Autodesk Inc v. Flowers et al, No. 5:2010cv01917 - Document 43 (N.D. Cal. 2011)
Court Description: ORDER GRANTING IN PART 34 MOTION for Default Judgment. Signed by Judge Koh on 1/31/2011. (lhklc1, COURT STAFF) (Filed on 1/31/2011)
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Autodesk Inc v. Flowers et al Doc. 43 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 SAN JOSE DIVISION United States District Court For the Northern District of California 10 11 AUTODESK, INC., a Delaware corporation, 12 Plaintiff, 13 14 15 16 v. GUILLERMO FLORES, an individual; GREG FLOWERS, an individual; GREGORIO FLORES, an individual; and DOES 1 through 10, inclusive, Defendants. 17 ) ) ) ) ) ) ) ) ) ) ) ) ) Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 18 Plaintiff Autodesk, Inc., moves for default judgment against Defendants Guillermo Flores, 19 Greg Flowers, and Gregorio Flores. Although Plaintiff initially had some contact with Defendants 20 regarding possible settlement of the case, Defendants did not file an Answer or otherwise appear in 21 this case. The Court has considered the motion and declarations submitted by Plaintiff. Pursuant 22 to Civil Local Rule 7-1(b), the Court finds that this motion is appropriate for determination without 23 oral argument and vacates the motion hearing scheduled for February 3, 2011. For the reasons set 24 forth below, the Court grants Plaintiff’s motion for default judgment, permanent injunction, 25 statutory damages, and post-judgment interest. The Court denies Plaintiff’s request for costs and 26 attorney’s fees without prejudice. 27 28 1 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT Dockets.Justia.com 1 2 I. Background Plaintiff Autodesk, Inc., develops, markets, distributes, and licenses a variety of 3 copyrighted software products, including computer aided design programs. First Amended Compl. 4 (“FAC”) ¶¶ 11, 16-17. Its copyrights are registered with the Copyright Office and cover products 5 including AutoCAD® 2009 software and AutoCAD® 2010 software, as well as numerous other 6 products. FAC ¶ 16. Autodesk also owns trademarks associated with its products, including the 7 trademarks AutoCAD® and Autodesk®, which are registered with the United States Patent and 8 Trademark Office. FAC ¶19. According to the memorandum and declarations submitted in support of its motion for 10 United States District Court For the Northern District of California 9 default judgment, Autodesk began investigating the conduct underlying this action in October 11 2009, when it received an email notifying it that advertisements offering illegal copies of Autodesk 12 products had been posted on the website www.craigslist.org (“Craigslist”). Decl. of Evelyn R. 13 LaHaie (“LaHaie Decl.”) ¶ 9 & Ex. A. The initial advertisement was titled “AutoCAD 2009 14 AutoCAD 2010” and indicated that the seller was located in San Diego, California. The 15 advertisement offered to sell copies of the two Autodesk products and stated “you’re getting a 16 $4,000.00 program for 70 bucks.Please [sic] save the questions like, does it come with the manual 17 and box, etc. It’s the full program, it works. You save tons of money.” Decl. of Eric A. Handler 18 (“Handler Decl.”) ¶ 2 & Ex. A. At the time, the suggested retail price for the Autodesk products 19 was $3,995. LaHaie Decl. ¶ 4. The ad also instructed interested buyers to “Call, text, or email” 20 and provided a telephone number. Handler Decl. ¶ 2 & Ex. A. The person who emailed Autodesk 21 about the ad stated that when he contacted the seller and asked if the products were original, the 22 seller responded with the following email: 23 24 25 26 They’re backed up from an original bro. I sell several a week and have no complaints about me on craigslist or anything negative for that matter. I can help install prior to payment to show you it works just fine. If not no problem however you won't find this 4,000 dollar program for such a good price. Take care. - Memo LaHaie Decl. Ex. A. 27 28 2 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 Subsequent investigation indicated that Defendant Gregorio Flores, aka Greg Flowers,1 had 2 posted numerous ads on Craigslist offering various versions of several different Autodesk products, 3 including AutoCAD® software, AutoCAD® Civil 3D® software, Autodesk® Revit® software, and 4 Autodesk® 3ds Max® software. Handler Decl., ¶¶ 6, 7, 10-13, Ex. D. Autodesk’s investigator 5 purchased one of the products advertised by Defendants on Craigslist and received by mail a 6 recordable digital videodisc (“DVD+R”) on which was hand-written “AUTOCAD 2010.” Id. at 7 ¶ 5 & Ex. E. Autodesk subjected the disc to forensic analysis and determined that it contained an 8 unauthorized copy of AutoCAD® 2010 software, as well as software used to circumvent the 9 copyright protection measures built into the AutoCAD® 2010 software. LaHaie Decl. Ex. C. The United States District Court For the Northern District of California 10 disc also contained instructions for installing the AutoCAD® software in conjunction with the 11 circumvention software so that the AutoCAD® software could be run without an activation code 12 from Autodesk. Id. 13 Based on the information from its investigations, Autodesk filed the instant action on May 14 4, 2010, against Defendants Greg Flowers and Gregorio Flores, asserting the following four claims: 15 (1) copyright infringement in violation of 17 U.S.C. § 501; (2) violation of the circumvention 16 technology provisions of the Digital Millennium Copyright Act, 17 U.S.C. §§ 1201(a), (b); (3) 17 trademark infringement and counterfeiting, in violation of 15 U.S.C. §§ 1114(1) and 1125(a); and 18 (4) false designation of origin, in violation of 15 U.S.C. § 1125(a). Further investigation revealed 19 that Guillermo Flores was the owner of the telephone number listed on the Craigslist ads and had 20 lived at the return address listed on the package received by Autodesk’s investigator. Accordingly, 21 on May 12, 2010, Autodesk filed a First Amended Complaint adding Guillermo as a defendant. 22 Handler Decl. ¶ 7. By June 18, 2010, Autodesk had served all Defendants with the First Amended 23 Complaint. See Certificate of Service, ECF Nos. 12-14. Around the same time, Autodesk also 24 contacted Defendants to determine whether litigation might be avoided. Id. at ¶ 9. In an initial 25 phone conference, Autodesk was able to confirm that Defendants used the names, addresses, and 26 phone number associated with the ads, and Defendants gave Autodesk access to one PayPal 27 1 28 It appears that Gregorio Flores uses the name “Greg Flowers” as an alias and that Gregorio Flores and Greg Flowers are in fact one person. See Handler Decl. ¶ 10. 3 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 account apparently owned by Gregorio and used by Guillermo to conduct business. Id. at ¶ 13. 2 However, out-of-court talks eventually broke down, and Autodesk gave Defendants notice that it 3 would seek entry of default if Defendants did not file and serve responses to the First Amended 4 Complaint by August 23, 2010. Id. at 23. Defendants failed to respond to the Autodesk’s 5 pleadings, and on September 2, 2010, the clerk entered default. Autodesk now moves for entry of 6 default judgment and issuance of a permanent injunction against all Defendants. Autodesk also 7 seeks an award of attorney’s fees incurred in this action. 8 9 United States District Court For the Northern District of California 10 II. Motion for Default Judgment A. Default Judgment Under Federal Rule of Civil Procedure 55(b)(2), a party may apply to the court for entry of 11 judgment by default. “The district court’s decision whether to enter a default judgment is a 12 discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In exercising 13 discretion to enter default judgment, courts typically consider the following factors: (1) the 14 possibility of prejudice to plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the 15 sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a 16 dispute concerning the material facts, (6) whether the default was due to excusable neglect, and (7) 17 the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 18 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). 19 20 1. Merits of Plaintiff’s Claims and Sufficiency of the Complaint After entry of default, “well-pled allegations in the complaint regarding liability are deemed 21 true.” Fair Housing of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). The Court will 22 therefore consider the merits of Autodesk’s claims and the sufficiency of its pleadings together. In 23 addition to the allegations in its FAC, Autodesk has also submitted extensive documentation of 24 Defendants’ advertisements on Craiglist and on-line transactions via PayPal, as well as detailed 25 declarations documenting Autodesk’s investigation of Defendants’ activities. The Court will also 26 consider these submissions in evaluating the merits of Autodesks’s substantive claims. 27 28 4 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 a. Copyright Infringement 2 Autodesk’s first cause of action asserts copyright infringement in violation of 17 U.S.C. 3 § 501. The Copyright Act grants the copyright owner the exclusive right to reproduce a 4 copyrighted work, to distribute copies of the work, and to authorize reproduction or distribution. 5 See 17 U.S.C. § 106(1)-(3). To establish copyright infringement, a plaintiff must prove: (1) 6 ownership of a valid copyright, and (2) that the defendant violated at least one exclusive right 7 granted to plaintiff under 17 U.S.C. § 106. A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 8 1013 (9th Cir. 2001). Autodesk has clearly met this standard. As to the first element, the FAC 9 alleges that Autodesk owns copyrights in at least fourteen different Autodesk products, including United States District Court For the Northern District of California 10 the AutoCAD® 2010 and AutoCAD® 2009 software explicitly offered in Defendants’ Craiglist 11 advertisements. See FAC ¶ 17 & Ex. A; Handler Decl. Exs. A-D. These copyrights are registered 12 with the Copyright Office, and Autodesk has provided a list of the registration numbers, 13 registration dates, and product titles as an exhibit to the FAC. FAC Ex. A. As to the second 14 element of infringement, Autodesk alleges that Defendants copied and distributed copyrighted 15 Autodesk products without authorization. FAC ¶ 22. Autodesk has also submitted declarations 16 stating that forensic analysis of a product purchased from Defendants included an unauthorized 17 copy of AutoCAD® 2010 software. LaHaie Decl. ¶ 11 & Ex. C. These allegations are sufficient to 18 establish a claim for copyright infringement pursuant to 17 U.S.C. § 501. 19 b. Circumvention of Technological Measures 20 Autodesk’s second cause of action alleges that Defendants sold, distributed, or trafficked in 21 circumvention technology, in violation of the Digital Millennium Copyright Act (“DMCA”), 17 22 U.S.C. §§ 1201(a)-(b).2 FAC ¶¶ 22, 29-31. The DCMA prohibits the sale or trafficking in “any 23 2 24 25 26 27 28 The FAC does not identify which subsections within §§ 1201(a) and (b) Defendants allegedly violated. In its motion, however, Autodesk indicates that it intended to allege violations of 17 U.S.C. §§ 1201(a)(1)(A), (a)(2), and (b)(1). The Federal Circuit has described the differences between these sections as follows: “Defendants who traffic in devices that circumvent access controls in ways that facilitate infringement may be subject to liability under § 1201(a)(2). Defendants who use such devices may be subject to liability under § 1201(a)(1) whether they infringe or not. Because all defendants who traffic in devices that circumvent rights controls necessarily facilitate infringement, they may be subject to liability under § 1201(b).” Chamberlain Group, 381 F.3d at 1195 (emphasis added). The FAC is focused on allegations that Defendants sold or trafficked in circumvention technology and does not allege that they actually used the technology themselves. Thus, Autodesk does not appear to have pled a claim under 5 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 technology, product, service, device, component, or part thereof” that is primarily designed “for the 2 purpose of circumventing a technological measure that effectively controls access to a work 3 protected under [federal copyright laws].” 17 U.S.C. § 1201(a)(2). The Federal Circuit has stated 4 that a plaintiff alleging a violation of § 1201(a)(2) must prove: 5 6 7 8 9 (1) ownership of a valid copyright on a work, (2) effectively controlled by a technological measure, which has been circumvented, (3) that third parties can now access (4) without authorization, in a manner that (5) infringes or facilitates infringing a right protected by the Copyright Act, because of a product that (6) the defendant either (i) designed or produced primarily for circumvention; (ii) made available despite only limited commercial significance other than circumvention; or (iii) marketed for use in circumvention of the controlling technological measure. United States District Court For the Northern District of California 10 Chamberlain Group, Inc. v. Skylink Technologies, Inc., 381 F.3d 1178, 1203 (Fed. Cir. 2004). The 11 DCMA provides that a technological measure “effectively controls access to a work” if the 12 measure, in the ordinary course of its operation, requires the application of information, with the 13 authority of the copyright owner, to gain access to the work. Id. § 1201(a)(3)(B). The DMCA 14 defines “circumvent a technological measure” to include avoiding, bypassing, removing, 15 deactivating, or impairing a technological measure, without the authority of the copyright owner. 16 17 U.S.C. § 1201(a)(3)(A). 17 Here, Autodesk alleges that Defendants trafficked in technology primarily designed to 18 circumvent a technological measure that effectively controls access to one or more of Autodesk’s 19 software products. FAC ¶¶ 14(b), 22(b)-(c). Autodesk also provides declarations establishing that 20 the AutoCAD® 2010 software includes technology that controls access to the copyrighted work by 21 requiring users to input an activation code provided by Autodesk. See LaHaie Decl. ¶ 12. 22 Autodesk claims, moreover, that the disc its investigator purchased from Defendants contained 23 software and instructions designed to permit access to the AutoCAD® 2010 software without an 24 activation code, thereby bypassing Autodesk’s access controls. Id. at ¶ 11-12 & Ex. C. These 25 26 27 28 § 1201(a)(1)(A). In addition, although the difference between § 1201(a)(2) and (b)(1) is not entirely clear, Autodesk’s claim appears to better correspond to § 1201(a)(2), which bars circumvention of measures that require authorization to access a work, than to § 1201(b), which bars circumvention of measures that prevent the exercise of rights belonging to the copyright owner. Because Autodesk seeks damages only for a single violation of § 1201, the Court will consider its claim solely under § 1201(a)(2). 6 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 allegations are sufficient to establish that Defendants trafficked in technology primarily designed to 2 circumvent the technological measures that control access to Autodesk’s copyrighted AutoCAD® 3 2010 software. Accordingly, Autodesk has established a claim for violations of the DCMA. 4 c. Trademark Infringement and Counterfeiting 5 Autodesk’s third cause of action alleges trademark infringement and counterfeiting under Sections 32(1) and 43(a) of the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a). To prove 7 trademark infringement, Autodesk must show: (1) it has a valid, protectable trademark; (2) 8 Defendants have used in commerce without authorization a copy, reproduction, counterfeit or 9 colorable imitation of Autodesk’s mark in connection with the sale, distribution, or advertising of 10 United States District Court For the Northern District of California 6 goods and services; and (3) Defendants’ use of the mark is likely to cause confusion. See Applied 11 Info. Scis. Corp. v. eBay, Inc., 511 F.3d 966, 969 (9th Cir. 2007); Brookfield Communications, Inc. 12 v. West Coast Entertainment Corp., 174 F.3d 1036, 1046 & n.6 (9th Cir. 1999); 15 U.S.C. 13 §§ 1114(1), 1125(a). Registration of a mark on the principal register in the Patent and Trademark 14 Office is prima facie evidence of the validity of the mark. See Applied Info., 511 F.3d at 970. 15 Autodesk alleges that it owns trademarks registered with the Patent and Trademark Office, 16 including the AutoCAD® and Autodesk® marks, and Autodesk lists its trademarks, registration 17 numbers, and registration date in an exhibit to the FAC. FAC ¶ 19 & Ex. B. The FAC also alleges 18 that Defendants used Autodesk’s trademarks, without authorization, in Internet commerce and on 19 unauthorized copies of Autodesk products, and that such use has caused consumer confusion as to 20 the source, quality, or nature of the unauthorized and unlicensed goods sold by Defendants. FAC 21 ¶¶ 34-39. In support of these allegations, Autodesk has submitted copies of Craigslist ads allegedly 22 posted by Defendants that offer “AutoCAD” and “Autodesk” software. Handler Decl. Exs. B, D. 23 These ads also include claims that the product offered is “the full suite, not a trial or demo,” a “full 24 version program,” and “the full suite, fully activated license guaranteed.” Id. This use of 25 Autodesk’s marks could certainly cause confusion and lead consumers to believe that they are 26 purchasing software authorized and licensed by Autodesk, when in fact they are not. Accordingly, 27 the Court agrees that Autodesk has sufficiently established a claim for trademark infringement. 28 7 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 2 d. False Designation of Origin and False Descriptions Autodesk’s fourth and final cause of action alleges false designation of origin and false 3 descriptions in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Section 43(a) 4 prohibits the use in commerce of 5 6 7 8 9 any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which – (A) 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, or United States District Court For the Northern District of California 10 11 12 (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, 13 15 U.S.C. § 1125(a). Autodesk alleges that Defendants used the Autodesk trademark to falsely 14 designate the origin of their products and made misleading descriptions of fact concerning those 15 products. FAC ¶ 44. Autodesk further alleges that these false designations and descriptions have 16 caused consumer confusion regarding the affiliation of Autodesk with Defendants’ products and 17 the approval by Autodesk of Defendants’ products. FAC ¶ 45. In addition, as discussed above, 18 Autodesk has submitted copies of advertisements in which Defendants used the Autodesk 19 trademark and suggest that they are selling fully licensed versions of Autodesk software. Handler 20 Decl. Exs. B, D. This false description of Defendants’ products and use of Autodesk’s trademarks 21 could lead consumers to believe that Defendants are offering products affiliated with and 22 originated by Autodesk. Thus, Autodesk has sufficiently established a claim for false designation 23 of origin and false description. 24 2. Remaining Eitel Factors 25 Based on the above analysis, the Court concludes that Autodesk’s well-pleaded complaint 26 and the merits of its substantive claims favor entry of default judgment. The Court also finds that 27 the remaining Eitel factors support Autodesk’s motion. First, Autodesk will be prejudiced if 28 default judgment is not entered. Because Defendants have refused to respond to the FAC or 8 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 otherwise take part in the litigation, Autodesk will be denied the right to adjudicate its claims and 2 obtain relief if default judgment is not granted. Second, as to the sum of money at stake, Autodesk 3 seeks $102,500 in statutory damages. Although entry of default judgment may not be appropriate 4 where a large sum of money is at stake, see Eitel v. McCool, 782 F.2d at 1472, here the damages 5 sought are statutory, and the amount is left to the Court’s discretion. Moreover, Autodesk seeks 6 damages based only on two instances of copyright and trademark infringement and one instance of 7 trafficking in circumvention technology, even though there is evidence to suggest that Defendants’ 8 infringing activities may have been more extensive. Third, given Defendants’ admissions to 9 Autodesk and the evidence submitted with Autodesk’s motion, it seems unlikely that the case United States District Court For the Northern District of California 10 would be subject to serious disputes concerning the material facts. Fourth, it does not appear that 11 Defendants’ default was due to excusable neglect. Autodesk had two telephone conferences with 12 Defendants, served them with all litigation documents, and gave notice that Autodesk would seek 13 default judgment if Defendants failed to respond to the First Amended Complaint by a specified 14 date. Handler Decl. ¶¶ 20-22. Defendants thus had notice and plenty of opportunity to appear in 15 this litigation before Autodesk moved for default judgment. Finally, although federal policy favors 16 decisions on the merits, it does not appear that resolution on the merits will be possible in this case. 17 Based on this analysis of the Eitel factors, the Court concludes that entry of default judgment is 18 appropriate and GRANTS the motion for default judgment. 19 20 B. Determination of Relief In its motion for default judgment, Autodesk seeks a permanent injunction and statutory 21 damages in the amount of $102,500 based on two instances of copyright infringement, two 22 instances of trademark infringement, and one instance of trafficking in circumvention technology. 23 Autodesk also seeks an award of costs, reasonable attorney’s fees, and post-judgment interest. The 24 Court will consider each form of requested relief in turn. 25 26 1. Injunctive Relief Autodesk seeks issuance of a permanent injunction under the Copyright Act, 17 U.S.C. 27 § 502(a), the Digital Millennium Copyright Act, 17 U.S.C. § 1203(b)(1), and the Lanham Act, 15 28 U.S.C. §§ 1114(2) and 1116(a). These statutes permit the issuance of a permanent injunction to 9 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 prevent future infringement. A plaintiff seeking a permanent injunction must demonstrate: “ (1) 2 that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary 3 damages, are inadequate to compensate for that injury; (3) that, considering the balance of 4 hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the 5 public interest would not be disserved by a permanent injunction.” eBay Inc. v. MercExchange, 6 L.L.C., 547 U.S. 388, 391 (2006). 7 In this case, each of these four factors supports granting a permanent injunction. With 8 regard to the first two factors, copyright and trademark infringement are generally presumed to 9 give rise to irreparable harm for which there is no adequate remedy at law. Marlyn Nutraceuticals, United States District Court For the Northern District of California 10 Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877 (9th Cir. 2009) (“[i]n a trademark 11 infringement claim, irreparable injury may be presumed from a showing of likelihood of success 12 on the merits”) (quotation marks and citation omitted); Cadence Design Systems, Inc. v. Avant! 13 Corp., 125 F.3d 824, 826-27 (9th Cir. 1997) (“a presumption of irreparable injury arises if the 14 plaintiff is able to show a likelihood of success on the merits of its copyright infringement claim”); 15 Century 21 Real Estate Corp. v. Sanlin, 846 F.2d 1175, 1180-81 (9th Cir. 1988) (“Injunctive relief 16 is the remedy of choice for trademark and unfair competition cases, since there is no adequate 17 remedy at law for the injury caused by a defendant’s continuing infringement.”). As to the third 18 factor, while Autodesk will be harmed by continued infringement, the Court perceives no potential 19 harm to Defendants as an injunction would simply require them to comply with the Copyright and 20 Lanham Acts. As to the fourth factor, a permanent injunction would likely serve the public interest 21 by reducing consumer confusion, see Internet Specialties West, Inc. v. Milon-DiGiorgio 22 Enterprises, Inc., 559 F.3d 985, 993 (9th Cir. 2009), and by “upholding” the rights that “Congress 23 has elected to grant . . . to the owner of a copyright in a protected work.” Apple Computer, Inc. v. 24 Franklin Computer Corp., 714 F.2d 1240, 1255 (3d Cir. 1983) (quoting Klitzner Industries, Inc. v. 25 H. K. James & Co., Inc., 535 F. Supp. 1249, 1259-60 (D. Pa. 1982)). 26 The Court notes, in addition, that Autodesk has submitted evidence indicating that 27 Defendants posted numerous advertisements during 2009 and 2010 offering products that infringed 28 Autodesks copyrights and trademarks. Defendants’ unwillingness to appear in this matter has 10 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 given the Court no assurance that they will cease their infringing activities and makes it difficult 2 for Autodesk to prevent further infringement. Based on these facts and the analysis above, the 3 court finds that Autodesk is entitled to a permanent injunction. 4 5 2. Statutory Damages The Copyright Act authorizes statutory damages of up to $30,000 per infringed work. 17 U.S.C. § 504(c)(1). In cases where the copyright owner sustains the burden of proving that the 7 infringement was committed willfully, the Copyright Act authorizes enhanced statutory damages of 8 up to $150,000 per infringed work. Id. § 504(c)(2). The Lanham Act, similarly, authorizes 9 statutory damages of up to $200,000 per mark, as well as enhanced statutory damages of up to $2 10 United States District Court For the Northern District of California 6 million per mark for willful infringement. 15 U.S.C. § 1117(c). In addition, under the DMCA, a 11 copyright owner can receive an award of up to $2,500 in statutory damages for each act of 12 circumvention or for each circumventing product. 17 U.S.C. § 1203(c)(3). Here, Autodesk argues 13 that Defendants acted willfully and requests the following statutory damages: enhanced statutory 14 damages of $30,000 each for infringement of the copyrighted AutoCAD® 2009 and AutoCAD® 15 2010 software ($60,000 total); enhanced statutory damages of $20,000 each for infringement of the 16 AutoCAD® and Autodesk® trademarks ($40,000 total); and the statutory maximum of $2,500 for 17 one instance of trafficking in circumvention technology, as documented by Autodesk’s 18 investigator. In the aggregate, Autodesk seeks $102,500 in statutory damages. 19 As a threshold matter, the Court agrees that there is sufficient evidence to support a finding 20 that Defendants’ conduct was willful. Under the Copyright and Lanham Acts, willfulness may be 21 found where the defendant’s infringing actions are undertaken either with knowledge that the 22 conduct constitutes infringement or with reckless disregard for the copyright or trademark owner’s 23 rights. See In re Barboza, 545 F.3d 702, 707-08 (9th Cir. 2008) (discussing willfulness standard in 24 copyright cases); Philip Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D. 494, 501 (C.D. 25 Cal. 2003) (noting that “courts faced with determining statutory damages under the [Lanham] Act 26 have analogized to the body of case law interpreting a similar provision in the Copyright Act”). 27 Willfulness may also be inferred or admitted based on a defendant’s failure to defend. See Derek 28 Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 696, 702 (9th Cir. 2008) (“all factual allegations in 11 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 the complaint are deemed true, including the allegation of [defendant’s] willful infringement”); 2 Philip Morris, 219 F.R.D. at 500 (accepting allegations of willfulness as true upon default). In this case, Autodesk has both alleged willful infringement, FAC ¶¶ 23, 25, 29, 33, and 4 submitted evidence that strongly supports a finding of willfulness. As noted above, Defendants 5 posted numerous ads that used Autodesk’s registered trademarks, without authorization, to sell 6 pirated copies of Autodesk’s copyrighted software. Many of these ads contained a “disclaimer” 7 stating that “you’re getting a $4,000.00 program for 70 bucks.Please save the questions like, does it 8 come with the manual and box, etc.” Handler Decl. Ex. A, B. Other ads state, “if it’s cardboard 9 and a piece of paper you want, you can pay over 1-2,000 dollars.” Id. Ex. C. This language 10 United States District Court For the Northern District of California 3 suggests that Defendants knew that they were offering unauthorized versions of Autodesk’s 11 software and were at least reckless in their disregard for Autodesk’s rights in its copyrighted 12 software and registered trademarks. Moreover, Defendants’ products contained software and 13 instructions specifically designed to circumvent the access protections on Autodesk’s copyrighted 14 works. LaHaie Decl. ¶¶ 11-12, Ex. C. In their advertisements, Defendants offered to install their 15 products themselves, suggesting that they were familiar with the installation process used to 16 override Autodesk’s access controls. See Handler Decl. Ex. D (“I can install prior to payment to 17 secure functionality.”). Defendants also referred to themselves as the “[l]ongest trusted program 18 provider on Craigslist,” Handler Decl. Ex. B, D, indicating that the sale to Autodesk’s investigator 19 was not an isolated, innocent instance of infringement, but one of many unauthorized sales. These 20 facts strongly suggest that Defendants knew that their conduct was unlawful and support a finding 21 of willfulness. 22 Such a finding does not end the inquiry, however, for the district court is given broad 23 discretion to determine the amount of statutory damages. Peer Intern. Corp. v. Pausa Records, 24 Inc., 909 F.2d 1332, 1336 (9th Cir. 1990). In awarding statutory damages, courts in this District 25 have considered whether the amount of damages requested bears a “plausible relationship” to the 26 plaintiff’s actual damages. See Adobe Systems, Inc. v. Tilley, No. C 09-1085, 2010 WL 309249, at 27 *5 (N.D. Cal. Jan. 19, 2010) (citing Microsoft Corp. v. Ricketts, No. C 06-06712, 2007 WL 28 1520965, at *4 (N.D. Cal. May 24, 2007). These courts have reasoned that while the plaintiff in a 12 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 copyright or trademark action is entitled to damages that will serve as a deterrent, the plaintiff is 2 not entitled to a windfall. Tilley, 2010 WL 309249, at *5. Thus, in cases where the plaintiff has 3 identified only a few sales of infringing products, awards have ranged from $1,000 to $10,000 for 4 each copyright or trademark infringed. See id. at *6 (awarding $10,000 per infringement based on 5 evidence of one sale); Adobe Systems Inc. v. Brooks, No. 5:08-cv-04044, 2009 WL 593343, at *4 6 (N.D. Cal. Mar. 5, 2009) (awarding $10,000 per infringement based upon one infringing sale and 7 evidence of possible additional infringement); Ricketts, 2007 WL 1520965, at *4 (awarding $1,000 8 per infringed trademark and $1,500 per infringed copyright). In contrast, in cases where the 9 plaintiff identifies numerous infringing transactions and evidence points to ongoing sales of United States District Court For the Northern District of California 10 infringing products, courts have awarded up to $50,000 per infringed work or mark. See Adobe 11 Systems, Inc. v. Taveira, No. C 08-2436, 2009 WL 506861, at *6 (N.D. Cal. Feb. 27, 2009) 12 (awarding $50,000 per mark where defendant sold at least 20 copies of counterfeit software and 13 plaintiff alleged that over 1,000 unauthorized copies were sold). 14 In this case, Defendants have referred to themselves in advertisements as the “[l]ongest 15 trusted program provider on Craigslist,” Handler Decl. Ex. B, D. In response to an inquiry about 16 the AutoCAD software, Defendants wrote, “I sell several a week.” LaHaie Decl. Ex. B. This 17 strongly suggests that Defendants’ conduct is not limited to a few isolated sales of unauthorized 18 software.3 Additionally, the identifiable transactions in the PayPal records submitted by Autodesk 19 indicate that Defendants made at least three sales of Autodesk software in 2009. Handler Decl. Ex. 20 E, at 6, 14. Moreover, as Autodesk points out, although Autodesk seeks damages based only on 21 two copyrighted works and two trademarks, there is evidence that Defendants sold a wider range of 22 Autodesk products and used several other Autodesk trademarks in its advertisements. See Handler 23 Decl. Ex. D. 24 25 Based on these facts, this case appears to fall somewhere between Taveira, which awarded $50,000 per infringed work based on evidence of 20 sales and allegations of more than 1,000 26 3 27 28 Defendants’ advertisements also offer a wide range of other software products, including Adobe, Apple, and Microsoft Office products, for prices ranging from about $80 to $120. Handler Decl. Ex. D. The PayPal records submitted by Autodesk show more than 30 sales of Adobe products and several sales of Microsoft Office products. Id. at Ex. E. 13 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT unauthorized transactions, and Brooks, which awarded $10,000 per infringed work based on one 2 infringing sale and evidence suggesting additional infringement. As to the copyright claims, the 3 Court agrees that an award of $60,000 under the Copyright Act ($30,000 per infringed work) and 4 the full $2,500 permitted under the DCMA is appropriate. By selling unauthorized copies of 5 Autodesk software equipped with software and instructions specifically designed to circumvent 6 access control, Defendants have essentially profited from the theft of Autodesk’s intellectual 7 property. This conduct is egregious and forms the core of this action, and a damage award of 8 $30,000 per work under the Copyright Act is in line with other awards in this District. The Court 9 finds, however, that the damages sought under the Lanham Act are somewhat duplicative of the 10 United States District Court For the Northern District of California 1 copyright damages. Accordingly, the Court will reduce the award of damages under the Lanham 11 Act to $10,000 for each infringed mark, for a total of $20,000. This amounts to a total award of 12 $82,500. 13 3. Attorney’s Fees 14 Both the Copyright Act and the DCMA permit a court to award full costs and reasonable 15 attorney’s fees to a prevailing party. 17 U.S.C. §§ 505, 1203(b)(4)-(5). An award of reasonable 16 attorney’s fees and costs is also expressly provided for in “exceptional cases” of trademark 17 infringement. 15 U.S.C. § 1117(a). “While the term ‘exceptional’ is not defined in the statute, 18 attorneys’ fees are available in infringement cases where the acts of infringement can be 19 characterized as malicious, fraudulent, deliberate, or willful.” Rio Props., Inc. v. Rio Int'l Interlink, 20 284 F.3d 1007, 1023 (9th Cir.2002); see also Derek Andrew, Inc. v. Poof Apparel Corp., 528 F.3d 21 696, 702 (9th Cir. 2008) (awarding attorney’s fees under Lanham Act where defendant admitted 22 allegations of willfulness by defaulting). Because the Court has found that Defendants acted 23 willfully in infringing Autodesk’s copyrights and trademarks, an award of costs and reasonable 24 attorney’s fees under the Copyright Act, the DCMA, and the Lanham Act is appropriate. 25 In support of its request for attorney’s fees, Autodesk submitted a declaration describing the 26 experience of the attorneys involved in this litigation, their ordinary billing rates, and the services 27 they provided to Autodesk during the course of this action. See Decl. of Julie E. Hofer in Supp. of 28 Mot. for Entry of Default Judgment (“Hofer Decl.”). The declaration indicates that the attorneys 14 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 created detailed billing entries for each task performed and that Ms. Hofer reviewed these entries, 2 deleting some and reducing others in order to avoid redundancies in the fees sought. Hofer Decl. 3 ¶¶ 7-12. However, Autodesk has not submitted billing records or a table of costs for the Court’s 4 review. Without this information, the Court cannot determine whether the fees and costs requested 5 are reasonable. See Gracie v. Gracie, 217 F.3d 1060, 1070 (9th Cir. 2000) (requiring district court 6 to analyze time records and make specific findings at to the reasonableness of the rates and hours 7 awarded); Zynga Game Network Inc. v. Erkan, No. 09-3264, at *2, 2010 WL 3463630 (N.D. Cal. 8 Aug. 31, 2010) (denying motion for attorney’s fees where plaintiff failed to attach billing records). 9 Accordingly, the Court DENIES Autodesk’s request for costs and reasonable attorney’s fees United States District Court For the Northern District of California 10 without prejudice. Autodesk shall file a revised motion for attorney’s fees within 30 days of this 11 order. 12 13 4. Post-Judgment Interest Finally, Autodesk also seeks post-judgment interest on the aggregate sum of statutory damages, 14 attorney’s fees, and costs awarded. Pursuant to 28 U.S.C. 1961(a), interest “shall be allowed on 15 any money judgment in a civil case recovered in a district court.” Accordingly, Autodesk shall be 16 awarded post-judgment interest, which will be calculated “at a rate equal to the weekly average 1- 17 year constant maturity Treasury yield, as published by the Board of Governors of the Federal 18 Reserve System, for the calendar week preceding the date of the judgment.” Id. 19 20 III. Conclusion For the foregoing reasons, the Court GRANTS Autodesk’s motion for entry of default 21 judgment, issuance of a permanent injunction, statutory damages, and post-judgment interest. The 22 Court DENIES the request for attorney’s fees without prejudice. Autodesk may file a renewed 23 motion for costs and fees, with documentation establishing the reasonableness of the rates and 24 hours sought, within 30 days of this Order. Because the Court has resolved Autodesk’s motion 25 without need for oral argument, the motion hearing scheduled for February 3, 2011, is hereby 26 VACATED. 27 28 In accordance with the above determinations, the Court hereby orders as follows: 1. Defendants shall pay Autodesk statutory damages in the amount of $82,500. 15 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 2 3 2. Post-judgment interest shall accrue from the date of judgment as provided by 28 U.S.C. 1961(a). 3. A permanent injunction hereby issues enjoining and restraining Defendants, and each of 4 them, and their respective agents, servants, employees, successors, and assigns, and all 5 other persons acting in concert or conspiracy with Defendants or affiliated with Defendants, 6 from: 7 8 a. copying, reproducing, distributing, or using any unauthorized copies of Autodesk’s copyrighted software products; b. otherwise infringing any of Autodesk’s copyrights; 10 United States District Court For the Northern District of California 9 c. manufacturing, importing, offering to the public, providing, or otherwise 11 trafficking in any technologies, products, services, devices, components, or parts thereof 12 primarily designed to or produced for the purpose of circumventing either a technological 13 measure that effectively controls access to one or more of Autodesk’s software products or 14 a protection afforded by such a technological measure (collectively, “Circumvention 15 Technology”); 16 d. copying, reproducing, advertising, offering for sale, or distributing any 17 goods or services in connection with the unauthorized use of any of Autodesk’s trademarks 18 or any other marks confusingly similar thereto; 19 e. using in any manner any of Autodesk’s trademarks, any marks confusingly 20 similar thereto, or reproductions, counterfeits, copies, or colorable imitations thereof in 21 connection with any of Defendants’ goods or services in such a manner that is likely to 22 create the erroneous belief that said goods or services are authorized by, sponsored by, 23 licensed by, or are in some way associated with Autodesk; and 24 25 26 f. otherwise infringing any of Autodesk’s trademarks. 4. Pursuant to 17 U.S.C. § 503(b), 17 U.S.C. § 1203 (b)(6), and 15 U.S.C. § 1118, Defendants are further ordered to immediately destroy: 27 a. any and all infringing copies of Autodesk’s software products; 28 b. any device or product involved in Defendants’ manufacture, importation, 16 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT 1 offering to the public, provision, or otherwise trafficking in any Circumvention 2 Technology; and 3 c. all labels, signs, prints, packages, wrappers, receptacles, and advertisements 4 bearing any of Autodesk’s registered trademarks without authorization; any materials 5 containing false designations of origin, false descriptions, or misrepresentations of fact 6 concerning Autodesk’s software products or any services or products of Defendants; any 7 materials bearing any reproduction, counterfeit, copy, or colorable imitation of Autodesk’s 8 registered trademarks; and all plates, molds, matrices, and other means of making the same. 9 IT IS SO ORDERED. United States District Court For the Northern District of California 10 11 Dated: January 31, 2011 _________________________________ LUCY H. KOH United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 Case No.: 10-CV-01917-LHK ORDER GRANTING IN PART MOTION FOR DEFAULT JUDGMENT
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