Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_07-cv-01165/USCOURTS-casd-3_07-cv-01165-0/pdf.json

Nature of Suit Code: 820
Nature of Suit: Copyright
Cause of Action: 17:501 Copyright Infringement

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- 1 - 07CV01165 WQH (CAB)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

MICROSOFT CORPORATION,

Plaintiff,

CASE NO. 07cv01165 WQH (CAB)

ORDER

vs.

ONLINE DATALINK COMPUTER, INC., a

California corporation; and HIEN HO, an

individual,

Defendants.

HAYES, Judge: 

The matter before the Court is the Motion for Default Judgment and Permanent Injunction

against Defendants Online Datalink Computer, Inc. and Hien Ho. (Doc. # 11). 

BACKGROUND

On June 26, 2007, Plaintiff Microsoft Corporation (“Microsoft”) filed the Complaint (Doc.

# 1) against Defendants Online Datalink Computer, Inc. (“Online Datalink”) and Hien Ho

(collectively referred to as “Defendants”). The Complaint alleges claims for copyright

infringement; federal trademark infringement; false designation of origin, false description, and

false representation; California common law unfair competition; the imposition of a constructive

trust upon the illegal profits of all Defendants; and for an accounting by Defendants. 

The Complaint alleges that Defendant Online Datalink is a corporation engaged in the

business of advertising, marketing, installing, and distributing computer hardware and software,

including Microsoft software, and that Defendant Hien Ho is an “individual who is an officer,

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shareholder, and/or director of and/or owns, operates, or otherwise controls Online Datalink.” 

Complaint, ¶¶ 2-3. The Complaint alleges that Hien Ho “personally participated in and/or had the

right and ability to direct and control the wrongful conduct alleged in this Complaint, and derived

direct financial benefit from that wrongful conduct.” Id. at ¶ 3.

The Complaint alleges that in March 2007, Defendants distributed a computer system with

software covered by Microsoft’s registered copyrights and trademarks to an investigator. Id. at ¶

12. The Complaint alleges that in a letter dated April 27, 2007, Microsoft notified Defendants that

Microsoft had received reports of Defendants’ distribution of infringing software and that the

March 2007 distribution was an infringement of Microsoft’s copyrights and trademarks. The

Complaint alleges that the letter demanded that Defendants cease and desist their infringing

conduct. Id. at ¶ 13. The Complaint alleges that Hien Ho received this letter and spoke with a

Microsoft representative about the proper distribution of Microsoft software. Id. at ¶¶ 13-14. The

Complaint alleges that in May 2007, Defendants again distributed computer systems with

infringing Microsoft software to an investigator. Id. at ¶ 14. The Complaint alleges that these

sales were not isolated incidents, and that “Defendants have been and continue to be involved in

advertising, marketing, installing, and/or distributing infringing copies of Microsoft’s software to

unidentified persons or entities.” Id. at ¶ 15. 

The Complaint alleges that Defendants acted willfully, or “at a minimum, Defendants were

willfully blind and acted in reckless disregard of Microsoft’s registered copyrights and marks.” Id.

at ¶¶ 17, 23. 

The Complaint alleges that Microsoft holds valid copyrights in Microsoft Windows XP

Professional, Microsoft Office 2003 Pro, Microsoft Office Excel 2003, Microsoft Office Outlook

2003, Microsoft Office PowerPoint 2003, Microsoft Office Word 2003, Microsoft Publisher 2003,

Microsoft Business Contact Manager for Outlook 2003, and Microsoft Office Access 2003. Id. at

¶¶ 8-9. The Complaint alleges that Defendants infringed each of these copyrights. Id. at ¶¶ 20-23. 

The Complaint alleges that Microsoft has duly and properly registered the following

trademarks and service marks: “Microsoft,” for computer programs and computer programming

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services; “Microsoft,” for computer hardware and software manuals, newsletters, and computer

documentation; “Windows,” for computer programs and manuals; the colored flag design;

“Powerpoint;” “Microsoft Access;” “Outlook;” and the four color square logo. Id. at ¶ 10. The

Complaint alleges that Defendants have infringed each of these trademarks. Id. at ¶¶ 28-34. 

The Complaint requests that the Court enter a judgment against Defendants that they

willfully infringed nine of Microsoft’s federally registered copyrights under 17 U.S.C. § 501, and

eight of Microsoft’s federally registered trademarks and service marks under 15 U.S.C § 1114. Id.

at p. 13-14. The Complaint also seeks injunctive relief against Defendants, enjoining their future

infringement of these copyrights and trademarks. Id. at p. 14-15. 

On June 27, 2007, Defendants were personally served with the Summons and Complaint in

this action. (Docs. # 6, 7). On September 6, 2007, pursuant to Microsoft’s request, the Clerk of

the Court entered default pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. (Docs. #

8, 10). To date, neither Online Datalink nor Hien Ho have filed an answer or otherwise responded

to the Complaint. Declaration of Jennifer N. Chiarelli (Chiarelli Decl.),¶ 3 (Doc. # 11-5). 

On February 1, 2008, Microsoft filed the Motion for Default Judgment and Permanent

Injunction against Defendants. Microsoft request that the Court enter default judgment against

Defendants, award Microsoft statutory damages totaling $970,000 and attorney’s fees and costs

totaling $5,677.20, and permanently enjoin Defendants from infringing Microsoft’s copyrights and

trademarks in the future. Mot. for Default, 3. 

ANALYSIS

Microsoft contends that it is entitled to a default judgment against Defendants for the

following reasons: Defendants have failed to respond to the Complaint; the Clerk of the Court has

entered Defendants’ default; Microsoft would be left without any recourse if the Court does not

enter default judgment; the Complaint alleges the required elements for copyright and trademark

infringement; there is no possibility of a dispute of material fact because the allegations in the

Complaint are now deemed true; and Defendants’ failure to respond to the Complaint makes

resolution on the merits impossible. Mot. for Default, p. 5-6. Microsoft contends that statutory

damages under the Copyright Act and the Lanham Act are appropriate because “Defendants failed

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to file an answer and refused to defend,” and “Microsoft could not conduct formal discovery.” Id.

at 6-7. Microsoft seeks the maximum amount of statutory damages for non-willful infringement,

even though it contends that Defendants infringed willfully. Id. at 9-10. Microsoft contends that a

permanent injunction to prevent the Defendants from continuing to infringe Microsoft’s copyrights

and trademarks is appropriate because “Defendants were caught distributing infringing Microsoft

software in violation of Microsoft’s copyrights and trademarks,” Defendants continued to violate

Microsoft’s intellectual property rights despite receiving warnings from Microsoft that such

conduct was illegal, and “there is little or no assurance that Defendant will refrain from future

infringement.” Id. at 11. Microsoft contends that it is entitled to attorneys’ fees and costs on

grounds that an award of reasonable costs and attorneys’ fees is authorized by both the Copyright

Act and the Lanham Act, and “[i]n cases against infringers of Microsoft software, courts have

consistently awarded attorneys’ fees and costs.” Id. at 11. 

Rule 55(a) of the Federal Rules of Civil Procedure provides that the clerk of the court must

enter a party’s default “[w]hen a party against whom a judgment for affirmative relief is sought

has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise.” FED.

R . CIV. P. 55(b). After a default has been entered by the clerk of the court, the complaint’s factual

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

TeleVideo Systems, Inc.v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). After the clerk has

entered default, a court may enter a default judgment pursuant to Rule 55(b). “Where damages are

liquidated . . . judgment by default may be entered without a damages hearing.” Dundee Cement

Co. v. Howard Pipe & Concrete Prods., 722 F.2d 1319, 1323-24 (7th Cir. 1983). Granting or

denying default judgment is within the sound discretion of the trial court. Aldabe v. Aldabe, 616

F.2d 1089, 1092 (9th Cir. 1980). The Ninth Circuit has articulated the following seven factors for

courts to consider when exercising its discretion to enter default judgment: 

(1) the possibility of prejudice to the plaintiff; (2) the merits of the 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). “In applying this discretionary standard,

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default judgments are more often granted than denied.” Philip Morris USA, Inc. v. Castworld

Products, Inc., 219 F.R.D. 494, 498 (C.D. Cal. 2003) (quoting PepsiCo, Inc. v. Triunfo-Mex, Inc.,

189 F.R.D. 431, 432 (C.D. Cal. 1999)). 

“Statutory damages are appropriate in default judgment cases because the information

needed to prove actual damages is within the infringers’ control and is not disclosed.” Microsoft

Corp. v. McGee, 490 F. Supp. 2d 874, 882 (S.D. Ohio 2007). The Copyright Act provides for

statutory damages of $30,000.00 for non-willful copyright infringement, and of $150,000.00 for

willful copyright infringement. 17 U.S.C. § 504(c). The Lanham Act provides for statutory

damages of $100,000.00 for non-willful trademark infringement, and of $1,000,000.00 for willful

trademark infringement. 15 U.S.C. § 1117(c). A plaintiff is entitled to a separate award of

statutory damages under both the Copyright Act and the Lanham Act when the defendant

simultaneously infringes a copyright and trademark. Nintendo of America, Inc. v. Dragon Pacific

Int’l, 40 F.3d 1007, 1011 (9th Cir. 1994). The Court has wide discretion to determine the amount

of statutory damages to be awarded. Peer Int’l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336

(9th Cir. 1990). 

The Copyright Act and Lanham Act both authorize the issuance of permanent injunctions

to prevent future infringements. 17 U.S.C. § 502(a); 15 U.S.C. § 1116(a). A permanent injunction

is warranted when there is no reason to believe that the infringing party has or will cease the

infringement without an injunction. Microsoft Corp. v. Nop, No. Civ. S-07-1276 MCE DAD,

2008 U.S. Dist. LEXIS 18727, at *9-10 (E.D. Cal. March 11, 2008); Jackson v. Sturkie, 255 F.

Supp. 2d 1096, 1103 (N.D. Cal. 2003).

The Copyright Act and Lanham Act both authorize the award of attorneys’ fees and costs. 

17 U.S.C. § 505; 15 U.S.C. § 1117(a). The Copyright Act authorizes attorneys’ fees for the

prevailing party as a matter of the court’s discretion. Fogarty v. Fogarty, Inc., 510 U.S. 517, 534

(1994). The Lanham Act authorizes the award of reasonable attorneys’ fees in exceptional cases,

defined by the Ninth Circuit as cases where the infringement can be defined as “malicious,

fraudulent or willful.” Rio Properties, Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1023 (9th Cir.

2002).

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An award of $970,000 is comparable to the amount of damages awarded in similar cases. See

Microsoft Corp. v. Nop, No. Civ. S-07-1276 MCE DAD, 2008 U.S. Dist. LEXIS 18727, at *9-10

(E.D. Cal. March 11, 2008)(awarding $970,00 for nine trademark infringements and seven copyright

infringements); McGee, 490 F.Supp. 2d at 882 (awarding $710,000 for five trademark infringements

and seven copyright infringements). 

- 6 - 07CV01165 WQH (CAB)

The Clerk of the Court has entered Defendants’ default. The factual allegations in the

Complaint are taken as true. The Complaint sufficiently alleges facts to support all of Microsoft’s

claims for copyright and trademark infringement. The Court concludes that Microsoft will be

prejudiced if default judgment is denied because Microsoft will have no other recourse for

recovery. The amount of damages sought is relatively small because Microsoft is only seeking

statutory damages for non-willful infringement. Defendants’ default is not a result of excusable

neglect because Microsoft alerted Defendants to the infringement before filing the Complaint, and

Microsoft served the Defendants with the Complaint. The Court has considered the factors

articulated in Eitel and concludes that a default judgment against Defendants is appropriate. 

Microsoft is entitled to recover statutory damages because the “information needed to

prove actual damages is within [Defendants’] control and is not disclosed” as a result of

Defendants’ failure to respond to the Complaint and defend this suit. Microsoft Corp. v. McGee,

490 F. Supp. 2d at 882. Microsoft is entitled to recover statutory damages under both the

Copyright Act and the Lanham Act because Defendants simultaneously infringed Microsoft’s

copyrights and trademarks. Microsoft seeks the maximum amount of statutory damages permitted

for non-willful copyright and trademark infringement ($30,000 for each of nine copyrights at

issue, and $100,000 for each of seven trademarks at issue, for a total of $970,000). Microsoft’s

requested statutory damages are reasonable given Microsoft has only requested the maximum nonwillful statutory damages despite the alleged willful conduct.1

 The Court concludes that Microsoft

is entitled to total statutory damages of $970,000, consisting of $100,000 for each of seven

trademark infringements and $30,000 for each of nine copyright infringements.

Defendants have continued to infringe the copyrights and trademarks of Microsoft despite

being warned of their unlawful conduct. There is no reason to believe they will cease these actions

without the issuance of a permanent injunction. The Court concludes that a permanent junction

enjoining Defendants’ future infringement of Microsoft’s copyrights and trademarks is

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appropriate. 

The Court concludes that Microsoft is entitled to reasonable attorneys’ fees and costs

totaling $5,677.20 in light of Defendants’ willful infringement of Microsoft’s copyrights and

trademarks, and the statutory authorization to award attorneys’ fees and costs in both the Lanham

Act and Copyright Act. See 17 U.S.C. § 505; 15 U.S.C. § 1117(a). 

CONCLUSION

IT IS HEREBY ORDERED that the Court GRANTS Plaintiff Microsoft Corporation’s

Motion for Default Judgment and Permanent Injunction (Doc. # 11). Microsoft Corporation is

entitled to a default judgment against Defendants, an award of $970,000.00 in statutory damages

and $5,677.20 in attorneys’ fees and costs, and a permanent injunction enjoining Defendants from

infringing Microsoft’s copyrights and trademarks in the future. The Court orders Microsoft to file

a proposed judgment in accordance with this Order on or before Monday, June 2, 2008. 

DATED: May 6, 2008

WILLIAM Q. HAYES

United States District Judge

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