`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF CALIFORNIA
`
`SYMANTEC CORPORATION,
`Plaintiff,
`
` v.
`LOGICAL PLUS, INC., et al.,
`Defendants.
` /
`
`No. C 06-7963 SI
`ORDER GRANTING IN PART AND
`DENYING IN PART PLAINTIFF’S
`MOTION FOR SUMMARY JUDGMENT
`
`On October 16, 2009, the Court heard oral argument on plaintiff’s motion for summary judgment
`on the trademark infringement, false designation of origin, and copyright infringement claims. Having
`considered the arguments of counsel and the papers submitted, the Court GRANTS in part and DENIES
`in part plaintiff’s motion.
`
`BACKGROUND
`Plaintiff Symantec Corporation designs, manufactures, publishes and distributes software for
`personal computers, including several versions of Norton SystemWorks (“NSW”). Brandon Decl. ¶¶
`2-11. Symantec also manufactures, publishes and distributes Norton AntiVirus, Norton Utilities, Norton
`Internet Security, Norton Ghost, and pcAnywhere. Id.
`Symantec does not directly sell its software or component parts to end-user consumers. Instead,
`Symantec sells its software to authorized distributors who resell the product. Id. ¶ 16. When customers
`interested in purchasing Symantec’s products visit the Symantec website and inquire about purchasing
`the products, they are redirected to a site owned, operated and maintained by a third party, Digital River.
`Symantec licenses to Digital River the use of its name and the right to sell its software to end-users over
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`For the Northern District of California
`
`United States District Court
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page2 of 15
`
`the Internet. Id.
`Symantec contracts with a third party, DisCopy Labs (“DCL”) for the manufacture of NSW
`software within the United States. Id. ¶ 17. As part of this process, Symantec supplies the digital art
`work for silkscreen manufacturing, and the computer program master to DCL, who then ensures that
`the CDs and associated components are reproduced according to Symantec’s standards. Id. DCL puts
`the CDs and associated components along with manuals in packaging designed by Symantec, and shrink
`wraps the boxes. Id. DCL receives product shipping instructions from Symantec, then palletizes and
`ships the products to distributors. Id. Any NSW software disk manufactured for sale in the United
`States by an entity other than DCL and those entities authorized by DCL is not an authorized product
`of Symantec. Id. ¶ 20.
`Defendant Logical Plus is a New York corporation, and defendant Joseph Chang (“Chang”) is
`the principal owner and operator of Logical Plus. Shuttle Products (“Shuttle”) is a California
`corporation, and defendant Yen Nelson Yu is the owner and operator of Shuttle Products. Gonzales
`Suppl. Decl. at 25-26; Deposition of Yen Nelson Yu (“Yu Depo”) at 41-42. Logical Plus sells software
`and other products through its website, www.logicalplus.com. Id. ¶ 28. Marc Brandon, Director of
`Global Brand Protection for Symantec, states in his declaration that Symantec received inquiries from
`a number of consumers concerning purported Norton and Symantec software that they had purchased,
`without retail packaging, from Logical Plus. Id. ¶ 24. Some of those consumers sent the software they
`purchased from Logical Plus to Symantec, and Symantec determined that the software was counterfeit.
`Id. ¶¶ 24-37; see generally Freedman Decl.
`Symantec also retained Jodie Pavey, an outside licensed private investigator, to conduct test
`purchases. Brandon Decl. ¶ 31; Pavey Decl. ¶ 5. Between February 2004 and October 2005, Ms. Pavey
`purchased several Norton software products from defendants. Brandon Decl. ¶ 31; Pavey Decl. ¶¶ 5-11,
`¶ 17. Brandon states that “[t]he CDs were shipped in sleeves without any retail packaging, manuals or
`other material that would accompany a genuine retail Symantec product.” Brandon Decl. ¶ 32. Ms.
`Pavey forwarded the CDs to Symantec, and “[e]xamination of the evidence revealed that each of the
`CDs . . . is counterfeit.” Id. ¶ 33; see also Freedman Decl. ¶ 10 (there is a “high likelihood, far beyond
`a reasonable probability, that all of the discs are counterfeit”).
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`2
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page3 of 15
`
`On or about February 14, 2005, Symantec sent written notice to defendants informing them that
`they were selling counterfeit copies of Symantec software products. Brandon Decl. ¶ 38, Ex. 12.
`Symantec demanded that defendants cease and desist from further sales of counterfeit Symantec
`products. Id. On or about February 14, 2005, defendant Joseph Chang sent an e-mail to Symantec
`stating that “We have taken all Symantec related softwares [sic] out of our website and stopped selling
`all Symantec softwares [sic].” Brandon Decl. Ex. 13. Defendant Chang further represented that he had
`purchased only “5 to 22” pieces of Symantec software from vendors at computer trade shows, and had
`obtained no invoices from the vendors. Id. Chang also stated that “We purchased these softwares based
`on the goodwill of the vendors of trade shows with no knowledge of counterfeit products. Please
`advise.” Id.
`At his deposition, defendant Chang testified that he was responsible for purchasing for Logical
`Plus. Chang also admitted that he lied in his February 14, 2005 e-mail response to Symantec, and that
`he lied to protect his friend, Oscar Sun, from whom Logical Plus purchased the software at issue:
`Q
`So you would agree with me that when you said there was only five to 22
`softwares, that was a lie; right?
`Yes.
`And then you say you bought them from the local computer trade shows.
`That’s not true.
`That’s a lie, too; right?
`Yes.
`
`A
`Q
`A
`Q
`A
`. . .
` So you lied about that. Is there a reason why you lied about that?
`Q
`I was protecting as a friend.
`A
`Chang Depo. at 155:7-24; 160:24-161:4 (attached as Ex. 202 to Munson Decl.). Chang also admitted
`that he falsely told Symantec that he had paid cash for the products and had no receipts. Id. at 156:23-
`157:7.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`3
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page4 of 15
`
`Chang testified that in fact Logical Plus purchased the products from V-Micro,1 which was
`owned by Oscar Sun.2 Id. at 36:2-24. Chang testified that after he received the cease and desist letter
`from Symantec, he contacted Sun, who told him that V-Micro was an authorized distributor of Symantec
`products, and that the products were not counterfeit. Id. at 99, 111:24-112:5. Chang also testified that
`Sun told him that he (Sun) would talk to Symantec and that Logical Plus should stop selling Symantec
`products for a period of time. Id. 98:2-12, 156:4-8. Chang testified that he never asked Sun where he
`obtained his Symantec products, id. 36:12-14; never asked Sun for any documentation to prove that the
`Symantec product he was selling was legitimate, id. 98:19-23; and that he never made any efforts,
`beyond the phone call to Sun, to ascertain whether the Symantec products that Logical Plus had been
`selling were legitimate, id. 99:3-8. Chang also testified that he does not know whether, in fact, Sun
`actually contacted Symantec in response to the cease and desist letter. Id. 160:7-18. Nevertheless,
`within a few weeks or a few months after receiving Symantec’s cease and desist letter, Logical Plus
`resumed selling Symantec products. Id. 156:9-22. According to plaintiff, in response to discovery
`requests defendants produced over approximately 150 sales invoices reflecting sales of 1,692 purported
`Norton and Symantec products after February 14, 2005. Munson Decl. ¶ 12, Ex. 204.3
`Defendant Yu, the owner and operator of Shuttle, is the brother-in-law of defendant Chang. Yu,
`through Shuttle, provided email addresses that Chang used for the Logical Plus enterprise. Chang Depo.
`at 10:46:14-22. It is unclear, however, to what extent these email addresses were used, or whether there
`were other email addresses used at the same time. Therefore, it is unclear to what extent the Logical
`Plus business relied on the use of those email addresses, or for what period of time they were used.
`Plaintiff filed the complaint on December 29, 2006. Plaintiff originally moved for summary
`
`1 The papers and deposition testimony alternately refer to V-Micro and Viewmicro.
`2 See Munson Decl. ¶ 15.
`3 The Munson declaration states that “defendants” produced approximately 150 invoices, and
`that Mr. Munson, a law clerk with Baute & Tidus LLP, reviewed those documents and determined that
`the invoices reflected sales of 1,692 units of Symantec products after Symantec’s February 14, 2005
`cease and desist letter. Munson Decl. ¶¶ 12-13. Plaintiff has attached “illustrative” invoices, which are
`all from Logical Plus. Thus, it is unclear from the Munson declaration and supporting evidence whether
`all of the invoices show sales from Logical Plus, or whether any of the invoices are connected to the
`other corporate defendants.
`
`4
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page5 of 15
`
`judgment against all defendants in January 2008. On February 8, 2008, before the motion was heard,
`defendants filed a notice that Logical Plus had filed for bankruptcy the same day. On February 20,
`2008, the Court issued an order staying action and denying without prejudice plaintiff’s motion for
`summary judgment. By order filed September 8, 2009, the Court granted plaintiff’s motion to sever
`Logical Plus and lift the stay as to the solvent defendants. Plaintiff renewed the motion for summary
`judgment as to defendants Chang, Yu and Shuttle Products, and the parties submitted supplemental
`summary judgment briefs.
`
`LEGAL STANDARD
`Summary adjudication is proper when “the pleadings, depositions, answers to interrogatories,
`and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any
`material fact and that the moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P.
`56(c).
`
`In a motion for summary judgment, “[if] the moving party for summary judgment meets its
`initial burden of identifying for the court those portions of the materials on file that it believes
`demonstrate the absence of any genuine issues of material fact, the burden of production then shifts so
`that the non-moving party must set forth, by affidavit or as otherwise provided in Rule 56, specific facts
`showing that there is a genuine issue for trial.” See T.W. Elec. Service, Inc., v. Pac. Elec. Contractors
`Ass’n, 809 F.2d 626, 630 (9th Cir. 1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986)). In
`judging evidence at the summary judgment stage, the Court does not make credibility determinations
`or weigh conflicting evidence, and draws all inferences in the light most favorable to the non-moving
`party. See T.W. Electric, 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
`Corp., 475 U.S. 574 (1986)); Ting v. United States, 927 F.2d 1504, 1509 (9th Cir. 1991). The evidence
`presented by the parties must be admissible. Fed. R. Civ. P. 56(e). Conclusory, speculative testimony
`in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary
`judgment. Thornhill Publ’g Co., Inc. v. GTE Corp., 594 F.2d 730, 738 (9th Cir. 1979).
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`5
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page6 of 15
`
`DISCUSSION
`
`I.
`
`Defendant Chang
`As an initial matter, plaintiff argues that liability for the alleged counterfeit sales should attach
`to Joseph Chang, because as the owner and operator of Logical Plus, he was a direct participant in the
`infringing activity of the now-bankrupt defendant. Defendant argues that he was the unknowing victim
`of the true perpetrator of the counterfeiting, Oscar Sun.4
`A corporate “officer or director is, in general, personally liable for all torts which he authorizes
`or directs or in which he participates, notwithstanding that he acted as an agent of the corporation and
`not on his own behalf.” Murphy Tugboat Co. v. Shipowners & Merchants Towboat Co., 467 F. Supp.
`841, 852 (N.D. Cal. 1979), aff’d sub nom. Murphy Tugboat Co. v. Crowley, 658 F.2d 1256 (9th Cir.
`1981), cert. denied, 455 U.S. 1018 (1982); Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d
`1001, 1021 (9th Cir. 1985); Coastal Abstract Service, Inc. v. First American Title Ins. Co., 173 F.3d
`725, 734 (9th Cir. 1999). Because Joseph Chang was the owner and operator of Logical Plus, he is
`directly liable for the trademark, false designation of origin, and copyright claims.
`Chang’s defense that he was the unwitting victim of Oscar Sun, and did not know that the
`merchandise he sold was counterfeit, is unconvincing. Plaintiff argues that prior to the cease and desist
`letter, Chang should have known that the merchandise was counterfeit based on the lack of retail
`purchasing and price. After the cease and desist letter, however, Chang had no reasonable basis to rely
`on Sun’s assurances that the merchandise was authentic. Chang’s claims that he was unaware that the
`CDs he sold were counterfeit cannot be true for the period after he received Symantec’s cease and desist
`letter.
`
`Chang also asserts that his damning deposition testimony would have been more accurate with
`an interpreter. However, Chang does not point to any specific instance of his testimony that he claims
`is inaccurate. Defendants could have arranged for a translator for Mr. Chang’s deposition, and chose
`not to. Indeed, Mr. Chang testified that he has spoken English for 20 years, uses English regularly in
`
`4 Neither party has produced definitive proof of how many counterfeit sales took place. Plaintiff
`argues that there were “thousands” of counterfeit sales, even after the cease and desist letter.
`Supplemental Reply at 2. Plaintiff has also alleged that there were invoices for 1,692 sales after the
`letter. Munson Decl. ¶¶ 12-13. Defendants only admit the purchases that plaintiff’s agent made.
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`6
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page7 of 15
`
`his business, and that he felt comfortable using English at his deposition. Chang Depo. at 5:11-23.
`Furthermore, a review of Mr. Chang’s deposition transcript shows that Mr. Chang clearly understood
`the questions he was asked. See e.g. id. at 178:9-15 (Chang informing questioner that question had
`previously been asked).
`Mr. Chang has attached an affidavit to his Supplemental Opposition stating he wished to “clarify
`those misrepresentations” due to being deposed “without the aid of an interpreter.” Chang Decl. at 2.
`Chang does not deny any of his deposition statements, nor does he deny lying to plaintiff. Instead, he
`simply attempts to explain why he lied to plaintiff. See id. ¶ 8. Accordingly, the Court finds that
`Chang’s deposition testimony is admissible.
`
`Trademark infringement
`A.
`“To prevail on its trademark infringement claim, [Symantec] must show that: (1) it has a valid,
`protectable trademark, and (2) that [defendants’] use of the mark is likely to cause confusion.” Applied
`Information Sciences Corp. v. eBAY, Inc., 511 F.3d 966, 969 (9th Cir. 2007); see Brookfield Commc’ns,
`Inc. v. W. Coast Entm’t Corp., 174 F.3d 1036, 1047, 1053 (9th Cir. 1999). “There are three ways in
`which [Symantec] may establish that it has a protectable interest: (1) it has a federally registered mark
`in goods or services; (2) its mark is descriptive but has acquired a secondary meaning in the market; or
`(3) it has a suggestive mark, which is inherently distinctive and protectable.” Applied Information, 511
`F.3d at 970. Symantec holds federally registered marks in the goods at issue, and there is undisputed
`evidence that defendants Logical Plus and Joseph Chang used the trademarks when they sold purported
`Symantec products. Thus, the only question remaining is whether defendants’ use is likely to cause
`confusion.
`“A likelihood of confusion exists when customers viewing a mark would probably assume that
`the product or service it represents is associated with the source of a different product or service
`identified by a similar mark.” Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062,
`1075-76 (9th Cir. 2006) (internal citations and quotations omitted). “The Ninth Circuit employs an
`eight-factor test (the ‘Sleekcraft’ factors) to determine the likelihood of confusion: (1) strength of the
`mark(s); (2) relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5)
`
`7
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page8 of 15
`
`marketing channels; (6) degree of consumer care; (7) defendant’s intent; (8) likelihood of expansion.”
`Id. at 1076 (citation omitted). The factors are not a rigid test however; the Court may apply them as it
`sees fit. Id.
`The Sleekcraft factors favor finding a likelihood of confusion in this case. As for the first factor,
`the marks were strong enough that Logical Plus sold products based on the marks; indeed, it was
`because of the strength of the mark that Logical Plus could sell counterfeit products. As to the second
`factor, the products were not just similar, they were identical. Logical Plus sold counterfeit copies of
`Symantec products, so the products were more than related. As to the third factor, the mark was similar
`enough that consumers who bought the counterfeit product did not suspect they had purchased a forgery.
`There is evidence that consumers were actually confused, in that plaintiff only found out about the
`counterfeit sales through consumers contacting Symantec for support on the counterfeit products they
`had purchased. As to the fifth factor, plaintiff, through its authorized vendors, also sells its products via
`the internet, so the same channels are used. As to the sixth factor, consumers can exercise extreme care
`and still purchase the counterfeit product, which they cannot inspect prior to purchase online. Seventh,
`the defendant’s intent here was actually to confuse consumers into purchasing the counterfeit products.
`Consumer confusion was the goal, because without it, Logical Plus would not have sold a single piece
`of software. It was marketed as plaintiff’s software. As to the eighth factor, it is unclear whether the
`expansion into other markets was likely for either plaintiff or defendant. Thus the eighth factor is the
`only one that is even moderately neutral; the first seven all favor finding confusion to be likely. The
`factors are not to be applied mechanically, but here they overwhelmingly support finding confusion to
`be likely.
`For these reasons, the Court GRANTS plaintiff’s motion for summary judgment on the
`trademark infringement claim as to defendant Chang. See In re Vuitton Et Fils S.A., 606 F.2d 1, 4 (2d
`Cir. 1979) (“Here, we believe that such a likelihood of product confusion exists. The allegedly
`counterfeit Vuitton merchandise is virtually identical to the genuine items. Indeed, the very purpose of
`the individuals marketing the cheaper items it so confuse the buying public into believing it is buying
`the true article.”); see also Nissan Motor Co. v. Nissan Computer Corp., 378 F.3d 1002, 1019 (9th Cir.
`2004) (affirming summary judgment where the marks were “legally identical,” the goods at issue were
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`8
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page9 of 15
`
`related, and the marketing channels overlapped).
`
`False designation of origin
`B.
`Under Section 43(a) of the Lanham Act, Symantec must prove that defendants: (1) used a false
`designation of origin, (2) in interstate commerce, (3) in connection with goods or services, (4) the false
`designation is likely to cause confusion or deception as to the origin, sponsorship or approval of
`defendants’ goods, and (5) damages. 15 U.S.C. § 1125(a)(1)(A); see McCarthy on Trademarks and
`Unfair Competition, § 27:13 (Fourth Ed.); see also Vision Sports, Inc. v. Melville Corp., 888 F.2d 609
`(9th Cir. 1989). The standard for violation of Section 43(a) is the same as that for trademark
`infringement: “Whether we call the violation infringement, unfair competition or false designation of
`origin, the test is identical – is there a ‘likelihood of confusion’”? New West Corp. v. N.Y.M. Co. of
`California, 595 F.2d 1194, 1201 (9th Cir. 1979); see also Abercrombie & Fitch Co. v. Moose Creek,
`Inc., 486 F.3d 629, 633 (9th Cir. 2007) (“The core element of trademark infringement is the likelihood
`of confusion, i.e., whether the similarity of the marks is likely to confuse customers about the source
`of the products.”) (internal quotations omitted). For the reasons stated above, the Court finds that there
`is a substantial likelihood of confusion, and thus GRANTS plaintiff’s motion for summary judgment
`for violation of Section 43(a) of the Lanham Act against defendant Chang.
`
`Copyright infringement
`C.
`Symantec argues that it is entitled to summary judgment on the copyright claims because it owns
`copyrights to Norton AntiVirus and Norton Internet Security, and their component programs, and
`defendants distributed these programs without authorization. “A plaintiff bringing a claim for copyright
`infringement must demonstrate (1) ownership of a valid copyright, and (2) copying of constituent
`elements of the work that are original.” Funky Films, Inc. v. Time Warner Entertainment Co., L.P., 462
`F.3d 1072, 1076 (9th Cir. 2006) (internal quotations omitted). See Feist Publications, Inc. v. Rural
`Telephone Service Co., Inc., 499 U.S. 340, 361 (1991). “Copying” is shorthand for the infringing of any
`of the copyright owner’s five exclusive rights. S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1085 n. 3
`(9th Cir.1989). The owner of a copyright has the exclusive right to “distribute copies or phonorecords
`
`9
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page10 of 15
`
`of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or
`lending,” or to authorize another party to do so. 17 U.S.C. § 106(3). See A&M Records, Inc. v. Napster,
`Inc., 239 F.3d 1004, 1013 (9th Cir. 2001). Normally, the copyright holder does not have evidence of
`direct copying, but must prove through indirect evidence (access and substantial similarity) that copying
`occurred. Where, as here, however, there is direct evidence of copying, that is the end of the case. See
`M. Kramer Mfg. Co., Inc. v. Andrews, 783 F.2d 421, 445 (4th Cir. 1986).
`Here, plaintiff has submitted undisputed evidence of it’s copyright in the software Norton
`AntiVirus, Norton Internet Security, Norton Utilities, Norton Ghost, and CleanSweep. See Brandon
`Decl. ¶ 15, Ex. 9. It is also undisputed that defendant Chang sold counterfeit copies of this software.
`See Freedman Decl. ¶ 10. After the cease and desist letter from Symantec, defendant Chang knew or
`should have known that he was selling counterfeit copies of this software. See Brandon Decl. ¶ 38, Ex.
`12. As has already been discussed above, Chang is directly liable for the acts committed through
`Logical Plus as its owner and operator. Therefore, plaintiff is entitled to summary judgment against
`defendant Chang for direct infringement of its copyrights.
`
`Willfulness
`D.
`Plaintiff’s counsel argued at the hearing that defendant Chang’s infringement was willful. No
`element of willfulness is necessary for a finding of trademark infringement. Saxlehner v. Siegel-Cooper
`Co., 179 U.S. 42, 42-43 (1900). Likewise, willfulness is not required for a finding of copyright
`infringement. See 17 U.S.C.A. § 504(c)(1-2) (allowing different calculation of damages when the
`copyright infringement is willful). However, a finding of willfulness increases the calculation of
`statutory damages under both the Lanham Act and the Copyright Act. See 15 U.S.C. § 1117(c)(2); 17
`U.S.C. § 504(c)(2). A “finding of willfulness in this context can be based on either intentional behavior,
`or merely reckless behavior.” In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (quotations omitted).
`The undisputed evidence shows that defendant Chang had actual knowledge that his merchandise
`was counterfeit after he received plaintiff’s cease and desist letter, and yet he continued to infringe.
`Furthermore, his response to the letter – lying to protect himself and his supplier – indicates that it is
`very likely that he knew he was selling counterfeit merchandise before he even received the letter.
`
`10
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page11 of 15
`
`Accordingly, the Court finds that defendant Chang engaged in willful infringement after receipt of the
`cease and desist letter. The record is more equivocal for the time period prior to the cease and desist
`letter. The evidence suggests that even if defendant Chang did not have actual knowledge that the
`merchandise was counterfeit, his behavior was reckless because he was purchasing and selling purported
`Symantec software at prices that were sufficiently below market value to arouse suspicion. However,
`given the state of the record, the Court cannot conclude on summary judgment that Chang’s conduct
`prior to the cease and desist letter was reckless.
`
`II.
`
`Defendants Yen Nelson Yu and Shuttle Products, Inc.
`A.
`Trademark infringement
`Plaintiff argues that liability for trademark infringement should also attach to defendants Yu and
`Shuttle Products, Inc., for their part in providing the email accounts that defendants Chang and Logical
`Plus used to sell counterfeit merchandise. Plaintiff argues that Shuttle hosted the website that Logical
`Plus sold its merchandise through, and that Shuttle supplied to Logical Plus products that Logical Plus
`then sold. Defendants assert that Shuttle only provided an email address that Logical Plus used for a
`limited period of time to correspond with clients, and that it was only one of six different email
`addresses used. Neither party has introduced evidence that would clarify the exact nature of Yu’s
`relationship with Chang’s business, apart from generally agreeing that Chang used an email address
`hosted by Shuttle Products. In addition, neither plaintiff nor defendants explain to what extent Logical
`Plus used the email address Shuttle provided in its business, how often other email addresses were used,
`nor how many sales of allegedly infringing materials occurred through the use of this email address.
`“To be liable for contributory trademark infringement, a defendant must have (1) intentionally
`induced the primary infringer to infringe, or (2) continued to supply an infringing product to an infringer
`with knowledge that the infringer is mislabeling the particular product supplied.” Perfect 10, Inc. v.
`Visa Intern. Service Ass’n, 494 F.3d 788, 807 (9th Cir. 2007) (internal quotation marks omitted); see
`Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 855 (1982). “When the alleged direct infringer
`supplies a service rather than a product, under the second prong of this test, the court must ‘consider the
`extent of control exercised by the defendant over the third party's means of infringement.’ For liability
`
`11
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page12 of 15
`
`to attach, there must be ‘[d]irect control and monitoring of the instrumentality used by a third party to
`infringe the plaintiff's mark.’” Perfect 10, 494 F.3d at 807 (citing Lockheed Martin Corp. v. Network
`Solutions, Inc., 194 F.3d 980, 984 (9th Cir. 1999)). There has been no evidence that Yu or Shuttle
`intentionally induced Chang to infringe Symantec’s trademarks. To constitute contributory
`infringement, Yu and Shuttle’s contributions would be in the form of supplying a service. However,
`there is no evidence that there was “direct control and monitoring” of the email addresses that Chang
`was using, and so no evidence to support contributory trademark infringement on the part of defendants
`Yu and Shuttle.
`Plaintiff relies upon Bambu Sales, Inc. v. Sultana Crackers, Inc., 683 F. Supp. 899, 913-14 (E.D.
`N.Y. 1988), Playboy Enterprises, Inc. v. Starware Pub. Corp., 900 F. Supp. 438, 441-42 (S.D. Fla.
`1995), and Novell, Inc. v. Unicom Sales, Inc., No. C-03-2785, 2004 WL 1839117, at *17 (N.D. Cal.
`2004), for the proposition that “[a]n individual defendant may be held liable for trademark and/or
`copyright infringement even if he is unaware that his acts will result in infringement.” Plaintiff’s
`Supplemental Brief at 8-9. All three cases, however, addressed the question of the liability of corporate
`officer defendants for the torts of their companies in which they directly participated. See Bambu, 683
`F. Supp. at 913-14; Starware, 900 F. Supp. at 441-42; Novell, 2004 WL 1839117 at *17. These cases
`are distinguishable because Yu and Shuttle were not corporate officers of the infringing party, Logical
`Plus.
`
`Plaintiff does not allege another basis for liability to attach to Yu and Shuttle, and does not
`explain nor offer evidence of either Yu’s or Shuttle’s contribution to the counterfeiting scheme beyond
`the provision of an email address. Therefore, the Court DENIES plaintiff’s motion for summary
`judgment as to defendants Yu and Shuttle for trademark infringement.
`
`Section 43(a) of the Lanham Act
`B.
`For the same reasons as discussed above, plaintiff has not alleged any specific basis for liability
`of defendants Yu and Shuttle for the false designation of origin claim. Plaintiff appears to argue that
`liability should attach to Yu and Shuttle as officers of the direct infringer, or as participants in the
`infringement. However, plaintiff has not explained how Yu and Shuttle directed or participated in the
`
`1 2 3 4 5 6 7 8 9
`
`10
`11
`12
`13
`14
`15
`16
`17
`18
`19
`20
`21
`22
`23
`24
`25
`26
`27
`28
`
`12
`
`For the Northern District of California
`
`United States District Court
`
`
`
`Case3:06-cv-07963-SI Document80 Filed10/20/09 Page13 of 15
`
`infringement directly, or even to what extent the email address or addresses that they provided were
`used in the infringement. There is insufficient proof of any theory to find Yu and Shuttle liable for the
`infringement at issue here. Therefore, plaintiff’s motion for summary judgment on the false designation
`of origin claim against defendants Yu and Shuttle is DENIED.
`
`Copyright infringement
`C.
`Plaintiff argues that defendants Yu and Shuttle also infringed its copyrights in their support of
`Chang’s direct infringement. Plaintiff has not specifically argued for contributory negligence, but even
`if it had, summary judgment is not appropriate. “Contributory copyright infringement is a form of
`secondary liability with roots in the tort-law concepts of enterprise liability and imputed intent.” Perfect
`10, 494 F.3d at 194-95. The Ninth Circuit and Supreme Court have held that “a defendant is a
`contributory infringer if it (1) has knowledge of a third party's infringing activity, and (2) induces,
`causes, or materially contributes to the infringing conduct.” Id. at 795 (internal citation and quotation
`omitted). In the internet context, contributory liability exists when the defendant “engages in