Feiya Cosmetics, LLC v. Beyond Beauty Int'l, LLC

FEIYA COSMETICS, LLC, Plaintiff,

v.BEYOND BEAUTY INTERNATIONAL, LLC, ET AL., Defendants.

Case No. C-10-00967 JCS

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Dated: August 29, 2011

REPORT AND RECOMMENDATION

RE:

1) MOTION FOR DEFAULT

JUDGMENT AGAINST DEFENDANTS

QUYNH DAO VIDEO AND HUNG TRAN

[Docket No. 89]

2) MOTION FOR DEFAULT JUDGMENT

AGAINST BEYOND BEAUTY

INTERNATIONAL, LLC; JENNY TRAN;

AND ALEX SAVASTANO [Docket No. 90]

I. INTRODUCTION

In this trademark infringement action, Plaintiff FEIYA COSMETICS, LLC ("Feiya") brings two motions seeking entry of default judgment, the first against Defendants Quynh Dao Video ("QDV") and its alleged owner, Hung Tran (hereinafter, "QDV Motion"), and the second against Defendant Beyond Beauty International, LLC ("Beyond Beauty") and its alleged owners, Jenny Tran and Alex Savastano (hereinafter "Beyond Beauty Motion"). Feiya seeks separate awards of statutory damages, attorneys' fees and costs against the two entities and their owners, as well as injunctive relief. A hearing on the Motions was held on Friday, May 20, 2011. At the hearing, the Court requested supplemental materials to address its concerns relating to personal jurisdiction and other matters, to be filed no later than July 1, 2011. Plaintiff requested an extension of time to file these materials to August 19, 2011 and the Court granted Plaintiff's request. Plaintiff filed supplemental materials in support of the Motions on that date. For the reasons stated below, it is recommended that the QDV Motion be DENIED. It is recommended that the Beyond Beauty Motion be GRANTED as to Beyond Beauty and Jenny Tran and DENIED as to Alex Savastano.

II. BACKGROUND

Plaintiff Feiya is a limited liability company doing business in the Northern District of California with its principal place of business in San Jose, California. First Amended Complaint ("FAC") ¶ 2. Feiya was founded in 2002 and sells a line of cosmetic products, including whitening creams, moisturizers, acne creams, anti-wrinkle creams and sun block, that sell on retail for around $25 to $45 per item. FAC, ¶ 18. Feiya's most popular products are its Day Cream and Night Cream. Id. Feiya is the owner of U.S. Trademark Registration No. 2,843,983 ("Feiya Mark"), which was issued for cosmetic products on May 18, 2004. Id., ¶ 17; see also Declaration of On Lu in Support of Motion for Default Judgment Against Quynh Dao Video and Hung Tran ("Lu Decl. re QDV Motion"), Ex. 1 (trademark registration for Feiya Mark). Plaintiff alleges that as a result of its substantial investment in its products, Feiya has become a well-known brand and its mark has acquired fame and secondary meaning in the field of cosmetics. FAC, ¶¶ 20-21. Since Feiya was founded, it has been the sole authorized distributor in the United States for all Feiya-branded products. Id., ¶ 22. Feiya has never granted a license to use the Feiya Mark to any other person or entity. Id.

Feiya filed the complaint in this action on March 5, 2010, naming numerous defendants,¹ including QDV, Beyond Beauty, and the alleged owners of Beyond Beauty, Jenny Tran and Alex Savastano. Feiya alleged that the defendants had violated federal trademark law and various California state laws by selling counterfeit versions of Feiya's Day and Night Cream, and that they had refused to stop infringing despite receiving cease-and-desist letters from Feiya demanding that they do so. On September 3, 2010, Feiya filed an amended complaint in which it added as a defendant Hung Tran, the alleged owner of QDV.

With respect to Beyond Beauty, Feiya alleged that Beyond Beauty sold cosmetics products over the internet at the following websites: 1) www.foreverbeautysecrets.com; 2) www.beyondbeauty online.com; and 3) www.bodybeautyonline.com. FAC, ¶ 33. Feiya further alleged that on June 2, 2009 and again on June 10, 2009, Feiya, through a shopper, obtained Day andNight Cream units sold by Beyond Beauty that were labeled with counterfeit packaging. Id., ¶¶ 34-35 & Ex. A (receipt of purchase for one unit of Day and Night Cream dated June 2, 2009 from www.foreverbeautysecrets.com) and Ex. B (receipt of purchase for one unit of Day and Night Cream dated June 10, 2009 from www.foreverbeautysecrets.com). In letters dated July 2, 2009 and August 11, 2009, Feiya's counsel notified Beyond Beauty that it was infringing Feiya's trademark and demanded that Beyond Beauty cease all infringing activity. Id. ¶ 36 & Ex. C (letter from Feiya's counsel demanding that Beyond Beauty cease and desist from all infringing acticvity). Feiya alleged that despite receiving Feiya's notices of infringement, Beyond Beauty refused to cease and desist from its infringing activity. Id., ¶ 37.

As to QDV, Plaintiff alleged that QDV is a retail store in New Orleans, Louisiana that rents and sells DVDs and videos and sells cosmetics. Id., ¶ 50. According to Feiya, on August 12, 2008, Feiya through a shopper obtained one Day Cream and one Night Cream unit sold by QDV, which were labeled with a counterfeit Feiya mark. Id., ¶ 51 & Ex. J (showing a picture of one box of Day Cream and one box of Night Cream with Feiya mark, a picture of two cardboard boxes stamped with "New Formula" that do not carry the Feiya Mark, a picture of a business card for QDV, a picture of a diet product that is not at issue in this case and a picture of what appears to be the back of a business card with the numbers 35, 35 and 70 in a column suggesting a price tally).²

On August 20, 2009, Feiya's counsel notified QDV of its infringement of Feiya's federally registered trademark and demanded that QDV cease its infringing activity. Id., ¶ 52 & Ex. K (a letter dated August 20, 2008 from Feiya's counsel based in San Jose California to QDV demanding that it cease and desist its infringing activity). Nonetheless, QDV continued to sell products labeled with counterfeit Feiya packaging. Id., ¶ 53. Feiya alleges, in particular, that on July 27, 2009, it obtained through a shopper two Night Cream units packaged with the counterfeit Feiya Mark. Id., 54. In support of this allegation, Feiya offered an exhibit showing "photos of the products purchased." Id. & Ex. L. The attached exhibit is a picture of two cardboard boxes that are stamped"New Formula" and do not appear to include the Feiya Mark. Id., Ex. L. Feiya further alleges that on August 12, 2009, Feiya obtained, through a shopper, one Day and one Night Cream unit labeled with the Feiya counterfeit mark, sold by QDV. Id., ¶ 55 & Ex. M (hand-written receipt with "Quyn Dao" written at the top, reflecting sale of one Day Cream and on Night Cream on August 12, 2009).

Plaintiff asserted the following claims in its First Amended Complaint: 1) counterfeiting, under 15 U.S.C. §§ 1114-1117, based on use of a mark identical to Feiya's mark to market Defendants' products as authentic Feiya products (against, inter alia, Beyond Beauty and QDV); 2) contributory counterfeiting based on allegation that owners of QDV and Beyond Beauty knowingly provided goods and services necessary to those entities' intentional counterfeiting (against, inter alia, Jenny Tran, Alex Savastano, and Hung Tran); 3) trademark infringement, under 15 U.S.C. §§ 1114-1117, based on alleged unauthorized use of Feiya Mark (against, inter alia, Beyond Beauty and QDV); 4) contributory trademark infringement based on allegation that owners of QDV and Beyond Beauty knowingly provided goods and services necessary to those entities' trademark infringement (against, inter alia, Jenny Tran, Alex Savastano, and Hung Tran); 5) trademark dilution, under 15 U.S.C. § 1125(c) (against, inter alia, Beyond Beauty and QDV); 6) False designation of origin, under 15 U.S.C. § 1125(a) (against, inter alia, Beyond Beauty and QDV); 7) Unfair competition, under 15 U.S.C. § 1125(a) (against all defendants); 8) state statutory and common law trademark, counterfeiting, infringement, dilution and unfair competition, under Cal. Bus. & Prof. Code §§ 14320, 14330 and 17200 et seq. (against all Defendants); 9) Intentional interference with prospective economic advantage, under Cal. Bus. & Prof. Code § 17200 (against all defendants); and 10) negligent interference with prospective economic advantage (under Cal. Bus. & Prof. Code § 17200).

In its Demand for Judgment, Plaintiff requests, inter alia, an injunction prohibiting Defendants from using the Feiya Mark or distributing counterfeit Feiya goods, statutory damages of $1,000,000 under 15 U.S.C. § 1117(c)(2), an award of attorneys' fees and costs, treble damages, and prejudgment and postjudgment interest.

Defendants QDV, Beyond Beauty, Jenny Tran, Alex Savastano and Hung Tran did not appear in this action and default has been entered against them by the Clerk. See Docket Nos. 24 (QDV), 53 (Savastano, Beyond Beauty), 66 (Jenny Tran), 85 (Hung Tran).

In the QDV Motion, Feiya seeks entry of judgment against QDV and its alleged owner, Hung Tran, as well as an injunction prohibiting further counterfeiting and trademark infringement, statutory damages in the amount of $1,000,000.00, attorneys' fees in the amount of $34,444.00 and costs in the amount of $1,897.41. In support of the Motion, Feiya cites to the exhibits filed with the First Amended Complaint reflecting sales of six units of Feiya counterfeit products between August 12, 2008 and August 12, 2009. QDV Motion at 16. Feiya argues that the six sales that were documented on separate days over a single year support the conclusion that QDV's sales were "probably significant." Id. at 17. Feiya also provides a declaration by its counsel stating that a second cease-and-desist letter was sent to QDV on April 14, 2009 and another letter was sent on May 27, 2010 alerting QDV that default had been entered against it. Lu Decl. re QDV Motion, ¶¶ 5-6 & Exs. 1-2. Feiya asserts in the Motion that personal jurisdiction exists because QDV received these cease-and-desist letters, which stated that Feiya is based in San Jose California, and...