United States District Court, D. Colorado
OTTER PRODUCTS, LLC, and TREEFROG DEVELOPMENTS, INC., Plaintiffs,
v.
EDDY WANG, and JOHN DOES 1-10, Defendants.
ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT
JUDGMENT AND PERMANENT INJUNCTION
Christine M. Arguello Judge
This
matter is before the Court on Plaintiffs Otter Products, LLC
and TreeFrog Developments, Inc.'s Motion for Default
Judgment and Permanent Injunction. (Doc. # 24.) Defendant
Eddy Wang did not file a response to the Motion. For the
following reasons, Plaintiffs' Motion is granted.
I.
BACKGROUND
Plaintiffs
develop, manufacture, market, and sell premium mobile device,
smartphone, and tablet cases and accessories under the
OTTERBOX® and LIFEPROOF® brands (“Otter
Products”). Plaintiffs sell their products exclusively
through their own website and their network of authorized
distributors, retailers, and resellers (“Authorized
Resellers”).
Otter
has registered several trademarks with the United States
Patent and Trademark Office (“USPTO”), including,
but not limited to: OTTERBOX® (U.S. Trademark Reg. Nos.
5, 439, 652; 5, 498, 180; 4, 602, 221; and 3, 788, 534);
DEFENDER SERIES® (U.S. Trademark Reg. No. 4, 616, 874);
STRADA SERIES® (U.S. Trademark Reg. No. 4, 864, 518);
STATEMENT SERIES® (U.S. Trademark Reg. No. 4, 952, 893);
SYMMETRY SERIES® (U.S. Trademark Reg. No. 4, 709, 178);
PURSUIT SERIES® (U.S. Trademark Reg. No. 4, 280, 846);
ALPHA GLASS® (U.S. Trademark Reg. No. 4, 702, 961);
VENTURE® (U.S. Trademark Reg. No. 5, 449, 981);
TROOPER® (U.S. Trademark Reg. No. 5, 496, 963); and
ELEVATION® (U.S. Trademark Reg. No. 5, 444, 887) (the
“OtterBox Trademarks”).
TreeFrog
has several trademarks with the USPTO, including, but not
limited to: LIFEPROOF® (U.S. Registration Nos. 4, 519,
288; 4, 520, 890; 4, 360, 963; and 4, 057, 201);
LIFEJACKET® (U.S. Registration No. 4, 354, 783); and
LET'S GO!® (U.S. Registration No. 4, 285, 129) (the
“LifeProof Trademarks”). The registrations for
the OtterBox and LifeProof Trademarks (collectively, the
“Otter Trademarks”) are valid, subsisting, and in
full force and effect.
In
recent years, there has been an increase in the amount of
retail sales completed through online marketplaces, such as
www.amazon.com (“Amazon”). These online
marketplaces allow third party sellers to sell a
manufacturer's products anonymously. It has been well
publicized that unauthorized third-party sellers sell
diverted products through the online marketplaces, including
damaged, defective, tampered-with, and/or fake products.
Because these third-party sellers operate anonymously, a
manufacturer has no ability to exercise its quality controls
over the products or to ensure the products are safe, which
presents serious risks to consumers.
Anonymous
sales by unauthorized sellers through the online marketplaces
also threaten a manufacturer's ability to maintain its
goodwill, reputation, and brand integrity. A consumer who
receives a defective or poor-quality product from an
unauthorized seller through an online marketplace is likely
to become frustrated with the brand. The consumer can leave a
negative review about the brand on the marketplace site,
thereby impacting the purchasing decisions of other
consumers. Plaintiffs have recieved multiple negative online
marketplace reviews, including on Amazon, from consumers who
purchased products bearing the Otter Trademarks from
unauthorized sellers. The negative reviews include receiving
damaged, defective, and poor-quality products.
To
protect consumers and the value and goodwill associated with
OtterBox and LifeProof brands, Plaintiffs have implemented
substantial quality controls that are designed to minimize
the likelihood that poor quality products reach consumers.
These quality controls include certain inspection, storage,
handling, and other requirements, assisting with any recalls
or other consumer safety information efforts, and customer
service requirements. Additionally, to further combat the
unauthorized sale of poor-quality products on the online
marketplaces, Plaintiffs have imposed additional requirements
on their Authorized Resellers that are approved to sell
online and on the online marketplaces. Moreover, to allow
Plaintiffs to know where their products are being sold so
that they can exercise control over their products and
address any quality issues that may arise, Authorized
Resellers are prohibited from selling on unauthorized
websites and online marketplaces and from selling to other
resellers. Authorized Resellers that are approved to sell on
online marketplaces may sell only under storefront names that
have been specifically approved by Plaintiffs and are
prohibited from selling products anonymously Plaintiffs vet
their Authorized Resellers before approving them to sell
online and on online marketplaces to make sure that the
Authorized Reseller operates an appropriate and acceptable
business that Plaintiffs wish to have representing their
brands. Authorized Resellers selling online and on the online
marketplaces must comply with several additional quality
control requirements, including opting out of certain
repackaging and commingling programs that may result in
consumers receiving used, damaged, or counterfeit products;
having tools in place to solicit customer feedback and
respond to any negative reviews and working with Plaintiffs
to address any such reviews; and maintaining an acceptable
online presence and seller rating. Further, Plaintiffs
monitor their Authorized Resellers to ensure their compliance
with Plaintiffs' quality controls, including conducting
reviews of the Authorized Resellers' websites,
storefronts, and reviews and conducting test purchases and
inspections.
The
quality controls Plaintiffs have imposed are legitimate and
substantial and allow Plaintiffs to control the quality of
products sold under their trademarks. A seller's
compliance with these quality controls would be material and
relevant to a consumer's purchasing decision Plaintiffs
also provide a Limited Warranty (“Warranty”) for
products purchased from Plaintiffs or their Authorized
Resellers, covering the repair or replacement of products for
defects for a period of time. The Warranty provides that a
customer can receive a repair or replacement product if a
product has a defect in manufacturing, materials, or
workmanship during the warranty period applicable to the
product. The Warranty is a material component of Otter
Products. Because Plaintiffs cannot exercise their quality
controls over products sold by unauthorized sellers, the
Warranty is not available for products sold by unauthorized
sellers who are not subject to Plaintiffs' quality
controls.
Defendant
Eddy Wang (“Wang”) operates storefronts on Amazon
under the names “1to3shop-store” and
“E&E Global” (the “Storefronts”).
Through the Storefronts, Wang has, and continues to,
advertise and sell products bearing the Otter Trademarks.
Wang is not an Authorized Reseller of Otter Products. The
products Wang sells bearing the Otter Trademarks are: not
genuine Otter Products; are materially different from genuine
Otter Products because they do not come with the Warranty;
and are also not genuine Otter Products because they do not
abide by and interfere with Plaintiffs' quality controls.
By
selling materially different, non-genuine products bearing
the Otter Trademarks, Wang is creating consumer confusion
because consumers who purchase products from Wang think they
are getting genuine Otter Products that come with the
Warranty and abide by Plaintiffs' quality controls when,
in fact, they are not.
Wang
advertises products bearing the Otter Trademarks on the
Storefronts as being “New” products that come
with the Warranty. His product listings also specifically
state that they come with the Warranty. These representations
are false because the products Wang sells do not come with
the Warranty.
Plaintiffs'
agreements with their Authorized Resellers prohibit
Authorized Resellers from selling products to third parties
for purposes of resale. Wang knows of this prohibition, but
has continued to acquire products from Plaintiffs'
Authorized Resellers for the purpose of reselling them and
infringing on the Otter Trademarks. Thus, Wang has acted with
an improper purpose because he intended to induce
Plaintiffs' Authorized Resellers to breach their
agreements.
Wang's
unlawful actions have caused, and continue to cause,
Plaintiffs significant harm. Wang has misled, and continues
to mislead, consumers into believing they are purchasing
genuine Otter Products that come with the Warranty and comply
with Plaintiffs' quality controls when, in fact, they are
not. As a proximate result of Wang's actions, Plaintiffs
have suffered, and will continue to suffer, irreparable harm
to their reputation, goodwill, and intellectual property
rights. Plaintiffs have also suffered monetary harm as a
result of Wang's actions, including loss of sales and
damage to their existing and potential business relations.
Wang's
unlawful actions have been willful and malicious. Plaintiffs
spent significant time and money trying to stop Wang's
illegal sale of its products through the Storefronts.
Plaintiffs sent Wang several cease and desist letters, but
Wang refused to comply and continued to sell products bearing
the Otter Trademarks. Further, despite being served with the
Summons and Complaint in this action, Wang has chosen not to
appear and continues to engage in its unlawful conduct.
II.
STANDARD OF REVIEW
Pursuant
to the Federal Rules of Civil Procedure, the court shall
enter a default judgment against a party that has failed to
plead or otherwise defend an action brought against it.
Fed.R.Civ.P. 55(b)(2). Default judgment may be entered by the
clerk of court if the claim is for “a sum certain,
” Fed.R.Civ.P. 55(b)(1), in all other cases, as here,
“the party must apply to the court for a default
judgment.” Fed.R.Civ.P. 55(b)(2). “[D]efault
judgment must normally be viewed as available only when the
adversary process has been halted because of an essentially
unresponsive party. In that instance, the diligent party must
be protected lest he be faced with interminable delay and
continued uncertainty as to his rights. The default judgment
remedy serves as such a protection.” In re
Rains, 946 F.2d 731, 732-33 (10th Cir. 1991) (internal
quotation marks and citation omitted).
A
default amounts to an admission of liability, and all
well-pleaded allegations in the complaint pertaining to
liability are deemed true. See Greyhound Exhibitgroup,
Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d
Cir. 1992) (internal citation omitted); Lyons P'ship,
L.P. v. D&L Amusement & Entm't, Inc., 702
F.Supp.2d 104, 109 (E.D.N.Y. 2010). It “remains for the
court to consider whether the unchallenged facts constitute a
legitimate cause of action, since a party in default does not
admit conclusions of law.” Leider v. Ralfe,
No. 01 Civ. ...