Yelp Inc. v. Catron
| Decision Date | 01 October 2014 |
| Docket Number | Case No. 13–cv–02859–WHO |
| Citation | 70 F.Supp.3d 1082 |
| Court | U.S. District Court — Northern District of California |
| Parties | Yelp Inc., Plaintiff, v. Timothy Catron, Defendant. |
Nitoj Paul Singh, Harmeet K. Dhillon, Dhillon and Smith LLP, Aaron Schur, Yelp! Inc., San Francisco, CA, for Plaintiff.
ORDER ADOPTING REPORT AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT
Re: Dkt. Nos. 17, 30
This order concerns Magistrate Judge Kandis A. Westmore's September 8, 2014 report and recommendation, in which she recommends that this Court grant default judgment in favor of plaintiff Yelp, Inc. (“Yelp”) but reduce the award of statutory damages from $2,000,000 to $45,000. Dkt. No. 30. Yelp filed objections to the damages recommendation on September 25, 2014, three days after the fourteen day deadline set by Federal Rule of Civil Procedure 72. Dkt. No. 32. I have considered Yelp's objections despite their tardy arrival.
Under 28 U.S.C. § 636(b)(1), the district court must “make a de novo determination of those portions of the [magistrate judge's] report or ... recommendations to which objection is made” and may then “accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” Id. Having considered the report and recommendation, Yelp's papers (including its objections), the record in this case, and the relevant legal authority, I agree with Judge Westmore's determination that Yelp's request for $2,000,000 in damages is excessive because it lacks a “plausible relationship” to Yelp's actual damages. See Adobe Sys., Inc. v. Tilley, No. 09–01085–PJH, 2010 WL 309249, at * 5 (N.D.Cal. Jan. 19, 2010) ; Microsoft Corp. v. Ricketts, No. 06–06712–WHA, 2007 WL 1520965, at *4 . Yelp reduces its request to $300,000 in damages in the objections filed on September 25, 2014. But Yelp offers no persuasive argument why a permanent injunction and award of $45,000 in damages will not have a sufficient deterrent effect, especially given that Yelp has provided evidence of only one sale of infringing services by Catron from which he earned at most $2,495. See Dkt. No. 30 at 22. While the plaintiff in a trademark infringement case is entitled to damages that will serve as a deterrent, it is not entitled to a windfall. Adobe Sys., 2010 WL 309249, at *5.
Judge Westmore's report and recommendation is correct, well-reasoned, and thorough, and it is adopted in whole. Accordingly, IT IS HEREBY ORDERED:
ORDER REASSIGNING CASE TO DISTRICT JUDGE; AND REPORT AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT
Plaintiff Yelp Inc. moves for default judgment against Defendant Timothy Catron for trademark infringement under 15 U.S.C. § 1114, unfair competition under 15 U.S.C. § 1125(a), dilution of a famous mark under 15 U.S.C. § 1125(c), cybersquatting under 15 U.S.C. § 1125(d), unfair competition under California Business and Professions Code § 17200, false advertising under California Business and Professions Code § 17500, breach of contract, and intentional interference with contractual relations. (Pl.'s Mot. for Default J. “Pl.'s Mot.,” Dkt. No. 17.) The clerk entered Plaintiff's motion for default on April 3, 2014. (Dkt. No. 18.) Yelp seeks injunctive relief, statutory damages pursuant to 15 U.S.C. § 1117(c), and an award of attorneys' fees and costs.
On August 21, 2014, the Court held a hearing on Plaintiff's motion for default judgment, where Defendant did not appear.
Since Defendant, by the very virtue of being in default, has not consented to the undersigned, the Court reassigns this action to a district judge and recommends that Plaintiff's motion be GRANTED IN PART AND DENIED IN PART.
Plaintiff Yelp owns and operates popular websites (collectively, the “Yelp Site”), which feature information about local businesses nationwide and around the world, including ratings, reviews, and photos. (Pl.'s Mot. at 2; Compl., Dkt. No. 1 ¶ 2.) Yelp owns seven service marks (collectively “Yelp Marks”), which have U.S. Patent and Trademark Office Registration Nos. 3,660,122; 3,660,119; 3,181,664; 3,938,129; 3,660,123; 3,660,120; and 3,316,616. (Compl. ¶¶ 32–34.) These represent three distinguishable marks. Id.
Access to, and use of, the Yelp Site is governed by Yelp's Terms of Service, which Yelp asserts is displayed prominently on the Yelp Site. (Compl. ¶ 8.) In order to contribute reviews to the Yelp Site, an individual must create a user account, which requires affirmative acceptance of the terms of service. (Id. ) Yelp's terms of service prohibit paid reviews on the Yelp Site. (Compl. ¶ 3.)
In January 2013, Yelp learned that AdBlaze was offering to sell Yelp reviews to the public. On January 29, 2013, Yelp conducted a WhoIs search that revealed that AdBlase was registered to Timothy Catron using an email address timcatron@gmail.com. Timothy Catron is, or at all relevant times has been, the registrant, owner, and content provider of the websites adblaze.com and BuyYelpReview.com. (Compl. ¶ 10.) Defendant created an individual Yelp user account on November 11, 2012 and a business account for AdBlaze on November 12, 2012 which he used to offer gift certificates and discounts related to AdBlaze's services. (Compl. ¶¶ 20–21.) Both accounts were registered with the same timcatron@gmail.com email address. Id. In creating the accounts, Defendant repeatedly agreed to the Yelp's terms of service. Id.
On January 30, 2013, Yelp sent a letter to Catron demanding that he cease from his violation of the Yelp terms of service through selling Yelp reviews, cease using Yelp's registered trademarks, and provide Yelp information about the reviews he had posted. (Compl. ¶ 16.) In response, Defendant refused to provide any of the information Yelp sought, but responded on February 5, 2013 that “[a]ny mention of Yelp has been removed from Adblaze.com.” (Id. ; Compl., Ex. 3.) On March 24, 2013, Catron promoted a different website BuyYelpReview.com on Twitter. (Compl. ¶ 18.) This new website charged $24.95 per Yelp review. (Compl. ¶ 19.)
In early 2013, Yelp allegedly purchased false reviews from Defendant through BuyYelpReview.com for a fictitious business Yelp created. (Compl. ¶ 24.) Yelp received and approved the content of the fake reviews through email correspondence, and the reviews eventually appeared on the fictitious business's Yelp listing. Id.
Yelp filed the instant suit on June 20, 2013 alleging trademark infringement under 15 U.S.C. § 1114, unfair competition under 15 U.S.C. § 1125(a), dilution of a famous mark under 15 U.S.C. § 1125(c), cybersquatting under 15 U.S.C. § 1125(d), unfair competition under California Business and Professions Code § 17200, false advertising under California Business and Professions Code § 17500, breach of contract, and intentional interference with contractual relations.
Defendant Catron was served with the summons and complaint on July 3, 2013. (Dkt. No. 8.) Defendant did not answer or otherwise respond to the complaint. On April 1, 2014, Yelp filed a motion for entry of default. (Dkt. No. 15.) The Clerk entered the default against Catron on April 3, 2014. (Dkt. No. 18.) On April 2, 2014, Yelp filed a motion for default judgment seeking injunctive relief, statutory damages under 15 U.S.C. § 1117(c), and attorneys' fees and costs. (Pl.'s Mot. at 13–16.) On June 13, 2014, Yelp filed supplemental briefing in support of its request for attorneys' fees and costs. (Dkt. Nos. 26 & 27.)
Federal Rule of Civil Procedure 55(b)(2) permits a court to enter a final judgment in a case following a defendant's default. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 999 (N.D.Cal.2001). Whether to enter a judgment lies within the court's discretion. Id. at 999 (citing Draper v. Coombs, 792 F.2d 915, 924–25 (9th Cir.1986) ).
Before assessing the merits of a default judgment, a court must confirm that it has subject matter jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the adequacy of service on the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir.1999). If the court finds these elements satisfied, it turns to the following factors (“the Eitel factors”) to determine whether it should grant a default judgment:
(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...
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