Sprint Nextel Corporation et al v. Ezcom Inc et al, No. 2:2012cv00222 - Document 41 (C.D. Cal. 2012)

Court Description: FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS EZCOM, INC. D/B/A TRICOM COMMUNICATIONS AND MICHAEL LI WU; DAMAGES AWARDED AGAINST DEFENDANT EZCOM, INC. D/B/A TRICOM COMMUNICATIONS filed by Judge John F. Walter. Final judgment is hereby en tered only against Defendant EZCOM, Inc. d/b/a Tricom Communications and in favor of the Plaintiff Sprint Nextel, on all of the claims set forth in Sprint Nextel's Complaint in the principal amount of Five Million Dollars and Zero Cents. (MD JS-6. Case Terminated) (kbr)

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Sprint Nextel Corporation et al v. Ezcom Inc et al 1 2 3 4 5 6 7 8 9 10 11 12 Doc. 41 Matthew A. Lesnick (SBN 177594) matt@lesnickprince.com Andrew A. Cahill (SBN 233798) acahill@lesnickprince.com LESNICK PRINCE LLP 185 Pier Avenue, Suite 103 Santa Monica, CA 90405 Telephone: 310-396-0964 Facsimile: 310-396-0963 James B. Baldinger (Florida Bar No. 869899) jbaldinger@carltonfields.com David B. Esau (Florida Bar No. 650331) desau@carltonfields.com CARLTON FIELDS, P.A. CityPlace Tower 525 Okeechobee Blvd, Suite 1200 West Palm Beach, FL 33401-6350 Telephone: (561) 659-7070 Facsimile: (561) 659-7368 Attorneys for Plaintiffs 13 UNITED STATES DISTRICT COURT 14 JS-6 CENTRAL DISTRICT OF CALIFORNIA 15 16 17 18 SPRINT NEXTEL CORPORATION, BOOST WORLDWIDE, INC., AND VIRGIN MOBILE USA, L.P., 19 v. 21 EZCOM, INC. d/b/a TRICOM COMMUNICATIONS, and MICHAEL LI WU, 23 24 25 26 Defendants. Judge: Hon. John F. Walter Courtroom: 16 Complaint Filed: January 9, 2012 Trial Date: January 29, 2013 Plaintiffs, 20 22 Case No.: 12-CV-0222-JFW (VBKx) FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS EZCOM, INC. D/B/A TRICOM COMMUNICATIONS AND MICHAEL LI WU; DAMAGES AWARDED AGAINST DEFENDANT EZCOM, INC. D/B/A TRICOM COMMUNICATIONS 27 28 1 FINAL JUDGMENT AND PERMANENT INJUNCTION Dockets.Justia.com 1 2 Sprint Nextel Corporation, Boost Worldwide, Inc., and Virgin Mobile USA, L.P. (“Sprint Nextel”), brought the above-captioned lawsuit against Defendants 3 4 EZCOM, Inc. d/b/a Tricom Communications and Michael Li Wu (“Defendants”), 5 alleging that Defendants are engaged in an unlawful enterprise involving the 6 acquisition, sale, and alteration of large quantities of Sprint Nextel, Boost Mobile, 7 8 and Virgin Mobile wireless telephones designed for use on Sprint affiliated wireless 9 service (collectively, “Sprint Nextel Handsets” or “Handsets”) and activation 10 materials, including but not limited to SIM cards, that causes substantial and 11 12 irreparable harm to Sprint Nextel (the “Bulk Handset Trafficking and Activation 13 Scheme”). 14 Defendants perpetrate the Bulk Handset Trafficking and Activation Scheme by acquiring bulk quantities of Sprint Nextel Handsets, which often include 15 16 Sprint Nextel SIM cards, from retail stores, such as Best Buy, Wal-Mart or Target. 17 Defendants solicit others to purchase Sprint Nextel Handsets and SIM cards in bulk 18 for their benefit. Defendants acquire the Sprint Nextel Handsets with the actual or 19 20 constructive knowledge and intent that the Handsets will not be activated for use on 21 the Sprint Nextel wireless network, but that the Handsets will be computer-hacked. 22 23 The purpose of this hacking, known as “unlocking,” is to erase, remove, and/or 24 disable proprietary software installed in the Handset, which enables the use of the 25 Sprint Nextel Handsets exclusively on Sprint Nextel’s wireless system. The 26 27 28 unlocked Handsets are then trafficked and resold overseas at a premium under the Sprint Nextel trademarks for unauthorized use outside of Plaintiff’s wireless system, 2 FINAL JUDGMENT AND PERMANENT INJUNCTION 1 2 and the SIM cards that come with the handsets are illicitly sold and/or fraudulently activated to misappropriate airtime. 3 4 Sprint Nextel Handsets are sold subject to terms and conditions (“Terms and 5 Conditions”) which conspicuously restrict and limit the sale and use of the Sprint 6 Nextel Handsets. These Terms and Conditions are set forth in printed inserts that 7 8 are included in the packaging with every Sprint Nextel Handset and are also 9 available to the public on the Sprint Nextel websites. The Terms and Conditions are 10 also referenced in printed warnings that are placed on the outside of the retail 11 12 packaging of the Handsets. 13 packaging constitute a valid and binding contract. 14 The Terms and Conditions and language on the Pursuant to the Terms and Conditions and the language on the packaging, 15 16 purchasers of Sprint Nextel Handsets agree, among other things, not to resell Sprint 17 Nextel products or services (including the Handsets), and not to use the Handsets for 18 any purpose that could damage or adversely affect Sprint Nextel. 19 20 As a result of the Defendants’ involvement in the Bulk Handset Trafficking 21 and Activation Scheme, Sprint Nextel has asserted claims against Defendants for 22 23 breach of contract, federal trademark infringement and false advertising under 15 24 U.S.C. § 1125(a)(1)(A) and (B), contributory trademark infringement, tortious 25 interference with business relationships and prospective advantage, civil conspiracy, 26 27 28 unjust enrichment, conspiracy to induce breach of contract, false advertising in violation of California Business & Professions Code § 17500 et seq., unfair 3 FINAL JUDGMENT AND PERMANENT INJUNCTION 1 2 competition in violation of California Business & Professions Code § 17200 et seq., harm to Sprint Nextel’s goodwill and business reputation, and violations of the 3 4 Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq. Based on the respective 5 positions advocated by the parties, and having reviewed the Complaint and file and 6 being otherwise duly and fully advised in the premises, it is hereby 7 ORDERED, ADJUDGED and DECREED that: 8 9 10 1. This Court has jurisdiction over all the parties and all of the claims set forth in Sprint Nextel’s Complaint. 11 12 13 14 2. The Court finds that Sprint Nextel has the right to use and enforce said rights in the standard character marks Sprint, Boost Mobile, payLo, Assurance, and Virgin Mobile, and the stylized Sprint and Boost Mobile Marks (collectively, the 15 16 “Sprint Nextel Marks”), as depicted below: 17 18 19 20 21 22 23 24 25 Sprint Nextel uses the Sprint Nextel Marks on and in connection with its 26 telecommunications products and services. The Sprint Nextel Marks are valid, 27 28 4 FINAL JUDGMENT AND PERMANENT INJUNCTION 1 2 distinctive, protectable, famous, have acquired secondary meaning, and are associated exclusively with Sprint Nextel and Boost Mobile. 3 4 5 6 3. The Court finds that the Terms and Conditions and the language in and on the packaging constitute a valid and binding contract enforceable against Defendants. The Court finds that (a) facilitating others to use Sprint Nextel 7 8 Handsets in conjunction with service providers other than Sprint Nextel; (b) selling 9 Sprint Nextel Handsets, and (c) tampering with or altering Sprint Nextel Handsets, 10 SIM cards or the Handsets’ software; and/or entering unauthorized activation codes 11 12 in the Handsets for purposes of unlocking the Handsets or facilitating others in such 13 acts, constitute independent breaches of contract for which Sprint Nextel is entitled 14 to relief. 15 16 17 4. The Court finds that the conduct set forth in the Complaint constitutes violations of 15 U.S.C. § 1125(a)(1)(A) and (B) (federal trademark infringement and 18 false advertising). The Court further finds that the conduct constitutes contributory 19 20 trademark infringement, tortious interference with business relationships and 21 prospective advantage, civil conspiracy, unjust enrichment, conspiracy to induce 22 23 breach of contract, false advertising in violation of California Business & 24 Professions Code § 17500 et seq., unfair competition in violation of California 25 Business & Professions Code § 17200 et seq., harm to Sprint Nextel’s goodwill and 26 27 28 business reputation, and violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq., and has caused substantial and irreparable harm to Sprint Nextel, and 5 FINAL JUDGMENT AND PERMANENT INJUNCTION 1 2 will continue to cause substantial and irreparable harm to Sprint Nextel unless enjoined. 3 4 5 6 5. Sprint Nextel has suffered damages, including loss of goodwill and damage to its reputation, as a result of Defendants’ conduct. On review and consideration of all relevant factors, Sprint Nextel is entitled to damages and 7 8 9 10 injunctive relief on the claims as set forth in the Complaint. 6. Final judgment is hereby entered only against Defendant EZCOM, Inc. d/b/a Tricom Communications and in favor of the Plaintiff Sprint Nextel, on all of 11 12 the claims set forth in Sprint Nextel’s Complaint in the principal amount of Five 13 Million Dollars and Zero Cents ($5,000,000.00 (U.S.)), which shall bear interest at 14 the legal rate, for which let execution issue forthwith. 15 16 17 7. Defendants and all of their past and present officers, directors, successors, assigns, parents, subsidiaries, affiliates, related companies, predecessors- 18 in-interest, companies, agents, employees, heirs, personal representatives, 19 20 beneficiaries, relatives, and all other persons or entities acting or purporting to act 21 for it or on its behalf, including but not limited to any corporation, partnership, 22 23 proprietorship or entity of any type that is in any way affiliated or associated with 24 Defendants or Defendants’ representatives, agents, assigns, parent entities, 25 employees, independent contractors, associates, servants, affiliated entities, and any 26 27 and all persons and entities in active concert and participation with Defendants who 28 6 FINAL JUDGMENT AND PERMANENT INJUNCTION 1 2 receive notice of this Order, shall be and hereby are PERMANENTLY ENJOINED from: 3 4 a. 5 purchasing, selling, unlocking, reflashing, altering, advertising, soliciting and/or shipping, directly or indirectly, any Sprint 6 Nextel Handsets or “Activation Materials,” which consist of SIM 7 8 cards, activation codes, and/or other mechanism, process or 9 materials used to activate service or acquire airtime in 10 connection with a new activation; 11 12 13 14 b. purchasing, selling, unlocking, reflashing, altering, advertising, soliciting and/or shipping, directly or indirectly, any Sprint Nextel mobile device or SIM card that Defendants know or 15 16 should know bears any Sprint Nextel Marks or any marks likely 17 to cause confusion with the Sprint Nextel Marks, or any other 18 trademark, service mark, trade name and/or trade dress owned or 19 20 used by Sprint Nextel now or in the future, including but not 21 limited to Sprint, Nextel, Boost Mobile, payLo, Assurance 22 23 Wireless, and Virgin Mobile. Specifically, Defendants are 24 enjoined from purchasing, selling, and/or shipping, directly or 25 indirectly, all models of Sprint Nextel Handsets and SIM cards 26 27 28 currently offered for sale by Sprint Nextel or that may be offered for sale in the future, as listed and updated from time to time on 7 FINAL JUDGMENT AND PERMANENT INJUNCTION 1 the 2 following websites: http://www.sprint.com, http://www.boostmobile.com, http://www.virginmobileusa.com, 3 4 http://www.assurancewirelss.com, and http://www.paylo.com, 5 regardless of whether such devices are new or used, whether in 6 or out of their original packaging, or whether “locked,” 7 “unlocked,” or otherwise modified in any way by any person; 8 9 10 c. unlocking of any Sprint Nextel Handset; d. accessing, altering, erasing, tampering with, deleting or 11 12 otherwise disabling the software contained in any Sprint Nextel 13 Handset; 14 e. supplying Sprint Nextel Handsets or SIM cards to or facilitating 15 16 or in any way assisting other persons or entities who Defendants 17 knows or should know are engaged in unlocking Sprint Nextel 18 Handsets and/or hacking, altering, erasing, tampering with, 19 20 deleting or otherwise disabling the software installed in Sprint 21 Nextel Handsets; 22 23 f. supplying Sprint Nextel Handsets or SIM cards to or facilitating 24 or in any way assisting other persons or entities who Defendants 25 know or should know are engaged in any of the acts prohibited 26 27 under this Permanent Injunction, including, without limitation, 28 8 FINAL JUDGMENT AND PERMANENT INJUNCTION 1 the buying and/or selling of locked or unlocked Sprint Nextel 2 Handsets or SIM cards; and 3 g. 4 5 knowingly using the Sprint Nextel Marks or any other trademark, service mark, trade name and/or trade dress owned or used by 6 Sprint Nextel now or in the future, or that is likely to cause 7 8 confusion with Sprint Nextel’s Marks, without Sprint Nextel’s 9 prior written authorization. 10 8. The purchase, sale or shipment of any Sprint Nextel Handsets or SIM 11 12 cards without Sprint Nextel’s prior written consent within and/or outside of the 13 continental United States and/or the sale of Activation Materials is and shall be 14 deemed a presumptive violation of this permanent injunction. 15 16 17 9. The address of Defendants is 1060 N. Hacienda Blvd., La Puente, CA 91744. 18 10. The address of Plaintiff Sprint Nextel is 6200 Sprint Pkwy, Overland 19 20 21 Park, Kansas 66251. 11. Defendants waive their right of appeal from the entry of this Final 22 23 24 25 Judgment. 12. The Court retains jurisdiction over this matter and the parties to this action in order to enforce any violation of the terms of this Permanent Injunction by 26 27 28 a finding of contempt and an order for payment of compensatory damages to Sprint Nextel in an amount of $5,000 for each Sprint Nextel Handset or item of Activation 9 FINAL JUDGMENT AND PERMANENT INJUNCTION 1 2 Material that a Defendant is found to have purchased, sold or unlocked in violation of this Injunction. The Court finds that these amounts are compensatory and will 3 4 serve to compensate Sprint Nextel for its losses in the event Defendants violate the 5 terms of this Order. 6 13. The Court hereby finds, pursuant to Fed. R. Civ. P. 54(b), that there is 7 8 no just reason for delay and orders that Judgment shall be entered against 9 Defendants as set forth herein. 10 DONE AND ORDERED this 10th day of September, 2012. 11 12 13 14 ___________________________________ HON. JOHN F. WALTER UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 FINAL JUDGMENT AND PERMANENT INJUNCTION

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