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Microsoft Corp. v. Online Datalink Computer

May 6, 2008

MICROSOFT CORPORATION, PLAINTIFF,
v.
ONLINE DATALINK COMPUTER, INC., A CALIFORNIA CORPORATION; AND HIEN HO, AN INDIVIDUAL, DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge

ORDER

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, 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 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 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 ...


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