Microsoft Corporation v. Nelson Gaspar Serratos et al, No. 2:2017cv07027 - Document 48 (C.D. Cal. 2019)
Court Description: ORDER GRANTING PLAINTIFFS MOTION FOR DEFAULT JUDGMENT 45 by Judge Otis D. Wright, II: The Court GRANTS Microsofts Motion for Default Judgment. (ECF No. 45.) The Court shall issue judgment. (pj)
Download PDF
<![CDATA[
Microsoft Corporation v. Nelson Gaspar Serratos et al Doc. 48 O 1 2 3 4 5 6 7 8 United States District Court Central District of California 9 10 11 12 MICROSOFT CORPORATION, a Washington corporation 13 15 16 ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT [45] Plaintiff, 14 Case No. 2:17-cv-07027-ODW(JPRx) v. OSCAR RIVERA and DOES 1-10, Defendants. 17 18 19 I. 20 INTRODUCTION 21 Presently before the Court is Plaintiff Microsoft Corporation’s Motion for 22 Default Judgment. (“Mot.,” ECF No. 45.) For the following reasons, the Court 23 GRANTS Microsoft’s Motion for Default Judgment and issues a permanent 24 injunction restraining Rivera’s infringement of Microsoft’s trademarks and 25 copyrights.1 26 27 28 After carefully considering the papers filed in connection with the Motion, the Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. 1 Dockets.Justia.com II. BACKGROUND 1 2 A. Factual Background 3 Microsoft is in the business of developing, advertising, marketing, distributing, 4 and licensing computer software programs. (Compl. ¶13, ECF No. 1.) Rivera, among 5 others, is alleged to have sold counterfeit Microsoft software and product activation 6 keys decoupled from the software they were authorized to activate. (Id. ¶ 27.) 7 Between November 10, 2016, and March 17, 2017, a Microsoft Corporation 8 investigator conducted three test purchases of Microsoft software subscriptions from 9 online marketplaces. (Id. ¶ ¶ 38, 46, 51.) The seller, “orz152,” was identified as 10 Rivera. (Id. ¶ 38.) The Microsoft investigator paid Rivera through PayPal. (Id. ¶¶ 38, 11 46, 51.) Rivera provided the Microsoft investigator with instructions for accessing 12 and installing the Microsoft software along with usernames, passwords, and product 13 keys. (Id. ¶¶ 39, 47.) 14 After each test purchase, the Microsoft investigator received parcels in the mail 15 bearing the return address of Rivera or one of his alleged co-conspirators. (Id. ¶¶ 40, 16 47, 54.) 17 subscription accounts and counterfeit Microsoft products. 18 Microsoft holds valid copyrights and trademarks on the products Rivera is alleged to 19 have illicitly distributed to the Microsoft investigator and Microsoft did not authorize 20 Rivera to distribute these products. (Id. ¶¶ 45, 50, 55, 60–62.) 21 22 The parcels enclosed DVDs containing usernames and passwords for (Id. ¶¶ 40, 49, 54.) As a result, Microsoft seeks injunctive relief against Rivera to prevent him from conducting his alleged fraud scheme. (Mot. 20–22.) 23 B. Procedural Background 24 Microsoft filed its Complaint on September 22, 2017. (Compl., ECF No. 1.) 25 Rivera was served personally pursuant to Fed. R. Civ. P. 4(e) on October 12, 2017. 26 (Proof of Service, ECF No. 19.) After Rivera’s failure to answer the Complaint, 27 Microsoft filed a Request to Enter Default against Rivera on January 23, 2018. (ECF 28 No. 30.) The Clerk entered default against Rivera on January 23, 2018. (ECF No. 2 1 34.) III. LEGAL STANDARD 2 3 Pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ. P.”) 55(b), a Court 4 may grant default judgment after the Clerk enters default under Rule 55(a). See 5 PepsiCo Inc., v. Cal. Security Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002). A 6 district court has discretion whether to enter default judgment. Aldabe v. Aldabe, 616 7 F.2d 1089, 1092 (9th Cir. 1980). In exercising its discretion, a court must consider 8 several factors, including: the possibility of prejudice to plaintiff; the merits of 9 plaintiff’s substantive claim; the sufficiency of the complaint; the sum of money at 10 stake; the possibility of a dispute concerning material facts; whether the defendant’s 11 default was due to excusable neglect; and the strong policy underlying the Federal 12 Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 13 1470, 1471–72 (9th Cir. 1986). 14 Upon default, the defendant’s liability generally is conclusively established, and 15 the well-pleaded factual allegations in the complaint are accepted as true. Televideo 16 Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–19 (9th Cir. 1987) (per curiam) (citing 17 Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977)). If the allegations 18 sufficiently establish liability, the court must then determine the “amount and 19 character” of the relief that should be awarded. Elektra Entm’t Grp. Inc. v. Crawford, 20 226 F.R.D. 388, 394 (C.D. Cal. 2005). IV. DISCUSSION 21 22 As a threshold matter, the Court must determine whether it has jurisdiction over 23 this proceeding before addressing if Microsoft has met the procedural requirements 24 for default judgment. The Court must then examine whether the Eitel factors weigh in 25 favor of granting default judgement before addressing the relief entitled to Microsoft, 26 if any. 27 A. Jurisdiction 28 Before addressing Microsoft’s request for entry of default judgment, the Court 3 1 must determine whether it has jurisdiction over the parties and the subject matter. In 2 re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). The Court may exercise subject matter 3 jurisdiction over the parties under 28 U.S.C. §§ 1331 and 1338 because Microsoft 4 alleges Rivera violated the Lanham Act and Copyright Act. (Compl. ¶ 8.) Since 5 Rivera was personally served in California, and is presently domiciled here, the Court 6 has personal jurisdiction over the parties. (Compl. ¶ 9.) Burnham v. Sup. Ct., 495 U.S. 7 619 (1990); Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) Consequently, the 8 Court’s jurisdiction is proper. 9 B. Procedural Requirements 10 Before a court can enter default judgment, the requesting party must satisfy the 11 procedural requirements set forth in Rule 55 of the Federal Rules of Civil Procedure, 12 as well as the Local Rules of this district. PepsiCo, 238 F. Supp. 2d at 1174. Central 13 District of California Local Rule 55–1 requires the movant to submit a declaration 14 establishing: (1) when and against whom the default was entered; (2) identification of 15 the pleading to which default was entered; (3) whether the defaulting party is a minor, 16 an incompetent person, or exempt under the Servicemembers’ Civil Relief Act; and 17 (4) that the defaulting party was served with notice, if required by Fed. R. Civ. P. 18 55(b)(2). Vogel v. Rite Aid Corp., 992 F. Supp. 2d 998, 1006 (C.D. Cal. 2014); C.D. 19 Cal. Local Rule 55-1. 20 In accordance with Fed. R. Civ. P. 55 and Local Rule 55-1, by declaration, 21 Microsoft’s attorney identified the Complaint and established that the Clerk of the 22 Court entered default against Rivera on January 23, 2018. (Decl. of James Harlan 23 Corning ¶ 6, ECF No. 42.) The Declaration further confirmed that Rivera is neither a 24 minor nor an incompetent person, nor is Rivera exempt under the Servicemember’s 25 Civil Relief Act. (Id. ¶ 7–8.) Finally, Microsoft provided the court with notice that 26 Rivera has not appeared in this action, and, as such, notice of default judgement is 27 unnecessary under Rule 55(b)(2), as referenced by Local Rule 55-1(e). (Id. ¶ 9.) 28 Accordingly, the Court finds that Microsoft complied with all the procedural 4 1 requirements. 2 C. Microsoft’s Motion for Default Judgment 3 The Court finds that the Eitel factors favor default judgment. The Court will 4 discuss each factor in turn. 1. First Eitel Factor: Microsoft Would Suffer Prejudice if Default is 5 Not Entered 6 7 The first Eitel factor considers whether Microsoft will suffer prejudice if default 8 judgment is not entered. PepsiCo, 238 F. Supp. 2d at 1177. When a defendant fails to 9 appear and defend their claims, the plaintiff would be without recourse and suffer 10 prejudice unless default judgment is entered. Id. 11 Here, Rivera failed to appear to contest this allegation. Without a default 12 judgment, Microsoft would be left without recourse and suffer prejudice for the 13 damages incurred as a result of Rivera’s conduct. Accordingly, the first Eitel factor 14 weighs in favor of granting default judgment. 15 2. Second and Third Eitel Factor: Microsoft’s Claims are Meritorious and Sufficiently Pleaded 16 17 18 The second and third Eitel factors address the merits and sufficiency of plaintiff’s claims pleaded in the complaint. Eitel, 782 F.2d at 1471–72. i. Copyright Infringement 19 20 Computer programs are “tangible mediums of expression” entitled to copyright 21 protection. Wall Data Inc. v. Los Angeles Cty. Sheriff's Dep't, 447 F.3d 769, 776 (9th 22 Cir. 2006) (quoting Apple Computer, Inc. v. Formula Int’l Inc., 725 F.2d 521, 524–25 23 (9th Cir. 1984)). To prove copyright infringement, Microsoft must establish “(1) 24 ownership of a valid copyright, and (2) copying of constituent elements of the work 25 that are original.” L.A. Printex Indus., Inc. v. Aeropostale, Inc., 676 F.3d 841, 846 26 (9th Cir. 2012) (citing Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 27 (1991). 28 5 1 Here, Microsoft presented a Certificate of Registration from the United States 2 Copyright Office demonstrating ownership of a valid copyright in Office 2016. 3 (Compl., Ex. 2.) Such a demonstration of ownership constitutes prima facie evidence 4 of the validity of the copyright. Lamps Plus, Inc. v. Seattle Lighting Fixture Co., 345 5 F.3d 1140, 1144 (9th Cir. 2003). Since Rivera has not appeared to rebut this showing, 6 the Court concludes that Microsoft owns a valid copyright in Office 2016. Further, it 7 is undisputed that Rivera copied Office 2016 to DVDs, which were then 8 impermissibly sold and delivered to the Microsoft investigator. (Id. ¶¶ 38–41, 46–55.) 9 Accordingly, Microsoft has sufficiently pleaded a meritorious copyright infringement 10 claim. ii. Contributory Copyright Infringement 11 12 To prevail on a claim of contributory copyright infringement, a plaintiff must 13 establish: (1) direct infringement; (2) that defendant had knowledge of the direct 14 infringement; and (3) that defendant intentionally induced, encouraged or materially 15 contributed to the direct infringement. See MGM Studios Inc. v. Grokster, Ltd., 545 16 U.S. 913, 930 (2005); see also A&M Records, Inc., 239 F.3d at 1019. 17 Here, it is undisputed that Rivera’s customers have unwittingly infringed 18 Microsoft’s copyrights by downloading and installing protected Microsoft software 19 without authorization or right under law. (Compl. ¶ 72; Mot. 16.) Further, Microsoft 20 has pleaded facts sufficient to support the conclusion that Rivera had knowledge of his 21 customers’ direct infringement. (Id. ¶¶ 38–41, 46–55.) Specifically, upon each test 22 purchase, Rivera directed the Microsoft investigator to download the file or provided 23 the Microsoft investigator with a link to download the file. (Compl. ¶¶ 38, 47, 52.) 24 Finally, it is undisputed that Rivera materially contributed to his customers’ direct 25 infringement. 26 decoupled product keys for Office 2016, which the Microsoft investigator used to 27 download and install Microsoft’s copyrighted software. (Id. ¶¶ 27, 38–41, 46–55.) 28 But for Rivera’s conduct, that infringement would not have occurred. Accordingly, (Id. ¶ 72.) Specifically, Rivera advertised, sold, and distributed 6 1 Microsoft has sufficiently pleaded a meritorious claim for contributory copyright 2 infringement. iii. Trademark Infringement 3 4 “To be liable for trademark infringement under the Lanham Act, a person must 5 (1) use in commerce (2) any word, false designation of origin, false or misleading 6 description, or representation of fact, which (3) is likely to cause confusion or 7 misrepresents the characteristics of his or another person’s goods or services.” 8 Freecycle Network, Inc. v. Oey, 505 F.3d 898, 902 (9th Cir. 2007); 15 U.S.C. § 9 1125(a)(1). Here, Rivera impermissibly advertised and sold counterfeit Microsoft products 10 11 on a “popular online marketplace.” 12 impermissibly used Microsoft trademarks to advertise and promote the sale of 13 counterfeit Microsoft products. (Id. ¶ 80; Mot. 17.) Finally, such a misleading use of 14 Microsoft trademarks would likely confuse customers into believing that they are 15 purchasing legitimate Microsoft products, which they are not. (Compl. ¶ 80; Mot. 16 17.) 17 trademark infringement. 18 19 20 21 22 23 24 25 (Compl. ¶¶ 38, 46, 51.) Further, Rivera Accordingly, Microsoft has sufficiently pleaded a meritorious claim for iv. False Designation of Origin The Lanham Act creates civil liability for [a]ny person who, on or in connection with any goods or services . . . uses in commerce any word . . . which . . . is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person. 15 U.S.C. § 1125(a)(1). 26 To prevail on its claim of false designation of origin, a plaintiff “must show that 27 1) [the defendant] made false or deceptive advertisements and representations to 28 customers; 2) those advertisements and representations actually deceived a significant 7 1 portion of the consuming public; and 3) [the plaintiff] was injured by [the defendant’s] 2 conduct.” William H. Morris Co. v. Grp. W, Inc., 66 F.3d 255, 257 (9th Cir. 1995). 3 Here, it is undisputed that Rivera advertised the counterfeit products as 4 authentic, licensed Microsoft software by using Microsoft’s name, marks, and visual 5 design. (Compl. ¶¶ 38, 46, 51, 87–88.) Further, actual confusion is presumed if the 6 plaintiff can prove the defendant intentionally deceived the consumers. Telecredit 7 Serv. Corp. v. Elec. Transaction Corp., 974 F.2d 1343 (9th Cir. 1992). 8 undisputed that Rivera intentionally engaged in his fraud scheme to deceive the 9 consuming public as to the authenticity of the Microsoft software. (Compl. ¶ 88.) 10 Consequently, Rivera has failed to rebut this presumption of actual confusion, so the 11 second element is satisfied. Finally, Microsoft has suffered injury “by way of diverted 12 sales and the dilution of its goodwill with its customers” because of Rivera’s false 13 advertising. (Mot. 18.) Accordingly, the Court finds that Microsoft has sufficiently 14 pleaded a meritorious claim for false designation of origin. 15 16 17 18 It is Accordingly, the second and third Eitel factors weigh in favor of granting default judgment. 3. Fourth Eitel Factor: The Sum of Money at Stake Weighs in Favor of Default Judgment 19 The fourth Eitel factor balances “the amount of money at stake in relation to the 20 seriousness of the [d]efendant’s conduct.” Pepsico, 238 F. Supp. 2d at 1176. Stated 21 otherwise, the Court is required to assess whether the recovery sought is proportional 22 to the harm caused by the Rivera’s conduct. 23 Enterprises, Inc., 725 F. Supp. 2d 916, 921 (C.D. Cal. 2010). Landstar Ranger, Inc. v. Parth 24 Here, Microsoft seeks narrowly tailored injunctive relief without monetary 25 damages. (Mot. 18.) Such relief is proportional to the harm caused because Plaintiff 26 only seeks to prevent Rivera from continuing his illicit distribution of Microsoft’s 27 products. (Id.) Accordingly, the fourth Eitel factor favors entry of default judgement. 28 8 1 4. Fifth Eitel Factor: There is no Possibility of Disputed Fact 2 The fifth Eitel factor examines whether material facts are disputed. Eitel, 782 3 F.2d at 1471–72. “Upon entry of default, all well-pleaded facts in the complaint are 4 taken as true, except those relating to damages.” Television Sys., Inc. v. Heidenthal, 5 826 F.2d 915, 917-18 (9th Cir. 1987). 6 7 8 9 10 11 Here, because Rivera defaulted, Microsoft’s facts supporting its claims are undisputed. Accordingly, the fifth Eitel factor favors entry of default judgment. 5. Sixth Eitel Factor: The Defendant’s Default is Not Due to Excusable Neglect The sixth Eitel factor considers whether Rivera’s default was due to excusable neglect. Eitel, 782 F.2d at 1471-72. 12 Here, Rivera was properly served according to Fed. R. Civ. P. 4(e) on October 13 12, 2017, and the Proof of Service was filed with the Court. (ECF No. 18.) Thus, the 14 possibility of excusable neglect is remote. Accordingly, the sixth Eitel factor favors 15 entry of default judgment. 16 17 6. Seventh Eitel Factor: Policy for Deciding on the Merits Does Not Preclude Default Judgment 18 Finally, the seventh Eitel factor reflects the policy that “cases should be decided 19 upon their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, 20 “a decision on the merits [is] impractical, if not impossible” when a defendant fails to 21 answer the plaintiff’s complaint. PepsiCo Inc., 238 F. Supp. 2d at 1177. 22 23 24 25 Here, a decision on the merits is not possible since Rivera did not respond to the complaint. Accordingly, the seventh Eitel factor favors entry of default judgment. Since the Eitel factors weigh in favor of granting default judgment, Microsoft is entitled to default judgment against Rivera. 26 C. Relief Sought 27 Having determined that Microsoft’s Motion for Default Judgment should be 28 granted, the Court now turns to Microsoft’s measure of relief. Microsoft requests that 9 1 the Court impose a permanent injunction against Rivera to prevent future illicit 2 distribution of Microsoft products. (Mot. 19.) Injunctive relief is authorized to 3 prevent copyright infringement and trademark violations under 17 U.S.C. § 502(a) and 4 15 U.S.C. § 1116(a), respectively. “As a general rule, a permanent injunction will be 5 granted when liability has been established and there is a threat of continuing 6 violations.” MAI Sys. Corp. v. Peak Computer, 991 F.2d 511, 520 (9th Cir.1993). To 7 justify injunctive relief, a plaintiff must demonstrate that: 1) it has suffered an 8 irreparable injury; 2) remedies available at law, such as monetary damages, are 9 inadequate to compensate for that injury; 3) the equities tip in the plaintiff’s favor; and 10 4) the injunction serves the public interest. eBay Inc. v. MercExchange, L.L.C., 547 11 U.S. 388, 391 (2006). For the following reasons, Microsoft has satisfied each of the 12 required elements. 13 1. Irreparable Harm 14 Rivera copied, sold, and distributed copyrighted Microsoft software and 15 decoupled product activation keys, which defrauded Microsoft and its customers, 16 infringed on Microsoft’s intellectual property rights, and harmed Microsoft’s brand 17 and goodwill. 18 choose how, when, and where it is reproduced and distributed. Metro-Goldwyn- 19 Mayer Studios Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1218 (C.D. Cal. 2007). 20 Rivera violated that right. 21 indefinitely, leading to irreparable harm. 22 As owner of the copyrighted software, Microsoft has the right to Absent an injunction, Rivera’s conduct may continue 2. Inadequate Remedy at Law 23 Given the profitable nature of Rivera’s fraudulent scheme, such conduct will 24 likely continue to harm to Microsoft’s brand and goodwill. Only an injunction will 25 adequately prevent future violations of Microsoft’s copyright. See Apple, Inc. v. 26 Pystar Corp., 673 F. Supp. 2d 943, 949–50 (N.D. Cal. 2009). Accordingly, monetary 27 damages are inadequate. 28 10 1 3. Balance of Equities & Public Interest 2 Rivera has no legitimate interest in continuing to violate Microsoft’s copyright. 3 See Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 830 (9th Cir. 1997) 4 (quoting Triad Sys. Corp. v. Southeastern Exp. Co., 64 F.3d 1330, 1338 (9th Cir. 5 1995), superseded by statute on other grounds as recognized in Apple Inc. v. Psystar 6 Corp., 658 F.3d 1150, 1158 (9th Cir. 2011)) (“Where the only hardship that the 7 defendant will suffer is lost profits from an activity which has been shown likely to be 8 infringing, such an argument in defense merits little equitable consideration…”). 9 Further, as previously mentioned, absent an injunction Rivera is free to continue to 10 defraud the consuming public and Microsoft may continue to lose profits and 11 goodwill. For these reasons, the equities tip in Microsoft’s favor and the public 12 interest is served by entering an injunction. 13 Microsoft’s request for an injunction and enjoins Rivera from further violating 14 Microsoft’s copyright. V. CONCLUSION 15 16 17 Accordingly, the Court GRANTS For the foregoing reasons, the Court GRANTS Microsoft’s Motion for Default Judgment. (ECF No. 45.) The Court shall issue judgment. 18 19 IT IS SO ORDERED. 20 21 22 23 24 April 16, 2019 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 25 26 27 28 11
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
