Tracfone Wireless, Inc. v. Pak China Grp. Co.

• Decision Date: 06 February 2012
• Docket Number: Case No. 1:10–CV–24386–JEM.
• Citation: 843 F.Supp.2d 1284
• Parties: TRACFONE WIRELESS, INC., a Delaware Corporation, Plaintiff, v. PAK CHINA GROUP CO. LTD., a foreign corporation; New Pak China Trade International Co., a foreign corporation; et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

843 F.Supp.2d 1284

TRACFONE WIRELESS, INC., a Delaware Corporation, Plaintiff,

v.PAK CHINA GROUP CO. LTD., a foreign corporation; New Pak China Trade International Co., a foreign corporation; et al., Defendants.

Case No. 1:10–CV–24386–JEM.

United States District Court,

S.D. Florida.

Feb. 6, 2012.

James Blaker Baldinger, Carlton Fields PA, West Palm Beach, FL, Steven Jeffrey Brodie, Aaron Stenzler Weiss, Carlton Fields, Miami, FL, for Plaintiff.

Olivia D. Griffin, Olivia D. Griffin, Miami, FL, for Defendants.

FINAL JUDGMENT AND PERMANENT INJUNCTION AGAINST DEFENDANTS PAK CHINA GROUP CO. LTD. AND NEW PAK CHINA TRADE INTERNATIONAL CO.

JOSE E. MARTINEZ, District Judge.

THIS MATTER is before the Court upon Plaintiff TracFone Wireless, Inc.'s (“TracFone”) Motion for Default Judgment against Pak China Group Co. Ltd. (“Pak China”), and New Pak China Trade International Co. (“New Pak China”) (collectively “Defendants”) [D.E. No. 79]. Plaintiff's complaint asserts claims for federal trademark infringement, 15 U.S.C. § 1114; federal unfair competition, 15 U.S.C. § 1125; breach of contract; contributory trademark infringement; copyright infringement, 17 U.S.C. § 101 et seq.; violations of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 1201 et seq.; tortious interference with a contractual right; conspiracy to induce breach of contract; civil conspiracy; and unjust enrichment.

I. Plaintiff TracFone Wireless, Inc.'s Business

TracFone's Complaint states that TracFone is the largest provider of prepaid wireless telephone service in the United States, and markets its service under the TracFone, Net10, SafeLink and Straight Talk brands (hereinafter referred to as “TracFone Prepaid Phones” or “Phones”). [DE 6 at ¶ 33]. TracFone's Complaint further states that TracFone's customers prepay for wireless service by purchasing TracFone airtime cards and wireless Phones specially manufactured for TracFone. Id. TracFone's Complaint states that TracFone subsidizes its customers' acquisition of its Phones by selling the Phones to retailers for much less than the Phones cost TracFone from the manufacturers. Id. at ¶ 35. TracFone states that it recoups this subsidy by selling prepaid airtime to customers who buy subsidized Phones. Id. TracFone states that it takes several steps to protect its investment in the subsidized Phones, which are designed to make sure that the Phones can only be used on TracFone's wireless network. Id. at ¶¶ 30–31.

TracFone states in connection with advertising and selling its Phones, TracFone has used, and continues to use, several trademarks (the “Marks”) in commerce includingthe marks TracFone, NET10, SafeLink and Straight Talk, which it states constitute the lawful, valued, subsisting and exclusive property of TracFone and that TracFone and its authorized, affiliated agents are permitted to use the Marks. Id. at ¶¶ 38–39.¹

TracFone states that its Marks are well known and established to customers and the trade as symbols identifying and distinguishing TracFone's products and services and signify distinctive products and services of high quality and provide actual notice that TracFone's Phones are intended for use solely within TracFone's network. Id. TracFone states that the Marks have become an intrinsic and essential part of the valuable goodwill and property of TracFone. Id.

TracFone states that it has learned that although large quantities of its TracFone Prepaid Phones are being purchased at retailers throughout the United States, a significant number of these TracFone Prepaid Phones are not being activated for use on the TracFone network. Id. at ¶ 49. According to TracFone, instead, entities and individuals are purchasing and selling TracFone Prepaid Phones in bulk quantities for use outside of the TracFone Prepaid Wireless Service and Coverage Area. Id. at ¶ 50. TracFone further states that “the Phones are removed from their original packaging, shipped overseas, and unlocked or reflashed.” Id.² TracFone claims that as a result of these actions, TracFone loses both: (1) the subsidy that it provided when selling the Phone to the retailer; and (2) the revenue from selling airtime on that handset. Id. at ¶ 52.

II. Defendants' Business

According to TracFone, Defendants are also engaged in unlawful business practices involving the unauthorized and unlawful bulk purchase and resale of TracFone Prepaid Phones, unauthorized and unlawful computer unlocking or reflashing of TracFone Prepaid Phones, alteration of TracFone's copyrighted and proprietary software installed in the Phones, trafficking of the Phones for profit, and for other violations of Federal statutory law (the “Bulk Resale Scheme”). See [DE 6 at ¶ 1]. As alleged in the Amended Complaint, documents in TracFone's possession demonstrate that Defendants trafficked thousands of TracFone Prepaid Phones in furtherance of the Bulk Resale Scheme. See [DE 6]. Defendants' participation in the Bulk Resale Scheme has caused damage and substantialand irreparable harm to TracFone. See id.

III. The Present Litigation

As a result of Defendants' business activities, TracFone asserted claims against Defendants for Federal Trademark Infringement in violation of 15 U.S.C. § 1114; Federal Unfair Competition in violation of 15 U.S.C. § 1125; Breach of Contract; Contributory Trademark Infringement; Copyright Infringement of Software in violation of Title 17 of the United States Code; Circumvention of Copyrighted Software Protection System and Trafficking in Circumvention Technology in violation of the DMCA; Tortious Interference with a Contractual right in Violation of Florida Common Law; Conspiracy to Induce Breach of Contract; Civil Conspiracy in Violation of Florida Common Law; and Unjust Enrichment in Violation of Florida Common Law. The Court finds that all of the allegations in the complaint are well pled, and they are deemed admitted by virtue of Defendants' default. See Eagle Hosp. Physicians, LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1307 (11th Cir.2009) (quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir.1975)). TracFone has therefore succeeded in proving its claims and Defendants are hereby permanently enjoined and liable to TracFone for the damages set forth herein.

JURISDICTION AND VENUE

This Court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1331, 1338, and 17 U.S.C. § 1203 because TracFone's claims arise under federal law, specifically, the United States Copyright Act, Title 17 of the United States Code, and United States Trademark Act, Title 15 of the United States Code. This Court has supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over TracFone's state law claims because those claims are so related to the federal claims that they form part of the same case or controversy.

This Court has personal jurisdiction over Defendants because Defendants have had continuous and substantial business connections to the State of Florida, including conducting business with companies located in Florida. Defendants are further subject to the personal jurisdiction of this Court pursuant to: Fla. Stat. § 48.193( l )(a) because Defendants have conducted, engaged in and carried out business ventures within the State of Florida; § 48.193(1)(b) because Defendants have committed tortious acts within the State of Florida; and § 48.193(1)(g) by failing to perform acts required by a contract to be performed in the State of Florida. Moreover, Defendants are also subject to this Court's personal jurisdiction pursuant to § 48.193(2) because Defendants have engaged in substantial and not isolated business activity within the State of Florida.

Venue is proper in this Court pursuant to 28 U.S.C. § 1391(a) and (b), and 28 U.S.C. § 1400, because a substantial part of the events or omissions giving rise to the claim occurred in this District, the impact of Defendants' misconduct occurred in this District, and Defendants are subject to personal jurisdiction in this District.

TracFone's Service of Process on Defendants

TracFone proffers that it has effectuated service on Defendants pursuant to Fed.R.Civ.P. 4(f)(2)(C)(ii), which requires that the mailing be addressed and dispatched by the Clerk of the Court. Specifically, Fed.R.Civ.P. 4(f)(2)(C)(ii) provides, in pertinent part, that if not prohibited, “an individual ... may be served at a place not within any judicial district of the United States: ... by (ii) using any form of mail that the clerk addresses and sends to the individual and that requires a signed receipt.” Fed.R.Civ.P. 4(f)(2)(C)(ii). “Thus, in addition to service through the Central Authority of each country, ‘Article 10(a) [of the Hague Service Convention] provides that, if the State of destination does not object, the Hague Convention does not change the freedom to send judicial documents, by postal channels, directly to persons abroad.’ ” TracFone Wireless, Inc. v. Bequator Corp., Ltd., 717 F.Supp.2d 1307, 1309 (S.D.Fla.2010) (citing Curcuruto v. Cheshire, 864 F.Supp. 1410, 1411 (S.D.Ga.1994)).

The Court further notes that this district, along with several district courts within the Eleventh Circuit and many other federal circuit courts and district courts, have held that Article “10(a) permits service by mail unless the country has objected to this method.” Bequator, 717 F.Supp.2d at 1309 (citing Curcuruto v. Cheshire, 864 F.Supp. at 1411);Conax Fla. Corp. v. Astrium Ltd., 499 F.Supp.2d 1287, 1293 (M.D.Fla.2007) (authorizing service by mail upon finding that “Article 10(a) is applicable to service of process.”); Lestrade v. United States, 945 F.Supp. 1557 (S.D.Fla.1996) (holding that service of IRS petition by mail satisfied Hague Service Convention); see also Brockmeyer v. May, 383 F.3d 798, 802 (9th Cir.2004) (holding that Article 10(a) does include service of process by mail, reasoning that “send judicial documents” encompasses “service of process,” and that such method is ...