Rockstar, Inc. et al v. Rap Star 360, LLC et al, No. 2:2010cv00179 - Document 11 (D. Nev. 2010)

Court Description: ORDER granting 10 Motion for Default Judgment. IT IS FURTHER ORDERED that Defendant, including its directors, officers, employees, agents, contractors, customers, and others acting in concert with them, are hereby permanently enjoined, prohibited , and otherwise restrained from the following: (1) using the mark RAPSTAR 360"(2) using the Rap Star star logo(3) using the Rap Star black and gold trade dress, and(4) using the domain names www.rapstar360.com and www.rapstar360.net. Signed by Judge Larry R. Hicks on 7/6/2010. (Copies have been distributed pursuant to the NEF - SD)
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Rockstar, Inc. et al v. Rap Star 360, LLC et al Doc. 11 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 DISTRICT OF NEVADA 8 *** 9 ROCKSTAR, INC., a Nevada corporation, and RUSSELL G. WEINER, an individual, 10 Plaintiffs, 11 v. 12 13 RAP STAR 360 LLC, a Delaware limited liability company, and ERIC BARRIER, an individual, 14 Defendants. 15 16 ) ) ) ) ) ) ) ) ) ) ) ) ) 2:10-CV-00179-LRH-RJJ ORDER Before the court is Plaintiffs Rockstar, Inc. and Russell G. Weiner’s 17 (collectively “Plaintiffs”) Motion for Default Judgment (#101). Defendant Rap Star 360 LLC has 18 not responded or otherwise appeared in this matter. 19 I. 20 Facts and Procedural History This is a trademark and trade dress infringement dispute. Weiner is the owner of several 21 U.S. Trademark Registrations for “ROCKSTAR” and other similar marks in connection with 22 energy drinks. Since 2001, Weiner has licensed his trademarks to Rockstar, Inc. 23 24 Rockstar, Inc. is a producer and distributor of various energy drinks, including ROCKSTAR ENERGY DRINK®. Rockstar, Inc.’s products and promotional materials feature a star as a 25 26 1 Refers to the court’s docket entry number. Dockets.Justia.com 1 substitute for the “A” in “ROCKSTAR,”along with a black and gold trade dress. Rockstar, Inc. 2 markets and promotes its products using the following Internet addresses: www.rockstar69.com 3 and www.rockstar69.net. 4 Defendant uses the mark “RAPSTAR 360" and trade name “RAP STAR 360" in connection 5 with its own energy drink which also features a star logo on its product and a black and gold trade 6 dress. Defendant markets and promotes its product at the following Internet addresses: 7 www.rapstar360.com and www.rapstar360.net. 8 9 On February 9, 2010, Plaintiffs filed a complaint alleging the following causes of action: (1) trademark infringement under section 32 of the Lanham Act, 15 U.S.C. §1114; (2) false 10 designation and description, trade dress infringement, and unfair competition in violation of section 11 41 of the Lanham Act, 15 U.S.C. §1125; and (3) common law unfair competition.2 On February 12 16, 2010, Plaintiffs served Harvard Business, Defendant’s registered agent for service of process, 13 with the summons and complaint. Defendant did not file a response before the March 9, 2010 14 deadline. 15 On March 22, 2010, Plaintiffs filed their Motion for Entry of Clerk’s Default (#8), which 16 the Clerk of the Court subsequently entered (#9). Thereafter, on May 5, 2010, Plaintiffs filed the 17 present motion for default judgment, seeking a permanent injunction barring Defendant’s further 18 use of the “RAPSTAR 360" mark and trade dress. 19 II. 20 Discussion Obtaining a default judgment is a two-step process governed by Federal Rule of Civil 21 Procedure 55. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). First, Rule 55(a) provides, 22 “When a party against whom a judgment for affirmative relief is sought has failed to plead or 23 otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the 24 25 26 2 Although Plaintiffs’ Complaint (#1) contains causes of action for Nevada Statutory Deceptive Trade Practices and Unjust Enrichment, Plaintiffs’ Motion for Default Judgment (#10) does not address these claims. 2 1 party’s default.” Fed. R. Civ. P. 55(a). Second, after the clerk enters default, a party must seek 2 entry of default judgment under Rule 55(b). 3 Upon entry of default, the court takes the factual allegations in the non-defaulting party’s 4 complaint as true. Nonetheless, while entry of default by the clerk is a prerequisite to an entry of 5 default judgment, “a plaintiff who obtains an entry of default is not entitled to default judgment as a 6 matter of right.” Warner Bros. Entm’t Inc. v. Caridi, 346 F. Supp. 2d 1068, 1071 (C.D. Cal. 2004) 7 (citation omitted). Instead, whether a court will grant a default judgment is in the court’s 8 discretion. Id. (citations omitted). 9 A. Default Judgment Factors 10 The Ninth Circuit has identified the following factors as relevant to the exercise of the 11 court’s discretion in determining whether to grant default judgment: (1) the possibility of prejudice 12 to the plaintiff; (2) the merits of the plaintiff’s substantive claims; (3) the sufficiency of the 13 complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning 14 material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy 15 underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel, 782 F.2d at 16 1471-72. The court will consider these factors below. 17 1. Prejudice The first Eitel factor considers whether the plaintiff will suffer prejudice if default judgment 18 19 is not entered. See PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). 20 Considering Defendant’s failure to respond or otherwise cooperate in this litigation, it is unlikely 21 that Defendant will cease use of the “RAPSTAR 360" mark in the absence of an entry of default 22 judgment. Thus, the possibility of prejudice to Plaintiffs is high, and this factor weighs in favor of 23 default judgment. 24 \\\ 25 \\\ 26 3 1 2. Merits of Plaintiffs’ Substantive Claims The second and third Eitel factors favor default judgment where the complaint sufficiently 2 3 states a claim for relief under the “liberal pleading standards embodied in Rule 8" of the Federal 4 Rules of Civil Procedure. See Fed. R. Civ. P. 8; Danning v. Lavine, 572 F.2d 1386, 1389 (9th Cir. 5 1978). Here, the court finds that Plaintiffs’ factual allegations sufficiently state a claim for relief. 6 a. Trademark Infringement 7 To establish Defendant’s liability for trademark infringement, Plaintiffs must demonstrate 8 the following: (1) they are the owner of a valid, protectable mark; and (2) the alleged infringer is 9 using a confusingly similar mark. See Grocery Outlet v. Albertson’s Inc., 497 F.3d 949, 951 (9th 10 Cir. 2007) (citing 15 U.S.C. § 1114(1); Brookfield Communications, Inc. v. West Coast Entm’t 11 Corp., 174 F.3d 1036, 1046 (9th Cir. 1999)). Further, to determine the likelihood of confusion, the 12 Ninth Circuit looks to the following eight non-exclusive factors: “strength of the mark; proximity 13 of the goods; similarity of the marks; evidence of actual confusion; marketing channels used; types 14 of goods and the degree of care likely to be exercised by the purchaser; defendant’s intent in 15 selecting the mark; and likelihood of expansion of the product lines.” AMF Inc. v. Sleekcraft 16 Boats, 599 F.2d 341, 348-49 (9th Cir. 1979) (citations omitted), abrogated in part on other 17 grounds by Mattel, Inc. v. Walking Mountain Prod., 353 F.3d 792 (9th Cir.2003). 18 Weiner is the valid owner of U.S. Trademark Registrations for “ROCKSTAR.” Plaintiffs 19 allege that consumers will mistakenly assume that Defendant’s energy drinks are associated or 20 affiliated with Rockstar, Inc. The goods in question are identical, and the marks have similar 21 meanings. Defendant’s energy drinks are or will be sold in the same retail outlets as used by 22 Plaintiffs. Finally, Defendant intentionally adopted its mark with the purpose of deceiving 23 consumers. Thus, the court finds that Plaintiffs have stated a sufficient claim for trademark 24 infringement. 25 \\\ 26 4 1 2 b. Trade Dress Infringement A three-part test is used to determine whether a trade dress is protected: “(1) whether the 3 trade dress is inherently distinctive or has acquired distinctiveness through secondary meaning; (2) 4 whether the trade dress is not functional; and (3) whether there is any likelihood of confusion 5 between a party’s trade dress and an alleged infringer’s.” GMC v. Let’s Make a Deal, 223 F. Supp. 6 2d 1183, 1195 (D. Nev. 2002) (citation omitted). 7 Plaintiff alleges that Rockstar Inc.’s trade dress has acquired a secondary meaning in the 8 minds of consumers, that the black and gold trade dress is nonfunctional, and that Defendant’s 9 black and gold packaging is confusingly similar to Rockstar Inc.’s trade dress. Accordingly, the 10 11 12 court finds that Plaintiffs have stated a sufficient claim for trade dress infringement. 3. Sum of Money at Stake Under the fourth Eitel factor, the court considers “the amount of money at stake in relation 13 to the seriousness of Defendants’ conduct.” PepsiCo, Inc., 238 F. Supp. 2d at 1176. Here, 14 Plaintiffs seek an injunction, rather than monetary relief. The suitability of injunctive relief is 15 discussed below. 16 17 4. Possible Dispute The fifth Eitel factor considers the possibility of dispute as to any material facts in the case. 18 PepsiCo, Inc., 238 F. Supp. 2d at 1177. Upon entry of default, all factual allegations of the 19 complaint, except those relating to the amount of damages, will be taken as true. Geddes v. United 20 Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (citation omitted). Here, given the sufficiency of the 21 complaint, no genuine dispute of material fact would preclude granting default judgment. 22 23 5. Excusable Neglect The sixth Eitel factor considers the possibility that the default resulted from excusable 24 neglect. A defendant’s conduct is culpable, rather than excusable, if the defendant received actual 25 or constructive notice of the filing of the action and failed to answer. Meadows v. Dominican 26 5 1 Republic, 817 F.2d 517, 521 (9th Cir. 1987). Here, Defendant had both actual and constructive 2 notice of this litigation. Plaintiffs properly served the summons and complaint on a registered 3 agent (#9). Therefore, it does not appear that Defendant’s default resulted from excusable neglect. 4 5 6. Decision on the Merits The seventh Eitel factor considers that “[c]ases should be decided upon their merits 6 whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, the “mere existence of [Rule 7 55(b)] indicates that this ‘preference, standing alone, is not dispositive.” PepsiCo, Inc., 238 F. 8 Supp. 2d at 1177 (citation omitted). Moreover, Defendant’s failure to answer Plaintiff’s complaint 9 makes a decision on the merits impractical, if not impossible. Thus, the court is not precluded from 10 entering a default judgment against Plaintiffs. 11 B. Permanent Injunction 12 The Lanham Act “vests the district court with the power to grant injunctions according to 13 principles of equity and upon such terms as the court may deem reasonable, to prevent the violation 14 of any right of the trademark owner.” Reno Air Racing Ass’n v. McCord, 452 F.3d 1126, 1137 (9th 15 Cir. 2006) (citing 15 U.S.C. § 1116). Plaintiffs seek a permanent injunction prohibiting Defendant 16 from further use of: (1) the “RAPSTAR 360" trademark, (2) the Rap Star logo, (3) the Rap Star 17 trade dress, and (4) anything confusingly similar thereto. 18 To obtain the requested permanent injunction Plaintiffs must establish the following: (1) 19 actual success on the merits; (2) a likelihood of irreparable injury to the plaintiff if injunctive relief 20 is not granted; (3) a balance of hardships favoring the plaintiff; and (4) advancement of the public 21 interest. See Winter v. Natural Res. Def. Council, 129 S. Ct. 365, 374, 381 (2008) (citation 22 omitted). 23 Here, an injunction is warranted because Plaintiffs have achieved “actual success on the 24 merits” through Defendant’s default. Further, Plaintiffs are likely to suffer irreparable injury 25 because, absent injunctive relief, Defendant’s trademark infringement will continue. Consumer 26 6 1 confusion and potential dissatisfaction with Defendant’s drinks are likely to have a negative effect 2 on Plaintiffs’ reputation and goodwill. Accordingly, the court finds the lost opportunities and 3 diminished value of goodwill resulting from Defendant’s continued unauthorized use of Plaintiffs’ 4 marks is likely to cause Plaintiffs irreparable harm. See Rent-A-Center, Inc. v. Canyon Television 5 & Appliance Rental, Inc., 944 F.2d 597, 603 (9th Cir. 1991) (citation omitted) (“[I]ntangible 6 injuries, such as damage to . . . goodwill, qualify as irreparable harm.”); MySpace, Inc. v. Wallace, 7 498 F.Supp.2d 1293, 1305 (C.D. Cal. 2007) (“Harm to business goodwill and reputation is 8 unquantifiable and considered irreparable.”). 9 Likewise, the balance of harms and the public interest both weigh in Plaintiffs’ favor. 10 Plaintiffs have expended substantial sums of money using and promoting their marks, and any 11 harm to Defendant in forcing it to comply with the requirements of the law merits little equitable 12 consideration. In addition, the public interest lies in favor of upholding property interests in 13 trademarks and preventing customer confusion. Because Plaintiffs have demonstrated a likelihood 14 of irreparable harm and that the balance of harms and the public interest weigh in their favor, the 15 court shall issue the requested permanent injunction as outlined below. 16 \\\ 17 \\\ 18 \\\ 19 \\\ 20 \\\ 21 \\\ 22 \\\ 23 \\\ 24 \\\ 25 \\\ 26 7 1 2 3 IT IS THEREFORE ORDERED that Plaintiffs’ Motion for Default Judgment (#10) is hereby GRANTED. IT IS FURTHER ORDERED that Defendant, including its directors, officers, employees, 4 agents, contractors, customers, and others acting in concert with them, are hereby permanently 5 enjoined, prohibited, and otherwise restrained from the following: 6 (1) using the mark “RAPSTAR 360"; 7 (2) using the Rap Star star logo; 8 (3) using the Rap Star black and gold trade dress; and 9 (4) using the domain names www.rapstar360.com and www.rapstar360.net. 10 IT IS SO ORDERED. 11 DATED this 6th day of July, 2010. 12 13 14 15 __________________________________ LARRY R. HICKS UNITED STATES DISTRICT JUDGE 16 17 18 19 20 21 22 23 24 25 26 8