of cease and desist letters served upon

them or their employees.” (Compl. ¶ 12.) As outlined in plaintiff’s motion, defendants have

failed to cooperate with plaintiff in its efforts to litigate this matter, including attempts at

settlement. For these reasons, the undersigned finds the requested award of $100,000 is just.3

Case 2:06-cv-02828-GEB-DAD Document 26 Filed 05/22/07 Page 5 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

6

In addition, plaintiff is entitled to the requested permanent injunctive relief. Title

15 U.S.C. § 1116(a) provides, in relevant part, that “[t]he several courts vested with jurisdiction

of civil actions arising under this chapter shall have power to grant injunctions, according to the

principles of equity and upon such terms as the court may deem reasonable.” In recommending

entry of default judgment in trademark infringement actions initiated by other plaintiffs, the

undersigned previously has endorsed similar, although not identical, requests for injunctive

relief. Accordingly, the undersigned will recommend that defendants be:

(1) prohibited from importing, manufacturing, distributing,

advertising, selling, and/or offering for sale any unauthorized

product which features any of the Nike trademarks;

(2) prohibited from importing, manufacturing, distributing,

advertising, selling, and/or offering for sale in connection thereto

any unauthorized promotional materials, labels, packaging, or

containers which picture, reproduce copy, or use the likenesses of

or bear a confusing similarity to any of the Nike trademarks;

(3) prohibited from engaging in any conduct that tends falsely to

represent that, or is likely to confuse, mislead, or deceive

purchasers, defendants’ customers, and/or members of the public to

believe, the actions of defendants, the products sold by defendants,

or defendants themselves are connected with Nike, are sponsored,

approved, or licensed by Nike, or are affiliated with Nike;

(4) prohibited from affixing, applying, annexing, or using in

connection with the importation, manufacture, distribution,

advertising, sale, and/or offer for sale or other use of any goods or

services, a false description or representation, including words or

other symbols, tending to falsely describe or represent such goods

as being those of Nike; and

(5) ordered to deliver for destruction all unauthorized products

which feature any of the Nike trademarks, including footwear, and

all label, signs, prints, packages, dyes, wrappers, receptacles, and

advertisements relating thereto in their possession or under their

control bearing any of the Nike trademarks or any simulation,

reproduction, counterfeit, copy, or colorable imitations thereof, and

all plates, molds, heat transfers, screens, matrices, and other means

of making the same.

See Levi Strauss & Co. v. Shilon, 121 F.3d 1309, 1314 (9th Cir. 1997) (affirming permanent

injunction against using “any counterfeit, copy, or colorable imitations of the trademarks of

Case 2:06-cv-02828-GEB-DAD Document 26 Filed 05/22/07 Page 6 of 7
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

7

Plaintiff Levi Strauss & Co. that is likely to cause confusion”); PepsiCo, Inc. v. California Sec.

Cans, 238 F. Supp. 2d 1172, 1177-78 (C.D. Cal. 2002) (granting motion for default judgment and

request for a permanent injunction enjoining defendant from using plaintiff’s trademarks on

counterfeit products).

Accordingly, IT IS HEREBY RECOMMENDED that:

1. Plaintiff’s April 13, 2007 motion for entry of default judgment be granted; and

2. Plaintiff’s proposed Judgment Pursuant to Entry of Default, as amended on

May 18, 2007, be signed by the district judge assigned to this case.

These findings and recommendations will be submitted to the United States

District Judge assigned to the case, pursuant to the provisions of 28 U.S.C. § 636(b)(l). Within

ten days after being served with these findings and recommendations, any party may file written

objections with the court and serve a copy on all parties. A document containing objections

should be titled “Objections to Magistrate Judge’s Findings and Recommendations.” Any reply

to objections shall be served and filed within five days after the objections are served. The

parties are advised that failure to file objections within the specified time may, under certain

circumstances, waive the right to appeal the District Court’s order. See Martinez v. Ylst, 951

F.2d 1153 (9th Cir. 1991).

DATED: May 21, 2007.

DAD:kw

Ddad1/orders.civil/nikeinc2828.mot.defaultjudgment.051807

Case 2:06-cv-02828-GEB-DAD Document 26 Filed 05/22/07 Page 7 of 7