Chanel, Inc. v. Huang Cong, 10-2086

CHANEL, INC., Plaintiff, v. HUANG CONG, and DOES 1-10, Defendants.

No. 10-2086

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION

Date: December 8, 2011

ORDER GRANTING PLAINTIFF'S MOTION FOR ENTRY OF FINAL DEFAULT

JUDGMENT

Before the Court is Plaintiff Chanel, Inc.'s ("Chanel") August 25, 2011 Motion for Entry of Final Default Judgment Against Defendant. (See Pl.'s Mot. for Entry of Final Default J. Against Def., ECF No. 12.) Defendant Huang Cong ("Cong") has not responded. For the following reasons, Plaintiff's Motion is GRANTED.

I. Background ¹

Chanel is a New York corporation with its principal place of business in New York, New York. (Compl. ¶ 2, ECF No. 1.) Chanel manufactures and distributes a wide range of high-qualityluxury goods around the world. (Id.) In Shelby County, Tennessee, Chanel operates boutiques and maintains a warehouse used to fulfill its e-commerce orders. (Id.)

Chanel owns a number of federally-registered trademarks, including variations on the word "Chanel," the word "J12," and a monogram consisting of a letter "C" interlocked with another, opposite-facing letter "C" (collectively the "Chanel Marks" or "Marks").² (Id. ¶¶ 2, 9; Hahn Decl. ¶ 4, ECF No. 12-2.) The Chanel Marks are registered in International Classes 9, 14, 18, 20, and 25 and are used in manufacturing and distributing Chanel's luxury goods, including its handbags and watches. (Compl. ¶¶ 9-10.)

The Chanel Marks symbolize Chanel's quality, reputation, and goodwill. (Compl. ¶ 11.) Chanel has never abandoned the Marks and has invested substantial time, money, and other resources developing and promoting them. (Id. ¶¶ 11-12.) In the United States, Chanel has used, advertised, and promoted the Chanel Marks in association with its luxury goods, carefullymonitoring their uses. (Id. ¶ 13.) As a result, consumers readily identify merchandise bearing the Marks as high-quality merchandise sponsored and approved by Chanel. (Id. ¶ 14.) Accordingly, the Chanel Marks have secondary meaning as identifiers of high quality. (Id. ¶ 15.)

Cong and Does 1-10 (collectively, the "Defendants") are individuals and/or business entities. (Id. ¶ 3.) The Defendants, individually and jointly, maintain fully operational websites operating under various domain names (collectively, the "Subject Domain Names").³ (Id. at 1, ¶ 4.) The Chanel Marks have never been assigned or licensed to the Defendants for use on any of the websites operating under the Subject Domain Names. (See Compl. ¶ 10.) Through the Subject Domain Names, the Defendants advertise, offer, sell, and distribute counterfeit products bearing the Chanel Marks. (See id. ¶¶ 3, 4, 18, 19.) The Defendants' products bear exact copies of the Chanel Marks in the same stylized fashion as genuine Chanel products, but the quality of the Defendants' products is substantially different. (Id. ¶ 17.)

On February 5, 2010, Chanel brought this action against the Defendants. (See Compl.) Chanel alleges that Defendants' actions constitute (1) counterfeiting and infringement underSection 32 of the Lanham Act, 15 U.S.C. § 1114, (see Compl. ¶¶ 30-35); (2) false designation of origin under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), (see id. ¶¶ 36-41); and (3) cyberpiracy under the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d), (see id. ¶¶ 44-48).

Chanel filed a Motion to Authorize Alternate Service of Process on Defendant Pursuant to Federal Rule of Civil Procedure 4(f)(3) of the Federal Rules of Civil Procedure on May 14, 2010. (See Chanel, Inc.'s Mot. to Authorize Alternate Services of Process on Def., ECF No. 4.) The Court granted that motion on November 4, 2010. (See Order Authorizing Alternate Service of Process on Def. Pursuant to Federal Rule of Civil Procedure 4(f)(3), ECF No. 7). Chanel served Cong with copies of the Summons and Amended Complaint by e-mail on November 5, 2010. (See Proof of Service ¶ 3, ECF No. 8-1; Morrow Decl. ¶ 3, ECF No. 9-1.) Over twenty days have elapsed since service was effective, and Cong has not responded. (See Morrow Decl. ¶ 4.) On January 7, 2011, the Clerk entered default against Cong. See Fed. R. Civ. P. 55(a); (Entry of Default, ECF No. 10). Chanel filed the Motion for Entry of Final Default Judgment now before the Court on August 25, 2011.⁴ (See Mot. for Default, ECF No. 12.)

II. Jurisdiction

A court's default judgment is invalid unless it has proper jurisdiction. See, e.g., Citizens Bank v. Parnes, 376 F. App'x 496, 501 (6th Cir. 2010) ("Personal jurisdiction over a defendant is a threshold issue that must be present to support any subsequent order of the district court, including entry of the default judgment.") (citing Kroger Co. v. Malease Foods Corp., 437 F.3d 506, 510 (6th Cir. 2006)).

Courts must consider subject-matter and personal jurisdiction, but not defects in venue, before entering a default judgment. Compare In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (holding that a district court properly raised the issue of personal jurisdiction sua sponte), and Williams v. Life Sav. & Loan, 802 F.2d 1200, 1203 (10th Cir. 1986) (per curiam) ("[W]hen entry of a default judgment is sought against a party who has failed to plead or otherwise defend, the district court has an affirmative duty to look into its jurisdiction both over the subject matter and the parties."), and Columbia Pictures Indus. v. Fysh, No. 5:06-CV-37, 2007 U.S. Dist. LEXIS 11234, 3-4 (W.D. Mich. Feb. 16, 2007) (considering and finding subject-matter and personal jurisdiction before entering a defaultjudgment), with Rogers v. Hartford Life & Accident Ins. Co., 167 F.3d 933, 942 (5th Cir. 1999) ("The Supreme Court has made clear that if a party defaults by failing to appear or file a timely responsive pleading, the party waives defects in venue.") (citations omitted), and Williams, 802 F.2d at 1202 ("[I]f a party is in default by failing to appear or to file a responsive pleading, defects in venue are waived, a default judgment may be validly entered and the judgment cannot be attacked collaterally for improper venue." (citing Hoffman v. Blaski, 363 U.S. 335, 343 (1960)).

A. Subject-matter Jurisdiction

Congress has specifically granted federal question jurisdiction for claims of copyright and trademark infringement. See 15 U.S.C. § 1121(a) (providing for jurisdiction over all trademark claims arising under Chapter 22 of Title 15 of the United States Code); 28 U.S.C. § 1338(a) (providing for jurisdiction of any action arising under a federal law relating to copyrights and trademarks). General federal question jurisdiction exists for any claims arising under the laws of the United States. See 28 U.S.C. § 1331. Chanel has alleged violations of federal statutes barring trademark infringement, false designation of origin, and cyberpiracy. See 15 U.S.C. §§ 1114(1)(a), 1125(a), 1125(d); (Compl. ¶¶ 31-51). Therefore, theCourt has subject-matter jurisdiction over Chanel's claims. See 15 U.S.C. § 1121(a); 28 U.S.C. §§ 1331, 1338(a).

B. Personal Jurisdiction

A court's subject-matter jurisdiction arises from the existence of a federal question. "[P]ersonal jurisdiction over a defendant exists 'if the defendant is amenable to service of process under the [forum] state's long-arm statute and if the exercise of personal jurisdiction would not deny the defendant[] due process.'" Flynn v. Greg Anthony Constr. Co., 95 F. App'x 726, 740 (6th Cir. 2003) (quoting Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002)). "Where the state long-arm statute extends to the limits of the due process clause, the two inquiries are merged and the court need only determine whether exercising personal jurisdiction violates constitutional due process." Bridgeport Music, Inc. v. Still N the Water Publ'g, 327 F.3d 472, 477 (6th Cir. 2003) (citing Nationwide Mut. Ins. Co. v. Tryg Int'l Ins. Co., 91 F.3d 790, 793 (6th Cir. 1996)). Because "the Tennessee long-arm statute has been interpreted as coterminous with the limits on personal jurisdiction imposed by the due process clause," federal courts in Tennessee may exercise personal jurisdiction if doing so is consistent with federal due process requirements. Id. (citing Payne v. Motorists' Mut. Ins. Cos., 4 F.3d 452, 454 (6th Cir. 1993)).

"Personal jurisdiction over an out-of-state defendant arises from 'certain minimum contacts with [the forum] such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Air Prods. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 550 (6th Cir. 2007) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Personal jurisdiction may be specific or general, depending on the type of minimum contacts maintained by the out-of-state defendant. Id. (citing Reynolds v. Int'l Amateur Athletic Fed'n, 23 F.3d 1110, 1116 (6th Cir. 1994)). The Sixth Circuit applies a three-part test to determine whether specific personal jurisdiction exists.

First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.

Air Prods., 503 F.3d at 550 (quoting S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968)) (emphasis added).

1. Purposeful Availment

To satisfy the first requirement of specific personal jurisdiction, the defendant "must have purposefully availed himself of 'the privilege of acting in the forum state orcausing a consequence in the forum state.'" Id. (quoting S. Mach Co., 401 F.2d at 381). Where a defendant's contacts with the forum state result from actions undertaken by the defendant himself, the defendant has purposefully availed himself of the privilege of acting in the state....