JAT Wheels v. DB Motoring - Tentative Ruling

8/20/2019 JAT Wheels v. DB Motoring - Tentative Ruling

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UNITED STATES DISTRICT COURT

CENTR AL DISTRICT OF CALIFORNIA

CIVIL M INUTES

G E N E R A L

CV 14-5097-GW(AGRx)

ecember 28, 2015

JA Wheels Inc. v. DB Motoring Group Inc. et al.

GEO R GE H . W U, UNITED STATES DISTRICT JUDGE

Patricia Gomez

atie Thibodeu x

Deputy Clerk ourt Reporter / Recorder

ape No.

Attorneys P resent for Plaintiffs:

ttorneys Present for Defendants:

Leontyne Fan one Present

PROCEEDINGS: PLAINTIFF S M OTION FOR ENTRY O F DEFAULT J UDGM ENT [20 1

Case called. The Court’s tentative ruling is circulated and attached hereto. Counsel request time to

address the Courts tentative. Plaintiff s supplemental brief is due by January 15, 2016. The Court

continues the motion for entry of default judgm ent to January 25, 2016 at 8:30 a.m.

0 1

Initials of Preparer PG

CV-90 (06/04’ IVIL MINUTES - GENERAL

age 1 of

Case 2:14-cv-05097-GW-AGR Document 23 Filed 12/28/15 Page 1 of 8 Page ID #:135


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JA Wheels Inc v.DB Motoring jjoup Inc.

Case No. CV-14-05097 G W (AGRx)

Tentative Ruling on Motion for Default Judgm ent against Defendant DB M otoring Group

Plaintiff JAT W heels, Inc.

( Plaintiff’)

filed suit against Defendant DB Motoring

Group, Inc. ( Defendant ) on July 1, 2014, asserting four claims for relief: 1) patent

infringement pursuant to

35

U.S .C. § 2 71; 2) federal copyright infringem ent, pursuant to

17 U.S.C. § 106; 3) unfair competition under California s common law; and 4) unfair

business practices, pursuant to California Business and Professions Code § 17200.

Plaintiffs Complaint arises out of the allegation that Defendant is manufacturing and

selling automobile parts on the Internet that are infringing Plaintiffs design patent.

See

Complaint T 13-20.

On July 29, 2014, Plaintiff served Defendant with the Summons and Complaint,

by executing service upon Evelyn Velasquez, the authorized person to accept service.

See

Dkt. 11; Fed. R. Civ. P. 4(h)(1)(B). Defendan t has not appeared in the action, and on

April 23, 2015, the Clerk entered default against Defendant. See

Dkt.

15. Because of

Defendant’s non-appearance and default, Plaintiff now seeks a default judgment,

including an award of dam ages, costs, attorney s fees and a perm anent injunction.

Local Rule 55 1

Under Local Rule

55-1 ,

a party requesting default judgment mu st make a showing

as to the following: (1) when and against what party the default was entered; (2) identi-

fication of the pleading to which default was entered; (3) whether the defaulting party is

an infant or incom petent person; (4) that Defend ant is not in m ilitary service such that the

Servicemembers C ivil Relief Act does no t apply; and (5) that notice has been served on

the defaulting party, if required by Fed . R. Civ. P. 55(b)(2). See

C.D. Cal. L.R. 55-1;

see

also Philip Morris US A, Inc. v. C astworld Prods., Inc., 219 F.R.D. 494, 498 (C .D. Cal.

2003 ). Plaintiff has supplied the information Lo cal Rule 5 5-1 requires.

See Wang D ecl.

(Dkt. 20-1)

5-9. Though n o service of this motion w as necessary under Fed . R. Civ. P.

55(b)(2) because De fendant has not appeared, Plaintiff served D efendant with it by mail.

Dkt. 20 at 2.

Plaintiff has also com plied with Local Rule 58 -11, which requires that it subm it a

proposed default judgm ent in compliance with Fed. R. Civ. P.

58 . See Dkt. 20-3.



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The M erits of a efault Judgm ent

On entry of a default, well-pleaded allegations in the co mplaint regarding liability

are generally deemed true. See G eddes v. United Fin. Corp., 559

F.2d 557, 560

(9th Cir.

1977 ); see also Alan Neu ma n Prods ., Inc. v. Albright,

862 F.2d 1388, 1392 (9th Cir.

1988) (holding that facts which are not established by the pleadings of the prevailing

party, or claims which are not well-pleaded, are not binding and cannot support the

[default] judgment ). The court need not make detailed findings of fact in the event of

default.

See Adriana Int l Corp.. v. Thoeren, 913 F.2d 14 06, 1414 (9th Cir. 1990).

This Court has discretion to refuse to enter a default judgment in an appropriate

case. See Draper v. Coom bs,

792 F.2d 915, 924-25 (9th Cir. 1986);

Aldabe v. Aldabe,

616 F.2d 1089, 1092 (9th Cir. 1980). The Court may consider a variety of factors in the

exercise of such discretion, including:

(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 m erits.

Eitel v. McCool,

782 F.2d 14 70, 1471-72 (9th Cir. 1986).

Fac tor One: Possib ility of Prejudice to Plaintiff

As the D efenda nt has not app eared in this action, Plaintiff will suffer prejudice if

default is not entered as the case cannot otherwise proceed, Thus, absent the entry of

judgment, Plaintiff would be left without a remedy against Defendant.

See, e.g., Philip

Morris USA,

219 F .R.D. at 499 ( Plaintiff would suffer prejudice if the default judgm ent

is not entered because Plaintiff will be without other recourse for recovery. ). Therefore,

the first

Eitel

factor favors granting the motion.

Factors Two and Three: Substantive Merits and Sufficiency of C omplaint

Although well-pleaded allegations are taken as true, claims which are legally

insufficient, are not established by default.

Cripps v . Life Insurance C o. o

North

America,

980 F.2d 1261, 1267 (9th Cir. 1992). Whether a plaintiff has properly stated a

claim is related to the second and third

Eilel

factors. See PepsiCo, Inc. v. Cal. Sec. Cans,

238 F. Supp. 2d 1172, 1175 (C .D. Cal. 2002).

P



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Patent Infringement

To establish a claim for direct patent infringement under 35 U.S.C. § 271, a

plaintiff must show that the defendant without authority makes, uses, offers to sell, or

sells any patented invention, within the United States or imports into the United States

any patented invention during the term of the patent therefor . . . .

35 U.S.C. § 271(a).

Here, the comp laint alleges that Defendant has been and is infringing U .S. Design Patent

Application No. 29,492,155 (the Design Patent ) by importing or selling the Traklite

Holeshot wheel. Because factual allegations are taken as true, Plaintiff is entitled to

default judgment on this claim.

[T]o establish willful infringement, a patentee must show by clear and

convincing ev idence that the infringer acted despite an objectively high likelihood that its

actions constituted infringement of a valid patent. In re Seagate Tech. LLC 497 F.3d

1360, 1371 (Fed. cir. 2007). This is an objective inquiry that does not implicate the state

of mind of the accused infringer. Id. After establishing this threshold element, the

patentee must also demonstrate that this objectively-defined risk (determined by the

record developed in the infringement proceeding) w as either known or so o bvious that it

should have been k nown to the accused infringer.

Id.

Here, the Complaint alleges that

Defendant was made aware of its infringing conduct through direct or indirect

communications with Plaintiff and/or as a result of its participation in- the aftermarket

automobile parts industry. Thus, the Complaint alleges that the sale of the Traklite

Holeshot wheel has been made with knowledge of Defendant’s infringement of the

Design Patent; These facts, taken as true, are sufficient to state a claim for willful

infringement.

Copyright Infringemet

In order to institute a law suit for copyright infringem ent, a plaintiff must initially

either pre-register or register with the U.S. Co pyright Office as mand ated in 17 U.S.C. §

411(a).

See Reed Elsevier Inc. v. Muchnick

559

U.S. 154, 157 (2010) (the registration

requirement is a precondition to filing a copyright infringement claim). Although the

Com plaint alleges that Plaintiff is the exclusive holder o f all rights, title and interest in its

photographs, it does not allege any facts regarding copy right registration.

See

Complaint

128. Accordingly, P laintiff has not pleaded a su fficient claim of copyright infringement.



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Unfair Com petition/ Cal. Bus. Prof Code § 17200

To prevail on its unfair competition claim under Cal. Bus. & Prof. Code §

17200,

et seq.,

Plaintiff must prove that Defendant engaged in unlawful, unfair or

fraudulent business act or practice and unfair, deceptive, untrue or misleading adver-

tising. Cal. Bus. & Prof. Code § 17200. Plaintiff alleges that Defendant has distributed

and sold infringing products utilizing the Design Patent, thereby creating a false designa-

tion of origin of Plaintiffs brand of goods and unfairly competing with Plaintiff’s

business.

See

Complaint ¶ 37. But Plaintiff’s allegations of unfair competition are

preempted by federal patent law because they are predicated upon claims that Defen-

dant’s products infringe Plaintiff’s Design Patent.

Bonito Boa ts, Inc. v. Thund er Craft

Boa ts, Inc.,

489 U.S. 141, 167-168, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989). Because

Plaintiff has not alleged any additional tortious conduct that is separate from the patent

law cause of action, preemption applies arid, hence, its unfair competition claim cannot

proceed. Sum mit Mach. Tool M fg. Corp. v. Victor CNC Sys., Inc., 7 F.3d 1434, 1439-40

(9th Cir.1993).

Accordingly, the second and third Eitel factors favor granting the motion only

with respect to the patent infringement claim.

Factor Four: Sum of MonMat Stake in the Action

By its motion for default judgment, Plaintiff seeks damages in the amount of

$100,000. Given the substantial amount of money at stake, this factor could weigh

against the entry of default judgment. As discussed below, however, the Court declines

to issue a judgment in the amount requested without supplemental briefing. Conse-

quently, the fourth Eitel

factor does not weigh ag ainst Plaintiff.

Factor Five: Possibilitv of Dispute C oncerning M aterial Facts

Plaintiff has provided the court with well-pleaded allegations. The Court may

assume the truth of w ell-pleaded facts in the com plaint (except as to damages) following

the clerk’s entry of default and, thus, there is no likelihood that any genuine issue of

ma terial fact exists. See, e.g., Elektra En tm ’t Group Inc. v. Crawford,

226 F.R.D. 388,

393 (C.D.Cal.2005) ( Because all allegations in a well-pleaded complaint are taken as

true after the court clerk enters default judgmen t, there is no likelihood that any genuine

issue of material fact exists. ). As such, the fifth factor favors a default judgme nt.

r



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Factor

Six:

Excusable Neglect

There is no evidence that Defendant’s failure to respond was due to excusable

neglect. Notice of the summons, Complaint, and Motion were properly served and filed

with the Court. Dkt. 11, 20. Therefore, the sixth

Eitel factor favors granting the motion.

Factor Seven: Pub lic Policy

The final

Eifel

factor takes into account the strong policy preference of deciding

claims on their merits. This factor generally disfavors the entry of default judgment.

However, the mere existence of Fed. R. Civ. P.

55(b)

indicates that this preference,

standing alone, is not dispositive.

PepsiCo, 238 F. Supp. 2d at 1177. In this case,

Defendant’s failure to respond precluded a decision on the merits with respect to its

liability. The seventh

Eifel factor weighs slightly against granting the Motion.

Conclusion

Consideration of the

Eifel

factors favors granting the motion. Entry of default

judgment is therefore appropriate.

elief equested

A plaintiff’s demand for relief must be specific, pursuant to Fed. R. Civ. P.

8(a)(3). Here, Plaintiff seeks a permanent injunction barring further actions of

infringemen t of the Design Patent, mo netary damag es, and attorney’s fees and costs. The

relief sought by the m otion is consistent with the relief requested in the Com plaint.

Injunctive Relief

The Patent Act permits courts to grant injunctions in accordance with the

principles of equity to prevent the v iolation of any right secured by patent, on such term s

as the court deem s reasonable. 35 U.S.C. § 283. The Copyrigh t Act also vests’

st the court

with the power to grant injunctive relief.

See

17 U.S.C. §

502(a). In fact, at least for a

time, injunctive relief in copyright cases was commonly issued as part of a default

judgment.

See, e.g., Sony Music Entrn t Inc. v. Elias,

No. CV 03-6387DT (RCx), 2004

LEXIS 30385, at

*11.44 (C.D. Cal. Jan. 20, 2004); see also MAIS ys., 991 F.2d at 520

( [A] permane nt injunction will be granted whe n liability has been established and there

is a threat of continuing violations. ). Under § 502(a), the court may grant injunctive

relief on such terms as it may deem reasonable to prevent or restrain infringement of a

copyright.

Peifect 10, Inc. v. Google, Inc.,

653 F.3d 976, 980 (9th C ir. 2011). Here, as



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noted abo ve, only Plaintiff’s patent claim w ould provide a basis for injunctive relief.

Under

eBay Inc. v. MercExchange LLC 547 U.S. 388 (2006), a plaintiff seeking

a permanent injunction must satisfy a four-part test: 1) that it has suffered irreparable

injury; 2) that there is no adequate remedy at law; 3) that considering the balance of

hardships between the plaintiff and defendant, a remedy in equity is warranted; and 4)

that the public interest wou ld not be disserved by a perm anent injunction.

See id.

at 391-

93.

A permanent injunction is appropriate here based upon Defendant’s violation of

Plaintiff’s patent. The general rule of law is that upon default the factual allegations of

the complaint, except those relating to the amount of damages, will be taken as true.

Tele Video Sys. Inc. v. Heidenthal 826 F.2d 915, 917 -18 (9th Cir. 1987) (quoting Geddes

v. United Financial Group 559

F.2d

557 560 (9th Cir.1977)). Because Defendant has

failed to answer the Complaint, Plaintiff’s allegation of infringement must be taken as

true for the purpose of this motion.

If an injunction were not granted, Plaintiff would suffer irreparable injury from

the ongoing acts of infringement. Furthermore, given the difficulty of determining exact

damages, mo netary compensation may be inadequ ate. Defendant has been unresponsive

to this litigation, further indicating that Plaintiff may have no other way aside from a

permanent injunction to stop Defendant’s infringement.

The balance of hardships favors Plaintiff because without an injunction, Plaintiff

will lose profits, while an injunc tion will only p roscribe Defen dant’s infringing activities.

Finally, an injunction is in the public interest because it will uphold society’s interest in

protecting intellectual property.

Blackberry Ltd. v. lypo Products LLC

2014 WL

1318689, at

*13

(N.D. Cal. Mar. 28, 2014) ( [T]he public interest in protecting valid

patents outweighs any purported benefit to consumers that [infringing products]

provides. ).

Monetary Damages

Pursuant to Fed. R. C iv. P. 55(b)(2)(B), following the entry of default judgment, a

court may conduct a hearing to determine the amount of damages at issue. Here, at this

point, the only basis for monetary damages would stem from Defendant’s infringement of

Plaintiff’s patent. Plaintiff has not requested statutory damages for its copyright claim



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and, as noted above, could it now get such dam ages under that claim. Nevertheless, with

respect to the claim for patent infringement, a separate hearing is needed to assess

monetary damages sustained due to the infringing acts.

Attorney’s Fees and Co sts

Pursuant to

3 5

U.S.C. § 285, [t]he court in exceptional [patent] cases may award

reasonable attorney fees to the prevailing party. An exceptional case is simply one that

stands out from others with respect to the substantive strength of a party’s litigating

position (considering both the governing law and the facts of the case) or the

unreasonable manner in which the case was litigated.

Octane Fitness LLC v. ICON

Health Fitness, Inc, 134 S.Ct. 1749, 1756 (2014). District courts may determine

whether a case is ’exceptional’ in the case-by-case exercise of their discretion,

considering the totality of the circumstances.

Id.

Plaintiff further alleges that Defendant’s infringement was willful and thereby

seeks enhanced damages under 35 U .S.C. § 284. However, Plaintiff submits no evidence

of its damages, and the Court declines to speculate. In addition, based on the limited

record, the Court does not find Defendant’s default in this case to rise to the level of the

type of misconduct that justifies an award of attorney’s fees.

See Telequip Corp. v. The

Change Exch.

No. 5:01CV-1748, 2007 WL 655734, at

*2

(N.D.N.Y.2007) (entering

default judgment and holding that the case was not exceptional, noting that neither

willful infringement nor defaults are unusual in patent infringemen t cases. ).

onclusion

The Court would grant Plaintiff’s motion for default judgment and request for

permanent injunction as to its patent cause of action, but defer. determination of the

monetary damages, attorney’s fees and costs until such issues are further briefed and

presented at a future hearing.


JAT Wheels v. DB Motoring - Tentative Ruling

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