Case3:12-cv-01038-WHA Document27 Filed09/20/12 Page1 of 7
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE NORTHERN DISTRICT OF CALIFORNIA
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`SANRIO, INC., DISNEY ENTERPRISES,
`INC., DC COMICS, a general partnership,
`Plaintiffs,
`
` v.
`KUMAR LALWANI, an individual and
`d/b/a Ali Jewelry a/k/a Hira Jewelry a/k/a
`Deena’s Jewelry; ASIM KHAN a/k/a Asim
`Ali Khan a/k/a Asim Au Khan, an
`individual and d/b/a Ali Jewelry a/k/a Hira
`Jewelry,
`
`Defendants.
` /
`
`No. C 12-1038 WHA
`
`ORDER GRANTING IN PART
`PLAINTIFFS’ MOTION FOR
`DEFAULT JUDGMENT AND
`PERMANENT INJUNCTION
`AGAINST DEFENDANT ASIM
`KHAN
`
`INTRODUCTION
`In this copyright infringement action, plaintiffs move for default judgment, a permanent
`injunction, and statutory damages against pro se defendants. For the reasons stated below,
`plaintiffs’ motion is GRANTED IN PART against defendant Asim Khan.
`STATEMENT
`Plaintiffs Sanrio, Inc., Disney Enterprises, Inc., and DC Comics, are corporations and
`partnerships that own copyrights and trademarks to popular designs such as Hello Kitty, Mickey
`Mouse, Minnie Mouse, Tinker Bell, and Superman (Compl. ¶¶ 4–40, Exhs. A–F). Defendant
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`Case3:12-cv-01038-WHA Document27 Filed09/20/12 Page2 of 7
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`Kumar Lalwani, an individual, resides in Santa Clara County. Defendant Asim Khan, an
`individual, resides in San Jose County. As alleged, defendants Lalwani and Khan did (and still
`do) business as Ali Jewelry — also known as Hira Jewelry and Deena’s Jewelry — through two
`mall kiosks, one in Milpitas and another in San Jose (Compl. ¶¶ 41–42). The complaint alleges
`that Messrs. Lalwani and Khan jointly operated two retail locations: mall kiosks in Milpitas and
`San Jose. At the recent hearing on plaintiffs’ motion for default judgment, however, defendant
`Lalwani represented to the Court that the defendants did not operate a joint business. Defendant
`Khan was not present at the hearing to affirm or deny.
`Plaintiffs allege that “defendants are engaged in the manufacture, importation,
`distribution, promotion, sale and offer for sale of jewelry, charms, personal accessories, decals
`and other merchandise, at multiple locations, which incorporate unauthorized likenesses of
`animated characters or other logos owned by Plaintiffs, including but not necessarily limited to,
`Hello Kitty, Mickey Mouse, Minnie Mouse and the Superman ‘S’ in Shield Logo” (Compl. ¶ 3).
`Defendants were not licensed by plaintiffs to manufacture, import, distribute, sell or offer for
`sale the infringing products (Compl. ¶ 44). After plaintiffs discovered that counterfeit products
`bearing plaintiffs’ copyrights and trademarks were being sold by defendants, plaintiffs retained
`the services of private investigators to develop background facts regarding defendants’ actions
`(see Holdridge Decl. ¶¶ 1–12). In particular, the private investigators reported that the Ali
`Jewelry kiosk in San Jose sold Mickey and Minnie Mouse pendants, a Sanrio Hello Kitty tongue
`ring and earrings, and one pair of Superman earrings (Holdridge Decl. ¶ 6). The private
`investigators also discovered that defendant Khan was the owner of the kiosk in San Jose
`(Holdridge Decl. ¶ 11). The investigators also noted “numerous [other] counterfeit jewelry
`products on display” at the San Jose kiosk (Holdridge Decl. ¶¶ 5, 11).
`This action was filed on March 1, 2012. On March 28 and 29, defendants were
`personally served with the complaint and summons (Dkt. Nos. 11, 12, 14, 15). Defendant Khan
`was served at the mall kiosk in San Jose. Defendants have failed to file any responsive pleading
`in this action. Default was entered against both defendants in May 2012. Notice of default was
`served on defendants (Wang Decl. ¶ 5). In July, plaintiffs moved for default judgment. The
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`notice and motion papers were served on defendants in July (Dkt. No. 20-1 at 17). While
`defendants have not filed an opposition, they made an appearance with the Court on August 20,
`when all parties filed a joint request to continue the hearing on the motion for default judgment
`(Dkt. No. 22). That request was granted and the hearing was moved to September 20, 2012.
`Defendants were served with the order scheduling the motion hearing weeks in advance of the
`hearing (Dkt. No. 22-1). Only defendant Kumar Lalwani and plaintiffs appeared at the
`September 20 hearing. Defendant Khan failed to appear. Defendant Khan still has not filed an
`opposition to the motion for default judgment. Nor has he moved to set aside the entry of default
`against him.
`In its motion for default judgment, plaintiffs seek statutory damages of $125,000 from
`both defendants collectively. Plaintiffs also seek entry of a permanent injunction prohibiting
`defendants and their representatives from further infringement of plaintiffs’ copyrights.
`ANALYSIS
`
`DEFAULT JUDGMENT.
`1.
`Under FRCP 55(b)(2), a plaintiff can apply to the district court for a default judgment
`against a defendant that has failed to otherwise plead or defend against the action. Default
`judgments are generally disfavored as “cases should be decided upon their merits whenever
`reasonably possible.” Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). In the Ninth
`Circuit, a district court must consider the following factors when deciding whether or not to use
`its discretion in granting a motion for default judgment: (1) the possibility of prejudice to the
`plaintiff; (2) the merits of plaintiffs’ 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 strong policy underlying the
`Federal Rules of Civil Procedure favoring decisions on the merits. Id. at 1471-72. Only contacts
`with the Court or plaintiffs that demonstrate a “clear purpose to defend” the action are
`considered appearances for purposes of FRCP 55(b)(2). In re Roxford Foods, Inc., 12 F.3d 875,
`879 (9th Cir. 1993).
`Because defendant Lalwani appeared at the recent hearing on plaintiffs’ motion for
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`default judgment, the motion against him will be held in abeyance. This order only addresses
`default judgment against defendant Khan, who did not appear at the recent hearing and has not
`filed any responsive pleadings.
`A.
`MERITS AND SUFFICIENCY OF THE COMPLAINT.
`After an entry of default, well-pled allegations in the complaint are deemed true, except
`for the amount of damages. Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002).
`The merits of plaintiffs’ substantive claims and sufficiency of the complaint are thus considered
`together. Plaintiffs claim that defendant Khan infringed upon several of their copyrights and
`trademarks. In order to state a claim for copyright infringement, plaintiffs must show: (1) that
`they own a valid copyright in the allegedly infringed material, and (2) that defendant Khan
`violated an exclusive right granted to the copyright owner. The exclusive rights of the copyright
`owner are enumerated in Section 106 and include the right to reproduce and distribute the
`copyrighted work. 17 U.S.C. 106(1), (3). To prevail on a claim of trademark infringement,
`plaintiffs must prove that: (1) they own the rights to a valid trademark and (2) that defendant
`Khan’s use of the mark in interstate commerce is likely to cause consumer confusion. KP
`Permanent Make-Up Inc., v. Lasting Impression I, Inc., 408 F.3d 596, 602 (9th Cir. 2005).
`Here, the complaint alleges that defendant Khan was involved in the willful sale of
`infringing goods at multiple locations, copied from plaintiffs’ copyrights and trademarks. The
`copies were virtually identical to the copyrighted and trademarked designs (see Dkt. No. 20 at
`Exhs. A–J). These designs and marks have built up consumer recognition and loyalty. By
`selling unlicensed versions of these designs, defendant Khan has deceived the public as to the
`source and sponsorship of their products. Taking these well-pled allegations as true, plaintiffs
`sufficiently plead the elements necessary to establish that defendant Khan infringed upon their
`copyrights and trademarks.
`B.
`REMAINING FACTORS.
`This order finds that the remaining Eitel factors likewise favor entry of default judgment
`against defendant Khan.
`First, plaintiffs will be prejudiced if default judgment is not granted. If default judgment
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`is not granted, plaintiffs will be denied the right to adjudicate their claims and defendant Khan’s
`conduct will remain unimpeded. Defendant Khan is aware of this action and have been given a
`fair opportunity to properly adjudicate this case before a district judge, yet he has chosen not to
`participate. Consequently, plaintiffs have no other option but to seek default judgment as
`defendant Khan is unwilling to appear. Second, based on the record, there does not appear to be
`a factual dispute between defendant Khan and plaintiffs regarding the nature of his business
`activities, at least with respect to the San Jose kiosk. Third, there is nothing excusable in regards
`to defendant Khan’s actions. He was properly served with the complaint and motion for default
`judgment but did not properly file an answer or opposition. Fourth, although federal policy
`favors decisions on the merits, the circumstances surrounding this case indicate that default
`judgment under FRCP 55(b) is proper. FRCP 55(b) allows the entry of default judgment in
`situations such as this, where the defendant has refused to litigate. See Microsoft Corp. v.
`Ricketts, 2007 WL 1520965 at *3 (N.D. Cal. 2007) (Alsup, J.). Lastly, plaintiffs seek an award
`of $125,000 for defendants’ willful copyright and trademark counterfeiting. Generally, the fact
`that a large sum of money is at stake disfavors default judgment. Eitel, 782 F.2d at 1472. As
`described below, however, the statutory damages will be adjusted according to the evidence in
`the record.
`STATUTORY DAMAGES.
`2.
`Under copyright law, a plaintiff may elect to recover an award of statutory damages. 17
`U.S.C. 504(c)(1). A court, in its discretion, can award not less than $750 but not more than
`$30,000 per copyright infringed. Enhanced damages of up to $150,000 per copyright infringed
`may be granted on a finding of willful infringement. 17 U.S.C. 504(c)(2). “Statutory damages
`are intended to serve as a deterrent, but that does not justify such a windfall.” Microsoft Corp. v.
`Ricketts, 2007 WL 1520965, at *4 (N.D. Cal. 2007) (Alsup, J.).
`Plaintiffs allege that defendant Khan’s infringement was willful. Allegations of willful
`infringement are deemed to be true on default. See Derek Andrew, Inc. v. Poof Apparel Corp.,
`528 F.3d 696, 702 (9th Cir. 2008). Moreover, there is evidence in the record that defendant
`Khan was notified of infringement before the filing of this action (Holdridge Decl ¶¶ 5–11; Dkt.
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`No. 20-3 at 2–4).
`Plaintiffs seek $25,000 for each copyrighted design for which they have appended
`evidence of infringement, specifically Hello Kitty, Mickey Mouse, Minnie Mouse, Tinker Bell,
`and the Superman “S” in shield logo for a total of $125,000 from both defendants, collectively.
`The evidence in the record, however, is insufficient to support statutory damages for these five
`copyrights. There is only evidence in the record that defendant Khan operated the mall kiosk in
`Eastridge Mall in San Jose. There is insufficient evidence that defendant Khan operated other
`retail locations. Indeed, defendant Lalwani, who appeared at the default hearing, represented to
`the Court that he and Mr. Khan did not jointly operate the kiosk in Milpitas, even though both
`kiosks shared the same name. There is only evidence that copies of the Mickey Mouse, Minnie
`Mouse, Hello Kitty, and Superman designs were sold in the San Jose kiosk (Holdridge Decl.
`¶ 6). There is no evidence that a Tinker Bell product was sold.
`Furthermore, this order only grants default judgment against defendant Khan and not
`defendant Lalwani. Accordingly, this order awards statutory damages of $50,000 against
`defendant Khan. In addition, post-judgment interest is awarded and shall be recoverable on all
`aspects of the judgment including the amounts awarded for damages, prejudgment interest,
`attorney’s fees and costs. Air Separation, Inc. v. Underwriters at Lloyd’s of London, 45 F.3d
`288, 290–91 (9th Cir. 1995). Interest will begin to accrue on the date judgment is entered at the
`applicable statutory rate. 28 U.S.C. 1961(a).
`These damages, coupled with a permanent injunction, discussed below, will adequately
`serve the purpose of deterrence and punishment for willful infringement.
`PERMANENT INJUNCTION.
`3.
`Plaintiffs first seek a permanent injunction to prevent future infringement of their
`copyrights. Under 17 U.S.C. 502, a court may enter an injunction against a defendant to prevent
`future copyright infringement. In order to receive injunctive relief, a plaintiff must demonstrate:
`(1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to
`compensate for that injury; (3) that, considering the balance of hardships between the plaintiff
`and defendant, a remedy in equity is warranted; and (4) that the public interest would not be
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`disserved by a permanent injunction. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391
`(2006). As alleged, defendant Khan has willfully infringed plaintiffs’ copyrights and
`trademarks. Plaintiffs have pled that, based on past practices of ignoring notices and refusing to
`surrender infringing products, defendant Khan will continue to infringe unless an injunction is
`imposed (Compl. ¶ 44; Holdridge Decl. ¶¶ 9–11). Plaintiffs have also pled irreparable harm
`(Compl. ¶ 49). Public interest would not be disserved by enjoining unlicensed copies of
`copyrighted designs. Therefore, a permanent injunction will be entered.
`CONCLUSION
`For all of the above-stated reasons, plaintiffs’ motion for entry of default judgment is
`GRANTED as follows: defendant Khan is ordered to pay damages of $12,500 to Sanrio, $25,000
`to Disney, and $12,500 to DC Comics. Defendant Khan is also ordered to pay interest pursuant
`to 28 U.S.C. 1961(a).
`Furthermore, defendant Khan and his agents, servants, employees and all persons in
`active concert and participation with them who receive actual notice of the injunction are hereby
`restrained and enjoined from importing, advertising, displaying, promoting, marketing,
`distributing, providing, offering for sale and selling of products that picture, reproduce, copy or
`use the likenesses of or bear a substantial similarity to the designs registered in the following
`copyright registrations: Mickey-1 (VA 58-937), Minnie-1 (VA 58-938), Peter Pan (RE 64-027),
`Superman Style Guide (TX 3-221-758), and Hello Kitty (VA 130-420).
`Plaintiffs have the responsibility to serve the injunction in such a manner to make it
`operative in contempt proceedings.
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`IT IS SO ORDERED.
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`Dated: September 20, 2012
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`
`WILLIAM ALSUP
`UNITED STATES DISTRICT JUDGE
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