“Generally, an 27 injunction must be narrowly tailored to remedy only the specific harms shown by a plaintiff, rather than to enjoin all possible 28 breaches of the law.”
How later courts described this case
- “Generally, an 27 injunction must be narrowly tailored to remedy only the specific harms shown by a plaintiff, rather than to enjoin all possible 28 breaches of the law.”
Written by the judges who cited it.
The opinion
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page1of24 Page ID #:3003
10!
8 UNITED STATES DISTRICT COURT
9 CENTRAL DISTRICT OF CALIFORNIA
10
11
VITAL PHARMACEUTICALS CV 20-06745-RSWL-JCx
12 | d/b/a Bang Energy; and JHO
13 | RSIBHRES Bice | grame ges Penatoay of rac
14 Ruling for Plaintiffs
Ls Plaintiffs,
16 v. Complaint Filed: May 19, 2020
17 Trial Date: May 31-June 1,
PHD MARKETING, INC., 2022
18
19 Defendant.
21 Plaintiffs Vital Pharmaceuticals, Ince. (“Vital”)
22 | and JHO Intellectual Property Holdings, LLC (“JHO”)
23 (collectively, “Plaintiffs”) initiated this Action
24 | against Defendant PhD Marketing, Inc. (“Defendant”) for
25 | trademark infringement and unfair competition arising
26 | from Defendant’s infringement of Plaintiffs’ registered
27 | “BANG” mark and “B” logo. On May 31 and June 1, 2022,
28 | the Court conducted a bench trial. Having considered
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 2 of 24 Page ID #:3004
1 the evidence, the parties’ objections to the evidence,
2 the credibility of the trial witnesses, and both
3 parties’ arguments at trial, the Court issues the
4 following findings of fact and conclusions of law
5 pursuant to Rule 52(a) of the Federal Rules of Civil
6 Procedure.
7 I. FINDINGS OF FACT
8 1. The Parties
9 Vital has manufactured and sold energy drinks
10 consistently using its “BANG” and “B” logos (the “BANG
11 Marks”) since at least February 2016. Day 1 Vol. 1 Tr.
12 35:15-19, 39:4-12, 40:9-13; Ex. 98 at 42. Vital uses
13 its BANG Marks to promote its products and its brand,
14 and most of Vital’s promotion takes place on social
15 media. Day 1 Vol. 1 Tr. 36:12-17; Ex. 103. Vital also
16 sells other merchandise using the BANG Marks, such as
17 clothing, coolers, and pens. Day 1 Vol. 2 Tr. 9:5-10:1;
18 Ex. 34. In advertising its BANG products, Vital places
19 large emphasis on its drink being the “healthy energy
20 drink on the market.” Day 1 Vol. 1 Tr. 37:20-24.
21 Defendant runs a “cash and carry” business out of
22 an approximately 12,000 square-foot warehouse. Day 2
23 Vol. 1 Tr. 45:22-25. Defendant’s customers typically
24 come to the warehouse and choose the products they would
25 like to purchase, and then customers either carry out
26 the products themselves or have Defendant ship the
27 products to them. Id. at 45:25-46:1.
28 ///
2
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 3of24 Page ID #:3005
1] 2. The Infringing Products
2 In June 2019, Defendant received a sample shipment
3 | of vaping products from VTEK, a Chinese supplier. Id.
4} at 30:10-16, 55:25-56:5; Ex. 2014. The packaging for
5 | these products contained the word “bang” and a star-
6 | shaped symbol in the middle of the “b.” Ex. 2006.
7 | Defendant refers to this logo as “Design One.” Day 2
8} Vol. 1 Tr. 8:20-9:7. Below is a side-by-side comparison
9} of the BANG Mark (taken from Exhibit 93) and Design One
10 (taken from Exhibit 2006):
11 es
12 ||
13
15 POTENT BRAIN AND BODY FUEL”
16
18
19 In July 2019, Defendant sent the VTEK vaping
20 | products to its customers to get feedback on their
21] quality and functionality. IRd. at 56:14-17. By April
22 | 2020, Defendant had agreed to order more vapes
23 | manufactured by VTEK and began regularly selling them to
24] customers. IERd. at 56:21-57:5; Ex. 2014. Defendant had
25 | agreed to be responsible for all sales and distribution
26 | of VTEK’s vaping products within the United States. Day
27 2 Vol. 1 Tr. 54:24-56:2, 69:10-14. Defendant sold two
28 | different models of vape pens using Design One, one
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 4 of 24 Page ID #:3006
1 known as “Bang Bars” and the other known as “XL” vape
2 pens. Ex. 2014. Defendant typically sold Bang Bars to
3 its customers at a price of around $4 and typically sold
4 XL vape pens to its customers at a price of around $5.
5 Jaber Dep. 129:2-20.
6 Once Defendant began selling VTEK’s vaping
7 products, a VTEK representative known as Bob would
8 frequently visit Defendant’s warehouse to verify the
9 quantity of vape pens remaining on the shelves and to
10 discuss future orders. Day 2 Vol. 1 Tr. 61:10-13. Bob
11 and Samir Jaber, Defendant’s CEO, would agree on the
12 models and quantities of products to be ordered from
13 VTEK, and those products would be shipped to Defendant’s
14 warehouse with an accompanying invoice. Id. at 62:22-
15 63:1. Defendant would often receive quantities that
16 varied from the amount reflected on the invoice, so
17 Defendant would count what it received and log that
18 amount into Defendant’s QuickBooks account.1 Id. at
19 63:1-8.
20 In June 2020, VTEK changed the design of its vape
21 pens to use what is known as “Design Two.” Day 2 Vol. 1
22 Tr. 59:25-60:5. Design Two is the same as Design One
23 with the addition of the words “vape with a” above the
24
1 Defendant’s General Manager, Khajadour Semikian, testified
25 that Bob and Jaber would confer on the proper amount to be paid
to VTEK and would instruct Semikian to pay that amount. Id. at
26 77:15-78:5. Semikian would then input the amount paid and apply
it to the invoices in the QuickBooks system. Id. at 78:5-6. The
27 payments made by Semikian did not tie directly to particular
invoices; the payments sometimes covered only a portion of an
28
invoice and sometimes covered multiple invoices. Id. at 78:7-9.
4
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 5 of 24 Page ID #:3007
1 word “bang.”2 Day 2 Vol. 1 Tr. 11:25-12:3; Ex. 2008.
2 VTEK began shipping vape pens using Design Two to
3 Defendant in June 2020, and Defendant sold vape pens
4 using only Design Two from June 2020 until it ceased
5 selling VTEK’s products. Day 2 Vol. 1 Tr. 60:2-12; Ex.
6 2014. Defendant only sold XL and XXL vape pens using
7 Design Two. Ex. 2014. Defendant typically sold XXL
8 vape pens, which were bigger and heavier than the other
9 two models, to its customers at a price between $7.50
10 and $9. Day 2 Vol. 1 Tr. 59:3-7.
11 3. Vital Receives Notice of Infringing Products
12 Meanwhile, on April 2, 2020, Vital received an
13 email from a marketing and distribution company
14 requesting more information about a vaping product
15 labelled with Design One. Ex. 45. After receiving
16 notice of this product and believing that Design One
17 infringed on Plaintiffs’ trademark rights, Vital sent
18 cease-and-desist letters in May 2020 to companies that
19 it believed were selling vaping products using Design
20 One. Exs. 2002-04. On May 4, 2020, Semikian sent a
21 letter to one of Defendant’s customers agreeing to
22 indemnify it from any trademark claims made by third
23 parties. Day 2 Vol. 1 Tr. 7:22-24, 23:6-24:13; Ex. 2.
24 On May 13, 2020, Semikian received a letter from the
25 same customer notifying Semikian that it had indeed
26 received a cease-and desist letter from Vital. Day 2
27
2 The vaping products using either Design One or Design Two
28
will collectively be referred to as the “Infringing Products.”
5
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 6 of 24 Page ID #:3008
1 Vol. 1 Tr. 26:20-27:4; Ex. 1.
2 On June 2, 2020, Vital’s customer service
3 department received an email regarding a product quality
4 control concern. Ex. 42. In the email, the customer
5 stated that he loves the BANG brand and frequently buys
6 BANG energy drinks but was “highly disappointed” with
7 the quality of their vape pen. Id. He stated that he
8 was excited to try all the vape flavors, but because of
9 his negative experience, he did not think he would buy
10 another one. Id. On July 11, 2020, a Facebook account
11 for a vendor posted a picture of BANG energy drinks
12 together with the Infringing Products to notify
13 followers that the store had both in stock. Ex. 112.
14 From December 2020 through March 2021, Defendant also
15 received inquiries about its affiliation with BANG
16 energy drinks. Day 2 Vol. 1 Tr. 35:10-19; Exs. 2019-23.
17 In October 2020, Defendant sought to obtain copyrights
18 over Design One and Design Two. Ex. 2017.
19 4. Defendant Ceases Sales of Infringing Products
20 Defendant stopped selling the Infringing Products
21 in April 2021, in part because of its ongoing litigation
22 with Plaintiffs, and in part because it became difficult
23 to compete with other companies that had started selling
24 “copycat” products with packaging using Design One and
25 Design Two. Day 2 Vol. 1 Tr. 67:25-68:19. Once
26 Defendant decided to stop selling the Infringing
27 Products, it sold off its remaining inventory. Id. at
28 31:22-24.
6
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 7 of 24 Page ID #:3009
1 In total, Defendant sold 730,207 vape pens that
2 used Design One and 1,097,629 vape pens that used Design
3 Two. Ex. 2032. Defendant’s total revenue for Design
4 One was $3,520,968.53. Ex. 2028 at 4-5. Defendant’s
5 total revenue for Design Two was $7,252,971.95. Id. at
6 2-3. Thus, Defendant’s total revenue for its sales of
7 the Infringing Products was $10,773,940.48. Id.
8 II. CONCLUSIONS OF LAW
9 On February 4, 2022, the Court entered judgment in
10 favor of Plaintiffs and against Defendant for
11 Plaintiffs’ trademark infringement and unfair
12 competition claims and dismissed Defendant’s
13 counterclaims with prejudice [151]. Thus, the only
14 issues remaining are the equitable remedies to be
15 awarded for Defendant’s trademark infringement.
16 Specifically: (1) whether Plaintiffs are entitled to
17 disgorgement of profits under the Lanham Act, and if so,
18 the amount of net profits to be awarded; (2) whether
19 Plaintiffs are entitled to a permanent injunction; and
20 (3) whether Plaintiffs are entitled to attorneys’ fees
21 under the Lanham Act.
22 A. Disgorgement of Profits
23 The Lanham Act provides that once trademark
24 infringement has been established, a plaintiff is
25 entitled, “subject to the principles of equity, to
26 recover . . . defendant’s profits.” 15 U.S.C. § 1117.
27 This statute affords district courts “broad discretion”
28 in fashioning a remedy for trademark infringement.
7
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 8 of 24 Page ID #:3010
1 Maier Brewing Co. v. Fleischmann Distilling Corp., 390
2 F.2d 117, 124 (9th Cir. 1968).
3 1. Willfulness
4 While a finding of willfulness is not a
5 prerequisite to disgorgement of profits, “a trademark
6 defendant’s mental state [remains] a highly important
7 consideration in determining whether an award of profits
8 is appropriate.” Romag Fasteners, Inc. v. Fossil, Inc.,
9 140 S. Ct. 1492, 1497 (2020). District courts should
10 therefore consider a defendant’s mental state in
11 determining what award of profits is appropriate.
12 Grasshopper House, LLC v. Clean & Sober Soc. Media, LLC,
13 2021 WL 3702243, at *3 (9th Cir. Aug. 20, 2021).
14 Here, the Court finds that Defendant’s mental state
15 sufficiently warrants disgorgement of the profits
16 Defendant received from its sale of the Infringing
17 Products. The evidence at trial revealed that Defendant
18 continued to sell the Infringing Products, and even
19 purchased additional products from VTEK, long after it
20 became aware of Plaintiffs’ BANG Marks. Day 2 Vol. 1
21 Tr. 23:6-24:13, 60:2-12; Exs. 2, 2014. Plaintiffs put
22 forth evidence of confused consumers, see Exs. 42, 60,
23 as well as confused vendors, see Exs. 61, 83, 112, 118.
24 Notably, the instances of consumer confusion included
25 emails received by Defendant directly, see Exs. 2019-24.
26 This confusion is unsurprising given the similarity of
27 the marks.
28 Defendant was therefore on notice of at least one
8
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 9 of 24 Page ID #:3011
1 instance of consumer confusion as early as June 30,
2 2020, but it did not stop selling the Infringing
3 Products until April 2021. Day 2 Vol. 1 Tr. 68:2-3.
4 Defendant also sought to obtain copyrights over Design
5 One and Design Two in October 2020, despite its
6 knowledge of Plaintiffs’ nearly identical BANG Marks.
7 Ex. 2017. Moreover, Defendant stopped selling the
8 products not in recognition of Plaintiffs’ trademark
9 rights, but because it was no longer profitable to
10 continue sales. Id. at 68:8-15.
11 Defendant’s continued sales despite its knowledge
12 of consumer confusion with Plaintiffs’ nearly identical
13 marks is indicative of an improper motive. See Lindy
14 Pen Co., Inc. v. Bic Pen Corp., 982 F.2d 1400, 1406 (9th
15 Cir. 1993) (internal quotation marks and citation
16 omitted) (“Willfulness and bad faith require a
17 connection between a defendant’s awareness of its
18 competitors and its actions at those competitors’
19 expense.”); Monster Energy Co. v. Integrated Supply
20 Network, LLC, 533 F. Supp. 3d 928, 933 (C.D. Cal. 2021)
21 (finding willfulness where “[d]efendant continued to
22 sell the infringing products after it received
23 [p]laintiff’s cease and desist letters and after
24 [p]laintiff filed the instant lawsuit”); Color Me Mine
25 Enters. Inc. v. S. States Mktg. Inc., No. CV 12-00860-
26 RGK (JCx), 2013 WL 12119715, at *11 (C.D. Cal. Apr. 25,
27 2013) (finding a triable issue of fact as to willfulness
28 where defendant continued to sell infringing product
9
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 10 of 24 Page ID
#:3012
1 despite knowledge of plaintiff’s mark and the likelihood
2 of consumer confusion). The Court therefore concludes
3 that disgorgement of Defendant’s profits is warranted
4 here based on Defendant’s willful infringement.
5 2. Net Profits
6 In determining the profits to be disgorged, the
7 plaintiff bears the burden to prove the defendant’s
8 gross sales from the infringing activity with reasonable
9 certainty. 15 U.S.C. § 1117(a). Once the plaintiff
10 demonstrates gross sales, they are presumed to be the
11 result of the infringing activity. Lindy Pen, 982 F.2d
12 at 1408. The burden then shifts to the defendant to
13 prove which, if any, of its total sales are not
14 attributable to the infringing activity and any
15 permissible cost deductions. 15 U.S.C. § 1117(a).
16 a. Gross Sales
17 At trial, Plaintiffs’ damages expert relied on
18 income statements provided by Defendant to determine
19 that Defendant’s total sales from January 2018 through
20 April 2021 for products using Design One and Design Two
21 were $10,773,940.48. Day 2 Vol. 2 Tr. 94:17-97:17; Ex.
22 2028. Defendant’s damages expert agreed with this
23 figure as an accurate representation of Defendant’s
24 gross sales. Day 2 Vol. 2 Tr. 28:23-29:8. This figure
25 appears credible given the total number of vapes
26 Defendant claims to have sold and the estimated price of
27 the vapes sold to Defendant’s customers.3 See Ex. 2032;
28
3 Indeed, while the Court accepts the figure provided by the
10
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 11 of 24 Page ID
#:3013
1 Jaber Dep. 129:2-130:1. Therefore, Plaintiffs have met
2 their burden of proving Defendant’s sales. See Monster
3 Energy, 533 F. Supp. at 937 (finding that plaintiff met
4 its burden where its damages expert based profits on
5 defendant’s financial documents and where defendant’s
6 CFO agreed on profit figure).
7 b. Deductions
8 Defendant claims a total of over $9.5 million in
9 cost deductions, yet it has produced troublingly little
10 evidence to support that figure. Not a single invoice,
11 receipt, or other original source document has been
12 produced to support the costs and expenses Defendant
13 claims. Indeed, the only documents Defendant has
14 offered in support of its claimed deductions are summary
15 financial reports, which were created by Semikian in
16 preparation for this litigation. See Exs. 2030-31.
17 Defendant’s damages expert, John Bone, relied on the
18 summary financial documents to arrive at the $9.5
19 million deduction figure, but he did not review any
20 original source documents in doing so.4 Day 2 Vol. 2
21 Tr. 32:7-15. In short, there is no evidence to support
22 the specific figures set forth in either Exhibit 2030 or
23 Exhibit 2031.
24 parties as credible, it appears possible from the information
provided by Defendant that its sales exceeded this amount.
25
4 Bone repeatedly emphasized that Plaintiffs never requested
26 that Defendant produce any original source documents, but that is
irrelevant. It is Defendant’s burden to produce evidence
27
sufficient to support its deductions claim, regardless of the
28 evidence Plaintiffs sought to discover prior to trial. See Lindy
Pen, 982 F.2d at 1408.
11
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 12 of 24 Page ID
#:3014
1 First, the Court finds no credibility as to
2 Defendant’s claimed payments to VTEK of over $7.3
3 million. Aside from the lack of evidence to support the
4 document summarizing these payments, see Ex. 2030, the
5 Court has a number of concerns regarding the stated
6 figures themselves. In particular, both the timing of
7 payments and the amount of each payment were highly
8 irregular. Day 2 Vol. 2 Tr. 100:8-102:6. Such a lax
9 payment arrangement is unusual between two companies
10 with no prior business relationship. Id. at 101:8-21.
11 It is possible that Defendant had a unique
12 relationship with VTEK that allowed for irregular
13 payments. But in light of such an unusual payment
14 system, Defendant should have been especially mindful to
15 keep clear records. Had an invoice, receipt, or other
16 source document been produced during trial to support
17 the VTEK payments, Defendant may very well have met its
18 burden as to that deduction. But the only documentary
19 evidence in support of the $7.3 million figure — aside
20 from the made-for-litigation summary financial document,
21 see Ex. 2030 — is Semikian’s testimony that these
22 payments did occur and are accurate. He testified that
23 Bob and Jaber would agree on an arbitrary amount for
24 Defendant to pay to VTEK that was not tied to any
25 invoice. Day 2 Vol. 1 Tr. 77:20-78:11. Semikian would
26 then manually input the amount he paid into Defendant’s
27 QuickBooks account. Id. This testimony is simply not
28 enough to overcome Defendant’s burden to prove that
12
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 13 of 24 Page ID
#:3015
1 these payments occurred in light of the aforementioned
2 irregularities. Without any corresponding invoices or
3 other documentation to substantiate this unusual payment
4 system, the Court has no way to confirm the accuracy of
5 the payments listed in Exhibit 2030.5
6 The same lack of evidentiary support belies
7 Defendant’s claimed deduction for shipping and delivery
8 expenses of over $2 million. While these payments are
9 slightly more regular than Defendant’s payments to VTEK,
10 there are still some months with multiple payments and
11 other months with no payments at all. See Ex. 2031.
12 Moreover, the shipping and delivery costs increased
13 drastically between September and November 2020. Id.
14 The only explanations Defendant offered for this
15 increase were the two-month gap in payments, the supply
16 chain bottleneck, and the increased weight of the XXL
17 vape as compared to the other two models. See Day 2
18 Vol. 1 Tr. 83:14-84:3. However, none of these
19 explanations justifies a cost increase of over six times
20 the previous monthly shipping cost, and other payments
21 that were more than ten times prior shipping costs. In
22
23 5 Defendant points to Voth’s statement that if the average
cost per unit of the Infringing Products was $4, and Defendant
24
sold about 1.8 million units, then there is support for
25 Semikian’s claim that total costs were around $7 million. See
Day 2 Vol. 2 Tr. 126:9-127:14. There is no evidence before the
26 Court as to the Infringing Products’ average cost per unit,
however, so any assumption as to that amount is speculative.
27 Moreover, Voth testified during trial that Jaber’s deposition
testimony about average cost per unit was vague and equivocal.
28
Id. at 125:8-21.
13
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 14 of 24 Page ID
#:3016
1 addition, there appears to be no correlation between the
2 payments made to VTEK and the claimed shipping and
3 delivery costs.
4 Without any additional support, the Court finds no
5 credibility as to the summary financial documents put
6 forth as Exhibits 2030 and 2031. Consequently, the
7 Court finds that Defendant has failed to meet its burden
8 to prove deductions based on either: 1) payments made to
9 VTEK, or 2) shipping and delivery expenses.
10 Other courts have similarly found that summary
11 financial documents coupled with testimony, absent any
12 documentary evidence, were insufficient to satisfy the
13 defendant’s burden to prove costs. See Brighton
14 Collectibles, LLC v. Believe Production, Inc., No. 2:15–
15 cv–00579–CAS(ASx), 2018 WL 1381894, at *7 (C.D. Cal.
16 Mar. 15, 2018) (declining to deduct cost where only
17 evidence in support of cost was witness testimony and
18 spreadsheets produced by the witness); Brighton
19 Collectibles, Inc. v. Marc Chantal USA, Inc., No. 06-CV-
20 1584 H (POR), 2009 WL 10674076, at *10 (S.D. Cal. Aug.
21 12, 2009) (declining to deduct costs because defendant
22 “did not submit any documentary evidence such as
23 invoices to substantiate its claimed deductions”).
24 Because Defendant has failed to meet its burden, the
25 Court declines to make any deductions on these bases.
26 See Frank Music Corp. v. Metro-Goldwyn-Mayer, Inc., 772
27 F.2d 505, 514 (1985) (citing Russell v. Price, 612 F.2d
28 1123, 1130–31 (9th Cir. 1979) (“If the infringing
14
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 15 of 24 Page ID
#:3017
1 defendant does not meet its burden of proving costs, the
2 gross figure stands as the defendant’s profits.”).
3 Defendant also seeks a deduction of $189,632 for
4 selling and operating expenses.6 Plaintiffs’ experts
5 did not dispute this deduction at trial. The Court
6 therefore deducts $189,632 in allocated selling expenses
7 from Plaintiff’s monetary award.
8 c. Apportionment
9 Disgorgement of profits “is intended to award
10 profits only on sales that are attributable to the
11 infringing conduct.” Lindy Pen, 982 F.2d at 1408.
12 However, “[o]nce the plaintiff demonstrates gross
13 profits, they are presumed to be the result of the
14 infringing activity.” Id. It is therefore the
15 defendant’s burden to demonstrate which of its total
16 sales are not attributable to the infringing activity.
17 Id. District courts should not apportion profits where
18 they cannot do so based on a “reasonable, nonspeculative
19 formula.” Frank Music Corp. v. Metro-Goldwyn-Mayer,
20 Inc., 772 F.2d 505, 519 (9th Cir. 1985).
21 To argue that some of Defendant’s profits are not
22
6 To arrive at this figure, Bone first determined
23 Defendant’s total selling expenses using its income statements.
Day 2 Vol. 2 Tr. 21:7-14. He then used the same income
24
statements to determine the percentage of total sales
25 attributable to the Infringing Products. Id. Bone then
allocated selling expenses based on this percentage to determine
26 the amount of selling expenses attributable to the Infringing
Products. Id. Courts have approved of similar allocation
27 methods when actual overhead costs for individual products could
not be determined. See Kamar Int’l, Inc. v. Russ Berrie & Co.,
28
Inc., 752 F.2d 1326, 1333 (9th Cir. 1984).
15
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 16 of 24 Page ID
#:3018
1 attributable to the infringement of the BANG Marks, Bone
2 relied on a likelihood of confusion survey conducted by
3 Plaintiff’s survey expert, Justin Anderson. The
4 Anderson survey found that approximately 20% of survey
5 respondents somehow associated Design One and Design Two
6 with the BANG Marks. Thus, Bone reasoned that because
7 80% of survey respondents did not associate the two,
8 then 80% of Defendant’s sales cannot be attributed to
9 its infringement of the BANG Marks. Day 2 Vol. 2 Tr.
10 26:8-18.
11 This logic is flawed for a number of reasons.
12 First, the Anderson survey did not narrow respondents to
13 actual purchasers of Bang vapes, so it reveals nothing
14 as to why actual Bang vape consumers decided to purchase
15 that product. Id. at 57:14-18. Second, consumer
16 confusion as to affiliation is not an accurate measure
17 of the importance a consumer places on a brand name and
18 logo when deciding to purchase a product. Id. at 62:16-
19 63:25. It is therefore unsurprising that other courts
20 have rejected the use of a likelihood of confusion
21 survey to apportion profits. See Globefill Inc. v.
22 Elements Spirits, Inc., No. 2:10–cv–02034–CBM (PLAx),
23 2017 WL 6520589, at *3 (C.D. Cal. Sept. 8, 2017); adidas
24 America, Inc. v. Skechers USA, Inc., No. 3:15-cv-01741-
25 HZ, 2017 WL 3319190, at *28 (D. Or. Aug. 3, 2017).
26 Defendant offers no additional evidence showing
27 that any of its sales were not attributable to its
28 unlawful infringement. Thus, the Court awards all of
16
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 17 of 24 Page ID
#:3019
1 Defendant’s net profits to Plaintiff because the
2 “infringing and noninfringing elements of [the] work
3 cannot be readily separated.” Nintendo of Am., Inc. v.
4 Dragon Pac. Int’l, 40 F.3d 1007, 1012 (9th Cir. 1994)
5 (quoting Hamilton–Brown Shoe Co. v. Wolf Bros. & Co.,
6 240 U.S. 251, 261–62 (1916)).
7 3. Statutory Enhancement
8 If a court finds that recovery based on profits is
9 either inadequate or excessive, the court in its
10 discretion may enter judgment in an amount it finds to
11 be just. 15 U.S.C. § 1117(a). If the court exercises
12 its discretion to adjust the award, the sum “shall
13 constitute compensation and not a penalty.” Id. To
14 penalize defendants for misconduct by enhancing Lanham
15 Act damages is an abuse of discretion; enhancement is
16 only available to ensure that the plaintiff receives
17 adequate compensation. Skydive Ariz., Inc. v.
18 Quattrocchi, 673 F.3d 1105, 1115 (9th Cir. 2012).
19 The Court finds that an award based on disgorgement
20 of profits will adequately compensate Plaintiffs for
21 Defendant’s infringement. Indeed, Plaintiffs’ argument
22 in favor of a statutory enhancement is based on
23 Defendant’s conduct rather than any losses they suffered
24 that disgorgement of profits would not compensate for.
25 See Day 1 Vol. 1 Tr. 21:12-25. Enhancement based on
26 Defendant’s conduct alone would constitute a penalty, so
27 the Court declines to enhance Plaintiffs’ award.
28 For the foregoing reasons, the Court awards
17
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 18 of 24 Page ID
#:3020
1 Plaintiffs a total of $10,584,308.48 in disgorged
2 profits.
3 B. Permanent Injunction
4 The Lanham Act empowers district courts to grant
5 injunctions to prevent the violation of a plaintiff’s
6 trademark rights. 15 U.S.C. § 1116(a). To be awarded a
7 permanent injunction, a plaintiff must show that: (1)
8 the plaintiff has suffered irreparable injury; (2) legal
9 remedies are inadequate to compensate the plaintiff for
10 the injury; (3) the balance of hardships favors an
11 injunction; and (4) the public interest would be served
12 by the injunction. eBay, Inc. v. MercExchange, LLC, 547
13 U.S. 388, 391 (2006).
14 1. Irreparable Injury
15 Plaintiffs who prove a violation of the Lanham Act
16 are entitled to a rebuttable presumption of irreparable
17 harm. 15 U.S.C. § 1116(a). Because Defendant
18 stipulated to trademark infringement and has offered no
19 evidence to rebut the presumption, irreparable harm is
20 presumed. See Nintendo of Am., Inc. v. Storman, No. CV
21 19-7818-CBM-(RAOx), 2021 WL 4772529, at *2 (C.D. Cal.
22 Aug. 5, 2021).
23 2. Inadequate Legal Remedies
24 “Injunctive relief is the remedy of choice for
25 trademark and unfair competition cases, since there is
26 no adequate remedy at law for the injury caused by a
27 defendant’s continuing infringement.” Century 21 Real
28 Estate Corp. v. Sandlin, 846 F.2d 1175, 1180 (9th Cir.
18
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 19 of 24 Page ID
#:3021
1 1988). In addition, “[d]amage to reputation and loss of
2 customers are intangible harms not adequately
3 compensable through monetary damages.” Leadership
4 Studies, Inc. v. ReadyToManage, Inc., No. 2:15-cv-09459-
5 CAS(AJWx), 2017 WL 2408118, at *6 (C.D. Cal. June 2,
6 2017) (quoting Car-Freshner Corp. v. Valio, LLC, No.
7 2:14-cv-01471-RFB-GWF, 2016 WL 7246073, at *8 (D. Nev.
8 Dec. 15, 2016)).
9 The Court has no evidence before it indicating that
10 Defendant will never begin selling the Infringing
11 Products again. While Defendant eventually stopped
12 selling the Infringing Products, it did not do so until
13 well into the litigation of this case. Moreover,
14 Plaintiffs introduced evidence at trial of reputational
15 harm they suffered as a result of the association
16 between BANG energy drinks and the Infringing Products.
17 See Exs. 42, 60-61. Plaintiffs have therefore
18 established that legal remedies are inadequate.
19 3. Balance of Hardships
20 Defendant will not be harmed by an injunction
21 preventing it from selling the Infringing Products
22 because Defendant has already stopped selling products
23 that use Design One and Design Two. Moreover, as
24 discussed above, Plaintiffs have shown that they may
25 suffer continued reputational harm and loss of good will
26 if an injunction is not entered. Therefore, the balance
27 of hardships favors granting an injunction. See AirWair
28 Int’l Ltd. v. ITX USA LLC, No. 19-cv-07641-SI, 2021 WL
19
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 20 of 24 Page ID
#:3022
1 5302922, at *4 (N.D. Cal. Nov. 15, 2021) (citation and
2 internal quotation marks omitted) (“Defendant will
3 experience little to no hardship so long as defendant
4 does not infringe and without an injunction plaintiff
5 would be needlessly vulnerable to future infringement
6 necessitating additional litigation.”).
7 4. Public Interest
8 Injunctive relief will serve the public interest
9 here by preventing consumer confusion and will vindicate
10 the Lanham Act by protecting the brands of authorized
11 trademark users. See Knature Co., Inc. v. Duc Heung
12 Grp., Inc., No. CV 20-3877-DMG (AFMx), 2021 WL 3913194,
13 at *5 (C.D. Cal. Jul 2, 2021). There are no exceptional
14 circumstances present here indicating that an injunction
15 would be against the public interest. See Leadership
16 Studies, Inc., 2017 WL 2408118, at *6. Thus, this
17 factor favors entering a permanent injunction.
18 In sum, all of the eBay factors favor a permanent
19 injunction in this case. The Court therefore GRANTS
20 Plaintiffs a permanent injunction against Defendant
21 preventing Defendant from selling any products using
22 Design One or Design Two.7
23
7 Defendant requests clarity as to whether it may continue
24 to use the “vape with a bang” tagline on products sold under
brand names other than “Bang.” See Def.’s Closing Arg. Brief
25 23:16-20, ECF No. 199. Plaintiffs do not appear to oppose this
request. See generally Pls.’ Reply to Def.’s Closing Arg. Brief,
26
ECF No. 200. The Court agrees that Defendant should be permitted
27 to continue using this tagline on products that do not use Design
One or Design Two. Plaintiffs have not shown that use of the
28 word “bang” alone, when detached from Designs One and Two, is
likely to cause consumer confusion. Therefore, these sales need
20
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 21 of 24 Page ID
#:3023
1 C. Attorneys’ Fees
2 The Lanham Act authorizes courts to award
3 reasonable attorneys’ fees to the prevailing party in
4 “exceptional cases.” 15 U.S.C. § 1117(a). “[D]istrict
5 courts analyzing a request for fees under the Lanham Act
6 should examine the ‘totality of the circumstances’ to
7 determine if the case was exceptional . . . using a
8 preponderance of the evidence standard.” SunEarth, Inc.
9 v. Sun Earth Solar Power Co., Ltd., 839 F.3d 1179, 1181
10 (9th Cir. 2016). Factors to consider include:
11 “frivolousness, motivation, objective unreasonableness
12 (both in the factual and legal components of the case)
13 and the need in particular circumstances to advance
14 considerations of compensation and deterrence.” Octane
15 Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S.
16 545, 554 n.6 (2014)).
17 In short, “an ‘exceptional’ case is simply one that
18 stands out from others with respect to the substantive
19 strength of a party’s litigating position . . . or the
20 unreasonable manner in which the case was litigated.”
21 Id. at 554. A court’s finding that a defendant’s
22 infringement was willful does not automatically compel
23 an award of attorneys’ fees to the prevailing plaintiff.
24 See UL LLC v. Space Chariot Inc., 250 F. Supp. 3d 596,
25
26 not be enjoined. See Craigslist, Inc. v. Naturemarket, Inc., 694
F. Supp. 2d 1039, 1062 (N.D. Cal. 2010) (“Generally, an
27 injunction must be narrowly tailored to remedy only the specific
harms shown by a plaintiff, rather than to enjoin all possible
28
breaches of the law.”).
21
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 22 of 24 Page ID
#:3024
1 615 (C.D. Cal. 2017).
2 Here, while the Court determined early on that
3 Plaintiffs had a high likelihood of success on the
4 merits of their trademark infringement claims, Defendant
5 raised nonfrivolous arguments that led the Court to
6 twice deny Plaintiffs’ requests for a preliminary
7 injunction. And while the Court has found that
8 Defendant’s infringement was willful, it cannot say that
9 Defendant’s litigating position was objectively
10 unreasonable. Plaintiffs put forth no evidence that
11 Defendant was aware of the BANG Marks when it began
12 selling the Infringing Products. Energy drinks also
13 occupy a distinct market from vaping products, and
14 Plaintiffs have not exhibited an intent to expand into
15 the vape industry. See Globefill Inc. v. Elements
16 Spirits, Inc., No. 2:10–cv–02034–CBM (PLAx), 2017 WL
17 6520589, at *3-4 (C.D. Cal. Sept. 8, 2017) (finding a
18 case to be unexceptional where plaintiff’s product was
19 different from infringing product and plaintiff had no
20 plans to expand into infringing product’s market).
21 Attorneys’ fees are also not necessary for purposes
22 of compensation or deterrence. The disgorgement award
23 will fully compensate Plaintiffs for Defendant’s
24 infringement, and the permanent injunction will
25 sufficiently deter any risk of future infringement. Cf.
26 Y.Y.G.M. SA v. Redbubble Inc., No. 2:19-cv-04618-RGK-
27 JPR, 2021 WL 4553186, at *4-5 (C.D. Cal. Oct. 5, 2021)
28 (finding a risk of future infringement where the court
22
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 23 of 24 Page ID
#:3025
1 denied injunctive relief and defendant could not
2 guarantee that its policing techniques would completely
3 eliminate future infringement). Defendant also did not
4 litigate this case in an unreasonable manner that
5 requires deterrence for future cases. While Defendant
6 had a low likelihood of success in defending against
7 trademark infringement, it stipulated to its own
8 liability and thereby streamlined issues for trial.
9 Under the totality of the circumstances, the Court
10 finds that this is not an exceptional case that stands
11 out from others. See UL LLC, 250 F. Supp. at 615
12 (finding a case to be unexceptional despite defendants’
13 willful infringement and failure to cooperate during
14 discovery); Eko Brands, LLC v. Adrian Rivera Maynez
15 Enters., Inc., No. 20-35369, 2021 WL 3630225, at *2 (9th
16 Cir. Aug. 17, 2021) (finding that district court did not
17 abuse its discretion in concluding the case was
18 unexceptional despite defendant’s willful infringement).
19 The Court therefore exercises its discretion to DENY
20 Plaintiffs’ request for attorneys’ fees.
21 ///
22 ///
23 ///
24 ///
25 ///
26 ///
27 ///
28 ///
23
Case 2:20-cv-06745-RSWL-JC Document 201 Filed 07/26/22 Page 24 of 24 Page ID
#:3026
1 III. CONCLUSION
2 Based on the foregoing, the Court awards Plaintiffs
3 $10,584,308.48 in disgorged profits. The Court also
4 GRANTS Plaintiffs’ request for a permanent injunction.
5 Defendant is hereby enjoined from selling any products
6 using Design One or Design Two. Finally, the Court
7 DENIES Plaintiffs’ request for attorneys’ fees. Within
8 seven (7) days of this Order, Plaintiff shall lodge a
9 Proposed Judgment with the Court consistent with the
10 conclusions set forth herein.
11 IT IS SO ORDERED.
12
13 DATED: July 26, 2022 _____/s_/ _R_o_n_a_ld_ _S_.W__. _L_e_w_______
HONORABLE RONALD S.W. LEW
14
Senior U.S. District Judge
15
16
17
18
19
20
21
22
23
24
25
26
27
28
24