Cooper Zietz Eng'rs v. The Akana Grp.

1

COOPER ZIETZ ENGINEERS, INC., dba AKANA, an Oregon corporation, Plaintiff, v. THE AKANA GROUP, INC., a Texas corporation, Defendant.

No. 3:21-cv-01584-SB

United States District Court, D. Oregon

November 15, 2022

FINDINGS AND RECOMMENDATION

HON STACIE F. BECKERMAN UNITED STATES MAGISTRATE JUDGE

Cooper Zietz Engineers, Inc., which does business as “Akana” (“Plaintiff”), filed this action against The Akana Group, Inc. (“Defendant”), alleging claims under the Lanham Act for trademark infringement and unfair competition see 15 U.S.C. §§ 1114, 1125, and a claim for common law trademark infringement. After Defendant failed to appear or otherwise defend, the clerk entered default against Defendant. Plaintiff now moves for a default judgment.^[1] See FED. R. CIV. P. 55(B).

The Court has original jurisdiction over Plaintiff's federal claims pursuant to 28 U.S.C. §§ 1331 and 1338 and supplemental jurisdiction over Plaintiff's state law claim pursuant to 28 U.S.C. § 1367.^[2] For the reasons explained below, the Court recommends that the district judge grant Plaintiff's motion.

BACKGROUND^[3]

Plaintiff is an Oregon corporation in “the business of engineering, design, health and safety, and construction management services for both private and government contracts.”

(Compl. ¶¶ 4, 11, 14; Decl. Timothy Oliver Supp Mot. Entry Default J. (“Oliver Decl.”) ¶ 2 ECF No. 13-1.) Plaintiff, which has offices in Oregon, Washington, Illinois, and Nevada and performed services across the United States, conducts business under the registered and assumed name “Akana” and has a federally registered trademark for “AKANA.” (Compl. ¶¶ 4, 10-11, 1415; Oliver Decl. ¶¶ 2-3.)

Plaintiff “began using the trademark AKANA in commerce as an assumed business name on October 1, 2014.” (Compl. ¶ 10; Oliver Decl. ¶ 3.) Plaintiff applied to the United States Patent and Trademark Office (“PTO”) to register the mark AKANA on October 31, 2014, and received a federal trademark for AKANA on September 15, 2015. (Compl. ¶ 11; id. Ex. A at 1-2; Oliver Decl. ¶ 3.)

Defendant, a Texas corporation, is also in the “business of providing construction equipment and construction services for both private and government contracts.” (Compl. ¶¶ 5-6, 16; Oliver Decl. ¶ 4; Decl. Scott Schnuck Supp. Pl.'s Mot. Entry Default J. (“Schnuck Decl.”) ¶ 2, ECF No. 13-2.) Defendant uses the tradename “The Akana Group” in connection with its business and services, which has resulted in “instances of actual confusion” between Plaintiff's and Defendant's business. (Compl. ¶¶ 1, 18.) In fact, the federal government once “inadvertently awarded” a contract to Defendant when Plaintiff was the “intended recipient.” (Id. ¶ 18; Oliver Decl. ¶ 5.)

Although Plaintiff sent a cease and desist letter to Defendant on February 19, 2020, Defendant failed to cease its use of AKANA. (Compl. ¶¶ 1, 17, 19.) Plaintiff reiterated its demand that Defendant stop all uses of AKANA in a January 15, 2021 letter, but Defendant failed to do so and “continue[s] to use ‘AKANA' in association with its business.” (Id. ¶¶ 19-20; Oliver Decl. ¶ 8.)

Based on the foregoing events, Plaintiff filed the present action against Defendant on October 29, 2021, alleging claims under the Lanham Act for trademark infringement and unfair competition, and a claim for common law trademark infringement. (Id. at 4-7.) After Defendant failed to appear or otherwise defend, the clerk entered default against Defendant on May 19, 2022.^[4] (ECF No. 12.) Plaintiff's motion for default judgment followed on August 26, 2022. (ECF No. 13.)

DISCUSSION

I. STANDARD OF REVIEW

“The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.”^[5] Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States, 323 U.S. 1, 12 (1944)). “However, a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (simplified).

Although “default judgments are ordinarily disfavored[, and] [c]ases should be decided upon their merits whenever reasonably possible,” NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986)), a court has the discretion to enter a default judgment. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (citations omitted). A court's decision should be guided by these seven factors (the “Eitel” factors):

(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

NewGen, 840 F.3d at 616 (quoting Eitel, 782 F.2d at 1471-72).

II. ANALYSIS

The Court accepts as true the well-pleaded factual allegations in Plaintiff's complaint because the clerk has entered Defendant's default. Accepting those allegations as true, the Court concludes that the Eitel factors, on balance, support granting Plaintiff's motion for default judgment.

A. Possibility of Prejudice to Plaintiff

The first factor “considers whether a plaintiff would suffer prejudice if default judgment is not entered, and any potential prejudice to the plaintiff favors granting a default judgment.” Progressive Universal Ins. Co. v. Johnson, No. 21-cv-00263-JR, 2021 WL 4163987, at *2 (D. Or. Aug. 13, 2021) (simplified), findings and recommendation adopted, 2021 WL 4165370, at *1 (D. Or. Sept. 11, 2011). The first factor favors granting Plaintiff's motion because Defendant has failed to appear or participate in this action and thus Plaintiff has no other means to prevent Defendant from causing it further harm. See ECBlend, 2017 WL 5999886, at *1-2 (addressing an out-of-state defendant's post-cease and desist letter use of an Oregon's company's trademark, and explaining that the first factor favored the plaintiff, who would “generally be prejudiced if a court decline[d] to grant default judgment where, as here, it lack[ed] other recourse to recover damages for its injury or means to prevent [the defendant] from causing it further harm”).

B. Merits of Plaintiff's Claims and Sufficiency of Plaintiff's Complaint

Plaintiff alleges claims under the Lanham Act for trademark infringement and unfair competition, see 15 U.S.C. §§ 1114, 1125, and a claim for common law trademark infringement. To such establish such claims, a plaintiff must demonstrate that “(1) [it has] a protectible ownership interest in the mark; and (2) [there is] a likelihood of consumer confusion in the defendant's use of its allegedly infringing mark.” Lodestar Anstalt v. Bacardi & Co. Ltd., 31 F.4th 1228, 1244-45 (9th Cir. 2022) (simplified) (explaining that when an “unfair competition claim is based on alleged infringement of a registered mark, the legal analysis under the two sections is essentially identical”); Edge Wireless, LLC v. U.S. Cellular Corp., No. 03-cv-01362-AA, 2004 WL 1661992, at *8 (D. Or. July 23, 2004) (citing the same two elements under Oregon law).

As to the first element of its trademark and unfair competition claims, the relevant factors favor default judgment because Plaintiff has shown that it has a protectible ownership interest in the “Akana” mark and attached the PTO registration to the complaint. (See Compl. ¶¶ 10-12; id. Ex. A at 1-2; Oliver Decl. ¶ 3); see Inhale, 2020 WL 6121942, at *5 (noting that “registration . . . with the [PTO] constitutes prima facie evidence of the validity of the registered mark, ownership of the mark and of the registrant's exclusive right to use the registered mark”) (simplified).

As to the second element, “[t]o determine whether a likelihood of consumer confusion exists, [the Ninth Circuit] relies on the eight-factor Sleekcraft test[.]” JL Beverage Co., LLC v. Jim Beam Brands Co., 828 F.3d 1098, 1106 (9th Cir. 2016) (citing AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), abrogated in part on other grounds by Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792, 810 n.19 (9th Cir. 2003)). The eight Sleekcraft factors are:

(1) the strength of the mark; (2) proximity or relatedness of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) the defendant's intent in selecting the mark; and (8) the likelihood of expansion of the product lines.

Id. (quoting Sleekcraft, 599 F.2d at 348-49).

Based on the limited record before the Court, the eight Sleekcraft factors appear to support the conclusion that Plaintiff's trademark and unfair competition claims are meritorious and sufficiently pled. Plaintiff is in “the business of engineering, design, health and safety, and construction management services for both private and government contracts.” (Compl. ¶¶ 4, 11, 14; Oliver Decl. ¶ 2.) Defendant is also in the “business of providing construction equipment and construction services for both private and government contracts.” (Compl. ¶¶ 5-6, 16; Oliver Decl. ¶ 4; Schnuck Decl. ¶ 2.) Further, Defendant uses the “Akana” mark in connection with advertising, promoting, and selling services in competition with Plaintiff and without its consent. (Compl. ¶¶ 10-35.) Additionally, Defendant's conduct has resulted in, among other things, the federal government improperly awarding a contract to Defendant when Plaintiff was the intended recipient. (Compl. ¶¶ 18, 30; Oliver Decl. ¶ 5.)

For...