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CONIFER SECURITIES, LLC v. CONIFER CAPITAL LLC

United States District Court, Northern District of California


April 1, 2003

CONIFER SECURITIES, LLC, PLAINTIFF,
v.
CONIFER CAPITAL LLC, DEFENDANT

The opinion of the court was delivered by: William Alsup, United States District Judge.

JUDGMENT

For the reasons stated in this Court's order and permanent injunction, dated April 1, 2003, judgment is entered against defendant and in favor of plaintiff.

IT IS SO ORDERED.

ORDER GRANTING PLAINTIFF'S APPLICATION FOR DEFAULT JUDGMENT AND PERMANENT INJUNCTION
INTRODUCTION

This order GRANTS plaintiff's application for default judgment and a permanent injunction in an action for trade-name infringement under 15 U.S.C. § 1125 (a), unfair competition under Section 17200 of the California Business and Professions Code, and false advertising under Section 17500 of the California Business and Professions Code.

STATEMENT

On November 26, 2002, plaintiff Conifer Securities, LLC, filed a complaint against Conifer Capital LLC for damages and injunctive relief. The complaint asserts three causes of action: trade-name infringement under 15 U.S.C. § 1125 (a), unfair competition under Section 17200 of the California Business and Professions Code, and false advertising under Section 17500 of the California Business and Professions Code.

To support these claims, the complaint alleges the following facts. Plaintiff, Conifer Securities, is a broker-dealer firm based in San Francisco (Compl. ¶ 7). The company provides brokerage services to individuals and institutions and is a "market maker in many over-the-counter equity securities, trading actively intra-day for its own account with its own capital" (id. ¶¶ 7-8). The company was founded under a different name in 1989 and has been doing business as Conifer Securities since 1999 (id. ¶ 9). Conifer Securities uses its name in conjunction with advertising and on promotional materials, a website, letterhead and other business-related documents (ibid.). According to the complaint, Conifer Securities has earned an excellent reputation for its services and has garnered strong goodwill in the San Francisco Bay Area and nationally (id. ¶ 10).

The complaint further alleges that defendant Conifer Capital is a new day-trading firm located in San Francisco (id. ¶ 11). Defendant advertised job openings for the position of "proprietary day trader" on a website (ibid.).

Plaintiff has received at least four inquiries from customers expressing confusion as to the relationship between Conifer Securities and Conifer Capital (id. ¶ 12). On October 24, 2002, counsel for plaintiff sent a cease-and-desist letter to Conifer Capital demanding that the latter stop using the Conifer Capital name (id. ¶ 13). Although the letter requested a response by October 31, 2002, none was received (ibid.).

Plaintiff served defendant with the summons and complaint on December 4, 2002. Defendant did not serve plaintiff with a responsive pleading within twenty days, as required by Federal Rule of Civil Procedure 12(a)(1)(A), or otherwise appear in this case. Default was entered on January 24, 2003. Plaintiff now requests entry of judgment by default and relief in the form of a permanent injunction.

ANALYSIS

Under Federal Rule of Civil Procedure 55(b)(2), a party can apply to the court for entry of judgment by default. Whether to grant a motion for default judgment is within the discretion of the trial court. Lau Ah Yew v. Dulles, 236 F.2d 415, 416 (9th Cir. 1956). In the Ninth Circuit, a court is to consider the following factors in exercising this discretion:

(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 v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). These factors favor entry of default judgment in this case.*fn1

1. MERITS OF SUBSTANTIVE CLAIMS AND SUFFICIENCY OF THE COMPLAINT.

After entry of default, well-pleaded allegations in the complaint regarding liability are taken as true, except as to the amount of damages. Fair Hous. v. Combs, 285 F.3d 899, 906 (9th Cir. 2002); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). The merits of plaintiff's substantive claims and the sufficiency of the complaint are thus considered in tandem. This order finds that these factors weigh in favor of entry of default judgment.

A. Trade-Name Infringement Under 15 U.S.C. § 1125 (a).

To prevail in an action for trade-name infringement under 15 U.S.C. § 1125 (a), plaintiff must show that it owns a distinctive name, that it used the name in interstate commerce, and that defendant's use of the name will cause a likelihood of confusion. New West Corp. v. NYM Co. of California, Inc., 595 F.2d 1194, 1198-1201 (9th Cir. 1979). The complaint indicates that Conifer Securities has used its name in interstate commerce. It is plain that the name Conifer Securities is distinctive and closely resembles Conifer Capital. Given that Conifer Capital is based in the same city as Conifer Securities and both companies are in the financial industry, defendant's use of the name Conifer Capital creates a likelihood of confusion. Furthermore, the complaint alleges that plaintiff has received inquiries evidencing such confusion.

B. Unfair Competition Under Section 17200.

The Ninth Circuit has "consistently held" that claims of unfair competition under Section 17200 are "substantially congruent" to claims under the Lanham Act. Cleary v. News Corp., 30 F.3d 1255, 1263 (9th Cir. 1994). Because plaintiff has sufficiently alleged a violation of the Lanham Act, it follows that the Section 17200 claim is likewise sufficiently alleged.

C. False Advertising Under Section 17500.

To prevail on a claim for false advertising under Section 17500 of the California Business and Professions Code, a plaintiff must show that with intent to perform professional or other services, the defendant made a statement concerning those services that is untrue or misleading, which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading. Cal. Bus. & Prof. Code 17500. The complaint alleges that defendant has used the name Conifer Capital in commerce in connection with goods and/or services in a manner likely to cause confusion as to the relationship between Conifer Capital and Conifer Securities and the origin, sponsorship, and approval of Conifer Capital's goods and services. This activity constitutes false advertising with the meaning of Section 17500. See Faberge, Inc. v. Saxony Prods., Inc., 605 F.2d 426, 428 (9th Cir. 1979) (stating that use of a trademark or trade dress that is likely to cause confusion constitutes a violation of Section 17500).

2. REMAINING FACTORS.

This order also finds that on balance, the remaining Eitel factors likewise favor entry of default judgment. To deny plaintiffs motion would leave plaintiff without a remedy, thus causing prejudice. That defendant is a corporation and was properly served makes it highly unlikely that default was the result of excusable neglect. Finally, plaintiff is not seeking a monetary sum; the only relief plaintiff seeks is injunction against future violations.

CONCLUSION

For the foregoing reasons, plaintiff's application for a default judgment and permanent injunction is GRANTED.

IT IS HEREBY ORDERED:

A. That defendant, Conifer Capital LLC, and its officers, agents, servants, employees, successors, assigns, parents, subsidiaries, affiliates, and all other persons acting or purporting to act in concert or participation with them, on their behalf, or under their direction or authority, be permanently enjoined and restrained from:

(1) using the name or mark Conifer Capital;

(2) using any mark, including any domain name, logo, or trade name, that is identical or confusingly similar to plaintiff Conifer Securities's mark in any manner that is likely to cause confusion or mistake, or to deceive;
(3) falsely designating the origin, sponsorship, or affiliation of its products or services;
(4) committing any acts likely to cause customers, potential customers, or others falsely to believe that defendant Conifer Capital's products and/or services are created, conducted, approved, sponsored, or endorsed by plaintiff Conifer Securities, or that defendant Conifer Capital or its products and services are in some way connected or affiliated with plaintiff Conifer Securities or its products and services; and
(5) continuing and all acts of unfair competition any against plaintiff Conifer Securities; and
(6) That defendant Conifer Capital be required to deliver up to the Court or to plaintiff any and all advertisements, or promotional materials in their possession, custody, or control or that of their owners, officers, agents, franchisees, servants or employees, that would, if used, marketed, sold, or otherwise distributed, violate the injunctive relief granted herein, for ultimate destruction of such materials.
B. That defendant shall pay plaintiff's costs of suit herein in the sum of $150.00.

C. That plaintiff serve defendant with this order in a manner to ensure notice.

IT IS SO ORDERED.


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