Synopsys, Inc. v. Khanh

1

SYNOPSYS, INC., Plaintiff, v. PHAN VAN KHANH, Defendant.

No. 22-cv-02546-JD

United States District Court, N.D. California

July 24, 2023

ORDER RE DEFAULT JUDGMENT

JAMES DONATO UNITED STATES DISTRICT JUDGE

In this copyright and trademark infringement action, plaintiff Synopsys, Inc. alleges that defendant Phan Van Khanh operated a website, ShareAppsCrack.com, that trafficked counterfeit Synopsys software. See Dkt. No. 1. Khanh has failed to appear in the action, and Synopsys has moved for default judgment on its claims under the Digital Millennium Copyright Act (DMCA), 17 U.S.C. § 1201, and the Lanham Act, 15 U.S.C. § 1125. Dkt. No. 27. The motion is granted and denied in part.

BACKGROUND

Synopsys designs copyrighted and trademarked software for the semiconductor industry. Dkt. No. 1 ¶ 21. Synopsys customers purchase licenses which grant them rights to install Synopsys software and use specific Synopsys programs subject to control by Synopsys' “License Key” security system. Id. ¶ 24. Synopsys software cannot be used without the appropriate license key, and Synopsys itself “is the sole source of legitimate license key files, which it provides only to licensed users of its software.” Id. ¶ 25.

As alleged in the complaint, Khanh resides in Vietnam and operated the website ShareAppsCrack.com, which sold “cracked” and counterfeit versions of software that are distributed without the owner's authorization and with modifications that circumvent access controls. Id. ¶¶ 2, 26, 29. Synopsys alleged that ShareAppsCrack.com allowed for unauthorized downloads of its software using counterfeit license keys, and advertised “cracked” versions of Synopsys software using Synopsys' protected trademarks. Id. ¶¶ 26, 29, 44-48.

Synopsys filed suit on April 26, 2022, and served Khanh on April 29 2022. Dkt Nos. 1, 81. On May 9, 2022, the Court entered a temporary restraining order (TRO) and an order directing Khanh to show cause why a preliminary injunction should not issue to enjoin the alleged violations of the DMCA and Lanham Act. Dkt. No. 13. Khanh did not respond to the orders or otherwise make any appearance in the case, but the ShareAppsCrack.com website was taken down on or around May 24, 2022. Dkt. No. 27-2 ¶ 21. A preliminary injunction was issued on June 15, 2022, on the same terms as the TRO Dkt. No. 16.

Khanh has failed to answer the complaint or otherwise appear in this matter. In January 2023, the clerk of the court entered default against Khanh. Dkt. No. 25. Synopsys moved for default judgment in February 2023.

DISCUSSION

I. JURISDICTION

“In default judgment proceedings, the Court has an affirmative duty to consider whether it has jurisdiction over the subject matter and parties to the case.” FormFactor, Inc. v. Mr. Prober Tech. Inc., No. 13-cv-03688-JD, 2015 WL 1870236, at *1 (N.D. Cal. Apr. 23, 2015) (citing In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999)); see also Crisman v. Van Der Hoog, No. 20-cv-02723-JD, 2021 WL 8445148, at *1 (N.D. Cal. Nov. 2, 2021). The Court has subject matter jurisdiction over this trademark and copyright infringement case. 28 U.S.C. § 1338(a).

A. Personal Jurisdiction

The Court also has personal jurisdiction over Khanh under Federal Rule of Civil Procedure 4(k)(2). “Federal Rule of Civil Procedure 4(k) governs personal jurisdiction in federal court.” Will Co., Ltd. v. Yee, 47 F.4th 917, 921 (9th Cir. 2022). “Under Rule 4(k)(2), a federal court may exercise jurisdiction over a foreign defendant if: (1) the claim arises under federal law, (2) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction, and (3) exercising jurisdiction comports with due process.” Id. at 922. Due process is satisfied if the defendant has “minimum contacts” within the forum such that the proceedings do not offend “‘traditional notions of fair play and substantial justice.'” Id. (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

The due process inquiry with respect to a foreign defendant under Rule 4(k)(2) “is nearly identical to the traditional personal jurisdiction analysis,” except that it considers “contacts with the nation as a whole.” Lang Van., Inc. v. VNG Corp., 40 F.4th 1034, 1041 (9th Cir. 2022) (quoting Holland Am. Line, Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 462 (9th Cir. 2007)) (internal quotations omitted). In the context of tort claims, like the trademark and copyright claims at issue here, “a defendant has requisite minimum contacts with the forum if: (1) the defendant ‘purposefully direct[s]' its activities at the forum, (2) the lawsuit ‘arises out of or relates to the defendant's forum-related activities,' and (3) the exercise of jurisdiction is ‘reasonable.'” Will Co., 47 F.th at 922 (quoting Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1227-28 (9th Cir. 2011)). To determine whether a defendant purposefully directed its activities toward the forum, a court must consider “whether the defendant: (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Id. (internal quotations omitted)).

Khanh's conduct readily satisfies these standards. He committed intentional acts by offering “cracked” and counterfeit software and infringing registered trademarks on his website. Dkt. No. 1 ¶¶ 26-53. The record establishes that those acts were expressly aimed at the United States: Synopsys submitted evidence that ShareAppsCrack.com offered for download more than 3,000 software titles, which included a large number of software titles from companies in the United States, and that many users of ShareAppsCrack.com downloaded Synopsys software through servers based in the United States. Dkt. No. 27-2 ¶¶ 10, 17, 20. That Khanh attempted to invoke the protections of the DMCA safe harbor by including a DMCA policy page on his website also indicates purposeful direction at the United States. See Dkt. No. 27-2 ¶ 8; see also Ayla, LLC v. Alya Skin Pty. Ltd, 11 F.4th 972, 983 (9th Cir. 2021) (finding that a foreign defendant “purposefully directed its activities toward and availed itself of the protections and benefits of the United States” by claiming FDA approval). There is also evidence that Khanh advertised ShareAppsCrack.com using U.S.-based social media platforms and purchased ads for SharesAppsCrack.com that targeted the United States market. Dkt. No. 27-2 ¶ 16. This all supports a conclusion that Khanh's intentional acts were expressly aimed at the United States. See Ayla, 11 F.4th at 980 (finding substantial sales to American consumers and significant advertising efforts targeted toward the forum established purposeful direction). And because Synopsys' claims all relate to Khanh's operation of ShareAppsCrack.com, they all arise from his forum-related activities.

“[O]nce the plaintiff has satisfied the first two prongs” of the due process analysis under Rule 4(k)(2), the burden then shifts to the defendant who must show that jurisdiction would be unreasonable. Lang Van, 40 F.4th at 1041. Khanh has not appeared and has not objected to the exercise of personal jurisdiction over him. In any event, the facts of this case demonstrate that personal jurisdiction in accordance with Rule 4(k)(2) is reasonable.

B. Service

Synopsys personally served Khanh with a copy of the complaint on April 29, 2022. Dkt. No. 8-1 ¶ 2. On June 29, 2022, Synopsys served Khanh via the Vietnamese Central Authority pursuant to the Hague convention process. See Dkt. No. 19-1, Ex. A. Khanh never appeared, but the fact that the ShareAppsCrack.com website was taken down shortly after the TRO was entered indicates that Khanh was noticed of the proceedings in this case. Dkt. No. 27-2 ¶ 21. The Court finds that Khanh was adequately served.

II. DEFAULT JUDGMENT

“Under Federal Rule of Civil Procedure 55(b)(2), a party may apply to the Court for entry of judgment by default against a defendant that has failed to defend against the action.” FormFactor, 2015 WL 1870236, at *2. “‘The district court's decision whether to enter a default judgment is a discretionary one.'” Id. (quoting Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980)). The decision is based on the following 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, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986)).

The main inquiries under the Eitel factors are the merits of the claim and the sufficiency of the complaint, which are typically considered together, “because after the entry of default, well-pleaded allegations in the complaint are deemed true, except as to the amount of damages.” FormFactor, 2015 WL 1870236, at *2 (citing Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002)); see also Bay Bread, LLC v. Lemonade Rest. Grp., LLC, No. 21-cv-02979-JD, 2023 WL 1802414, at *2 (N.D. Cal. Feb. 7, 2023)

Synopsys seeks default judgment on its claims that Khanh trafficked protected works and infringed upon Synopsys' trademarks in violation of the DMCA and the Lanham Act. See Dkt. No. 27. A claim under Section 1201(a)(2) of the DCMA requires Synopsys to show that Khanh offered to the public or otherwise trafficked technology primarily designed or produced to circumvent technological access controls to protected works. 17 U.S.C. § 1201(a)(2); see MDY Indus.,...