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Disney Enterprises, Inc., Dc Comics, and Sanrio, Inc v. Vuong Tran A.K.A. Vuong Nguyen A.K.A. Ricky Tran A.K.A.

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA


May 1, 2013

DISNEY ENTERPRISES, INC., DC COMICS, AND SANRIO, INC., PLAINTIFFS
v.
VUONG TRAN A.K.A. VUONG NGUYEN A.K.A. RICKY TRAN A.K.A. RICKY VUONG, AN INDIVIDUAL AND D/B/A WWW.NORCALJUMPER.COM, JOEY NGUYEN A.K.A. DUONG NGUYEN, AND DOES 1-10, INCLUSIVE,
DEFENDANTS.

ORDER GRANTING APPLICATION FOR DEFAULT JUDGMENT

I.INTRODUCTION

Now before the Court is Plaintiffs Disney Enterprises, Inc., 22

DC Comics, and Sanrio, Inc.'s (collectively "Plaintiffs") motion 23 for entry of default judgment against Defendant Joey Nguyen a.k.a. 24

Dung Nguyen a.k.a. Duong Nguyen ("Nguyen" or "Defendant"). ECF No. 25 ("Mot."). For the reasons stated below, the Court GRANTS Plaintiffs' motion.

II.BACKGROUND

Plaintiffs are companies that own the rights to a wide variety 3 of well-known copyrighted and trademarked designs.*fn1 Compl. ¶¶ 3-4. 4

Defendant owns a business that manufactures, imports, distributes, 5 rents, and sells goods -- mainly inflatable play areas ("jumpers") 6 for children's parties and jumper accessories -- featuring an array 7 of Plaintiffs' copyrighted and trademarked designs.*fn2 Compl. ¶ 1. 8

The designs that Plaintiffs allege to have been infringed are: 9

Mickey Mouse, Minnie Mouse; Donald Duck; Daisy Duck; Pluto; Chip 10 'N' Dale; Tinker Bell; various characters from the motion pictures United States District Court For the Northern District of California Toy Story 3, Pirates of the Caribbean, High School Musical, The 12 Little Mermaid, and Hannah Montana; Batman; Superman; Wonder Woman; 13 Hello Kitty; KeroKeroKeropi; My Melody; and Badtz Maru 14 (collectively the "Designs"). Mot. at 18. All of the Designs are 15 registered under federal copyright and trademark law. See id. 16

Plaintiffs are the exclusive licensors of the Designs, and 17 they have not granted Defendant any license or authorization to 18 make any sort of use of the Designs. Compl. ¶¶ 1, 15. However, 19 according to Plaintiffs' allegations, Defendant has (among other 20 things) reproduced, sold, rented, and otherwise exploited the 21

Designs in order to promote their own business. Plaintiffs 22 therefore sued Defendant in this Court on September 27, 2012, 23 asserting claims for copyright infringement, trademark 24 infringement, unfair competition, trademark dilution, and 2 declaratory relief. See Compl. ¶¶ 13-47. Defendant did not answer 3 the complaint or otherwise appear in this action. Plaintiffs now 4 ask the Court to enter default judgment against Defendant solely as 5 to the copyright infringement claims, to award both statutory 6 damages under the Copyright Act and post-judgment interest, and to 7 enter an injunction preventing Defendant from further infringing 8 any of Plaintiffs' copyrights. 9 10

III.LEGAL STANDARD

United States District Court For the Northern District of California After entry of default, the Court may enter a default 12 judgment. Fed. R. Civ. P. 55(b)(2). Its decision whether to do 13 so, while "discretionary," Aldabe v. Aldabe, 616 F.2d 1089, 1092 14 (9th Cir. 1980), is guided by several factors. As a preliminary 15 matter, the Court must "assess the adequacy of the service of 16 process on the party against whom default judgment is requested." 17

Bd. of Trs. of N. Cal. Sheet Metal Workers v. Peters, No. C-00-0395 18 VRW, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D. Cal. Jan. 2, 2001). 19

If the Court determines that service was sufficient, it should 20 consider whether the following factors support the entry of default 21 judgment: (1) the possibility of prejudice to the plaintiff; (2) 22 the merits of a plaintiff's substantive claim; (3) the sufficiency 23 of the complaint; (4) the sum of money at stake in the action; (5) 24 the possibility of a dispute concerning material facts; (6) whether 25 the default was due to excusable neglect; and (7) the strong policy 26 underlying the Federal Rules of Civil Procedure favoring decisions 27 on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 28 1986).

"The general rule of law is that upon default the factual 2 allegations of the complaint, except those relating to the amount 3 of damages, will be taken as true." Geddes v. United Fin. Grp., 4 559 F.2d 557, 560 (9th Cir. 1977). However, "necessary facts not 5 contained in the pleadings, and claims which are legally 6 insufficient, are not established by default." Cripps v. Life Ins. 7 Co., 980 F.2d 1261, 1267 (9th Cir. 1992). 8 9

IV. DISCUSSION

A. Procedural Requirements

United States District Court For the Northern District of California

Before the Court may consider whether to exercise its 12 discretion to enter default judgment, it must be satisfied that the 13 procedural prerequisites, including adequate service of process, 14 have been met. See, e.g., PepsiCo, Inc. v. California Sec. Cans, 15 238 F. Supp. 2d 1172, 1175 (C.D. Cal. 2002). In this matter, 16 Plaintiffs properly served Defendant by substituted service on 17 October 27, 2012. ECF No. 12 (Proof of Service); see also Fed. R. 18 Civ. P. 4(e)(2)(B). Further, Plaintiffs served Defendant with the 19 moving papers and other documents in this matter on March 14, 2013.

Defendant never responded to the original service or the instant 21 motion. Since Defendant is a resident of San Jose, California, the 22 Court has personal jurisdiction over him. The Court finds that 23 Plaintiffs met the procedural prerequisites in this case. 24

B. Eitel Factors

Since service was proper, the Court turns to the Eitel factors 26 to determine whether default judgment is appropriate. 27

i. Prejudice Against Plaintiffs

The first factor considers the possibility of prejudice 3 against the plaintiff if default judgment is not entered. The 4 Court finds that because Plaintiff may be without recourse for 5 recovery if default judgment is not entered, this factor weighs in 6 favor of default judgment. See PepsiCo, 238 F. Supp. 2d at 1177. 7

ii. Plaintiffs' Allegations Must State a Claim

The second and third Eitel factors require that a plaintiff's 9 allegations state a claim upon which it can recover. Since 10

Plaintiffs have only requested default judgment as to their United States District Court For the Northern District of California copyright claims, Plaintiffs must state a claim for copyright 12 infringement. To do so, they must establish ownership of a valid 13 copyright and unauthorized copying of original elements of the 14 protected work by Defendant. See Feist Publ'ns, Inc. v. Rural Tel. 15 Serv. Co., 499 U.S. 340, 361 (1991); Shaw v. Lindheim, 919 F.2d 16 1353, 1356 (9th Cir. 1990). It is the defendant's burden to prove 17 that he has no knowledge or reason to believe that the work at 18 issue in a copyright infringement action was protected, 17 U.S.C. § 19 504(c)(1)(2), and if a plaintiff produces a copyrighted work's 20 certificate of registration, made before or within five years of 21 the work's publication, then that certificate is prima facie 22 evidence of copyright validity, 17 U.S.C. § 410(c). 23

As Plaintiffs allege, they are the exclusive owners or 24 licensees of exclusive rights under the Copyright Act. Compl. ¶¶ 25 5-9.

The rights Plaintiffs control extend to the uses Defendant 26 has made of the Designs. Id. ¶¶ 13-20. Moreover, Plaintiffs have 27 provided proof of their exclusive rights under the Copyright Act as 28 to the Designs. Compl. ¶¶ 5.e, 6.j, 7.d; ECF No. 20 (Decl. of Annie S. Wang ISO Mot. ("Wang Decl.") ¶¶ 8-10*fn3 ; Wang Decl. Exs. J-L 2 (copyright registration certificates).*fn4 These facts satisfy the 3 first requirement for a copyright infringement claim. 4 Second, Plaintiffs provide ample documentation of the 5 websites, advertisements, products, and other media in which 6 Defendant has infringed the Designs. See Compl. ¶¶ 1, 14-17; 7 Peterson Decl. ¶¶ 2-3; Fernandez Decl. ¶¶ 4-11; Reed Decl. ¶ 4; 8 Diaz Decl. ¶¶ 7-8; Suemori Decl. ¶ 9. A work is considered 9 "copied" under the Copyright Act when it is "so overwhelmingly 10 identical that the possibility of independent creation is United States District Court For the Northern District of California precluded." Twentieth Century Fox Film Corp. v. MCA, Inc., 715 12 F.2d 1237, 1330 (9th Cir. 1983). Defendant's reproductions of the 13 Designs are indeed virtually identical to the registered Designs 14 Plaintiffs provide, so the second criterion for a copyright 15 infringement claim is met here. 16

The Court finds that Plaintiffs' allegations state a claim for 17 copyright infringement. 18

iii. The Amount of Money at Stake

As to the fourth Eitel factor, the Court must consider "the 20 amount of money at stake in relation to the seriousness of 21 defendant's conduct." N. Cal. Sheet Metal Workers, 2000 U.S. Dist. 22 LEXIS 19065, at *4-5. "The Court considers Plaintiff's 23 declarations, calculations, and other documentation of damages in 24 determining if the amount at stake is reasonable." Truong Giang 2 Corp. v. Twinstar Tea Corp., No. 06--CV--03594, 2007 WL 1545173, at 3 *12 (N.D. Cal. May 29, 2007). 4

In their motion, Plaintiffs ask for $625,000 in statutory 5 damages, plus interest on the judgment. This would probably be a 6 substantial burden on Defendant, and requests for such large sums 7 of money generally counsel against entry of default judgment. 8

Eitel, 782 F.2d at 1472. However, as discussed below, the Court 9 adjusts Plaintiffs' requested damages to an appropriate amount 10 based on deterrence considerations and the evidence in the record.

iv. Likelihood of Dispute over Material Facts

With respect to the fifth Eitel factor, the material facts of 13 the instant case are not reasonably likely to be subject to 14 dispute. The record indicates that the nature of Defendant's 15 business is infringing. 16 v. Excusable Neglect

For the sixth Eitel factor, there is no support for finding 18 that Defendant's default is due to excusable neglect. Defendant 19 was served with the Complaint and Summons in this action over five 20 months ago and has yet to enter an appearance. Plaintiffs also 21 served Defendant with their motion for entry of default judgment 22 and its accompanying papers. In such circumstances, default cannot 23 be attributed to excusable neglect. See Shanghai Automation 24 Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal. 2001). 25

This factor supports entry of default judgment. 26

vi. Policy Favoring Decision on the Merits

"Cases should be decided upon their merits whenever reasonably 28 possible." Eitel, 782 F.2d at 1472. However, this policy is not dispositive, and "Defendant's failure to answer Plaintiff['s] 2

Complaint makes a decision on the merits impractical, if not 3 impossible." PepsiCo, 238 F. Supp. 2d at 11. Termination of a 4 case before hearing the merits is allowed when a defendant fails to 5 defend an action. Id. Therefore, in this case, this factor does 6 not weigh against default judgment. 7

vii. Summary of Eitel Factors

Considered together, the Eitel factors favor entry of default 9 judgment. The Court addresses Plaintiffs' requested remedies 10 below.

C. Remedies

12

i. Damages

Plaintiffs seek $625,000 in statutory damages. Pursuant to 14 section 504(a) of the Copyright Act, an infringer is liable for 15 either the plaintiff's actual damages or statutory damages. See 17 16

U.S.C. § 504(a). A plaintiff seeking statutory damages may recover 17 between $750.00 and $30,000.00 for all infringements of a 18 copyrighted work. Id. § 504(c). Additionally, if a copyright 19 owner "sustains the burden of proving, and the court finds, that 20 infringement was committed willfully, the court in its discretion 21 may increase the award of statutory damages to a sum of not more 22 than $150,000." Id. § 504(c)(2). If a plaintiff chooses to 23 recover statutory damages, he need not prove actual damages. See 24 Columbia Pictures Indus., Inc. v. Krypton Broad. of Birmingham, 25 Inc., 259 F.3d 1186, 1194 (9th Cir. 1997) (citation omitted). When 26 awarding statutory damages, the Court has broad discretion within 27 the range provided by statute. Id. Importantly, "[s]tatutory 28 damages are intended to serve as a deterrent, but that does not justify . . . a windfall." Microsoft Corp. v. Ricketts, No. C 06-2 6712 WHA, 2007 WL 1520965, at *4 (N.D. Cal. 2007). 3 Plaintiffs allege that Defendant's infringement was willful. 4

Allegations of willful infringement are deemed to be true on 5 default. See Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 6 696, 702 (9th Cir. 2008). Despite their apparent entitlement to 7 increased damages under the Copyright Act's willful infringement 8 allowance, Plaintiffs ask for $25,000 for each of the twenty-five 9 infringed Designs, for a total of $625,000. See Mot. at 17. Even 10 so, the $25,000 per infringement award is "at the high end of the § United States District Court For the Northern District of California 504(c)(1) scale." Disney Enters., Inc. v. San Jose Party Rental, 12 No. C 10-0511 CRB, 2010 WL 3894190, at *2 (N.D. Cal. Oct. 1, 2010). 13

After evaluating the evidence and Plaintiffs' motion, the Court 14 does not find that Defendant's operation merits such extensive 15 damages. Per the Court's "wide discretion in determining the 16 amount of the statutory damages to be awarded, constrained only by 17 the specified maxima and minima," Harris v. Emus Records Corp., 734 18 F.2d 1329, 1335 (9th Cir. 1984), the Court awards Plaintiffs 19 $10,000 per infringement multiplied by twenty-five Designs for a 20 total of $250,000, in recognition of the fact that Plaintiffs do 21 profit from the use of their copyrights. The Court finds this 22 amount sufficient for the purposes of deterrence. 23

ii. Injunctive Relief

Plaintiffs allege that Defendants infringed on their 25 copyrights by willfully and knowingly manufacturing, distributing, 26 and selling moonwalks featuring Plaintiffs' Designs, despite 27 Plaintiffs' cease and desist requests. Compl. ¶¶ 44; Peterson 28 Decl. ¶ 4. This demonstrates that Plaintiffs' exclusive rights in the Designs have been, and continue to be, violated by the 2 Defendant. In such circumstances, the Court is authorized to issue 3 a permanent injunction to prevent or restrain further 4 infringements. See 17 U.S.C. § 502(a); Sega Enters. Ltd. v. 5 MAPHIA, 948 F. Supp. 923, 940 (N.D. Cal. 1996) ("Generally, a 6 showing of copyright infringement liability and the threat of 7 future violations is sufficient to warrant a permanent 8 injunction."). In order to receive injunctive relief, a plaintiff 9 must demonstrate: (1) that it has suffered an irreparable injury; 10 (2) that remedies available at law are inadequate to compensate for that injury; (3) that, considering the balance of hardships between 12 the plaintiff and defendant, a remedy in equity is warranted; and 13 (4) that the public interest would not be disserved by a permanent 14 injunction. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 15 (2006). 16

As alleged, Defendant has willfully infringed Plaintiffs' 17 copyrights. Defendant's failure to respond to the suit, alongside 18 Plaintiffs' pleadings, suggests that his infringing activities will 19 not cease absent judicial intervention. See, e.g., Jackson v. 20 Sturkie, 255 F. Supp. 2d 1096, 1103 (N.D. Cal. 2003). The Court 21 finds that Plaintiffs will be irreparably harmed if an injunction 22 is not issued. Therefore, a permanent injunction will be entered. 23 11 iii. Interest

The Court finds that Plaintiffs are entitled to post-judgment 25 interest pursuant to 28 U.S.C. § 1961(a).

V. CONCLUSION

As explained above, Plaintiffs Disney Enterprises, Inc. and DC 3 Comics, and Sanrio, Inc.'s motion for entry of default judgment is 4 GRANTED. Defendant Joey Nguyen a.k.a. Dung Nguyen a.k.a. Duong 5 Nguyen is ORDERED to pay damages of $250,000 to Plaintiffs. 6 Defendant Nguyen is also ordered to pay interest pursuant to 28 7 U.S.C. § 1961(a). 8

Furthermore, Defendant and his agents, servants, employees and 9 all persons in active concert and participation with them who 10 receive actual notice of the injunction are hereby restrained and enjoined from importing, advertising, displaying, promoting, 12 marketing, distributing, providing, offering for sale and selling 13 of products that picture, reproduce, copy or use the likenesses of 14 or bear a substantial similarity to the designs registered in the 15 following copyright registrations: Mickey-1 (VA 58-937); Minnie-1 16 (VA 58-938); Donald Duck (Gp 80-184); Daisy-1 (VA 58-933); Pluto 17 (Gp 80-192)/(RE 826-536); Chip (R 567-615); Dale (R 567-614); Walt 18 Disney's Peter Pan Coloring Book #21865 (RE 66-285); Toy Story -- 19 Buzz Lightyear (VAu 337-566), Toy Story -- Woody (VAu 337-565), Toy 20 Story -- Rex (VAu 337-568), Toy Story (PA 765-713), Pirates of the 21 Caribbean: The Curse of the Black Pearl (PA 1-138-412); High School 22 Musical -- Fall/Winter 2007 Style Guide (VA 1-405-075); Ariel 9-9-87 23 Ruff (VAu 123-355); Flounder (VAu 123-349); Triton (VAu 123-350); 24 Ruff Sebastian (Vau 123-354), Hannah Montana Branding Guide (VA 1-25 403-647); DC Comics Anti-Piracy Guide (TXu 1-080-661); Superman 26 Style Guide (TX 3-221-758); the Hello Kitty registration (VA 130-27 420); KeroKeroKeropi (VA 636-579); Sanrio 2005 Character Guide (VAu 28 684-322); and Sanrio 2010 Character Guide (VAu 1-078-385).

Plaintiffs have the responsibility to serve the injunction in 2 such a manner to make it operative in contempt proceedings. 3 4

IT IS SO ORDERED.


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