Little Genie Prods. LLC v. Phsi Inc.
| Decision Date | 02 July 2014 |
| Docket Number | Civil Action No. 2:12-cv-00357-RSM |
| Court | U.S. District Court — Western District of Washington |
| Parties | LITTLE GENIE PRODUCTIONS LLC, a Washington limited liability corporation, Plaintiff, v. PHSI INC., an Arizona corporation dba PHS INTERNATIONAL, and JAMES H. HORNE and JANE DOE HORNE, individually and their marital community Defendants. |
THIS MATTER comes before the Court on Plaintiff's Motion for Default Judgment. Dkt. # 21. On September 9, 2013, the Court issued an Order setting an evidentiary hearing on the instant Motion (Dkt. # 22), which has been continued on successive occasions due to the unavailability and illness of Plaintiff's counsel. The hearing took place on May 13, 2014, at which time the Court ordered counsel for Plaintiff to file supplemental briefing in support of Plaintiff's damages and request for relief and to provide documentation supporting its request for attorney's fees. Having considered Plaintiff's briefing, arguments before the Court, and theremainder of the record, and for the reasons stated herein, the Court grants Plaintiff's Motion for Default Judgment in part as follows.
The instant matter arises out of alleged infringement of the intellectual property rights of Plaintiff Little Genie Productions LLC ("Little Genie") to its romance board game, "Passion Throw," by Defendants PHSI, Inc. ("PHSI") and its president James Horne ("Horne"). Plaintiff seeks a default judgment of $104,269 in actual damages for copyright infringement of Passion Throw by PHSI, together with post-judgment interest, injunctive relief, and attorney's fees. See Dkt. ## 22, 29.
For over a decade, Little Genie has designed, produced, and sold "Passion Throw," as its sole owner of copyright, trademark, and trade dress rights. Dkt. # 1 ("Compl."), ¶¶ 8-9. Little Genie registered its copyright to Passion Throw (Registration No. VA 1-776-386) with the United States Copyright Office on June 3, 2011. See id. at ¶ 9. PHSI is Little Genie's competitor and a former customer, having procured Little Genie products for resale in 2005. Dkt. # 21, Ex. 1, ¶ 4. In early 2011, Little Genie discovered that PHSI was marketing and selling a nearly identical romance board game under its "Heart 2 Heart" line, using the names "Heart 2 Heart Game" and "Playground Game." Id. at ¶ 5; Dkt. # 21, Ex 2. On three occasions in 2011, Little Genie directed correspondence to PHSI and Horne, demanding that they cease and desist their infringing activities. Dkt. # 21, Ex. 1, ¶5. Defendants allegedly ignored these demands, continuing to buy and sell the infringing game. Id. at ¶ 8.
On March 1, 2012, Little Genie filed the instant complaint against Defendants PHSI and Horne, alleging copyright infringement under the Copyright Act, 17 U.S.C. § 101 et seq, unfair competition under the Lanham Act, 15 U.S.C. § 1151, and unfair competition under Washington common law. The complaint asserts that Defendants "deliberately and willfully infringed Little Genie's intellectual property rights" by copying Passion Throw and by "marketing and selling a virtually identical replica nationally and internationally under PHSI's 'Heart 2 Heart' line." Compl. at ¶ 10. Little Genie asserts that Defendants were aware of Passion Throw and have continued to sell their infringing game after receiving notice of infringement. Id. at ¶ 13.
Although Defendant Horne has successfully evaded service, summons and complaint were served on PHSI on March 12, 2012. PHSI failed to answer, and default was entered againstit on April 20, 2012. Dkt. # 7. Plaintiff filed the instant Motion for Default Judgment against PHSI over a year later, on July 3, 2013. Dkt. # 21. Little Genie originally sought an award of statutory damages of no less than $150,000, the maximum enhanced damages available under the Copyright Act, 17 U.S.C. § 504(c)(1), as well as additional awards under the Lanham Act, 15 U.S.C. § 1051, et seq., at the Court's discretion. Plaintiff also requested permanent injunctive relief to prevent further infringements under the Copyright and Lanham Acts, as well as the delivery of all PHSI games in Defendants' possession, custody, or control to Little Genie "for destruction," pursuant to 15 U.S.C. § 1116(d)(1)(A) of the Lanham Act. Under 15 U.S.C. § 1117(a) of the Lanham Act. Plaintiff further requested attorney's fees based on PHSI's alleged willful infringement and default in the amount of $30,000 for 106 hours of work completed by counsel Jason Rhodes and associates. See Dkt. # 21. On September 9, 2013, the Court issued an Order setting an evidentiary hearing on Plaintiff's Motion upon finding that Plaintiff had failed (1) to offer evidence sufficient to support the requested statutory damages, (2) to submit evidence as to actual damages, and (3) to present evidence to substantiate the amount and reasonableness of its requested $30,000 in attorney's fees. Dkt. # 22.
Upon Plaintiff's request, the Court continued the evidentiary hearing on successive occasions, first to accommodate Plaintiff's discovery needs and subsequently to accommodate the severe health impairment suffered by Plaintiff's former counsel, Jason Rhodes. See, e.g., Dkt. # 27. Mr. Rhodes was ultimately replaced, with permission of the Court, by current counsel John Ray Nelson, who represented Little Genie at the evidentiary hearing, held on May 13, 2014. See Dkt. # 28. Through the evidentiary hearing and its Supplemental Memorandum in Support of Damages and Request for Relief, Plaintiff modified its damages request to seek an award of actual, rather than statutory, damages pursuant to 17 U.S.C. § 504(b). See Dkt. # 29. Plaintiff further requested an additional award of attorney's fees under the Lanham Act, 15 U.S.C. § 1117(a), in the amount of $7,281 for 18.20 hours of work completed by counsel John Ray Nelson. See Dkt. #21, Ex. 3; Dkt. # 29. Plaintiff provided evidence at the hearing to support its claim for actual damages, composed of lost copyright development costs, past lost profits, and future lost profits, as well as evidence to support its attorney's fees request. At the close of the evidentiary hearing, the Court requested additional briefing by Little Genie regarding its authority to award actual damages prior to the time of copyright registration, which Little Genie has provided. See Dkt. # 29.
The Federal Rules of Civil Procedure authorize the district court to enter default judgment against a party that has failed to plead or defend after entry of that party's default by the clerk. Fed. R. Civ. P. 55(b). The entry of default judgment is left to the sound discretion of the district court. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In determining whether to enter default judgment, the court considers seven factors (the "Eitel Factors"), which include: (1) the possibility of prejudice to the plaintiff, (2) the merits of the plaintiff's claims, (3) the sufficiency of the complaint, (4) the sum of money at stake, (5) the possibility of a dispute concerning material facts; (6) whether the default was due to excusable neglect, and (7) the strong policy under the Federal Rules favoring decision on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
At the default judgment stage, well-pleaded factual allegations are considered admitted and are sufficient to establish a defendant's liability, but allegations regarding the amount of damages must be proven. Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977); Microsoft Corp. v. Lopez, 2009 WL 959219 (W.D. Wash. 2009). Unless the plaintiff's claim is for a "sum certain," the party "must apply to the court for default judgment." Fed. R. Civ. P. 55(b)(2). The plaintiff must support the motion with a declaration and other evidence establishing entitlement to the relief sought. LCR 55(b)(2)(A). The court must ensure that the amount of damages is reasonable and demonstrated by the evidence. See Fed. R. CIv. P. 55(b); Getty Images (US), Inc. v. Virtual Clinics, 2014 WL 358412 (W.D. Wash. 2014). In doing so, the court may conduct such hearings as it deems necessary in order to determine the amount of damages or establish the truth of any allegation by evidence. Fed. R. Civ. P. 55(b)(2); LCR 55(b)(4). A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings. Fed. R. Civ. P. 54(c). In addition, a plaintiff seeking attorney's fees must state the basis of the award and include a declaration from counsel establishing the reasonable amount of fees, including hourly rate, hours worked, and tasks performed. LCR 55(b)(2)(C).
Entry of default judgment is warranted in this case and supported by application of the Eitel factors. As to the first factor, "prejudice" for purposes of default judgment exists where the plaintiff has no "recourse for recovery" other than default judgment. Microsoft Corp. v. Lopez, 2009 WL 959219, at *2 (W.D. Wash. 2009); Getty Images, 2014 WL 358412, at *2. Accepting Plaintiff's well-pleaded factual allegations as true, Little Genie is likely to suffer prejudice if default judgment is not entered because Little Genie would be without other recourse for recovery. Plaintiff's cease and desist letters have had no effect, and absent default judgment, Little Genie would be forced to wait, perhaps indefinitely, for PHSI to participate in this litigation. In the meantime, Little Genie attests that it will continue to suffer irreparable harm by PHSI's infringing activities, including through loss of goodwill and reputation and through confusion of its customers. See Compl.
To satisfy the second and third Eitel factors - the merits of the plaintiff's claims and the sufficiency of its complaint - the plaintiff must state a claim for relief on which it may recover. Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). In...
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