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Montblanc-Simplo GmbH v. Ilnitskiy

United States District Court, E.D. Virginia, Alexandria Division

January 25, 2018

MONTBLANC-SIMPLO GMBH, Plaintiff,
v.
MIROSLAV ILNITSKIY, Defendant.

          REPORT AND RECOMMENDATION

          Theresa Carroll Buchanan United States Magistrate Judge.

         This matter comes before the Court on Plaintiff's Motion for Default Judgment (Dkt. 39). After a representative for Defendant failed to respond to Plaintiff's Motion or to appear at the hearing on December 22, 2017, the undersigned U.S. Magistrate Judge took the matter under advisement.[1] For the reasons stated below, the undersigned now recommends that Plaintiff's Motion for Default Judgment be GRANTED.

         I. INTRODUCTION

         A. Background

         On April 6, 2017, Montblanc-Simplo GmbH ("Plaintiff") filed this lawsuit, and subsequently, on September 7, 2017, added Miroslav Ilnitskiy ("Defendant") as a defendant in its First Amended Verified Complaint (Dkt. 24). Plaintiff's suit against Defendant involves allegations of trademark infringement and trademark counterfeiting in violation of the Lanham Act, 15 U.S.C. § 1114(1), and copyright infringement in violation of the Copyright Act, 17 U.S.C. § 501. (Am. Compl. ¶¶ 10, 79, 85, 96.)[2]Plaintiff alleges that Defendant has improperly used Plaintiff's trademarks and copyrighted works without permission to promote and sell counterfeit products on the Internet. (Mem. Supp. Default J. at 1.) Plaintiff now seeks default judgment against Defendant and requests permanent injunctive relief and statutory damages. (Id. at 1-2.)

         B. Jurisdiction and Venue

         The Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1338(a), because this action involves federal questions arising under the Lanham Act and the Copyright Act, which are federal laws relating to trademarks and copyrights. (Am. Compl. ¶¶ 10-11.)

         This Court has personal jurisdiction over Defendant pursuant to the Virginia Long-Arm Statute, Va. Code § 8.01-328.1. For personal jurisdiction over a defendant, the standards of both federal due process and the forum state's long-arm statute and must be satisfied. See Tire Eng'g & Distrib., LLC v. Shandong Linglong Rubber Co., 682 F.3d 292, 301 (4th Cir. 2012). Federal due process permits personal jurisdiction where a defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The Virginia Long-Arm Statute "extends the jurisdiction of its courts as far as federal due process permits." ePlus Tech., Inc. v. Aboud, 313 F.3d 166, 176 (4th Cir. 2002). With federal due process and the Virginia Long-Arm Statute requiring the same standards, essentially only one personal jurisdiction inquiry is required. See id.

         Personal jurisdiction can exist over a nonresident defendant based on that defendant's Internet contacts with the forum. A state may exercise personal jurisdiction over a nonresident defendant when that defendant "(1) directs electronic activity into the State, (2) with the manifested intent of engaging in business or other interactions within the State, and (3) that activity creates, in a person within the State, a potential cause of action cognizable in the State's courts." ALS Scan, Inc. v. Dig. Serv. Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002). However, a state may not exercise personal jurisdiction over a nonresident defendant when that defendant engages in "passive Internet activity'' such as "simply plac[ing] information on the Internet." Id.

         Though Defendant is not a resident of Virginia, Virginia may exercise personal jurisdiction over Defendant based on Defendant's Internet contacts. Defendant set up an interactive e-commerce website and social media accounts accessible to Virginia residents. (Am. Compl. ¶ 51.) Defendant used his websites and accounts to individually communicate with, receive payment from, and ship counterfeit products to at least one customer in Virginia. (Id. ¶¶ 53-54.) Therefore, Defendant directed electronic activity into Virginia with the intent to engage in business and other interactions, and such activity created potential causes of action.

         Venue is proper in this District pursuant to 28 U.S.C. § 1391(b)(2), because a substantial part of the events giving rise to the claims against Defendant occurred in this District. (Id. ¶ 16.)

         C. Service of Process

         Service of process has been proper in this action. Federal Rule of Civil Procedure 4(f)(3) allows service on individuals in a foreign country "by other means not prohibited by international agreement, as the court orders." However, any court-ordered method of service of process allowed by Rule 4(f)(3) must still comply with constitutional due process, meaning that a court "must approve a method of service that is 'reasonably calculated' to give notice to defendant.'' BP Prods. N. Am., Inc. v. Dagra, 232 F.R.D. 263, 264 (E.D. Va. 2005) (citation omitted). Service of process through electronic and online communications, such as email and social networking messages, generally satisfy constitutional due process. See WhosHere, Inc. v. Orun, No. 1:13-cv-00526-AJT-TRJ, 2014 WL 670817, at *3 (Feb. 20, 2014).

         On September 26, 2017, Plaintiff filed its Motion for Service by Publication and Email (Dkt. 27). On September 27, 2017, the Court granted Plaintiff's Motion through an Order (Dkt. 30) (the "September 27th Order"), which required Plaintiff to complete service of process by publishing the Court's September 27th Order in The Washington Post or The Washington Times within fourteen days and by sending the September 27th Order to Defendant's eight previously used email addresses. The Court determined then, and reaffirms now, that such service of process was reasonably calculated to give notice to Defendant. Plaintiff complied by emailing copies of the September 27th Order to Defendant's email addresses on October 3, 2017, and by publishing a copy of the September 27th Order in The Washington Times on October 5, 2017. (Weslow Decl. ¶¶ 6, 8.)[3] Through its compliance with the court-ordered method of service of process that was reasonably calculated to give notice to Defendant, Plaintiff properly completed service of process for this action.

         D. Grounds for Default: Judgment

         To date, Defendant has not appeared or otherwise participated in these proceedings. The Court's September 27th Order, which was sent to Defendant's eight email addresses and published in The Washington Times, stated that Defendant was to answer or respond to the lawsuit within twenty-one days after publication of the September 27th Order, and ''[i]f no appearance or pleading is filed as required by this Order, this Court may render a judgment against Defendant." The September 27th Order was published in The Washington Times on October 5, 2017, and no party responded on behalf of Defendant within twenty-one days, despite instruction to do so by the Court.

         On November 15, 2017, Plaintiff filed its Request for Clerk's Entry of Default (Dkt. 36), seeking an entry of default for Defendant. On November 16, 2017, the Clerk of the Court issued the Entry of Default (Dkt. 37) for Defendant. On December 1, 2017, Plaintiff filed its Motion for Default Judgment. The undersigned then held a hearing on Plaintiff's Motion on December 22, 2017, at which no representative for Defendant appeared. Finding the matter uncontested, the undersigned took the matter under advisement to issue this Report and Recommendation.

         II. FINDINGS OF FACT

         Upon a full review of the pleadings and the record in this case, the undersigned finds that Plaintiff has established the following facts.

         Plaintiff Montblanc-Simplo GmbH is a German corporation headquartered in Hamburg, Germany. (Am. Compl. ¶ 5.) Plaintiff is in the business of manufacturing, designing, branding, and selling sophisticated, high-quality products ("Montblanc Products") such as writing instruments, writing accessories, watches, leather goods and belts, jewelry, and eyewear. (Id. ¶¶ 2, 18.) Defendant Miroslav Ilnitskiy is an individual who has used various email addresses, websites, and social media accounts to promote and sell counterfeit Montblanc Products with the intent to profit from such promotion and sale. (Id. ¶¶ 9, 51, 68.)

         Plaintiff has manufactured, designed, and sold Montblanc Products since 1906, with its initial product being high-quality writing instruments. (Id. ¶ 18.) Plaintiff promotes Montblanc Products and its other services using formative marks including the word "Montblanc" and various other designs ("Montblanc Marks"). Montblanc Marks are famous and distinctive through the United States and the world. (Id. ¶ 23.) Plaintiff's Montblanc Products and their packaging display Montblanc Marks. (Id. ¶ 20.) Plaintiff also operates an Internet website through the domain name <montblanc.com>, through which it sells and advertises its Montblanc Products and displays Montblanc Marks. (Id. ¶¶ 19-20.) Plaintiff has common law rights in Montblanc Marks and has registered various Montblanc Marks as trademarks around the world, such as word marks and design marks, including registration with the Principal Trademark Register of the U.S. Patent and Trademark Office. (Id. ¶¶ 22, 24-27, Scheds. B-C.) Plaintiff also has copyrighted various original images and expressions ("Montblanc Works") for use in advertising Montblanc Products. (Id. ¶¶ 88, 90, Sched. D.) Plaintiff displays Montblanc Works on their website <montblanc.com> and in other advertising. (Id. ¶ 89.) In 2010 alone, Plaintiff's brand generated more than $780 million in total sales revenue worldwide. (Id. ¶ 21.)

         On August 17, 2015, using an alias, Defendant registered the domain name <montblancua.com> through a domain name registrar. (Id. ¶ 30.) After registration, <montblancua.com> was configured to replicate Plaintiff's genuine <montblanc.com> website, and <montblancua.com> displayed Montblanc Marks and Montblanc Works and promoted counterfeit Montblanc Products for sale. (Id. ¶¶ 31-32.) The email addresses <mbformens@gmail.com>, <miroslav.ilnitskiy@gmail.com>, <ilnitskiy.miroslav@gmail.com>, and <miroshandmade@gmail.com> (the "'Subject Email Addresses") were associated with the sale of counterfeit products through <montblancua.com> and were accessed primarily from IP addresses in Ukraine. (Id. ¶¶ 34-35.) The email address <ilyas@ukr.net> was also associated with the Subject Email Addresses. (Id. ¶ 34.) Plaintiff's investigator purchased counterfeit products from <montblancua.com> and paid for the counterfeit products through a Paypal account associated with the email address <miroslav.itnitskiy@gmail.com>. (Id. ¶¶ 33, 36.) On around August 17, 2016, approximately one month after Plaintiff's investigator purchased the counterfeit products, <montblancua.com> was disabled.

         Between November 6, 2016 and December 6, 2016, Defendant registered the domain names <montblancpensoutletcheapsale.com>, <montblancpensoutletcheap.com>, and <montblancpensoutletcheaponsale.com> (the "Subject Domain Names"), using a privacy service that concealed his identity. (Id. ¶¶ 38, 41.) After registration, the Subject Domain Names were configured to replicate Plaintiff's genuine <montblanc.com> website, and the Subject Domain Names displayed replicas of Montblanc Marks and Montblanc Works and promoted counterfeit Montblanc Products for sale. (IcL ¶¶ 39-40, 42-43.) Defendant also used a webpage on the third-party webhosting platform <vk.com> (the "Vk.com Webpage") to display replicas of Montblanc Marks and Montblanc Works and promote counterfeit Montblanc Products for sale. (Id. ¶¶ 49-50.)

         Defendant operated nine Instagram accounts with the following usernames: m7-montblanc, zekta-montblanc, adaam.fmontblanc, ladonmontblanc, filidam-montblanc, light-montblanc, dimoncheg-montblanc, mjt-montblanc, and amira-montblanc (the "Subject Instagram Accounts'') . (Id. ¶¶ 44-45.) The Subject Instagram Accounts displayed replicas of Montblanc Marks and Montblanc Works and promoted counterfeit Montblanc Products for sale. (Id. ¶¶ 44, 47-48.) The Subject Instagram Accounts were associated with free email accounts from Internet service providers based in Russia and Ukraine, and the Instagram accounts were accessed primarily from IP addresses located in Ukraine. (Id. ¶ 46.) Plaintiff's investigator purchased a counterfeit product that was advertised on the Subject Instagram Accounts by communicating with Defendant via Defendant's email address <mbformens@gmail.com>. (Id. ¶¶ 52-53.) Defendant requested and received payment for the counterfeit product through a Paypal account associated with the email address <miroslav.ilnitskiy@gmail.com>. (Id. ¶ 53.) Defendant shipped the counterfeit product, which displayed replica Montblanc Marks, to this District. (Id. ¶¶ 54-55.)

         III. EVALUATION OF PLAINTIFF'S COMPLAINT

         When a defendant has defaulted, the well-pleaded allegations of facts set forth in the plaintiff s complaint are deemed admitted. JTH Tax, Inc. v. Grabert, 8 F.Supp.3d 731, 736 (E.D. Va. 2014) (citing Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001)). Before entering default judgment, however, the Court must evaluate the plaintiff's complaint against the standards of Federal Rule of Civil Procedure 12(b)(6) to ensure that the complaint properly states a claim. GlobalSantaFe Corp. v. Globalsantafe.com, 250 F.Supp.2d 610, 612 n.3 (E.D. Va. 2003). As such, it is appropriate to evaluate Plaintiff's trademark infringement, trademark counterfeiting, and copyright infringement claims in its Complaint (Dkt. 1) against the standards of Federal Rule of Civil Procedure 12(b)(6).

         A. Trademark Infringement Under -the Lanham Act

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plaintiff alleges a claim of trademark infringement in violation of the Lanham Act, 15 U.S.C. &sect; 1114(1). The Lanham Act prohibits the use of a colorable imitation of a registered mark in connection with the distribution of goods and services where such use is likely to cause confusion or to deceive. 15 U.S.C. &sect; 1114(1). For a claim of trademark infringement, a plaintiff must show that: (1) it has a valid trademark; (2) the trademark is protectable; and (3) the defendant&#39;s use of a colorable imitation of the trademark is likely to cause confusion among consumers. Synergistic Int'l, LLC v. ...


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