orderofdefaultoregondistrictcourt 05-15-2014

8/11/2019 OrderofDefaultOregonDistrictCourt 05-15-2014

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willfully promoted and engaged in such services without authorization, tolerance or license from,

or notice to plaintiff. Plaintiff alleges it has suffered at least $10,000 in damages as a result.

The clerk issued an entry of default on February 26, 2014. Plaintiff now seeks a default

judgment. By virtue of he default, all allegations, with the exception o f damages, are taken as true.

Accordingly, plaintiff seeks: (1) an extrapolated amount of $15,000 in lost profits or statutory

damages of$10,000; (2) attorney's fees; and (3) an injunction.

Any person who, on or in connection with any goods or services, or anycontainer for goods, uses in commerce any word, term, name, symbol, or device, orany combination thereof, or any false designation of origin, false or misleadingdescription of fact, or false or misleading representation of fact, which

(A) is likely to cause confusion, or to cause mistake, or to deceive asto the affiliation, connection, or association of such person withanother person, or as to the origin, sponsorship, or approval of his orher goods, services, or commercial activities by another person, or

(B) in commercial advertising or promotion, misrepresents the nature,characteristics, qualities, or geographic origin of his or her or anotherperson's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or islikely to be damaged by such act.

15 U.S.C. 1125(a)(l).

To demonstrate trademark infringement, plaintiff must show that the it holds a protectible

mark, and that defendants' imitating mark is similar enough to cause confusion or to deceive.

Surfvivor Media. Inc. v Survivor Prod., 406 F.3d 625, 630 (9th Cir. 2005). The critical

determination is whether an defendants' use o f a mark creates a likelihood that the consuming public

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Case 6:13-cv-02021-TC Document 19 Filed 05/15/14 Page 2 of 8


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protected by the Lanham Act, the state trademark claim could be preempted. See Classic

Instruments, Inc. v VDO-Argo Instruments, Inc., 73 Or.App. 732, 745 (1985) (State trademark

infringement claim preempted where asserted design was protected by federal law, citing Litton

Systems, Inc. v Whirlpool Corp., 728 F.2d 1423, 1448 (Fed. Cir. 1984)(overruled on other grounds

by Two Pesos Inc v Taco Cabana 505 U.S. 763 (1992). 3 Under the Lanham Act, Congress

directed that fees only be awarded in exceptional cases with respect to violation o a right associated

with a trademark. See 15 U.S.C. 1117(a). However, ORS 20.080 requires taxing o fees merely

upon prevailing in a tort action for a limited amount ($10,000 or less) so long as demand is made

pre-filing. t is apparent in this action that plaintiff has engaged in artful pleading in an attempt to

sidestep Congressional intent on fees. See, e.g., Motion for Default Judgment ( # 14) at p 2 (seeking

statutory damages under the Lanham Act in the amount o $10,000, notably less than actual

economic damages); Complaint (#1) at -r 106 ( while the prayed for relief is specific [$10,000],

plaintiff hereby provides notice o he potential damages available under ... federal laws, such as 15

U.S.C. 1117 and 1118, which include ... profits ... full damages Trebled damages ... Statutory

damages ... o up to $2,000,000.00 per counterfeit mark ... Punitive damages .... ). Plaintiff appears

3But See, Golden Door. Inc. v Odisho, 646 F.2d 347, 352 (9th Cir. 1980) (court found thatthe 15 U.S.C. 1115(b) defense does not preempt rights under California trademark infringementstatute because it extends, without compromising the federal system, greater protections totrademarks than is available under the Lanham Act, and rejected previous dicta in Mister Donut oAmerica, Inc. v Mr. Donut Inc., 418 F.2d 838, 844 (9th Cir, 1969) where the court then stated the

Lanham Act preempted, apparently entirely, the fieldo

trademark law). Nonetheless, the federalpurpose must not be undermined by state trademark law. See Mariniello v Shell Oil Co., 511 F.2d853, 858 (3d Cir. 1975). Congress has expressed its intent to require exceptional circumstances tojustify fees and use o a nearly identical state trademark statute to bootstrap a state law simple feeshifting statute would undermine Congressional intent in the Lanham Act, even though it is possiblethat ORS 647.095, by itself, may not.

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to want to have its cake and eat it too wherein it pleads it may move to elect the full scope of relief

available .... Complaint ( # 1 at , 107. The fact that plaintif f fails to discuss which portion of the

state statute defendants have violated or the elements of a common law claim for passing off, further

demonstrates an intent to simply sidestep Congress's desire to require exceptional circumstances

prior to a court awarding fees under the Lanham Act. Therefore, the court declines to enter judgment

on plaintif fs fourth claim for relief(s tate trademark law pursuant to ORS 647.005 et seq. ), fifth

claim for relief (common law passing off); and sixth claim for relie f(ORS 20.080 and 20.082). 4

Under 15 U.S.C. 1117(a) plaintiff is entitled to recover (1) defendant's profits, (2) any

damages sustained by the plaintiff, and (3) the costs of the action. Plaintif f asserts that although it

has been denied the opportunity to fully investigate and prove damages, it is confident enough to

contend that based on a sampling that indicates 75% of all of defendants tracks are infringing

counterfeits, and a minimum estimated number oftracks of20 000 it is reasonable to extrapolate

that defendants profited from not less than 15,000 counterfeit tracks. Motion (#14) at p. 11.

Plaintiff then asserts lost profits of $15,000 as a result. However, the sampling of 11 out of 14

observed tracks is insufficient to establish a 75% rate of infringement. See Declaration of Kurt

Slep(# 15) a t 12. In addition, simply because Mr. slep believes most karaoke jockeys operate with

at least 20,000 tracks (id. a t 15), does not establish that defendants had 20,000 tracks with 15,000

infringing tracks. Nonetheless, plaintiff also requests statutory damages in the amount of $10,000.

Pursuant to 15 U.S.C. 1117(c)(1) and (2), a plaintiff may electto recover, instead of actual

damages and profits, an award of statutory damages in the amount of:

0RS 20.082 relates to an award of fees for small contract claims and the complaint failsto allege the existence of such a claim).

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(1) not less than $1,000 or more than $200,000 per counterfeit mark per type ogoods or services sold, offered for sale, or distributed, as the court considers just; or

(2) i the court finds that the use o the counterfeit mark was willful, not more than$2,000,000 per counterfeit mark per type o goods or services sold, offered for sale,

or distributed, as the court considers just.

As noted above, plaintiff has established that defendants played 11 unauthorized karaoke

tracks. Accordingly, statutory damages in the amount o $10,000 is appropriate.

Plaintiff also requests attorney's fees and costs. As noted above, the court declines to award

fees under state law. Accordingly, there are two potential provisions under which the court can

award attorney's fees for the prosecution o these claims. First, under 15 U.S.C. 1117(a), [t]he

court in exceptional cases may award reasonable attorney fees to the prevailing party. A trademark

infringement is viewed as exceptional under 1117(a) when the infringement is malicious,

fraudulent, deliberate or willful. Lindy Pen Co. v Bic Pen Corp., 982 F.2d 1400, 1409 (9th Cir.

1993)(citing Sealy, Inc. v Easy Living, Inc., 743 F.2d 1378, 1384 (9th Cir. 1984)). Second, under

S U.S.C. 1117(b), in cases in which the violation o 15 U.S.C. 1114(1)(a) consists o

intentionally using a mark or designation, knowing such mark or designation is a counterfeit mark,

the court shall grant the prevailing party a reasonable attorney's fee, unless it finds extenuating

circumstances. In counterfeiting cases, 'unless the court finds extenuating circumstances,' treble

damages and reasonable attorney's fees are available. Intel Corp. v Terabyte Int'l, Inc., 6 F.3d 614,

620 (9th Cir. 1993) (quoting 15 U.S.C. 1117(b)). Under both sections 1117(a) and 1117(b),

awards are never automatic and may be limited by equitable considerations. Intel Corp., 6 F.3d at

620 (quoting Lindy Pen Co., 982 F.2d at 1405, 1409).

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The court cannot determine from the complaint alone that the infringement was malicious,

fraudulent, deliberate or willful despite the conclusory allegation of willfulness. The court simply

does not know the circumstances under which defendants obtained the offending tracks and whether

they were aware o f the lack o f a license or i f hey themselves copied the offending tracks outside of

the tolerance permitted by plaintiff. n addition, the court declines to find exceptional circumstances

simply due to defendants' failure to appear. Also, because attorneys' fees are considered here as a

part of damages, the court need not accept the conclusion that defendant's conduct was willful for

purposes of section 1117(a) or intentional for purposes o f section 1117(b . Furthermore, the manner

in which plaintif f has pleaded this case (as well as many other similar cases against similarly situated

defendants), i.e., asserting millions in statutory damages which could be trebled while at the same

time seeking a lowball amount, suggests an attempt to extract a settlement short ofl itigation based

on the sanction alone as opposed to intentionally infringing conduct. f course the various statutes

at issue provide such liability, but this combined with the artful pleading as noted above provide

sufficient extenuating circumstances in the eyes o f the court to decline an award of attorney's fees

in this case. 5 Plaintiff is, nonetheless, entitled to costs o f $510.00.

In addition, plaintiff seeks an injunction. To prevent the violation of any right o f the

registrant o f a mark registered in the Patent and Trademark Office or to prevent a violation under 15

U.S.C. 1125, the court has the authority to grant injunctions. Although the degree of culpability

for purposes of damages cannot be adequately determined in this case, the allegations in the

5Plaintiff all but admits this is merely a small claims case when it argues that fees areappropriate under ORS 20.080 because the legislature enacted the statute to encourage settlemento f small claims. Motion ( 14) at p. 13.

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orderofdefaultoregondistrictcourt 05-15-2014

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