United States District Court, E.D. Virginia, Alexandria Division
REPORT & RECOMMENDATION
Michael S. Nachmanoff United States Magistrate Judge.
matter comes before the Court on plaintiffs Volvo Car
Corporation's (“Volvo Car”) and Volvo
Trademark Holding AB's (“Volvo Trademark
Holding”) (collectively, “plaintiffs”)
Motion for Entry of Default Judgment (Dkt. No. 72). Having
reviewed the record and the pleadings, the undersigned
Magistrate Judge recommends entering default judgment in
plaintiffs' favor for the reasons that follow.
August 7, 2018, plaintiffs filed a Complaint against the
Unincorporated Associations Identified in Schedule A to the
Complaint (collectively, “defendants”) alleging
various claims of trademark infringement based on
defendants' unauthorized use of counterfeit imitations of
plaintiffs' federally-registered trademarks in connection
with the sale, offering for sale, distribution, and/or
advertising of infringing goods (Dkt. No. 1). Specifically,
the Complaint alleges three counts against defendants,
including: Trademark Infringement and Counterfeiting under
Section 32 of the Lanham Act, 15 U.S.C. § 1114, for
“selling, offering to sell, marketing, distributing,
and advertising products using counterfeit
reproductions” of plaintiffs' trademarks without
plaintiffs' permission, ” Compl. (Dkt. No. 1)
¶¶ 32-38; False Designation of Origin under Section
43 of the Lanham Act, 15 U.S.C. § 1125(a), for
“promoting, marketing, offering for sale, and
sale” of counterfeit reproductions of plaintiffs'
trademarks that created a likelihood of confusion, mistake,
and deception among the general public as to the affiliation,
connection, or association with plaintiffs or the origin,
sponsorship, or approval of defendants' counterfeit
products, id. at ¶¶ 39-43; and Trademark
Dilution under Section 43 of the Lanham Act, 15 U.S.C. §
1125(c), for willfully and intentionally using
plaintiffs' trademarks in connection with the
advertisement, promotion, and sale of defendants'
products, id. at ¶¶ 44-53.
Complaint, plaintiffs seek the following relief: an order
temporarily, preliminarily, and permanently enjoining and
restraining defendants from engaging in their alleged
unlawful conduct, id. at A; an order requiring
third-parties in privity with defendants-including online
marketplace platforms, web hosts, sponsored search engines or
ad-word providers, credit cards, banks, merchant account
providers, payment processing service providers, and internet
search engines-to disable and cease providing services being
used by defendants to engage in the sale of goods using
plaintiffs' trademarks and displaying any advertisements
used by defendants in connection with the sale of counterfeit
and infringing goods using plaintiffs' trademarks,
id. at B; an order requiring defendants to account
for, or to pay plaintiffs, all profits realized by defendants
arising from their unlawful conduct and that the amount of
damages for infringing plaintiffs' trademarks be
increased by a sum not exceeding three times the amount as
provided under 15 U.S.C. § 1117, id. at C; in
the alternative, an award of statutory damages for willful
trademark counterfeiting under 15 U.S.C. § 1117(c)(2) of
$2, 000, 000.00 for each and every use of plaintiffs'
trademarks and $4, 000, 000.00 for those defendants that sell
counterfeit goods, id. at D; and an award for
reasonable attorneys' fees and costs, id. at E,
among other relief the Court deems just and proper,
id. at F.
August 8, 2019, plaintiffs filed a Motion for Order
Authorizing Service of Process By Email because plaintiffs
were unable to determine defendants' identities and
actual physical locations due to defendants actively
concealing their real identities and physical addresses (Dkt.
No. 14); however, plaintiffs verified that defendants conduct
foreign business via known email addresses and requested to
serve defendants via those email addresses, id. The
Court granted plaintiffs' motion on August 31, 2018 (Dkt.
No. 26). On October 19, 2018, plaintiffs filed a Notice of
Service of Defendants by Email stating that on October 17,
2018, plaintiffs emailed defendants a copy of the Verified
Complaint, the individual defendant's summons, and the
Court's August 31, 2018 Order to all defendants. Daniel
S. Block Declr. (Dkt. No. 60) ¶¶ 4-5.
August 9, 2018, plaintiffs filed an Ex Parte Motion
for Temporary Asset Restraint and Expedited Discovery
requesting the Court to issue a Temporary Restraining Order
(“TRO”) freezing the assets of defendants'
PayPal and AliPay accounts, restraining and enjoining the
transfer of any monies held in such accounts, and to permit
limited expedited discovery directed to PayPal, AliPay, and
eBay to determine defendants' identity, the amount and
location of the profits of defendants' counterfeiting and
infringement, and the scope of defendants' activities
(Dkt. No. 11). The Court granted plaintiffs' motion on
August 31, 2018 (Dkt. Nos. 25). On September 11, 2018, plaintiffs
filed an Ex Parte Motion to Extend the Temporary
Restraining Order until September 28, 2018 because AliPay had
failed to freeze any of defendants' accounts, but was
working diligently to effectuate the TRO (Dkt. No. 27). The
Court granted the motion on September 12, 2018 (Dkt. No. 33).
On September 26, 2018, plaintiffs moved for a Second Ex
Parte Motion to Extend the Temporary Restraining Order
until October 5, 2018 because AliPay still had not completed
effectuating the TRO (Dkt. No. 37), which the Court granted
on September 27, 2018 (Dkt. No. 41). On October 4, 2018,
plaintiffs filed an Entry of a Preliminary Injunction seeking
to freeze defendants' PayPal and Alipay accounts and to
restrain and enjoin those accounts from transferring monies
(Dkt. No. 42), which the Court granted that same day (Dkt.
October 12, 2018, plaintiffs filed a Notice of Dismissal
Under Rule 41(a)(1) seeking to dismiss the following
defendants without prejudice: dkyang0753; fuwangwang105;
manzhi881; shengyihonghonghuohuo17; xinlong199; xiyouji002;
yypbws; gadgetsstorenet; sunnysportsfun; shinianzhien-5;
fengguang2015; and nastyaangel247 (Dkt. No. 52). The Court
granted the notice that same day (Dkt. No. 54). On October
26, 2018, plaintiffs filed a Notice of Agreed Stipulated
Dismissal with Prejudice as to Certain Defendants because the
following defendants agreed to terms and conditions
representing a negotiated settlement of this action:
andy.vipseller; kakeymall; surefa.yang;
betterdeal2015; sprjiji3; xautoparts; and globaldrive (Dkt.
No. 62). The Court granted plaintiffs' notice on October
29, 2018 (Dkt No. 64). On November 26, 2018, plaintiffs filed
a second Notice of Dismissal Under Rule 41(a)(1) seeking to
dismiss the following defendants without prejudice:
Shop3109041 Store; Decoration My Car Store; and Car
Accessories A Store (Dkt. No. 66). The Court granted this
notice on November 27, 2018 (Dkt. No. 70).
November 26, 2018, plaintiffs filed a Request for Clerk's
Entry of Default (Dkt. No. 67), which the Clerk of Court
entered on November 27, 2018 (Dkt. No. 69). On December 3,
2018, plaintiffs filed a Motion for Entry of Default Judgment
(Dkt. No. 72), along with a Memorandum in Support of
Plaintiffs' Motion for Entry of Default Judgment (Dkt.
No. 73) and Notice of Hearing for December 14, 2018 (Dkt. No.
74), against the remaining defendants. See
Appendix A (listing defendants). Specifically, plaintiffs
seek an order permanently enjoining defendants from making,
using, selling or offering for sale unauthorized products
containing plaintiffs' trademarks, Pls. Proposed Order
(Dkt. No. 72-1) 1; a monetary judgment of $4, 000,
00.00 for infringing plaintiffs' trademarks,
id.; an order requiring PayPal and Alipay to release
plaintiffs' monies currently restrained in
defendants' financial accounts as partial payment of the
monetary judgment, id. at 1-2; and an order that
until plaintiffs have recovered full payments of the monetary
judgment, plaintiffs shall have an ongoing authority to serve
a court order on PayPal or Alipay in the event that any new
accounts controlled or operated by defendants are opened,
among other instructions id. at 2. On December 14,
2018, counsel for plaintiffs appeared at the hearing on
plaintiffs' Motion for Entry of Default Judgment before
the undersigned and no claimant appeared on behalf of
defendants (Dkt. No. 76). Accordingly, the motion is ripe for
Car and Volvo Trademark Holding are corporations organized
under Swedish law and have principal places of business in
Gothenburg, Sweden. Compl. (Dkt. No. 1) ¶¶ 5-6.
Volvo Car is a world-famous automobile manufacturer that
sells Volvo automobiles, genuine parts, and accessories (the
“Volvo Car Products”) through a network of
licensed Volvo Car dealerships throughout the United States.
Id. at ¶ 8. The Volvo brand is one of the most
well-recognized brands in the world. Id. at ¶
9. For example, consumers have long associated the Volvo
brand with “automobile safety” as evidenced in
Consumer Reports that stated that “the Volvo brand is
the ‘single, clear choice' for consumers that care
about safety in automobiles, and that it ‘will be a
challenge for [competing] automakers to close the gap with
Volvo' to change perceptions of consumers with respect to
Volvo brand and safety.” Id. Moreover, Brand
Finance, a global brand valuation consultancy, recently
ranked Volvo in the top 500 brands globally. Id.
are the owners of numerous federally-registered trademarks
for automobiles, parts, accessories, and a long list of
related services and merchandise (the
“Trademarks”). Id. at ¶ 10. The
Trademarks are valid, subsisting, in full force and effect,
and many are incontestable pursuant to 15 U.S.C. § 1065.
Id. at ¶ 11. Pursuant to an agreement with
Volvo Trademark Holding, Volvo Car can “police and
enforce” plaintiffs' trademarks in the United
States. Id. at ¶ 7. Volvo Car incorporates
these distinctive Trademarks in the design of its vehicles,
vehicle parts, and vehicle accessories. Id.
Plaintiffs' Trademarks “have been used exclusively
and continuously by Volvo Car in relation to passenger cars
and related goods and services for over 50 years, and have
never been abandoned.” Id. Volvo Car spends
millions of dollars in advertising, promoting, and developing
plaintiffs' Trademarks and Volvo Car's trade dress,
including their distinctive and famous VOLVO Mark, throughout
the world. Id. at ¶ 15. Due to such advertising
expenditures and significant sales of Volvo Car's
products in the United States and internationally,
plaintiffs' Trademarks have come to symbolize the
brands' marketability, reputation, and goodwill.
Id. at ¶¶ 11, 15.
are individuals and business entities who, on information and
belief, reside in China. Id. at ¶ 17.
Defendants have gone to great lengths to conceal their
identities and often use multiple fictitious names, business
names, and addresses to register and operate their network of
internet stores. Id. at ¶¶ 18, 27.
Defendants further attempt to conceal their identity by
regularly creating new websites and online marketplace
accounts on various platforms as well as other unknown
fictitious names and addresses. Id. at ¶ 27.
Defendants operate in online marketplaces, including eBay,
Alibaba, and AliExpress, by selling thousands of counterfeit
goods bearing plaintiffs' Trademarks at substantially
lower prices than genuine Volvo Car Products. Id. at
¶¶ 12, 17. Many of defendants' counterfeit
goods were stamped with genuine Volvo Car product numbers and
the online listings stated the goods were intended to fit
original Volvo Car automobiles. Id. at ¶ 20. In
July 2018, plaintiffs reviewed the offerings from each of
defendants' internet stores on eBay and AliExpress and
confirmed that defendants were in fact selling counterfeit
Volvo Car Products. Id. at ¶ 20, 24.
facilitate their sales by designing internet stores that
appear to be authorized online retailers, outlet stores, or
wholesalers. Id. at ¶ 25. Defendants
“further perpetuate the illusion of legitimacy by
purporting to offer ‘customer service' and using
indicia of authenticity and security that consumers have come
to associate with retailers, including the Visa®,
MasterCard®, AliPay®, and/or PayPal®
logos.” Id. Defendants also deceive consumers
by using plaintiffs' Trademarks without authorization
within the content, text, and/or meta tags of their websites
to attract various search engines looking for websites
relevant to consumer searches for Volvo Car Products.
Id. at ¶ 26. Moreover, defendants use
plaintiffs' Trademarks in product images while using
strategic item titles and descriptions that will trigger
their listings when consumers are searching for Volvo Car
Products. Id. Accordingly, defendants, without any
authorization or license from plaintiffs, have knowingly and
willfully used and continue to use plaintiffs' Trademarks
in connection with the advertisement, distribution, offering
for sale, and sale of counterfeit Volvo Car Products into the
United States and over the internet. Id. at ¶
30. Defendants' conduct is likely to “cause and has
caused confusion, mistake, and deception by and among
consumers and irreparably harming [p]laintiffs.”
Id. at ¶ 31.
Jurisdiction, Venue, and Service of Process
must have both subject matter and personal jurisdiction over
a defaulting defendant before it can render a default
judgment. The court has original subject matter jurisdiction
under 15 U.S.C. § 1121(a) and 28 U.S.C. §§
1331, 1338(a)-(b) because this action arises under federal
law, the Lanham Act. Because defendants' contacts to
Virginia are also the basis for the civil action, specific
personal jurisdiction is the appropriate standard. See
ALS Scan, Inc. v. Dig. Serv. Consultants, Inc., 293 F.3d
707, 712 (4th Cir. 2002). In determining specific
jurisdiction, courts consider “(1) the extent to which
the defendant ‘purposefully avail[ed]' itself of
the privilege of conducting activities in the State; (2)
whether the plaintiffs' claims arise out of those
activities directed at the State; and (3) whether the
exercise of personal jurisdiction would be constitutionally
‘reasonable.'” Id. (internal
satisfy each of these factors to establish specific personal
jurisdiction. First, defendants purposefully availed
themselves of conducting business in Virginia by seeking to
do business with Virginia's residents through operating
one or more commercial internet stores in which Virginia
residents can purchase counterfeit products, targeting sales
towards Virginia residents by operating online stores that
offer shipping to the state, and accepting payment in U.S.
dollars. See Compl. (Dkt. No. 1) ¶ 4. Second,
this civil action arises directly from defendants'
unauthorized and unlicensed sales of counterfeit products
directed at Virginia. Id. at ¶¶ 23-24.
Lastly, this Court's exercise of personal jurisdiction
over defendants would be constitutionally reasonable.
See, e.g., World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 292 (1980) (determining what is
constitutionally reasonably by looking at the burden on the
defendant, the forum state's interest in adjudicating the
dispute, the plaintiff's interest in obtaining convenient
and effective relief, and the interstate judicial
system's interest in obtaining the most effective
resolution of controversies). Based on the record, there is
no burden on defendants to litigate in this court given that
majority of them did not even respond to the Complaint.
Moreover, this court has an interest in adjudicating the
dispute because courts have a “valid interest in the
resolution of the grievances of its citizens and
businesses….” CFA Inst. v. Inst. of
Chartered Fin. Analysts of India, 551 F.3d 285, 297 (4th
Cir. 2009). Because defendants have engaged in such conduct
towards this judicial district, venue is also proper pursuant
to 28 U.S.C. § 1391.
have properly effectuated service on defendants. On August 9,
2018 plaintiffs filed a Motion for Order Authorizing Service
of Process By Email because plaintiffs verified that
defendants conduct foreign business via known email addresses
(Dkt. No. 14), which the Court granted on August 31, 2018
(Dkt. No. 26). On October 17, 2018, plaintiffs emailed
defendants the Verified Complaint, the individual
defendant's summons, and the Court's August 2018
Order in each service email. Daniel S. Block Declr. (Dkt. No.
60) ¶¶ 1-4. Plaintiffs believe that the emails were
delivered to all defendants except for three, including
Shop3109041 Store, Car Accessories A Store, and Decoration My
Car Store, id. at ¶ 5, who were later dismissed
from the action, see Dismissal (Dkt. No. 70) 1.
judgment is appropriate if the well-pleaded allegations of
the complaint establish that the plaintiff is entitled to
relief, and the defendant has failed to plead or defend
within the time frame set out in the rules. Fed.R.Civ.P. 55;
see also Agri-Supply Co. v. Agrisupply.com, 457
F.Supp.2d 660, 662 (E.D. Va. 2006). By defaulting, the
defendant admits the plaintiff's well-pleaded allegations
of fact, which then provide the basis for judgment. See
Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th
Cir. 2001) (quoting Nishimatsu Constr. Co. v. Houston
Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975));
Partington v. Am. Int'l Specialty Lines Ins.
Co., 443 F.3d 334, 341 (4th Cir. 2006). Nevertheless,
“‘[a] court confronted with a motion for default
judgment is required to exercise sound judicial discretion in
determining whether the judgment should be entered, and the
moving party is not entitled to default judgment as a matter
of right.'” ReadyCap Lending, LLC v.
Servicemaster Prof'l Cleaning, Inc., 2016 ...