Levi Strauss & Co et al v. Papikian Engerprises, Inc et al
Filing
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ORDER by Judge Jeffrey S. White RE 91 and 102 Finding Defendant in Contempt and Imposing Sanctions and Attorneys' Fees. (jswlc3, COURT STAFF) (Filed on 8/10/2012)
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NOT FOR PUBLICATION
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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LEVI STRAUSS & CO.,,
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For the Northern District of California
United States District Court
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No. C 10-05051 JSW
Plaintiff,
ORDER FINDING DEFENDANT
IN CONTEMPT OF STIPULATED
INJUNCTION AND IMPOSING
SANCTIONS AND ATTORNEYS’
FEES
v.
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PAPIKIAN ENTERPRISES, INC, et al.,
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Defendants.
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INTRODUCTION
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This matter came before the Court upon the motion to find Defendants, Papikian
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Enterprises, Inc. and Galoust Papikian (collectively “Papikian”) in civil contempt, filed by
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Plaintiff Levi Strauss & Co. (“LS&CO”). LS&CO argues that Papikian has violated various
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terms of a Stipulated Final Judgment and Permanent Injunction (the “Injunction”). The Court
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has considered the parties’ papers, relevant legal authority, the record in this case, including the
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parties’ supplemental briefing on LS&CO’s request for attorneys’ fees, and it has had the
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benefit of oral argument. For the reasons set forth in the remainder of this Order, the Court
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finds Papikian in contempt and shall impose sanctions in the form of modifications to the
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Injunction and an award of attorneys’ fees.
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BACKGROUND
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The facts underlying this dispute are set forth in previous Orders and shall not be
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repeated here. On March 21, 2012, the parties attended a settlement conference with Magistrate
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Judge Bernard Zimmerman. Following that settlement conference, the parties entered into the
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Injunction. (Docket No. 91-2, Declaration of Gregory S. Gilchrist (“Gilchrist Decl.”), Ex. A.)
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The Court entered the Injunction and vacated the trial date. LS&CO monitored Papikian’s
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compliance with the terms of the Injunction, or lack thereof, and unsuccessfully attempted to
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resolve the issues presented by this motion with Papikian.
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ANALYSIS
If a party disobeys a “specific and definite court order” by failing to “take all reasonable
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steps within the party’s power to comply” with that order, it may be held in contempt. Go-
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Video v. Motion Picture Ass’n of Am. (In re Dual Deck), 10 F.3d 693, 695 (9th Cir. 1993).
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“There is no good faith exception to the requirement of compliance with a court order.” Id. If,
however, a party’s actions are based on a “good faith and reasonable interpretation” of the
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For the Northern District of California
United States District Court
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order, it will not be held in contempt of the order. Id. Similarly, a party should not be held in
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contempt based on “a few technical violations where every reasonable effort has been made to
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comply.” Id. “Congress has determined that the power to hold a party in contempt is a
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discretionary power vested in the court whose order has been violated.” Crystal Palace v. Mark
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Twain, 817 F.2d 1361, 1364 (9th Cir. 1987). As the party seeking to hold Papikian in contempt,
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LS&CO must show by “‘clear and convincing evidence,’” that Papikian violated the injunction.
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Go-Video, 10 F.3d at 695 (quoting Vertex Distribution, Inc. v. Falcon Foam Plastics, Inc., 689
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F.2d 885, 889 (9th Cir. 1982)).
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In this case, LS&CO permitted Papikian to continue to use 501USA.com as a domain
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name, email address and a logo, on the following conditions: (1) 501USA.com would be used
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“no more than once on each page”; (2) at “the top of each page of the website, Papikian would
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state: ‘Not authorized or sponsored by Levi Strauss & Co.’”; and (3) that Papikian would have a
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link identified as “Legal Disclaimer” or “Legal Notices” that would take a user to a webpage
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that contained a further disclaimer that 501USA.com Papikian Enterprises was neither affiliated
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with nor sponsored or endorsed by LS&CO. (Injunction, ¶ 1.) The parties also agreed to a
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particular depiction of the 501USA logo, “so long as it is not materially changed.” (Id., ¶ 3.)
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The depiction in the Injunction shows that the 501USA logo would be placed above the
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disclaimer “Not authorized or sponsored by Levi Strauss & Co.,” which was set in white letters
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on a black background. (Id.)
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LS&CO submits evidence that Papikian materially changed the logo as depicted in the
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Injunction, by putting the disclaimer in black font on a blue background. (Gilchrist Decl., ¶¶ 5,
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7, Exs. C, E.) Papikian ultimately changed the disclaimer to a gold, then white, font on a blue
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background, but he placed the disclaimer above the logo. (Id., ¶¶ 14-15, 17, Exs. L-M, O.)
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Further, at some point Papikian introduced an entirely new logo. (Id., ¶ 16, Ex. N.) The
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screenshots of Papikian’s website also show that he uses the 501USA.com identifier more than
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once per page. (See, e.g., id., ¶¶ 5, 7-8, Exs. C, E-F.)
The terms of the Injunction also precluded Papikian from “[u]sing additional links that
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For the Northern District of California
United States District Court
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contain [LS&CO] trademarks on the www.501USA.com website beyond those that are
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currently in use, unless the link is necessary to forward a user to a new web page that identifies
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[a new] category of LEVI’S® brand products. In such a case, only one additional link on each
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page of the website may be used for each such additional webpage.” (Injunction, ¶ 5.) LS&CO
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submits evidence that Papikian added a number of links that encompass products that were
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already available and, thus, were not a “new category” of products. (Gilchrist Decl., ¶ 9, Ex.
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G.)
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The Court finds that these terms of the Injunction are clear and definite. The Court also
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finds that LS&CO has presented clear and convincing evidence that Papikian violated those
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terms. The Court heard argument from Papikian at the hearing, and it finds that these
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modifications are neither technical nor based on a good faith and reasonable interpretation of
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the terms of the Injunction. Most notably, with respect to the additional links, Papikian
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admitted that he added them in order to optimize search results for his website.
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Having determined that Papikian violated the Injunction and should be held in contempt,
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the Court turns to the appropriate remedies. LS&CO asks the Court to modify the injunction to,
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inter alia, preclude Papikian from using 501USA.com as a domain name, trade name, or for any
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other purpose. (Docket No. 91-18, Proposed Amended Final Judgment and Permanent
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Injunction.) “Civil contempt is characterized by the court’s desire to compel obedience to a
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court order … or to compensate the contemnor’s adversaries for the injuries which result from
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the non-compliance.” Falstaff Brewing Corp. v. Miller Brewing Co., 702 F.2d 770, 778 (9th
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Cir. 1983) (citations omitted). To the extent a sanction is intended to be compensatory, it must
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be based on “the actual losses, sustained as a result of the contumacy.” Shuffler v. Heritage
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Bank, 720 F.2d 1141, 1148 (9th Cir. 1983).
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The Court finds that coercive sanctions in the form of modifications to the Injunction are
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warranted, including modifying the injunction to preclude Papikian from using 501USA as a
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domain or trade name. LS&CO has consistently alleged that Papikian infringes its marks,
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including the “LEVI’S®,” and “501®” marks, and that his usage of those marks does not
qualify as nominative fair use. The Ninth Circuit has held that an injunction that precluded
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For the Northern District of California
United States District Court
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plaintiffs from using “any ... domain name, service mark, trademark, trade name, meta tag or
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other commercial indication of origin that includes the mark LEXUS” was overly broad. See
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Toyota Motor Sales, Inc. v. Tabari, 610 F.3d 1171, 1176 (9th Cir. 2010). However, the court
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distinguished domain names that consisted of “trademarkusa.com.”
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The court reasoned that the latter type of domain name could suggest sponsorship or
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endorsement by the trademark holder, especially where, as here, the “site is used to sell goods
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of services related to the trademarked brand....” Toyota Motor Sales, 610 F.3d at 1178 n. 4.
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That is exactly the case here, and it appears evident from the testimony at the hearing that
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Papikian continues to use LS&CO marks in order to trade upon LS&CO’s goodwill and its
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brand. Indeed, the fact that Papikian admits that he added new links for products that were not
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new to the website to optimize his search engine strongly suggests that Papikian is using
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LS&CO marks more than is reasonably necessary. In addition, unlike the plaintiffs in the
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Toyota Motor Sales case, Papikian has resisted the use of a disclaimer that would be
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prominently displayed to consumers who arrive at his website. For these reasons, the Court
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shall enter LS&CO’s proposed final amended injunction, with some modifications.
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LS&CO also asks for attorneys’ fees in the amount of $13,261.05, incurred in
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connection with these proceedings. This Court has the discretion to award attorneys’ fees as a
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remedy for civil contempt, and it finds that an award of attorneys’ fees is appropriate in this
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case, although not in the amount LS&CO requests. See Perry v. O’Donnell, 759 F.2d 701, 704-
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05 (9th Cir. 1985); Shuffler, 720 F.2d at 1148. In order to determine the amount of an award for
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attorney’s fees, the Court uses the lodestar method. See Ferland v. Conrad Credit Corp., 244
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F.3d 1145, 1149 (9th Cir. 2001). The Court applies the lodestar method by multiplying a
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reasonable hourly rate by the number of hours reasonably spent litigating the case. Id.
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According to the record, Mr. Gilchrist’s billing rate was $607.50, which represents a discount of
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his normal hourly rate of $675.00, and Ms. Alban’s billing rate was $382.50, which represents a
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discount of her normal hourly rate of $425.00, and the billing rate for Mr. Ferrari, their
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paralegal, was $216, which represents a discount from his normal hourly rate of $240.00.
(Docket No. 102-2, Declaration of Gregory S. Gilchrist, ¶ 5.) Although it is evident that both
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Mr. Gilchrist and Ms. Alban are experienced in their field, the Court finds these rates excessive
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for the work done on these proceedings. Thus, the Court will discount their hourly billing rates
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as follows: $500.00 for time spent by Mr. Gilchrist, $275.00 for time spent by Ms. Alban, and
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$195 for time spent award fees for time spent by Mr. Ferrari.1
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The Court has also considered the time spent by the attorneys’ and, for the most part,
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finds it reasonable. However, it has deducted 1.0 hours from the time incurred by Mr. Ferrari
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on June 8, 2012 and June 19, 20120, and has deducted 1.5 hours from the time Mr. Gilchrist
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spent on June 12, 2012. Thus, the Court awards LS&CO attorneys’ fees in the amount of
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$9,597.00. Papikian shall pay this amount to LS&CO within thirty (30) days of the date of this
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Order.
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IT IS SO ORDERED.
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Dated: August 10, 2012
JEFFREY S. WHITE
UNITED STATES DISTRICT JUDGE
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The Court declines to award any fees for the time spent by Mr. McMahon.
(See Gilchrist Decl., ¶ 5.c.)
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For the Northern District of California
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