Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-03464/USCOURTS-cand-3_05-cv-03464-1/pdf.json

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

---

United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CHANEL, INC,

 Plaintiff,

 v

BRANDON DOAN, et al

 Defendants.

 

No C 05-03464 VRW

 ORDER

On August 26, 2005, Chanel, Inc filed this action

alleging that defendants had committed, inter alia, trademark

counterfeiting, infringement and false designation of origin. Doc

#1. Before the court is plaintiff’s unopposed motion for default

judgment against defendants, as well as plaintiff’s application for

statutory damages, permanent injunction and attorney fees. Doc

#15-1. For the reasons that follow, the court GRANTS plaintiff’s

motion for default judgment, GRANTS statutory damages and

injunctive relief and GRANTS an award of attorney fees and

expenses. 

//

Case 3:05-cv-03464-VRW Document 22 Filed 03/13/07 Page 1 of 15
United States District Court

For the Northern District of California

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I

Plaintiff, a well known fashion house, alleges that

defendants violated its trademark rights through its businesses,

Cizi’s Handbags, Cizicollection.com and Cizinguyen. Doc #1. 

Although served with summons and complaint on September 4, 2005

(Doc ##4-6), defendants never filed an answer or responsive

pleading. Upon plaintiff’s motion, the clerk entered default on

December 21, 2005, in accordance with FRCP 55(a). Doc #9. 

Subsequently, plaintiff submitted its motion for default

judgment on June 2, 2006. Doc #15-1. Defendant Eddie Doan filed a

notice of change of address on July 13, 2006, but none of the

defendants filed an opposition or a statement of non-opposition as

required by Civil Local Rule 7-3. Doc #17. On July 25, 2006, the

court ordered defendants on or before August 17, 2006, to show

cause why judgment should not be entered in favor of plaintiff for

failure to respond to plaintiff’s complaint. Doc #18. No response

was received, although defendant Eddie Doan submitted a letter to

the court on August 24, 2006, nearly one year after being served. 

Doc #20. 

Plaintiff requests that default judgment be entered and

that defendants pay $127,701.00 in statutory damages pursuant to

the Lanham Act, 15 USC § 1117© (2006), jointly and severally. Doc

#15-1. Plaintiff further requests a permanent injunction barring

defendants from marketing or selling any goods that infringe on

plaintiff’s marks. Id. Finally, plaintiff seeks to recover all

fees, including attorney fees, investigative fees and costs. Id.

The following factual summary comes from plaintiff’s

complaint, declarations and supporting exhibits. Doc ##1, 15-2 to

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For the Northern District of California

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15-9. Plaintiff is a corporation that manufactures and distributes

a variety of luxury carrying apparel, including handbags. Doc #1 ¶

2. Plaintiff owns six federally registered trademarks that it uses

to market and sell its handbags. Doc #1 ¶ 7. 

Defendants sell handbags containing these trademarks via

the internet and a San Jose storefront. Doc #1 ¶¶ 3, 4, 16. 

Despite lacking permission to use these marks, defendants promote

their products both as genuine Chanel merchandise and as “look

alike” products. Doc #1 ¶ 9; Doc ##15-5 to 15-6. 

Plaintiff hired a private investigator, aptly named

Robert Holmes, to inquire into defendants’ operations. Doc #15-7

¶¶ 1, 3. Holmes purchased a counterfeit Chanel handbag from

Cizicollection.com for $115.00. Doc #15-7 ¶ 6. This website,

Holmes discovered, was registered to “Cizi Collection” with Brandon

Doan listed as an administrative contact. Doc #15-7, ¶ 4. 

Defendants’ website promoted a panoply of handbags bearing the

Chanel mark, some labeled “authentic” and others described as “look

alike.” Doc #15-5. Assertedly authentic Chanel handbags were

listed for prices as high as $1280.00, whereas “look alike”

handbags ranged in price from $89.00 to $145.00. Id. Defendants

also listed their products on an auction website, characterizing

them as “100% Real Authentic.” Doc #15-6.

The handbag delivered to Holmes bore the return address

of 5089 Eppling Lane, San Jose, CA 95111 (Doc #15-7 ¶ 8) — the same

address at which defendants were served with the summons and

complaint and at which defendant Eddie Doan registered with the

court on July 13, 2006. Doc ##4, 5, 6, 17. Plaintiff’s employee,

Adrienne Hahn Sisbarro, inspected this handbag and determined that

Case 3:05-cv-03464-VRW Document 22 Filed 03/13/07 Page 3 of 15
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it contained counterfeit Chanel marks and was a replica. Doc #15-

3.

Plaintiff then hired Suzi Vasylionis to investigate the

storefront location of “Cizi’s Handbags,” which she visited on

March 29, 2005. Doc #15-4 ¶¶ 1, 3, 4. Vasylionis observed

approximately 10 handbags bearing Chanel marks priced between

$70.00 and $135.00. Doc #15-4 ¶ 5. A female clerk who identified

herself as “Cizi” told Vasylionis that the handbags were “copies”

and stated that she could sell such handbags in wholesale

quantities. Id. Vasylionis purchased one of these handbags for

$65.00. Id at ¶ 6. 

In June of 2005, plaintiff prepared a cease and desist

letter and hired Robert Hargrove to deliver it to defendants at the

San Jose storefront location of “Cizi’s Handbags.” Doc #15-9 ¶¶ 3,

5. Defendants Hau Nguyen and Brandon Doan identified themselves as

co-owners of the retail store and as husband and wife. Doc #15-9

¶¶5, 6. Nguyen and Doan refused to surrender the counterfeit

merchandise to Hargrove but destroyed some of the handbags in his

presence. Doc #15-9 ¶ 7.

At this point, plaintiff sought the assistance of the

court, filing a complaint alleging that defendants’ actions

constitute trademark infringement and counterfeiting in violation

of the Lanham Act and the California Business and Professions Code. 

Doc #1. 

//

//

//

//

Case 3:05-cv-03464-VRW Document 22 Filed 03/13/07 Page 4 of 15
United States District Court

For the Northern District of California

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II

The court first addresses plaintiff’s motion for default

judgment. “Courts have inherent equitable powers to dismiss

actions or enter default judgments for failure to prosecute,

contempt of court, or abusive litigation practices.” Televideo

Systems, Inc v Heidenthal, 826 F2d 915, 917 (9th Cir 1987) (citing

Roadway Express, Inc v Piper, 447 US 752, 764 (1980); Link v Wabash

RR, 370 US 626, 632 (1962); United States v Moss-American, Inc, 78

FRD 214, 216 (ED Wis 1978)). 

“The general rule of law is that upon default the factual

allegations of the complaint, except those relating to the amount

of damages, will be taken as true.” Televideo Systems, 826 F2d at

917-18 (quoting Geddes v United Financial Group, 559 F2d 557, 560

(9th Cir 1977)). “Upon entry of default judgment, facts alleged to

establish liability are binding upon the defaulting party, and

those matters may not be relitigated on appeal.” Danning v Lavine,

572 F2d 1386, 1388 (9th Cir 1978)(citations omitted). Following

default judgment, a defendant is deemed to have admitted the wellpleaded allegations in the complaint. Benny v Pipes, 799 F2d 489,

495 (9th Cir 1986), amended, 807 F2d 1514 (9th Cir 1987) (citing

Thomson v Wooster, 114 US 104, 114 (1884); In re Visioneering

Construction, 661 F2d 119, 124 (9th Cir 1981)).

Defendants responded to neither plaintiff’s complaint,

the clerk’s entry of default, the court’s order to show cause nor

plaintiff’s motion for default judgment. All the while, defendants

sought settlement with plaintiff, filed a notice of change of

address with the court and sent a letter to the court. By refusing

to defend this suit, defendants leave no other remedy to plaintiff

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than default judgment. Plaintiff’s motion for default judgment is

therefore GRANTED. 

A 

Because default judgment is appropriate, the court takes

the well-pleaded allegations in the complaint as true and facts

establishing liability are binding upon defendants. Danning, 572

F2d at 1388; Geddes, 559 F2d at 560. Plaintiff’s complaint asserts

two causes of action for alleged violations of the Lanham Act, 15

USC §§ 1114 and 1125(a). Plaintiff’s complaint also advances state

causes of action under Cal Bus & Prof Code §§ 14330, 14335, 14340

and 17200 et seq.

15 USC § 1114(1)(a) makes liable “[a]ny person who shall,

without consent of the registrant use in commerce any reproduction,

counterfeit, [or] copy * * * of a registered mark in connection

with the sale, offering for sale, distribution, or advertising of

any goods or services on or in connection with which such use is

likely to cause confusion * * *.” Similarly, § 1125(a)(1) makes

liable “[a]ny person who, in connection with any goods or services

* * * uses in commerce any word, term, name, symbol or device * * *

which is likely to cause confusion * * * as to the affiliation * *

* of such person with another person * * * or in commercial

advertising or promotion, misrepresents the nature * * * of his or

her or another person’s goods* * *.”

Plaintiff’s state law claims are subject to the same

analysis as the federal Lanham Act claims. Cleary v News Corp,30

F3d 1255, 1263 (9th Cir 1994); Panavision Int’l v Toeppen, 141 F3d

1316, 1324 (9th Cir 1998); Entrepreneur Media, Inc v Smith, 279 F3d

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1135, 1153 (9th Cir 2002). Hence, if the factual allegations of

the complaint are sufficient to establish liability under the

Lanham Act, they are also sufficient to establish liability

pursuant to the state claims.

The plaintiff alleges in the complaint that defendants

knowingly sell and distribute counterfeit and infringing handbags

and use the Chanel marks to advertise these counterfeit goods in a

manner that is likely to cause consumer confusion. Doc #1 ¶¶ 17,

29, 30, 32, 37. Accordingly, the factual allegations of

plaintiff’s complaint, admitted by defendants through default,

establish that defendants violated the plaintiff’s rights under

both the Lanham Act and state law claims.

B 

Having established defendants’ liability, the court turns

to the relief requested by plaintiff. The scope of damages

available to plaintiff under each alleged violation is essentially

the same. As plaintiff acknowledges in its application for default

judgment, it is not entitled to double recovery; it may only

recover under one claim. The plaintiff elects to recover damages

available for defendants’ violation of 15 USC § 1114. 

The remedies available to a prevailing plaintiff under

§ 1114 of the Lanham Act include those listed under § 1117 (a-c). 

Under § 1117(a), a registered mark holder may recover the

defendant’s profits, registrant/plaintiff’s damages and the costs

of the action, subject to the principles of equity. Section

1117(b) requires the court to treble the damages assessed under

subsection (a) if the defendant “intentionally us[es] a mark or

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designation, knowing such mark * * * is a counterfeit mark * * *,

in connection with the sale, offering for sale, or distribution of

goods or services.” Section 1117© permits a plaintiff to elect

statutory damages in “case[s] involving the use of a counterfeit

mark” in connection with the sale of goods. 

Here, plaintiff may recover statutory damages pursuant to

§ 1117©, as defendants marketed and sold counterfeits of

plaintiff’s registered marks. Statutory damages are most

appropriate if, as here, data regarding the business practices and

profits of the defendants are unavailable due to lack of

cooperation on the part of defendants. Jackson v Sturkie, 255 F

Supp 2d 1096, 1101 (ND Cal 2003). In enacting § 1117©, Congress

acknowledged that statutory damages are “both necessary and

appropriate in light of the deception routinely practiced by

counterfeiters.” S Rep No 177, 104th Cong, 1st Sess, 7 (1995). 

Unlike the remainder of the allegations in the complaint,

those regarding damages are not controlling. Geddes, 559 F Supp 2d

at 560. Hence, it is the province of this court to determine the

appropriate amount of statutory damages. Section 1117(c)(1)

provides for damages of “not less than $500 or more than $100,000

per counterfeit mark per type of goods or services sold * * * as

the court considers just.” Yet, upon a finding that the use of the

counterfeit was willful, § 1117(c)(2) permits a maximum of

$1,000,000 per counterfeit mark per type of violating good sold. 

“Willful infringement carries a connotation of deliberate

intent to deceive.” Lindy Pen Co, Inc v Bic Pen Corp, 982 F2d

1400, 1406 (9th Cir 1993). Whether defendants acted willfully or

with bad faith “require[s] a connection between [the] defendant[s’]

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awareness of its competitor and its actions at those competitors’

expense.” Id.

Here, the declarations and exhibits attached to

plaintiff’s application for default judgment contain considerable

evidence of willfulness. Printouts from defendants’ website show

merchandise listed as both authentic and “look alike” Chanel bags. 

Doc #15-5. Defendants’ statements on an auction website declared

the counterfeit bags were “100% Real Authentic.” Doc #15-6. 

Furthermore, a woman identifying herself as “Cizi” told Vasylionis

that the handbags for sale in the San Jose storefront were

“copies.” Finally, on its website, defendants priced handbags

falsely labeled as authentic for approximately ten times the price

of those listed as “look alike,” implicitly recognizing that

plaintiff’s marks command higher prices. This conduct plainly

constitutes a “deliberate attempt to deceive,” entitling plaintiff

to recover up to the maximum of $1,000,000 per counterfeit mark for

type of good sold or offered as provided under § 1117(c)(2).

To calculate statutory damages under the Lanham Act, many

district courts turn to the analysis developed for a similar

provision within the Copyright Act. Sara Lee Corp v Bags of New

York, Inc, 36 F Supp 2d 161, 167 (SD New York 1999); Louis Vuitton

v Veit, 211 F Supp 2d 567, 583 (ED Pennsylvania 2002); Tommy

Hilfiger v Goody’s, 2003 US Dist LEXIS 8788, 74 (ND Georgia 2003);

Phillip Morris USA, Inc v Shalabi, 352 F Supp 2d 1067, 1076 (CD Cal

2004). Under the Copyright Act, the court has wide discretion in

calculating statutory damages, “constrained only by the specified

maxima and minima.” Harris v Emus Records Corp, 734 F2d 1329, 1335

(9th Cir 1984) (citing LA Westermann Co v Dispatch Printing Co, 249

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US 100, 39 (1919)). Plaintiff may recover statutory damages

without offering evidence of plaintiff’s actual damages or the

defendants’ profits because of the dual “compensatory and punitive

purposes” of statutory damages. Los Angeles News Service v Reuters

Television Int’l Ltd, 149 F3d 987, 996 (9th Cir 1998). 

Furthermore, “[t]he Supreme Court has stated that even for

uninjurious and unprofitable invasions of copyright the court may,

if it deems it just, impose a liability within the statutory limits

to sanction and vindicate the statutory policy of discouraging

infringement.” Peer Int’l Corp v Pausa Records Inc, 909 F2d 1332,

1337 (9th Cir 1990) (quoting FW Woolworth Co v Contemporary Art,

Inc, 344 US 228, 232 (1952)) (internal quotation marks omitted). 

Although the statutory damages need not reflect the

defendants’ unlawfully obtained profits, some district courts use

§ 1117(b) as a guide for setting damages under § 1117©. Sara Lee,

36 F Supp 2d at 170; Louis Vuitton, 211 F Supp 2d at 583. In doing

so, courts both counteract the profitability of counterfeiting and

execute the punitive purposes of the statute. Los Angeles News

Service, 149 F 3d at 996; Louis Vuitton, 211 F Supp 2d at 583.

 The lack of discovery in this case leaves a paucity of

data concerning the extent of defendants’ profits. Plaintiff

contends that it is reasonable to assume that defendants earned as

much as $42,567 in the time between registering their domain name

and receiving plaintiff’s complaint. Doc #15 ¶ III©. 

Unfortunately, plaintiff fails to demonstrate how it reached this

number other than offering a blanket reference to the data

contained in the exhibits and declarations.

//

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Based on the price of the handbags sold to plaintiff, as

well as the prices listed on defendants’ website, the court

estimates that defendants’ handbags averaged a price of $293. A

conservative estimate of 10 bags sold per week amounts to $2930 in

weekly revenue, which, multiplied across the relevant damages

period (approximately 42 weeks), yields $123,060 in estimated gross

proceeds from selling infringing handbags. Under a 50% profit

margin, as recommended by plaintiff, defendants would have garnered

$61,530 during the relevant period, which exceeds plaintiff’s

calculation of defendants’ profit ($42,567). Accordingly, the

court finds that plaintiff’s calculation amounts to a reasonable

estimation.

Trebling plaintiff’s calculation, pursuant to the court’s

previous finding of willfulness, yields a total of $127,701 in

damages. Plaintiff’s request for an award of this amount appears

to be fair, especially considering that the plaintiff pled factual

allegations, admitted by default, that would permit the court to

award up to $1,000,000 per infringement. Accordingly, the court

GRANTS plaintiff’s requested damage award in the amount of

$127,701.00.

Section 1116(a) confers to the court power to grant

injunctions “according to the principles of equity” in order to

prevent violation of the rights of a registered trademark holder. 

Plaintiff contends that a permanent injunction is warranted due to

the strong demand for Chanel products, defendants’ disregard of

plaintiff’s trademark rights and defendants’ failure to respond to

the complaint. Indeed, defendants’ willful violations, admitted by

default, and their lack of participation in this litigation give

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the court little assurance that defendants’ infringing activities

will cease. Accordingly, the court GRANTS plaintiff’s request for

permanent injunctive relief.

C

Finally, the court takes up plaintiff’s request for

attorney and investigator fees. Although 15 USC § 1117(c) does not

mention attorney fees, § 1117(b) does. Many district courts have

determined, as has this court, that it is appropriate to award fees

and costs to a prevailing plaintiff under subsection (b) when

damages are assessed under subsection (c). Tommy Hilfiger, 2003 US

Dist Lexis at 112; Louis Vuitton, 211 F Supp 2d at 585-86; Sara

Lee, 36 F Supp 2d at 170-71. To determine a reasonable attorney

fee award under § 1117(a), the court must find an objective source

for setting counsel’s hourly rates and determine whether the hours

expended by counsel are concordant with the requirements of the

litigation at hand.

Plaintiff’s counsel Stephen M Gaffigan submits in his

declaration that he worked 14.28 hours on this case, bills $350 per

hour for intellectual property litigation, has over 11 years of

trademark litigation experience and practices in Fort Lauderdale,

FL. Doc #15-8 (Gaffigan Decl ¶¶ 1,3). Plaintiff’s counsel Stephen

Scherzer submits in his declaration that he spent 35 hours on this

case at a billing rate of $175 per hour and has been an attorney

for over 30 years in Santa Ana, CA. Doc #15-2 (Scherzer Decl ¶¶

4,6,7). Each of the three private investigators assert fees as

well, which total $2,310.25. Doc #15-7 (Holmes Decl ¶ 10); Doc

#15-4 (Vasylionis Decl ¶ 8); Doc #15-3 (Sisbarro Decl ¶ 16).

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(118.59 - 118.3) / 118.3 = .00245, or about .3%.

13

It is the practice of the undersigned judge to rely on

official data to determine appropriate hourly rates. One reliable

official source for rates that vary by experience levels is the

Laffey matrix used in the District of Columbia. See http://www.

usdoj.gov/usao/dc/Divisions/Civil_Division/Laffey_Matrix_6.html

(citing Laffey v Northwest Airlines, Inc, 572 F Supp 354 (D DC

1983), aff’d in part, rev’d in part on other grounds, 746 F2d 4 (DC

Cir 1984)).

Under the 2006-2007 Laffey matrix, attorneys with 20 or

more years of experience bill $425/hour and attorneys with 11-19

years of experience bill $375/hour. These figures are, however,

tailored for the District of Columbia, whereas Gaffigan’s offices

are located in Fort Lauderdale, Florida and Scherzer’s are located

in Santa Ana, CA. The court will adjust these figures accordingly. 

The locality pay differentials within the federal courts -- which,

like law firms, employ lawyers and legal support staff --

approximate these differences. See http://jnet.ao.dcn/Human_

Resources/Pay_Tables/2007_Pay_Tables/Judiciary_Salary_Plan_

Locality_Rate_Pay_Tables_2007.html. The Washington-Baltimore area

has an +18.59% locality pay differential; the Miami-Fort

Lauderdale-Miami Beach area has a +18.30% locality pay

differential; the Los Angeles-Long Beach-Riverside area has a

+24.03% locality pay differential. Thus, adjusting the Laffey

matrix figures downward by 0.3% will yield rates appropriate for

Fort Lauderdale.1

 Adjusting the Laffey matrix figures upward by

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(124.03 - 118.59) / 118.59 = 0.04587, or about 5%.

14

approximately 5% will yield rates appropriate for Santa Ana.2

Applying this adjustment and rounding, the court obtains

the following rates: Attorneys with 11-19 years of experience

located in Fort Lauderdale, FL bill $376/hour; attorneys with 20 or

more years of experience located in Santa Ana, CA bill $446/hour. 

Therefore, both Gaffigan and Scherzer have charged reasonable

hourly rates, lower than would otherwise be available under the

Laffey matrix.

The court next evaluates whether the number of hours

expended by counsel are appropriate to the requirements of the

particular case. Plaintiff’s counsel gathered investigative

information, prepared documents and pleadings and discussed

settlement with defendants. Doc #15–8. Counsel expended a total

of 49.28 hours accomplishing these tasks, which the court finds

reasonable. Accordingly, the court awards attorney fees in the

amount of $11,125. 

Plaintiff also requests the payment of investigative fees

to Holmes, Vasylionis and Hargrove. Not having a suitable

substitute for the investigators’ billing rates, the court will

accept the asserted values in the declarations. See In Re HPL

Technologies, Inc, 366 F Supp 2d 912 (ND Cal 2005). The court

awards the plaintiff’s reasonable investigative fees in the amount

of $2310.25.

Finally, plaintiff requests recovery of court costs in

the amount of $463. Scherzer asserts in his declaration that $463

in costs were incurred for filing fees and service of process. Doc

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#15-8. The plaintiff’s application for default judgment includes a

breakdown of these costs, Doc #15 ¶ F, which the court finds

reasonable. Accordingly, the court awards plaintiff its costs in

the amount of $463. 

In sum, the court awards plaintiff $141,599.25,

consisting of $127,701 in statutory damages, $11,588 in attorney

fees and costs and $2310.25 in investigative costs.

III

For the foregoing reasons, the court GRANTS plaintiff’s

motion for default judgment and ENJOINS defendants from infringing

any of plaintiff’s trademarks. The clerk is DIRECTED to enter

judgment for plaintiff and against defendants in the amount of

$141,599.25, close the file and terminate all motions. 

IT IS SO ORDERED.

 

VAUGHN R WALKER

United States District Judge

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