Tracfone Wireless Inc v. Skycom Wireless Inc et al, No. 8:2008cv00382 - Document 26 (C.D. Cal. 2008)
Court Description: FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIABfiled by Judge Stephen G. Larson (am)
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Tracfone Wireless Inc v. Skycom Wireless Inc et al Doc. 26 1 CENTRAL DISTRICT OF CALIFORNIA 3 4 TRACFONE WIRELESS, INC., a 5 Delaware corporation, Plaintiff, 6 7 v. 8 SKYCOM WIRELESS, INC., a California Corporation; MOHAMAD 9 CHEHAB; AHED YOUSEF DIAB 10 a/k/a EDDIE DIAB; RANDALL SALDIVAR; and DOES 1-10, 11 12 O UNITED STATES DISTRICT COURT 2 Defendants. ) ) ) ) ) ) ) ) ) ) ) ) Case No. SACV 08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff, TracFone Wireless, Inc. (“TracFone”), brought the above-captioned lawsuit against Defendants, Skycom Wireless, Inc., a California Corporation (“Skycom”), Mohamad Chehab (“Chehab”), Ahed Yousef Diab a/k/a Eddie Diab (“Diab”) (Skycom, Chehab, and Diab are collectively referred to as “Defendants”), and Randall Saldivar (“Saldivar”) alleging that the Defendants are engaged in an unlawful enterprise involving the acquisition, sale and alteration of large quantities of TracFone and TracFone’s NET10 branded prepaid wireless telephones (“TracFone/NET10 Prepaid Phones” or “Phones”) purchased from various retail outlets such as Wal-Mart, Target and Sam’s Club, the solicitation and payment of others to bulk purchase TracFone/NET10 Prepaid Phones for Defendants’ benefit, computer hacking and erasing or otherwise disabling the prepaid software (“TracFone/NET10 Prepaid Software”) installed in the Phones essential for consumers to access TracFone’s prepaid wireless network, or reselling the Phones to others who disable the software, and ultimately selling the altered Phones as new 44350 14013128.1 1 CV08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB Dockets.Justia.com 1 under TracFone’s trademarks for the unauthorized use outside of the TracFone 2 prepaid wireless system for profit (the “Bulk Resale Scheme”). 3 TracFone/NET10 Prepaid Phones are sold subject to terms and conditions 4 (“Terms and Conditions”) which conspicuously restrict and limit the sale and use of 5 TracFone/NET10 Prepaid Phones. These Terms and Conditions are set forth in 6 printed inserts that are included in the packaging with every TracFone Phone, and 7 are also available to the public on TracFone’s website. The Terms and Conditions 8 are also referenced in printed warnings that are placed on the outside of the retail 9 packaging of the Phones. The Terms and Conditions and language on the packaging 10 constitute a valid binding contract. 11 Pursuant to the Terms and Conditions and the language on the packaging, 12 purchasers of TracFone/NET10 Prepaid Phones agree: (a) to use the Phones only in 13 conjunction with the TracFone/NET10 prepaid wireless service; (b) not to tamper 14 with or alter TracFone/NET10 Prepaid Phones or the Phones’ software, enter 15 unauthorized PIN numbers in the Phones, engage in any other unauthorized or 16 illegal use of the Phones or the TracFone/NET10 service, or assist others in such 17 acts; and (c) not to export any TracFone/NET10 Prepaid Phones outside of the 18 TracFone/NET10 wireless system coverage area (“Coverage Area”). In violation of 19 the Terms and Conditions, TracFone alleges that Defendants have, among other 20 things, unlawfully exported TracFone/NET10 Prepaid Phones to foreign countries 21 outside of the Coverage area or knowingly facilitated others who have done so; 22 facilitated others to use the Phones without the TracFone/NET10 prepaid wireless 23 service; and altered TracFone/NET10 Prepaid Phones and the Phones’ software or 24 facilitated others who have done so. 25 As a result of Defendants Skycom and Chehab’s involvement in the Bulk 26 Resale Scheme, TracFone asserted claims against the Defendants for federal 27 trademark infringement under 15 U.S.C. § 1114; federal unfair competition under 15 28 44350 14013128.1 2 Case No. CV08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB 1 U.S.C. § 1125(a); violation of California Business & Professions Code § 17200, et 2 seq.; contributory trademark infringement; copyright infringement under 17 U.S.C. 3 § 106; copyright infringement under Title 17 of the United States Code; 4 circumvention of copyrighted software protection systems and trafficking in 5 circumvention technology under 17 U.S.C. § 1201, et seq. as a violation of the 6 Digital Millennium Copyright Act (“DMCA”); breach of contract; interference with 7 business relationships and prospective advantage; interference with contract; 8 dilution of TracFone’s Trademarks under California Business & Professions Code § 9 14200, et seq.; and conspiracy to induce breach of contract. Accordingly, it is 10 hereby, 11 ORDERED, ADJUDGED and DECREED that: 12 1. This Court has jurisdiction over all the parties and all of the claims set 13 forth in TracFone’s complaint. 14 2. The Court finds that TracFone owns all right, title, and interest in and 15 to United States Trademark Registration No. 2,114,692, issued on November 18, 16 1997 and based on a first use date of June 30, 1996; United States Trademark 17 Registration No. 2,761,017, issued on September 9, 2003 and based on a first use 18 date of December 2000; United States Trademark Registration No. 3,224,929, 19 issued on April 3, 2007 and based on a first use date of December 31, 2005; United 20 States Trademark Registration No. 3,222,623, issued on March 27, 2007 and based 21 on a first use date of December 31, 2005; United States Trademark Registration No. 22 3,118,250, on July 18, 2006 and based on a first use date of March 1, 2005; United 23 States Trademark Registration No. 3,255,754, issued on June 26, 2007 and based on 24 a first use date of December 31, 2005; United States Trademark Registration No. 25 3,253,506, issued on June 19, 2007 and based on a first use date of December 31, 26 2005; and United States Trademark Registration No. 3,251,389, issued on June 12, 27 28 44350 14013128.1 3 Case No. CV08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB 1 2007 and based on a first use date of December 31, 2005 (collectively the 2 “TracFone Trademarks”). 3 3. The TracFone Trademarks are valid, distinctive, protectable, and 4 famous, have acquired secondary meaning and are associated exclusively with 5 TracFone. The Court finds that the trademark registered under Registration No. 6 2,114,692 is incontestable. 7 4. The Court further finds that TracFone holds a valid and enforceable 8 copyright registration, TX 6-515-894, on the TracFone Prepaid Software. 9 5. The Court finds that the Defendants’ involvement in the Bulk Resale 10 Scheme constitutes federal trademark infringement under 15 U.S.C. § 1114; federal 11 unfair competition under 15 U.S.C. § 1125(a); violation of California Business & 12 Professions Code § 17200, et seq.; contributory trademark infringement; copyright 13 infringement under 17 U.S.C. § 106; copyright infringement under Title 17 of the 14 United States Code; circumvention of copyrighted software protection systems and 15 trafficking in circumvention technology under 17 U.S.C. § 1201, et seq. as a 16 violation of the DMCA; breach of contract; interference with business relationships 17 and prospective advantage; interference with contract; dilution of TracFone’s 18 Trademarks under California Business & Professions Code § 14200, et seq.; and 19 conspiracy to induce breach of contract. 20 6. The Court finds that the Terms and Conditions constitute a valid 21 binding contract enforceable against Defendants. The Court finds that (a) 22 facilitating others to use TracFone/NET10 Prepaid Phones in conjunction with 23 service providers other than TracFone, (b) tampering with or altering 24 TracFone/NET10 Prepaid Phones or the Phones’ software, entering unauthorized 25 PIN numbers in the Phones for purposes of unlocking or reflashing the Phones, or 26 facilitating others in such acts, and/or (c) exporting TracFone/NET10 Prepaid 27 28 44350 14013128.1 4 Case No. CV08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB 1 Phones outside of the Coverage Area, or assisting others in such acts, respectively, 2 constitute independent breaches of contract for which TracFone is entitled to relief. 3 7. The Court further finds that Defendants’ participation in the Bulk 4 Resale Scheme has caused substantial and irreparable harm to TracFone, and will 5 continue to cause substantial and irreparable harm to TracFone unless enjoined. 6 8. TracFone is entitled to injunctive relief and damages on the claims set 7 forth in the Complaint. 8 9. On November 27, 2006, the Librarian of Congress, upon the 9 recommendation of the Register of Copyrights, issued a Final Rule setting forth six 10 (6) classes of copyrighted works that are exempt from the provisions of the DMCA, 11 including: 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Computer programs in the form of firmware that enable wireless telephone handsets to connect to a wireless telephone communication network, when circumvention is accomplished for the sole purpose of lawfully connecting to a wireless telephone communication network. 71 Fed. Reg. 68472 (Nov. 27, 2006) (amending 37 C.F.R. § 201.40(b)). The Court finds that this new exemption does not absolve the Defendants of liability for their violations of the DMCA as alleged in TracFone’s complaint, because the Defendants’ conduct as alleged in this case does not come within the scope of the new exemption. The Defendants’ purchase and resale of the TracFone handsets was for the purpose of reselling those handsets for a profit, and not “for the sole purpose of lawfully connecting to a wireless telephone communication network.” Because the exemption does not apply to the conduct alleged in this case, there is no need for the Court to address the validity of the exemption or the circumstances surrounding its enactment. 10. Final judgment is hereby entered, jointly and severally, against Defendants, Skycom Wireless, Inc., a California Corporation, and Mohamad Chehab, and in favor of the Plaintiff, TracFone Wireless, Inc., on all of the claims 44350 14013128.1 5 Case No. CV08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB 1 set forth in TracFone’s complaint, in the principal amount of Two Million Dollars 2 and Zero Cents ($2,000,000.00) for which let execution issue forthwith. 3 11. Defendants, and each and all of their past and present respective 4 officers, directors, successors, assigns, parents, subsidiaries, affiliates, related 5 companies, predecessors-in-interest, agents, employees, attorneys, accountants, 6 investigators, consultants, heirs, personal representatives, beneficiaries, relatives, 7 and all other persons or entities acting or purporting to act for him/her/it or on 8 his/her/its behalf, including but not limited to any corporation, partnership, 9 proprietorship or entity of any type that is in any way affiliated or associated with 10 any Defendant or any Defendant’s representatives, agents, assigns, parent entities, 11 employees, independent contractors, accountants, attorneys, associates, servants, 12 affiliated entities, and any and all persons and entities in active concert and 13 participation with any Defendant who receive notice of this Order, shall be and 14 hereby are PERMANENTLY ENJOINED from: 15 a. purchasing and/or selling any wireless mobile phone that they know or 16 reasonably should know bears any TracFone Trademark, any other 17 trademark owned or used by TracFone, or any other model of wireless 18 mobile phone sold or marketed by TracFone (“TracFone/NET10 19 Handsets”). Specifically, the Defendants are enjoined from purchasing 20 and/or selling all models of TracFone/NET10 Handsets currently 21 offered for sale by TracFone, or that may be offered for sale in the 22 future, as listed and updated from time to time on TracFone’s and 23 NET10’s websites, http://tracfone.com/activation_pick_brand.jsp and 24 www.net10.com, 25 TracFone/NET10 handsets: 26 Motorola W175g Motorola W260g Motorola W370 27 28 including 44350 14013128.1 without limitation Motorola C155 Motorola C343 Motorola V60i 6 the following Nokia 1221 Nokia 1600 Nokia 2285 Case No. CV08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB Motorola Motorola Motorola Motorola Motorola Motorola 1 2 3 W375 C261 C139 V176 V170 V171 Motorola V175 Nokia 2126 Nokia 2126i Nokia 2600 Nokia 1100 Nokia 1112 4 LG 3280 LG CG225 LG 1500 LG 200C LG 300 LG 400G Kyocera K126C 5 b. reflashing and/or unlocking of any TracFone/NET10 Handset; 6 c. accessing, altering, erasing, tampering with, deleting or otherwise 7 disabling TracFone’s proprietary prepaid cellular software contained 8 within any and all models of TracFone/NET10 Handsets; 9 d. facilitating or in any way assisting other persons or entities who 10 Defendants know or reasonably should know are engaged in reflashing 11 and/or unlocking TracFone/NET10 Handsets and/or hacking, altering, 12 erasing, tampering with, deleting or otherwise disabling the software 13 installed in TracFone/NET10 Handsets; 14 e. facilitating or in any way assisting other persons or entities who 15 Defendants know or reasonably should know are engaged in any of the 16 acts prohibited under this permanent injunction including, without 17 limitation, the buying and/or selling of unlocked TracFone/NET10 18 Handsets; and 19 f. knowingly using the TracFone Trademarks or any other trademark 20 owned or used by TracFone, or that is likely to cause confusion with 21 TracFone’s 22 25 26 27 28 without TracFone’s prior written authorization. 23 24 Trademarks, 12. The last known address of Defendant, Skycom Wireless, Inc., a California Corporation, 12519 Crenshaw Boulevard, Hawthorne, California 90024. 13. The last known address of Defendant, Mohamad Chehab, is 4133 Redwood Avenue, Unit 2019, Los Angeles, California 90066. 44350 14013128.1 7 Case No. CV08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB 14. 1 The last known address of Defendant, Ahed Yousef Diab a/k/a Eddie 2 Diab, is 3212 W. 157th Street, Gardena, California 90249. 15. 3 The address of Plaintiff, TracFone Wireless, Inc. is 9700 N.W. 112th 4 Avenue, Miami, Florida 33178. 16. 5 The Court retains jurisdiction over this matter and the parties to this 6 action in order to enforce any violation of the terms of this Permanent Injunction by 7 a finding of contempt in the event a Defendant violates the terms of this Order. 17. 8 The prevailing party in any proceeding to enforce compliance with the 9 terms of this Permanent Injunction shall be entitled to an award of its reasonable 10 attorneys’ fees and costs. DONE AND ORDERED in Riverside, California, this 27th day of October , 11 12 2008. 13 14 15 THE HONORABLE STEPHEN G. LARSON UNITED STATES DISTRICT JUDGE 16 17 18 Copies furnished to: 19 Counsel and pro se parties of record 20 21 22 23 24 25 26 27 28 44350 14013128.1 8 Case No. CV08-00382-SGL (SSx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS SKYCOM WIRELESS, INC., MOHAMAD CHEHAB, AND AHED YOUSEF DIAB A/K/A EDDIE DIAB
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