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Adobe Systems Inc, v. Tanvir

United States District Court, N.D. California

July 13, 2017

ADOBE SYSTEMS INCORPORATED, a Delaware Limited Liability Company, Plaintiffs,
v.
FRAZ TANVIR, an Individual; and DOES 1-10, Inclusive, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR DEFAULT JUDGMENT

          CHARLES R. BREYER UNITED STATES DISTRICT JUDGE

         Plaintiff Adobe Systems Inc. (“Adobe”) brings this Motion for Default Judgment against Defendant Fraz Tanvir (“Tanvir”). See generally Mot. for Default J. (“MDJ”) (dkt. 29). In addition to Tanvir, Adobe named an additional ten “Doe” defendants. Compl. (dkt. 1). On February 24, 2017, the court clerk entered default against Tanvir. See generally Entry of Default (dkt. 18). Tanvir has neither filed a response nor appeared in this action. Adobe alleges that Tanvir sold on www.ebay.com (“eBay”) computers with counterfeit and unauthorized Adobe-branded software. Compl. ¶ 24 (dkt. 1).

         Tanvir was properly served with summons and complaint in his Pennsylvania home on January 19, 2017. Decl. of Nicole Drey Huerter (“Huerter Decl.”) ¶ 14 (dkt. 29-1). Adobe's attorney spoke over the phone with Tanvir's attorney once before the February 9, 2017 answer deadline, and she received an email on February 3, 2017. Id. ¶¶ 15-16. Despite this, neither Tanvir nor his attorney has appeared before this Court, filed a response, or since contacted Adobe's counsel. Id. For the reasons outlined below, the Court GRANTS in part and DENIES in part Adobe's default judgment motion. The Court further GRANTS reduced damages and injunctive relief.

         I. BACKGROUND

         Tanvir allegedly operates web stores on www.ebay.com (“eBay”) under the seller IDs “theephonedealer” and “fzitelectronics.” Compl. ¶ 24. According to Adobe, Tanvir advertises, offers for sale, sells, and/or distributes computers that are pre-loaded with software infringing on Adobe-branded products. Id. Tanvir has allegedly sold “$8, 039.99 . . . of computers specifically identified as containing Adobe-Branded Software; $641, 180.40 . . . of computers identified as coming ‘bundled' or with ‘extras' or ‘more'; and $115, 415.65 . . . of computers that lacked any indication of whether they contained added software.” MDJ at 4 (citing Exs. M, N, O, & P (dkts. 29-14-29-17)). Moreover, despite Adobe's cease-and-desist letter and two follow-up emails, Tanvir continues to offer for sale and sell personal computers pre-loaded with Adobe-branded software. See Compl. ¶ 30.

         A. Plaintiff's Trademarks, Copyrights, and Licensing Restrictions

         Adobe attributes its software's success “in part to [its own] marketing and promotional efforts, ” which include time and effort in developing consumer recognition, awareness, and goodwill. Compl. ¶ 13. Through these efforts, the quality of the software, and word-of-mouth promotion, “Adobe-Branded Software and the associated marks thereto have been prominently placed in the minds of the public.” Id. ¶ 15. Adobe owns numerous registered trademarks and copyright registrations for its Adobe-branded software. See Id. ¶¶ 17-18. In addition to Adobe's trademarks and copyrights, “[e]very piece of Adobe-Branded Software is licensed, ” and Adobe “maintains title to the Adobe-Branded Software at all times . . . .” Id. ¶ 19.

         As well as the standard individual software licenses that anyone can buy, Adobe offers volume and beta licenses. Id. ¶¶ 20-21. Volume-licensed software allows organizations to “purchase a piece of Adobe-Branded Software and activate it on multiple computers, simply paying an additional fee (often discounted from the full retail price) for each additional license.” Id. ¶ 20. “These licenses are not to be sold to individuals, ” and any use of such a license by anyone other than the licensee is unauthorized. Id.

         Beta software is a pre-release version of software that Adobe distributes before releasing final versions of a software product. Id. ¶ 21. Under Adobe's licensing agreements, “[b]eta software may not be resold . . . .” Id. Beta software that has been resold is unauthorized. Id.

         Adobe alleges (i) the infringement of its trademarks; (ii) the false designation of origin, false or misleading advertising, and unfair competition; (iii) the dilution of its trademarks; (iv) the infringement of its copyrights; and (v) unlawful, unfair, fraudulent business practices. Id. at 14-19; see also MDJ at 6-13 (discussing only Plaintiff's trademark infringement (along with unfair competition and business practices), trademark dilution, and copyright infringement claims).

         B. Tanvir's Use of Plaintiff's Trademarks and Copyrights

         According to Adobe, Tanvir advertises, markets, offers for sale, sells, and distributes “numerous counterfeit and/or unauthorized Adobe-Branded Software products to consumers . . . .” Compl. ¶¶ 35, 37. Adobe purchased two computers from Tanvir during an investigation into pirated and counterfeit Adobe-branded software. Id. ¶¶ 24-29. The two computers, purchased from Tanvir through the eBay seller IDs “theephonedealer” and “fzitelectronics, ” were received by Adobe's investigator, who analyzed the computers' software. Id. ¶¶ 26-29. On one computer, Adobe determined that there was “a counterfeit copy” of Adobe Creative Suite Master Collection CS6 (“Adobe Creative Suite”). Id. ¶ 27; Huerter Decl. ¶ 7. On the other computer, Adobe determined that there was an unauthorized volume-licensed version of Adobe Photoshop Lightroom and unauthorized beta versions of other Adobe-branded software. Id. ¶ 29.

         C. Plaintiffs Send Cease and Desist Notices and Serve Complaint

         On August 14, 2015, Adobe's counsel mailed a cease-and-desist letter to Tanvir “at the address listed on the package.” Compl. ¶ 30. Adobe sent follow-up emails on September 8, 2015 and September 21, 2015. Id. Adobe received neither a confirmation of receipt nor a response. Id.; Ex. K (dkt. 29-12). Adobe filed its complaint against Tanvir on November 29, 2016. See Compl. Tanvir was served with copies of the summons and complaint on January 23, 2017. See Executed Summons (dkt. 14).

         D. Plaintiff Obtains Limited Discovery

         Pursuant to Federal Rule of Civil Procedure 45 and Magistrate Judge Elizabeth D. Laporte's Order allowing limited and expedited discovery, see Order (dkt. 24), Adobe “served a subpoena on PayPal, Inc. (“PayPal”), seeking [Tanvir's] sales record to determine the extent of his infringing conduct.” See Huerter Decl. ¶ 19. On April 18, 2017, PayPal produced documents responsive to Adobe's Rule 45 subpoena. Id.; Ex. M (dkt. 29-14) at 1. Adobe alleges that Tanvir has sold a total of 1071 infringing products. Huerter Decl. ¶ 21.

         E. Plaintiff Moves for Entry of Default Judgment

         On May 8, 2017, Adobe filed the Motion for Default Judgment now before the Court. See MDJ. Tanvir was properly served, see Proof of Service (dkt. 14), and after he failed to respond, the Clerk of Court entered default against him on February 24, 2017, see Entry of Default (dkt. 18).

         II. LEGAL STANDARD

         Pursuant to Federal Rule 55(b), the Court may enter a default judgement upon motion by the Plaintiff after entry of default by the clerk. See Fed.R.Civ.P. 55(b). “The district court's decision whether to enter a default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980); accord Lau Ah Yew v. Dulles, 236 F.2d 415, 416 (9th Cir. 1956). Judicial economy, however, should not outweigh “a court's duty to do justice.” Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 96 (2d Cir. 1993) (“[B]ecause defaults are generally disfavored and are reserved for rare occasions, when doubt exists as to whether a default should be granted or vacated, the doubt should be resolved in favor of the defaulting party.”). Upon an entry of default by the clerk, the factual allegations of the plaintiff's complaint will be taken as true, except those relating to the amount of damages. See Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008); accord TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-918 (9th Cir. 1987). If the facts necessary to determine damages are not contained in the complaint, or are legally insufficient, they will not be established by default. See Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992). “It is well settled that a default judgment for money may not be entered without a hearing unless the amount claimed is a liquidated sum or capable of mathematical calculation.” Davis v. Fendler, 650 F.2d 1154, 1161-62 (9th Cir. 1981) (citing United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)).

         A court should consider seven discretionary factors, often referred to as the “Eitel factors, ” before issuing a decision on a motion for default judgment. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). The Eitel Factors are as follows: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claims; (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 likelihood of obtaining a decision on the merits. Id.

         III. DISCUSSION

         A. Default Judgment Under Eitel

         This Court examines the following factors in determining whether to enter a default judgment: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claims; (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 likelihood of obtaining a decision on the ...


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