Petition for Writ of Certiorari — Risty v. Chicago, RI & PR Co.

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IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1995

NTDEC, NINTENDO ELECTRONIC CO., LTD.,

JIMMY YAO, WANG WEN-FU, WANG SU-

TANG, CHEN MEI-LIN and MEGA SOFT, INC.,

Petitioners,

NINTENDO OF AMERICA, INC.,

Respondeni.

On Petition For Writ Of Certiorari

To The United States Court of Appeals

for the Ninth Circuit

PETITION FOR WRIT OF CERTIORARI

Jay I. Lee

Counsel of Record

CHANG & LEE

150 N. SANTA ANITA AVENUE, #300

ARCADIA, CA 91006

(818) 821-0674

RECEIVED

QUESTIONS PRESENTED FOR REVIEW

1. Does a $24+ million default judgment against seven

Taiwanese defendants meet the requirement of due process when the

defendants received no actual notice of the impending judgment or its

probable magnitude?

ai Does that same default judgment comply with the statutory

language and equitable principles embodied in the Lanham Act, 15 U.S.C.

§1117, when the judgment is based on the defendants’ purported gross sales

rather than their “profits,” and those sales are then trebled?

PARTIES TO THE PROCEEDING

All of the parties are named in the caption. To the knowledge of

Petitioners’ counsel, the three corporate Petitioners have no corporate

parents on subsidiaries, although Petitioner Mega Soft, Inc. was at one time

intended to be Petitioner NTDEC’s affiliate in Los Angeles.

As recited in the Memorandum Decision of the Ninth Circuit Court

of Appeals, Respondent Nintendo of America, Inc. is a wholly owned

subsidiary of Nintendo Company, Ltd. of Kyoto, Japan.

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I. Petitioners’ Lack Of Actual Notice Coupled With

the Monumental Amount Of This Default Judgment

Provide Equitable Reasons For Vacating It ............ 9

II. In Awarding Damages Based On A Trebling Of

Petitioners’ Guestimated Gross Sales, The Courts

Below Gave Respondent An Inequitable Windfall ........ 12

SE Cece cee hees vc aees PEO RE EEO ECE ORTON 13

PE 6 os una epee COR COREE CORPO PAG ELT Al

Memorandum Decision, filed March 28, 1995............ Al

Findings of Fact and Conclusions of Law,

ee ia ay 6 6a ces be ae eae es Al3

Amended Judgment in a Civil Case,

a ak cle es cade be cecccees A30

Memorandum and Order, filed August 25, 1993......... A34

iii

TABLE OF AUTHORITIES

Cases

, 13 F.3d 1145

j , 710 F.2d 1480, reh. denied 718

F.2d 1115 (11th Cir. 1983), cert, denied 465 U.S. 1102 ...... 13

Carl Marks & Co, vy USSR, 665 F. Supp. 323 (S.D.N.Y. 1987),

aff'd 841 F.2d 26 (2d Cir.), cert, denied 487 U.S. 1219 (1988) . 10

ee ees ee Ce ise ans ae Oa hn 0.40 0 4 12

Erick Rios Bridoux y. Eastern Air Line, 214 F.2d 207

(D.C. Cir.), cert, denied 348 U.S. 821 (1954) ............ 12

Lindy Pen Co, v. Bic Pen Corp,, 982 F.2d 1400 (9th Cir. 1993) .. 12

131

F.R.D. 408 (S.D.N.Y 1990), cert. denied 112 S. Ct. 440 ..... 11

Schwartz v. Marketing Pub, Co., 153 F.R.D. 16 (D. Conn. 1994) . 11

United States vy. Miller, 9 F.R.D. 506, 509 (M.D.Pa. 1949) ..... 13

Statutes

Capyrigtt Ast, 27:0). BC, GOOG isis iiseinse Kea die 6 cite e once iien 0 5

Federal Rule of Civil Procedure S . 0... 2 eee ccc rec eees 11

Federal Rule of Civil Procedure 60(b)(6) ............. 3, 9, 10, 13

Judicial Code, 26 U.S.C. $1254(1) 2c ccc ccc ccc eer eeee 2

Judicial Code, 28 U.S.C. §§1331 and 1338 ................ 5

Lanham Act, 15 U.S.C. §1117(a) and (b)................ 3, 4, 12

RG AP We GORE bc ceed eed tec eheernceee 5

OPINIONS IN THIS CASE

On May 19, 1993 the United States District Court for the District

of Arizona (Visiting Senior District Judge James F. Battin) issued Findings

of Fact and Conclusions of Law. They have been reported in Nintendo of

America, Inc. v. NIDEC, 822 F. Supp. 1462 (D. Ariz. 1993). On June

9, 1993 the District Court entered an Amended Judgment in a Civil Case,

in accordance with those Findings and Conclusions. On August 25, 1993

the District Court filed a Memorandum and Order, denying Petitioners’

motion to set aside the Amended Judgment.

On March 28, 1995 the Judgment of the District Court was

affirmed in a Memorandum Decision of the Ninth Circuit Judges William

A. Norris, Charles E. Wiggins and Ferdinand F. Fernandez), issued “not

for publication.”

IURISDICTION OF THIS COURT

The Memorandum Decision of the United States Court of Appeals

for the Ninth Circuit, affirming the judgment of the United States District

Court of Arizona, was filed on March 28, 1995. There was no request for

a rehearing. Hence, this Petition for Writ of Certiorari is timely if filed or

postmarked by June 26, 1995.

Petitioners believe that this Court has jurisdiction to review the

decision of the Ninth Circuit under 28 U.S.C. §1254(1).

STATUTES INVOLVED IN THIS CASE

Federal Rule of Civil Procedure 60(b)(6):

On motion and upon such terms as are just, the court may relieve

a party or a party’s legal representative from a final judgment, order, or

proceeding for the following reasons:...(6) any other reason justifying relief

from the operation of the judgment.

Lanham Act, 15 U.S.C. §$1117(a) aud (b):

(a) Profits; damages and costs; attorney fees

When a violation of any right of the registrant of a mark registered

in the Patent and Trademark Office, or a violation under section 1125(a)

of this title, shall have been established in any civil action arising under this

chapter, the plaintiff shall be entitled, subject to the provisions of sections

1111 and 1114 of this title, and subject to the principles of equity, to

recover (1) defendant’s profits, (2) any damages sustained by the plaintiff,

and (3) the costs of the action. The court shall assess such profits and

damages or cause the same to be assessed under its direction. In assessing

profits the plaintiff shall be required to prove defendant’s sales only;

defendant must prove all elements of cost or deduction claimed. In

assessing damages the court may enter judgment, according to the

circumstances of the case, for any sum above the amount found as actual

damages, not exceeding three times such amount. If the court shall find

that the amount of the recovery based on profits is either inadequate or

excessive the court may in its discretion enter judgment for such sum as the

court shall find to be just, according to the circumstances of the case. Such

sum in either of the above circumstances shali constitute compensation and

not a penalty. The court in exceptional cases may award reasonable

attorney fees to the prevailing party.

(b) Treble damages for use of counterfeit mark

In assessing damages under subsection (a) of this section, the court

shall, unless the court finds extenuating circumstances, enter judgment for

three times such profits or damages, whichever is greater, together with a

reasonable attorney's fee, in the case of any violation of section 1114(1)(a)

of this title or section 380 of Title 36 that consists of intentionally using a

mark or designation, knowing such mark or designation is a counterfeit

mark (as defined in section 1116(d) of this title), in connection with the

sale, offering for sale, or distribution of goods or services. In such cases,

the court may in its discretion award prejudgment interest on such amount

at an annual interest rate established under section 6621 of Title 26,

commencing on the date of the service of the claimant’s pleadings setting

forth the claim for such entry and ending on the date such entry is made,

or for such shorter time as the court deems appropriate.

STATEMENT OF THE CASE

On May 31, 1991 Nintendo of America, Inc. ("Respondent") filed

a complaint against NTDEC, Nintendo Electronic Co., Ltd., Jimmy Yao,

Wang Wen-Fu, Wang Su-Tang, Chen Mei-Lin and Mega Soft, Inc. (jointly

"Petitioners") in the United States District Court for the District of

Arizona. The complaint sought damages and injunctive relief for copyright

infringement, trademark infringement, unfair competition and false

designation of origin. Jurisdiction was alleged under 17 U.S.C. §501, 15

U.S.C. $1121, and 28 U.S.C. §§1331 and 1338; and was found to exist by

the District Court.

Petitioners are two Taiwanese corporations (NTDEC and Nintendo

Electronic Co., Ltd.), their one time intended affiliate in Los Angeles,

California which never became operational (Mega Soft, Inc.) and four

Taiwanese individuals Jimmy Yao, Wang Wen-Fu, Wang Su-Tang and

Chen Mei-Lin) who worked for or were otherwise connected with one or

the other of the Taiwanese corporations.

On July 7, 1991 Edmund Y. Nomura, an attorney in Phoenix,

Arizona, served an answer to the complaint on behalf of all seven

Petitioners. Two of the individual Petitioners (Wang Su-Tang and Chen

Mei-Lin) had not been served with process and had not been in the United

States. Nonetheless, on June 18, 1991 Nomura had acknowledged to

Respondent and the District Court that he was authorized to accept service

for all Petitioners, both those served and those not served. On August 14,

1991 the District Court approved the substitution of counsel whereby

Burton M. Bentley, another Phoenix attorney, assumed the representation

of four of the Petitioners: Nintendo Electronic Co., Ltd., Jimmy Yao,

Wang Wen-Fu and Mega Soft, Inc.

In March 1992 Nintendo Electronic Co., Ltd. and Mega Soft, Inc.

answered document requests which had been propounded by Respondent.

On April 21, 1992 Wang Wen-Fu was deposed by Respondent in Tucson,

Arizona, with the assistance of two Chinese language interpreters.

Some time after the deposition, Wang Wen-Fu left the United States

and returned to Taiwan. From that point on, Petitioners’ attorneys appear

to have lost contact with their clients. On August 24, 1992 Mr. Bentley

filed a motion to withdraw from representing his four clients. All four

approved the withdrawal in a document which provided that they should be

served henceforth "c/o Henry Wong, 6636 E. 26th Street, Los Angeles,

California 90040". The District Court granted the motion on September

11, 1992.

On September 3, 1992 Mr. Nomura served a motion to withdraw

from representing Petitioners NTDEC, Wang Su-Tang and Chen Mei-Lin.

He cited geographic and language barriers as the reasons for the cessation

of his communications with his clients. On October 2, 1992 the District

Court granted Mr. Nomura’s motion, with the provision that all future

court documents would be served on his former clients at: NTDEC

Electronics Co., Ltd., 6 F No. 22, Sec. 2, Keelung Road, Taipei, Taiwan,

R.O.C. The order also directed these three Petitioners to furnish the court

with a current address and telephone number, and with any changes of

address or telephone number in the future.

During the period that Petitioners’ attorneys were withdrawing and

afterward, Respondent filed motions for default judgment based on

Petitioners’ various failures to provide discovery and comply with court

orders directing them to do so. On August 21, 1992 Respondent served a

motion for entry of default judgment against NTDEC, Wang Su-Tang and

Chen Mei-Lin. On November 5, 1992 Respondent served a similar motion

against Nintendo Electronic Co., Ltd. and Jimmy Yao. On January 20,

1993 Respondent served a similar motion against Wang Wen-Fu. On

February 17, 1993 Respondent served the last such motion, for default

The first of these four motions was served on Petitioners’ Arizona

counsel, with whom Petitioners were no longer in contact. The second

motion was served on "Mr. Henry Wong, 6636 East 26th Street, Los

Angeles, CA 90040". The third and fourth motions were served on Mr.

Henry “Wang” at the Los Angeles address, and NTDEC in Taiwan. All

of the motions were unopposed and eventually granted.

On March 30, 1993 the District Court held a hearing on damages.

Only Respondent and its witnesses attended. The court heard testimony on

the problems and estimated losses worldwide that Respondent and its

corporate parent had suffered due to counterfeiting activity from numerous

sources, including many persons unrelated to Petitioners. The court was

told of certain isolated sales purported!yv made by Petitioners to entities in

the United States, Mexico and South America in 1990 and the first half of

1991.

Respondent’s witnesses testified concerning Petitioners’ purported

production capacity in Taiwan, Malaysia and the Philippines. From this

information, and without any supporting evidence, the court concluded that

Petitioners were operating at maximum Capacity throughout the entire

damage period, fully engaged in making products which infringed those of

Respondent. Although Respondent’s expert acknowledged that it was "very

costly” and a “sophisticated process" for Petitioners to replicate

Respondent’s video game products, the court made no allowance for any

costs incurred by Petitioners in so doing. The court treated Petitioners’

entire hypothetical gross receipts as pure profit, since the absent Petitioners

did not provide any evidence to the contrary. The District Court then

trebled these gross receipts and awarded Respondent judgment for

$24,059,062, plus attorneys’ fees of $108,829 and costs.

The staggeringly large judgment attracted the attention of the

foreign business press, and Wang Wen-Fu first learned of it from an article

in a Taiwanese newspaper. He promptly retained his present attorney, who

is Chinese-American, and Sought to set aside the amended default

judgment.

On June 17, 1993 Wang Wen-Fu singed a declaration in which he

denied each of the statements made in the District Court’s findings Nos.

25(a) through (h), concerning sales of infringing products, and denied that

Mr. Nomura had been authorized to accept service of process for any of

the Petitioners. Wang Wen-Fu was under the misimpression that

Petitioners had never answered the complaint, and that they had not done

so based on their misapprehension that any judgment would be

unenforceable in Taiwan.

Wang Wen-Fu declared that Petitioners had never received actual

notice of Respondent’s applications for default judgment, and explained that

the East 26th Street address in Los Angeles, California had become

obsolete before Respondent began sending papers to it. That location was

to have been the place of business of Mega Soft, Inc., and none of the

other Petitioners, who are all permanent residents of Taiwan, had ever used

that address.

On July 15, 1993 Henry Wong submitted a supporting declaration.

He recalled that in 1992 he had received a number of documents from a

law firm, simply addressed to him. Since Wong had not been instructed

to forward the documents to anyone else, and did not know that he was

supposed to do so, he just marked “return to sender” on the outside of the

envelopes, and redeposited them in the mailbox.

In a Memorandum and Order filed on August 25, 1993, the District

Court denied Petitioners’ motion to set aside the default judgment.

Petitioners’ Notice of Appeal to the Ninth Circuit was filed on September

23, 1993.

ARGUMENT

I PETITIONERS’ LACK OF ACTUAL NOTICE COUPLED WIT

H THE MONUMENTAL AMOUNT OF THIS DEFAULT

JUDGMENT PROVIDE EQUITABLE REASONS FOR

VACATING IT.

Federal Rule of Civil Procedure 6 (b) (6) provides that, on such

terms as are just, the court may relieve a party from a final judgment for

any reason justifying relief. This rule calls upon the court to dispense due

process, tempered with considerations of equity. Petitioners submit that the

harsh treatment accorded them was not merited, and that the courts below

should have given due weight to their geographic distance from the forum,

their lack of familiarity with the language and judicial system prevailing in

this country, and the magnitude of Petitioners’ ultimate liability.

In Eri i i ir Line, 214 F.2d 207 (D.C.

Cir.), cert. denied 348 U.S. 821 (1954), such equitable considerations were

accorded weight on appeal, resulting in a reversal of the financial calamity

that had befallen another alien in our court System. Bridoux was a citizen

of Bolivia. An airplane he was piloting collided in the air with one

operated by Eastern Air Line, causing many fatalities. When Eastern sued,

attorneys retained to defend Bridoux filed an answer and counterclaim for

him. Bridoux then returned to his native country, after which his attorneys

were granted leave to withdraw. When Bridoux, who was then in pro per,

failed to attend a pretrial conference, the court entered a default judgment

against him for $160,000.

The appellate court noted that Bridoux had left the United States

because he had no money to remain. He had not received notice of his

attorney’s withdrawal or the pretrial hearing, although Eastern had

attempted to serve him. Only after the default judgment had been entered

did Bridoux receive actual notice of the proceeding. The reviewing court

commented on the "very large money judgment entered by default" and

concluded that Bridoux “should have exercised greater care to keep parties

and counsel advised of his address." (214 F.2d at 210) The court

fashioned an equitable remedy to accommodate the interests of both Sides:

the court set aside the default judgment while allowing the dismissal of

Bridoux’s counterclaim to stand.

Clearly, the size of the default judgment against Bridoux pales in

comparison to the $24,000,000+ default judgment against the present

Petitioners. The latter, too, could have maintained better communications.

But their omissions do not merit a $24,000,000+ penalty. A fair result in

these circumstances would be to set aside the enormous default judgment

while allowing the determination of liability to stand.

The courts below were understandably affronted at what they

perceived to be a deliberate disregarding of our legal process. But these

reactions should not have been allowed to interfere with the dispensing of

justice. In Carl Marks & Co. v USSR, 665 F. Supp. 323 (S.D.N.Y.

1987), aff'd 841 F.2d 26 (2d Cir.), cert. denied 487 U.S. 1219 (1988), suit

was brought against the Soviet Union to collect on Imperial Russian bonds,

and a default judgment was entered. Afterward, the defendant moved

under F.R.C.P. 60(b) to vacate that judgment.

The Second Circuit was “convinced that the USSR at all times knew

that it was necessary to answer and appear in order to assert the waivable

affirmative defense of sovereign immunity” (665 F. Supp. at 332).

However, the court also recognized that “the Soviet Union’s willful default

is tempered by its genuine but unfounded belief that it enjoys such

sovereign immunity that it can merely crumple and discard our legal

process, and that this inherent quality of sovereignty cannot be impaired

unilaterally by the United States’ adoption of the [Foreign Sovereign

Immunities Act] (id,). The court’s reasoning then led it to set the default

aside under F.R.C.P. 60(b)(4).

In the present case the Petitioners, lacking the resources of the

former Soviet Union’s arsenal of legal advisers, were also under a genuine

but unfounded belief that the judgment of an American court could not be

enforced against them in their native country. Now of a different view,

Petitioners respectfully seek the opportunity to prove what their liability

should realistically be.

Petitioners’ earnest plea should be considered in light of the fact

that they received no actual notice of the colossal liability sought to be

imposed on them. Instead of serving notice on Petitioners “in care of”

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Henry Wong, as the District Court had directed, Respondent simply mailed

papers to Henry Wong, with no reference to Petitioners on any of the

envelopes. Mr. Wong was neither an attorney nor a party to the litigation,

and he simply returned the unfamiliar papers to the sender.

This is not the same situation as occurred in Nati Vv

i , 131 F.R.D. 408, 413 (S.D.N.Y 1990), cert.

denied 112 S. Ct. 440, where legal papers were given to a person who

normally forwarded them to the defendant (Adnan Khashoggi) overseas,

and where the defendant was a sophisticated businessman thoroughly fluent

in English.

Finally, when Respondent's various papers leading to the default

judgment were filed with the court, they were uniformly deficient in

meeting the requirement of F.R.C.P. 5(d) that they include a signed

certificate of service. Respondent ameliorated these deficiencies to the

Satisfaction of the District Court by submitting the declaration of a legal

secretary on July 6, 1993, one month after the Amended Judgment had

been issued, when Petitioners were seeking to set it aside.

In their strong desire not to reopen the proceedings which had been

concluded, the courts below glossed over the procedural requirements for

filing documents contained in the federal rules, to Petitioners’ substantial

detriment. A different approach was taken in i

Co,, 153 F.R.D. 16, 20 (D. Conn. 1994), where the court demonstrated

much more deference for due process. In that case the court explained:

The notation "cc:", which commonly appears at the end

of a letter, obviously does not comply with either the

letter or the spirit of Rule 5. The notation is probably

understood to mean that a copy has been transmitted to

the person identified. Standing alone, however, the

notation certifies absolutely nothing. Nor does the

ambiguous “cc:" reveal either the date or the manner of

transmission to the recipient. This plainly is not what

Rule 5 requires. Rather, the rule contemplates a clear

and unambiguous certification that a document was served

in a particular way on a certain date. Anything short of

this invites mischief.

Il IN AWARDING DAMAGES BASED ON A TREBLING OF

PETITIONERS’ GUESTIMATED GROSS SALES, THE

COURTS BELOW GAVE RESPONDENT AN

INEQUITABLE WINDFALL.

Practically all of the damages comprising the $24,059,062+

judgment were awarded under the Lanham Act, 15 U.S.C. §1117(a)

and (6). Subsection (a) entitles Respondent to Petitioners’ "profits"

and places the burden on Petitioners of proving their costs of

production and sale. That subsection also requires the court to employ

“principles of equity” and mandates that the amount of any award

“constitute compensation and not a penalty."

Admittedly, Petitioners were not present to refute the gross

sales misattributed to them, or to prove their substantial costs of

production and sale. Nevertheless, the District Court was bound to

follow the law: “section 1117(a) (unlike section 1117(b)) does not

allow a ‘penalty’ against the defendant. . . . the benchmark for making

this determination is the likely benefit accruing to the defendant on

account of its infringement." Badger Meter, Inc, v. Grinnell Corp.,

13 F.3d 1145, 1157 (7th Cir. 1994).

In Lindy Pen Co, v. Bic Pen Corp,, 982 F.2d 1400, 1405-

1408 (9th Cir. 1993), where the defendant was not in default and

presented a more sympathetic posture, the court was more mindful of

the statutory guidelines for awarding damages. The court reiterated

that the plaintiff is not entitled to "a windfall", citing Bandag, Inc. v.

Al Bolser’s Tire Stores, 750 F.2d 903, 918 (Fed. Cir. 1984). The

court noted that the Lanham Act “clearly stipulates that a remedy

‘shall constitute compensation [and] not a penalty.” 15 U.S.C.

§1117(a)." The court deferred to the teaching of this Court in

Eastman Kodak Co, v. Southern Photo Materials Co,, 273 U.S. 359,

379 (1927), that while absolute exactness is not required, “a

reasonable basis for computation must exist.” (982 F.2d at 1407) The

court concluded that the plaintiff's burden was to establish the

defendant’s “gross profits from the infringing activity with reasonable

certainty." (id, at 1408)

Accord, Burger King Corp. v. Mason, 710 F.2d 1480, 1495,

teh, denied 718 F.2d 1115 (11th Cir. 1983), cert. denied 465 U.S.

1102: “Guided by the principles of equity, the court may award the

defendants profits. . . . . The statute also provides for the adjustment

of any profits award if it is inadequate or excessive."

In the present case, the quest for reasonableness and equity was

abandoned. Petitioners’ purported gross sales, which Respondent had

every incentive and opportunity to inflate, and which Petitioners

refuted in their motion to set aside the default judgment, were accepted

as synonymous with profits. The distortion was then multiplied

threefold by the statutory trebling. The result was what the court in

United States v, Miller, 9 F.R.D. 506, 509 (M.D.Pa. 1949), described

as “unconscionable”. In Miller a default judgment for treble damages

under the Emergency Price Control Act, based on a guess as to the

amount of overcharges, was held to be excessive to the point of being

unconscionable, justifying relief from default under F.R.C.P. 60(b).

The court ruled that the judgment had to be based on something more

substantial than guesswork or estimates.

CONCLUSION

Petitioners may not be the most sympathetic parties to come

before this Court, but they are smalltime businessmen who have been

pursued relentlessly by a large multinational corporation, which is

much better equipped financially, culturally and linguistically to wend

its way through the American judicial system. The result is a

$24,000,000+ default judgment, based on a complaint which

contained no dollar amounts, and an evidentiary hearing of which

Petitioners received no actual notice. The colossal award was arrived

at without resort to any principles of equity; when trebled, it produced

a windfall for Respondent which far exceeds Statutory bounds.

Petitioners request that certiori be granted so that this injustice

can be reexamined, for the benefit of all persons who may henceforth

seek the extraterritorial enforcement of American judgments.

Dated: June 23, 1995

CHANG & LEE

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Attorne r Petitioners

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FILED

NOT FOR PUBLICATION MAR 28 1995

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT Cathy A. Catterson, Clerk

U.S. Court of Appeals

NINTENDO OF AMERICA INC., )

)No. 93-16858

Plaintiff-Appellee, )D.C No. CV-91-00300-WDB

)

vs. )

)

NTDEC, NINTENDO ELECTRONIC CoO., )MEMORANDUM*

JIMMY YAO, WANG WEN-FU; WANG SU-_ )

TANG, CHEN MEI-LIN and MEGA SOFT )

INC. )

Defendants-Appellants. )

)

Appeal from the United States District Court

for the District of Arizona

William D. Browning, District Judge, Presiding

Submitted March 15, 1995**

San Francisco, California

Before: NORRIS, WIGGINS, and FERNANDEZ, Circuit Judges

OVERVIEW

Defendants appeal from the entry and amount of a default

judgment in favor of plaintiff in this action for copyright and

trademark infringement in violation of 17 U.S.C. §501 and 15 U.S.C.

§1121 and for unfair competition. Plaintiff, a video game

* This disposition is not appropriate for publication and may not be

cited to or by the courts of this circuit except as provided by 9th Cir.

R. 36-3.

** The panel finds this case appropriate for submission without

argument pursuant to Fed. R. App. P. 34(a) and 9th Cir. R. 34-4.

manufacturer, alleged that defendants were engaged in a largescale

operation counterfeiting plaintiff's video games. The district court

awarded plaintiff $24,059,062 plus attorneys fees of $108,829.00 and

costs of $709.80. The court also granted a worldwide permanent

injunction to prevent continued violation of plaintiff's intellectual

property rights.

Defendants challenge, first, the entry of default judgment,

alleging defects in plaintiff's service of documents subsequent to the

complaint. Next, they challenge the amount of the judgment, claiming

that although the district court’s calculations purported to base the

award on defendants’ profits from their illegal activity, in fact the

court unrealistically assumed defendants had zero costs of production

and distribution. Finally, defendants appeal the district court’s denial

of their motion to set aside the default judgment. This court has

jurisdiction over the timely appeal under 28 U.S.C. §1291, and we

affirm.

BACKGROUND

Plaintiff-appellee, Nintendo of America, Inc. ("Nintendo"), is

a wholly owned subsidiary of Nintendo Company, Ltd. of Kyoto,

Japan. Nintendo is the owner of Nintendo Company, Ltd.’s

copyrights and trademarks in its products in the United States.

Defendants-appellants NTDEC and Nintendo Electronic Co. are

Taiwanese corporations. Defendant Mega Soft, Inc. is NTDEC’s Los

Angeles affiliate. Both NTDEC and Mesa Soft are owned and/or

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operated by defendants Jimmy Yao, Wang Wen-Fu, Wang Su-Tang,

and Chen Mei-Lin, who are citizens of Taiwan.

Defendants made a business of reproducing plaintiff's

computer games, repackaging them, and exporting them for sale into

the United States and other countries. Investigators for plaintiff,

posing as potential wholesale buyers, visited defendants’ plant in

Taiwan, purchased samples of infringing products, and were given

sales brochures with price lists for infringing products.

On June 4, 1991, defendants Jimmy Yao and Wang Wen-Fu

were arrested in Chicago for violating 18 U.S.C. §2320 (trafficking

in counterfeit goods) on the basis of their importation and sale of

counterfeit Nintendo video game cartridges in the United States. The

U.S. Attorney dropped the criminal charges in exchange for a guilty

plea by Nintendo Electronics Company, Ltd. on the same felony

charge.

Nintendo brought the current civil action shortly after the

arrest in Chicago. Nintendo served Jimmy Yao and Wang Wen-Fu

personally with the complaint. Their attorney, Edmund Nomura,

acknowledged service on behalf of all the defendants and filed an

answer on July 2, 1991. On August 14, 1991, Burton Bentley was

substituted as attorney of record for defendants Nintendo Electronics

Co., Jimmy Yao, Wang Wen-Fu, and Mega Soft. Nomura continued

to represent defendants NTDEC, Chen Mei-Lin, and Wang Su-Tang.

Plaintiff Nintendo’s attempts to conduct discovery were

repeatedly frustrated. Plaintiff succeeded in deposing Wang Wen-Fu,

but defendants subsequently ceased to participate in further discovery.

Nintendo resorted to motions to compel discovery, which the district

court granted. Its orders explicitly threatened the entry of a default

judgment for failure to comply.

On August 24, 1992, Bentley moved to withdraw as counsel.

Included in the motion was a consent, signed by all his clients except

Jimmy Yao, to serve them “addressed to Defendants, and each of them

c/o Henry Wong.” His motion to withdraw was mailed to the

defendants in care of Wong. On September 9, Nomura also filed a

motion to withdraw as counsel. His declaration shows that he had

been unable to communicate with any of the defendants: his clients

failed to respond to his repeated letters or provide any instructions.

On September 11, the court granted Bentley’s motion to withdraw.

The order directed that all pleadings be “served on said Defendants,

in care of Henry Wong” and listed Wong’s address. On October 2,

the court granted Nomura’s motion to withdraw and ordered that

service on Nomura’s former clients be made at the following address:

NTDEC Electronics Co., Ltd., 6F No. 22, Sec.2 Keelung Rd.,

Taipei, Taiwan, R.O.C.'/ The order also instructed each of Nomura’s

clients to provide the court with a current address and phone number

and to inform the court of any changes. No addresses or phone

numbers were provided.

1 Nomura confirmed that this was the most current address for all

of his clients.

Prot mel Lee ae

Before Nomura’s withdrawal, on September 15, the court

granted plaintiff's August 21 motion for entry of default judgment

against NTDEC, Wang Su-Tang, and Chen Mei-Lin for failure to

comply with the discovery orders. Plaintiff subsequently moved

successfully for entry of default judgment against each of the

remaining defendants. The court issued a notice of hearing for

proving up damages against the defaulted defendants, scheduled for

March 30, 1993. Defendants did not appear at the hearing to rebut

testimony presented by plaintiff. On June 7, 1993 the district court

entered a default judgment in the amount of $24,059,062, plus fees

and costs. The court also granted plaintiff a worldwide permanent

injunction against defendants infringing activities.

On June 17, 1993, defendants petitioned the district court to set

aside the default judgment. Among other things, defendants alleged

that they had been erroneously advised by counsel that a default

judgment would be unenforceable against them in Taiwan. The

district court denied the motion. Defendants appeal the entry of

judgment, the amount of damages, and the district court’s refusal to

set the judgment aside.

DISCUSSION

I. ENTRY OF DEFAULT JUDGMENT

Defendants argue that the district court lacked jurisdiction to

enter a default judgment against them because technical errors in

certain of the papers prepared by plaintiff deprived defendants of

formally correct service and thereby deprived the court of in personam

jurisdiction over defendants.

Whether a default judgment is void for lack of personal jurisdiction is

a question of law reviewed de novo. Electrical

& Ranch Supplv, Inc,, 967 F.2d 309, 311 (9th Cir. 1992).

The first alleged defect concerns the omission of the words

"Certificate of Service" and a corresponding signature line from

several papers that plaintiff filed with the court. We hold that this

omission did not deprive defendants of proper service or deprive the

court of jurisdiction.

The papers in question state that a copy of the foregoing

document was mailed on a certain date to the appropriate addresses.

Some papers are signed underneath this statement, and some are

signed only by the attorney at the end of the document’s text.

Defendants argue that unsigned statements of mailing, which do not

include signature lines, are not certificates of service under Fed. R.

Civ. P. 5(d). We hold that the alleged deviations are immaterial.

Any defects in the form of the certificates of service accompanying the

documents filed with the court were remedied by the undisputed

affidavit of legal secretary Barbara S. Stamm, which was filed in

connection with Nintendo’s opposition to defendants’ motion to set

aside the default judgments.?/ Ms.

2 Rule 5(d) requires that certificates of service accompany certain

papers filed with the court. The certificates of service are evidence,

but only evidence, that proper service was made. See Fed. R. Civ. P.

5(d), Advisory Committee Notes, 1991 amendment (stating that

certificates of service are required to be on file because they may be

useful for many purposes, including proof of service if an issue arises

concerning the effectiveness of the service”); see also Fed. R. Civ. P.

4(1) ("Failure to make proof of service does not affect the validity of

the service. The court may allow proof of service to be amended.").

Rule 4()) refers to the manner of service of the complaint. Both Rule

4(]) and the

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Stamm testified that each of plaintiff's several motions for entry of

default judgment were served by her on defendants at the addresses set

forth in the district court’s September 14, 1992 and October 5, 1992

orders authorizing withdrawal of defendants’ counsel. Therefore,

defendants’ Rule 5(d) argument is unavail ing.

Defendants also contend that service of the notice of hearing on

the default judgment, as well as several other papers, was ineffective

because plaintiff addressed them to "Henry Wong" rather than to the

“defendants, in care of Henry Wong." Wong’s affidavit states that he

did not forward any of the mailings to defendants; rather, he returned

some to the sender and disposed of the rest. Defendants argue that,

because the envelopes were not addressed "in care of," Wong had no

way of knowing he was supposed to forward the documents to

defendants.

Defendants’ argument is without merit. When confronted with

an unfamiliar mailing, a reasonable person would begin to read it and

would see defendants’ names in the caption. Absent any suggestion

that the addressee, Henry Wong, did not open or read his own mail,

the omission of the "in care of" instruction could not deprive him of

actual notice that the enclosures were intended for defendants.

Omission of the "in care of" instruction was harmless. The issue is

who, plaintiff or defendants, must bear responsibility for Wong’s

failure to forward the documents to defendants.

note on Rule 5(d) reflect the drafters’ intent that certificates of service

be merely an aid to proof of valid service, and that the validity of

service not be dependent on the formal correctness of the certificate

filed with the court.

Responsibility rests squarely with the defendants. Their own

attorney is the source of Wong’s address; it was they who designated

Wong as the agent to whom their mail should be entrusted.

Thereafter, it was defendants’ responsibility to advise Wong of his

obligations as recipient of their mail. The alleged failures or

omissions of Wong in disposing of their mail are no concern of

plaintiff or the court.

Defendants argue that they were unable to advise Wong of his

responsibilities, because there is no evidence that defendants ever

received notice of the court’s order that defendants mail should be sent

to them in care of Wong. Wong’s and NIDEC’s addresses were the

last known addresses for defendants, given by defense counsel in

counsel’s motions to withdraw and incorporated into the court’s orders

permitting withdrawal. Nonetheless, defendants contend that they

cannot be charged with knowing that Wong would be receiving their

papers, because counsel had been unsuccessful at contacting defendants

even before that point. In short, defendants ask the court to relieve

them of responsibility for all events occurring after they broke off

contact with their attorneys. This court will not do so.

Defendants’ success at evading the diligent efforts of their own

attorneys to communicate with them is additional proof that none of

plaintiff's alleged errors in service were of any practical consequence.

Nevertheless, defendants make a final allegation of defective service:

the certificates of service accompanying plaintiff's documents failed to

declare that copies were mailed to the “last known address” of

defendants.

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;

Defendants do not challenge the fact that the addresses listed

were, in fact, the last addresses known to plaintiff. The addresses

were those given to the court by defendants’ attorneys, and the court

had ordered all papers to be served on defendants at those addresses.

Plaintiff was entitled to rely on the court’s orders. Reference to the

"last known address" in the certificates themselves was unnecessary.

Defendants were given proper notice of the hearings on the

motions for default judgment. Defendants’ failure to show up at the

hearings to argue on their own behalf cannot be attributed to any fault

of plaintiff or the court, and defendants must bear the consequences.

The entry of judgment by default was entirely proper.

II. COMPUTATION OF THE AMOUNT OF THE

JUDGMENT

Defendants challenge the amount of plaintiff's award,

contending that, as a matter of law, the district court should have

taken defendants’ costs into account when it determined defendants’

profits from their infringing activity. The district court heard evidence

presented by plaintiff on defendants’ gross sales, but the court did not

offset this number by any amount representing defendants’ costs of

production and distribution.

Section 1117 of Title 15, United States Code, authorizes treble

damages based on defendants’ profits. It allocates the burdens of

proof on sales and costs as follows: “In assessing profits the plaintiff

shall be required to prove defendant’s sales

only; defendant must prove all elements of cost or deduction claimed."

15 U.S.C. §1117(a).

Defendants argue that adherence to the statutory allocation of

the burden is inappropriate when defendants are not present to defend

themselves: even without any evidence presented by defendants, they

argue that the court could and should assume that defendant had some

costs; therefore, award of the full amount of gross sales was improper.

Defendants do not explain how the district court could have

ascertained how much to deduct, even if it intended to deduct some

amount representing defendants’ costs of production. In light of

defendants’ failure to appear, plaintiff was the court’s only source of

information. If plaintiff chose not to provide information from which

the court could infer defendants’ costs, the court was not required to

order plaintiff to produce additional evidence and argue defendants’

case. Section 1117(a) explicitly states that “the plaintiff shall be

required to prove defendant’s sales only.” lll offsets are the

responsibility of the defendant, who may either prove offsetting

amounts or rely solely to the court’s discretion.*/ The statute

specifically contemplates that if the defendant fails to meet its burden,

and if the court does not see fit to modify the award in the interests of

justice, no deduction will be made.

3 Such discretion is explicitly granted to the court by 15 U.S.C.

§1117(c), which states:

If the court shall find that the amount of the recovery based on profits

is either inadequate or excessive the court may in its discretion enter

judgment for such sum as the court shall find to be just, according to

the circumstances of the case.

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In support of their argument, defendants point to cases in which

the defendants were unable to prove their costs with the requisite

specificity, but deductions were nevertheless made in order to avoid

windfalls to the plaintiffs. However, the downward modification in

these cases rests on the court’s discretion to modify its award in the

interests of justice.‘/

The case at hand, however, is not one in which defendants tried

to prove deductions but were unable to do so. Nothing but defendants’

own intransigence prevented them from presenting their own cost

figures. Absent any evidence of the amount of defendants’ costs, the

court was not obligated to take costs into account in calculating profits,

and this court will not compel the district court to exercise its Statutory

discretion in defendants’ favor.

Ill. | MOTION TO SET ASIDE DEFAULT JUDGMENT

With respect to defendants’ motion to set aside a default

judgment, this court reviews the district court’s factual findings for

clear error. If findings are undisputed or are not Clearly erroneous,

then the lower court’s ultimate determination

4 For instance,

Corp., 918 F.2d 1060 (2d Cir. 1990), held that the district court did

not abuse its discretion to deduct costs, despite the fact that the

defendants had not proved them with certainty, because the best

information about those costs was in the hands of the plaintiff, whose

Sales of inputs to the defendant constituted the largest component of

the defendant’s costs. Even in that case, however, there was no

argument that the district court was required to accept speculative cost

deductions; rather, the court’s discretion to do so was squarely

grounded in the language of Section 1117(c).

All

is reviewed for an abuse of discretion. Meadows v. Dominican

Republic, 817 F.2d 517, 521 (9th Cir. 1987).

Although default judgments are generally disfavored, a district

court has discretion to deny a motion to set aside a default judgment

when the defendant’s culpable conduct led to the default. Id, A

defendant’s conduct is culpable if he has received actual or

constructive notice of the filing of the action and failed to answer. Id.

We find the defendants’ conduct similarly culpable in this case: after

answering, defendants willfully absented themselves from the

proceedings, cut off contact with their attorneys, and evaded actual

receipt of all further papers. Defendants’ mistaken belief that they

could evade payment of the resulting judgment because it would be

unenforceable in Taiwan does not spell out any ground for setting

aside the default judgment pursuant to Rule 60(b). The district court

did not abuse its discretion in refusing to do so.

CONCLUSION

The judgment of the district court is AFFIRMED.

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FILED __ LODGED

___ RECEIVED --COPY

MAY 19 1993

IN THE UNITED STATES DISTRICT COURT

CLERK US DISTRICT COURT

FOR THE DISTRICT OF MONTANA DISTRICT OF ARIZONA

BY DEPUTY

NINTENDO OF AMERICA INC., )

)

Plaintiff, )CV 91-300 TUC-JFB (WDB)

)

vs. )

)

NTDEC, NINTENDO ELECTRONIC )FINDINGS OF FACT AND

CO.; JIMMY YAO, WANG WEN-FU )CONCLUSIONS OF LAW

WANG SU-TANG, CHEN MEI-LIN )

and MEGA SOFT INC., )

)

Defendants. )

An evidentiary hearing regarding damages in the above-

captioned matter was held on March 30, 1993, before Senior United

States District Judge James F. Battin. Notice was given to the

defaulted Defendants but they failed to appear to rebut the testimony

presented by Plaintiff Nintendo of America, Inc. (hereinafter

“Nintendo"). The Court, having heard the testimony of the witnesses’

and having reviewed the exhibits admitted into evidence, makes the

following Findings of Fact and Conclusions of Law.

FINDINGS OF FACT

l. Nintendo is a Washington corporation with corporate

headquarters in Redmond, Washington. Nintendo is a wholly-owned

subsidiary of Nintendo Company, Ltd. ("NCL") of Kyoto, Japan, and

owns the copyrights and trademarks in its products in the United

'The Court heard the oral testimony of Ms. Lynn E. Hvalsoe, John

Tintinger, James Perrone, Mike Woodworth, and Robert Chesney.

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States as well as in many other countries, such as Canada, Mexico,

and South America. Nintendo markets its products in countries under

registered Nintendo trademarks.

2. Nintendo is a leader in the video game industry with a

reputation both in the United States and abroad for developing and

producing high quality video game products.

\. Nintendo owns numerous, valid United States copyright

registrations ami trademarks registrations, including but not limited

to the fot!owing:

GAME TITLE ___ REGISTRATION NO.

Balloon Fight PA 247-651

Baseball PA 219-072

Clu Clu Land PA 246-926

Donkey Kong PA 115-040

Donken Kong 3 PA 191-724

Donkey Kong Jr. PA 146-003

Donkey Kong Jr. Math PA 29-101

Duck Hung PA 254-151

Excitebike PA 254-906

F-1 Race PA 540-572

Golf PA 246-462

Hogan’s Alley PA 260-315

Ice Climber PA 254-907

Mach Rider PA 284-966

Mario Bros. PA 178-079

Pinball PA 247-092

Popeye PA 154-248

Slalom PA 908-801

Soccer PA 288-502

Super Mario Bros. PA 273-028

Super Mario Bros. 2 PA 451-717 (FCS)

Super Mario Bros. 3 PA 454-718 (FCS)

PA 454-812 (NES)

Tennis PA 204-665

Urban Champion PA 241-478

Volleyball PA 339-801

Wrecking Crew PA 287-352

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U.S. TRADEMARK REGISTRATIONS

TRADENARK TRADENARK

REGIST. GAME REGIST.

TRADEMARK Pitti: NO.

Balloon Fight 1,454,474 Nintendo 1,213,822

Donkey KOng 1,331,984 Nintendo Enter- 1,440,706

Tainment System

Donkey Kong 3 1,328,723 Nintendo Offic. 1,570,911

Seal of Quality

and Design

Donkey Kong Jr.1,328,713 Slalom 1,447,728

F-1 Race 1,667,216 Urban Champion 1,469,207

Hogan's Alley 1,376,107 Duck Hunt 1,377,451

Ice Climber 1,467,524 Excitebike 1,379,330

Mach Rider 1,486,969 Super Mario Brs 1,453,314

Mario Bros. 1,303,633 Wrecking Crew 1,398,680

4. The above-identified Nintendo copyright registrations

tai ti lataa tisha 7 se ;

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protect the audiovisual aspects of the aspects of the applicable

Nintendo video games.

5. The above-identified Nintendo trademark registrations protect

various trademarks used by Nintendo in conjunction with its video

game products. Nintendo’s video game products are sold under its

trademarks, which are recognized by the trade and purchasing

public as being associated with only the highest quality products.

6. The commercial life span of a video game is limited, and the

development and promotion of such games is costly. For instance,

a single game tay take a team of several authors up to two years to

designate and develop and can cost as much as $500,000.00 or more

to develop.

7. Nintendo has widely advertised and promoted its video game

products throughout the United States and internationally.

The extensive advertising and promotional campaigns have resulted in

widespread use and acknowledgement of Nintendo products to the

extent that approximately 90% of the homes in the United States are

familiar with Nintendo’s products. As a result, Nintendo has

established a tremendous amount of goodwill in its trademarks

domestically as well as internationally.

8. The sale, advertising and distribution of counterfeit video game

cartridges results in lost profits to Nintendo and causes damage to

Nintendo’s business reputation.

9. During the combined years of 1990 and 1991, Nintendo and

its licensees lost at least $2 billion worth of wholesale sales in the

United States due to counterfeiting activity, and an additional

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$2 billion internationally. Approximately 30% of those losses were

directly attributable to Nintendo.

10. In 1990, approximately 20-50 million counterfeit video

games were sold in the Western Hemisphere. Of these,

approximately 75% violate one or more of Nintendo’s registered

trademarks.

11. Nintendo has an enforcement program for combating such

infringement including reliance on the U.S. Customs Service to

seize imported infringing products prior to entry into this country.

12. Through random inspection of goods, the U.S. Customs

Service is able to prevent approximately 2-5% of such counterfeit

importations into the United States.

13. Defendants NTDEC and NINTENDO ELECTRONIC

COMPANY (jointly “NTDEC") are Taiwanese corporations, or are

one and the same Taiwanese corporation.

14. Defendants JIMMY YAO, WANG WEN-FU, WANG

SU-TANG, and CHEN MEI-LIN are citizens of Taiwan.

15. MEGASOFT, INC. of Los Angeles, California, is or was

intended to be a United States corporation owned and operated by

the previously identified Defendants to this action.

16. Nintendo has neither licensed nor assigned any copyright

or trademark right to any of the Defendants. None of the

Defendants has ever had any authority tc act for Nintendo, whether

as a licensee, distributor, agent or in any other capacity.

17. Nintendo was alerted to Defendants’ activities as a result

of an on-going investigation of counterfeiting activities in

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Taiwan and elsewhere. On October 8, 1990, during the course of an

undercover investigation of Defendants’ activities, Nintendo’s

investigators visited and observed the Defendants’ offices in Taiwan.

The investigators were given a tour of the facilities and observed

activities consistent with the operation of counterfeit video game

production.

18. In the course of the investigation, Defendants provided the

investigators with sale brochures (which contained advertisements for

counterfeit Nintendo video game cartridges) and sold the investigators

counterfeit video game cartridges. These games, sold and advertised

by Defendants, were direct copies of Nintendo’s copyrighted video

games bearing one or more of Nintendo’s registered trademarks.

19. Defendants admitted to Nintendo’s investigators orally and in

writing that they knew their actions, with regard to the advertisement

and sale of counterfeit Nintendo video game cartridges, were

illegal in the United States.

20. Defendants also provided the undercover investigators with

price lists, showing sale prices of counterfeit Nintendo video game

cartridges ranging from $1.93 for a single game cartridge to $34.00

for an 82-in-1 video game cartridge.

21. At different times in the course of the investigation,

Defendants communicated orally and/or in writing that their factory

could produce 1.2 million video game cartridges per year.

22. Defendants were active in their sales of counterfeit Nintendo

video game cartridges from at least January of 1990 to

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PEt

June of 1991. On June 4, 1991, Defendants Jimmy Yao and Wang

Wen-Fu (aka Wen Fu Wang) were arrested in Chicago for violating

18 U.S.C. §2320 (trafficking in counterfeit goods) on the basis of

their importation and sale of counterfeit Nintendo video game

cartridges in the United States. The U.S. Attorneys’ office did not

prosecute the charges against the individual Defendants in exchange

for the Defendant Nintendo Electronic Company, Ltd.’s December

23, 1991, guilty plea to the same felony charge. As a result,

Defendant Nintendo Electronic Company, Ltd. paid a

$50,000.00 fine and restitution in the amount of $2,442.50.

23. Documents seized from Defendants Wang and Yao at the time

of their arrest included documents which reflected wide-spread activity

in the assembly and distribution of counterfeit Nintendo video game

cartridges.

24. In addition to the information obtained in the investigation of

the Defendants, evidence procured through U. S. Customs’ and/or

FBI's seizures in New York, Ohio, Arizona, Florida, Nevada, Texas,

and Montana of counterfeit video game products revealed that

Defendants, acting wholly without authority, infringed Nintendo’s

valuable intellectual property rights in the advertisement, distribution

and sales of counterfeit video games to customers in many other

locations.

25. The evidence further showed:

a). Defendants sold at least 135 counterfeit Nintendo video

game cartridges to a Taiwanese company known as Dar Yar which in

turn sold those counterfeit cartridges to an undercover

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purchaser in North Carolina.

b). Defendants provided catalogs advertising counterfeit

Nintendo video game cartridges and provided counterfeit Nintendo

video game cartridges themselves to a customer in Miami, Florida,

known as Galaxia, which in turn sold at least $20,000.00 in

cartridges to purchasers in Peru, at least $10,000.00 in cartridges to

purchasers in Venezuela, and at least $2,000.00 in cartridges to

purchasers in Costa Rica. Defendants also supplied counterfeit

Nintendo cartridge components to Galaxia’s factory in Venezuela

which sold 150,000 counterfeit Nintendo cartridges per month,

20,000 cartridges per month of which were shipped to Mexico.

Galaxia sold counterfeit Nintendo cartridges for approximately two

years.

c). For an unknown period of time, Defendants sold

5,000-6,000 counterfeit Nintendo video game cartridges every three

weeks to a company located in Mexico known as Mercadeo.

Defendants conducted at least $2 million dollars worth of business

with Mercadeo in the eighteen month period preceding August 8,

1990.

d). Defendants sold counterfeit Nintendo video game cartridges

to Eviatar Parnass in Jacksonville, Florida during at least the year

1990. Products which were included in these sales were later

discovered and seized in a civil action for trademark and copyright

infringement brought by Nintendo against Mr. Parnass. The action

resulted in a civil judgment against Mr. Parnass in the United

States District Court, Middle District of Florida, Jacksonville

Division, in the amount of $1,194,000.00 plus

attorneys fees and costs. This judgment was entered September 9,

1992 and has never been satisfied.

¢). Defendants sold counterfeit Nintendo video Cartridges

to a company known as Rapidex in Miami, Florida, including a

250-in-1 Nintendo video game cartridge being sold by Rapidex for

$330.00, and a 190-in-1 Nintendo video game cartridge which

Rapidex sold for $150.00.

f). Defendants also supplied counterfeit Nintendo video game

cartridges to another Taiwanese company known as Tri-Master,

which in turn shipped such counterfeit cartridges to Las Vegas,

Nevada. This shipment included counterfeit Nintendo video game

cartridges incorporating up to 500 video games therein.

8). Defendants additionally sold great numbers of

counterfeit Nintendo video game cartridges to a company in

London, England, which in turn shipped these counterfeit Nintendo

video game cartridges to New York, South Africa, and Los

Angeles. One shipment included $6,000.00 worth of counterfeit

Nintendo video game cartridges.

h). Defendants sold counterfeit Nintendo video game cartridges

to a company known as AMC Enterprises, Inc., a California

corporation. This corporation, and other individuals were the

subject of a civil law suit brought by Nintendo for trademark and

Nintendo video games which resulted in a stipulated judgment in the

amount of $110,000.00, which was paid by the Defendants in full.

26. In summary, Defendants knowingly and intentionally

advertised, solicited sales and sold infringing Nintendo video game

cartridges to its customers world wide, despite knowing a) that

Nintendo was the copyright owner of many of the games contained in

the counterfeit cartridges; b) that NTDEC was not authorized to do so

by Nintendo; c) that the cartridges, or many of them, were counterfeit

since they contained unauthorized direct copies of Nintendo’s

copyrights and trademarks; d) that their activities violated Nintendo’s

trademarks would cause customer confusion. Further, Defendants’

illegal domestic and extraterritorial activities had a direct impact on

U. S. commerce by causing economic damage to Nintendo, a U. S.

corporation.

27. In addition to the foregoing, the Court finds that Plaintiff's

request for attorney fees and costs pursuant to 15 U.S.C. §1117 and

17 U.S.C. §505 is reasonable. Nintendo asserts that fees incurred by

primary counsel in this case were $91,481.00 and that fees incurred

by local counsel were $17,348.00. The Court having reviewed the

Declaration of James Anable,” together with the summaries and actual

time records of services rendered by counsel in this matter, finds that

the hours expended on the litigation and the hourly rates charged are

reasonable in light of the special skill and experience of counsel and

the complexity of

2 Mr. Anable is a partner in the firm of Christenson,

O’Connor, Johnson & Kindness, and he specializes in the field of

intellectual property law, including patent, trademark, and copyright

litigation.

A22

Sistiatd dei hin ai

the case.

Nintendo also filed a Bill of Costs for a total of $709.80 which

includes $120.00 for the United States District Court filing fee and

$589.80 for a reporter at Uen Fu Wang’s deposition. The Court finds

that these costs are reasonable.

28. Any of the foregoing Findings of Fact that are

conclusions of law shall constitute conclusions of law.

CONCLUSIONS OF LAW

1. The Court has jurisdiction over the parties and the causes of

action herein pursuant to 17 U.S.C. §501; 15 U.S.C. §1121; and 28

U.S.C. §§1331, 1338. .

2. The Defendants’ activities as set forth in the foregoing

Findings of Fact constitute copyright infringement pursuant to 17

U.S.C. §1101, et seg, The Defendants have wrongfully infringed at

least 28 separate Nintendo U. S. copyright registrations, and some or

all of the copyright registrations so infringed are set forth in Paragraph

3 of the foregoing Findings of Fact.

3. The Defendants’ activities as set forth in the foregoing

Findings of Fact constitute trademark infringement pursuant to 15

U.S.C. §1114(1). The Defendants have wrongfully infringed

Nintendo’s U. S. trademark registrations, and some or all of the

trademark registrations so infringed are set forth in Paragraph 3 of the

foregoing Findings of Fact.

4. The Defendants’ activities as set forth in the foregoing

Findings of Fact constitute false designation of origin pursuant to

A23

15 U.S.C. §1125(a).

5. The Defendants’ activities as set forth in the foregoing

Findings of Fact constitute violations of Arizona statutes and also

constitute common law unfair competition.

6. Pursuant to 15 U.S.C. §1116 and 17 U.S.C. §502, Nintendo

is entitled to a worldwide permanent injunction to prevent the

continued violation of its intellectual property rights.

7. The Defendants shall deliver to Nintendo any and all

infringing goods for destruction pursuant to 15 U.S.C. §1118 and 17

U.S.C. §503.

8. Plaintiff is entitled to recover damages under 15 U.S.C.

$1114 et seg., as well as damages under 17 U.S.C. §504, against all

Defendants.

9. Plaintiff is entitled to recover attorneys’ fees and costs and

prejudgment interest under 15 U.S.C. §1117 and attorneys’ fees and

costs under 17 U.S.C. §505. Calculation of the amount of attorney’s

fees properly awarded begins with the calculation of a “lodestar”

amount, which is “°’the number of hours reasonably expended on the

litigation multiplied by a reasonable hourly rate.’"” Pennsvivania v.

Delaware Valley Citizens’ Council for Clean Air, 106 S.Ct. 3088,

3097 (1986) (quoting Hensley, 461 U.S. at 433); Cunningham v.

County of Los Angeles, 879 F.2d 481, 484 (9th Cir. 1988). This

lodestar amount is presumptively reasonable. Jordan vy. Multnomah

County, 815 F.2d 1258, 1262-63 (9th Cir. 1987).

A District Court may adjust the lodestar figure based upon

twelve factors listed in Kerr v. Screen Extras Guild, 526 F.2d

A24

;

nl a ant) Soe

67, 69-70 (9th Cir. 1975).> however, certain of the Kerr factors

have been held to be subsumed in the lodestar calculation, and do

not provide a basis for a subsequent adjustment. Blum v. Stenson,

465 U.S. 886, 898-890 (1984); Cunningham, 879 F.2d at

484. Specifically, the subsumed factors are: the novelty and

complexity of the issues; the special skill and experience of counsel,

the quality of the representation, the results obtained and the

superior performance of counsel. Id.

With these principals [sic] in mind, the Court concludes that

Nintendo is entitled to an award of attorney fees in the amount of

$108,829.00. Furthermore, the Court concludes that Nintendo’s

application for costs is also reasonable and awards Nintendo $709.80

as recoverable costs.

11. Plaintiff has elected to seek statutory damages under 17

U.S.C. §504(c) for the 28 registered copyrights infringed by

Defendants. Plaintiff is entitled to recover the maximum Statutory

amount of $100,000.00 for each violation.

3 The twelve Kerr factors are: (1) the time and labor required; (2)

the novelty and difficulty of the questions involved; (3) the skill

requisite to perform the legal service properly; (4) the

preclusion of other employment by the attorney due to acceptance of

the case; (5) the customary fee; (6) whether the fee is fixed or

contingent; (7) time limitations imposed by the client or the

circumstances; (8) the amount involved and the results obtained; (9)

the experience, reputation, and ability of the attorneys; (10) the

"undesirability” of the client; (11) the nature and length of the

professional relationship with the client; and (12) awards in similar

cases. Kerr, 526 F.2d at 70.

12. For trademark damages, Plaintiff is entitled to recover

Defendants’ profits in the amount of $6,374,997.00 and is entitled to

have that amount trebled pursuant to 15 U.S.C. §1117(b).

13. Prejudgment interest in the amount of 6.68% (annual

interest rate established under Section 6621 of the Internal Revenue

Code of 1954 as of 6/1/91) is applicable to said trebled amount under

15 U.S.C. §1117(0). The interest shall commence from the time the

lawsuit was served, on June 5, 1991.

14. For trademark damages, Plaintiff is further entitled to recover

its net losses in the amount of $433,296.00.

15. Defendants are entitled to a credit for the amount paid to

Plaintiff in restitution in the amount of $2,442.50.

16. Any of the foregoing Conclusions of Law that are Findings

of Fact shall constitute Findings of Fact.

Based on the foregoing Findings of Fact and Conclusions of

Law,

IT IS ORDERED that Plaintiff have and recover of

Defendants, jointly and severally, the sum of $24,059,062.00, with

interest accruing from the date of this Order at the federal rate.

Plaintiff shall have and recover of Defendants, jointly and

severally, an award of attorneys’ fees in the amount of $108,829.00

and costs in the amount of $709.80.

IT IS FURTHER ORDERED that Defendants and their

respective agents, servants, employees, successors and assigns, and all

of those acting in concert or participation with them, be permanently

enjoined and restrained from, either in the United

States, or elsewhere in the world:

1. Using in any manner any of Nintendo’s trademarks or any

portion thereof, alone or in combination with any other mark which

so resembles any of Nintendo’s marks as to be likely to cause

confusion, deception or mistake in connection with the manufacture,

assembly, distribution, advertisement, promotion, offer for sale and/or

sale of any product not manufactured, distributed, sponsored or sold

by Nintendo;

2. Using in any manner any of Nintendo’s works, characters or

audio-visual materials which so resemble any of Nintendo’s works as

to be likely to be a copy thereof in connection with the manufacture,

assembly, distribution, advertisement, promotion, offer for sale

and/or sale of any product not manufactured, distributed, sponsored

or sold by Nintendo;

3. Using any of Nintendo’s copyrighted video games or

characters or any colorable imitations thereof in the manufacture,

assembly, distribution, advertisement, promotion, offer for sale and/or

sale of any goods or merchandise;

4. Passing off, inducing or enabling others to sell or pass off any

product or item as a product or item produced by Nintendo, which is

not Nintendo’s or not produced under the control or supervision of

Nintendo and approved by Nintendo for sale under any of Nintendo’s

marks and as Nintendo’s works;

5. Falsely representing themselves as being connected with

Nintendo or sponsored by or associated with Nintendo or engaging in

any act that is likely to cause the trade, retailers or members of

A27

the purchasing public to believe that Defendants are associated with

Nintendo or their activities are endorsed or approved by Nintendo;

6. Committing any acts calculated or likely to cause purchasers

to believe falsely that goods sold by Defendants are sold under the

control and supervision of Nintendo or are sponsored by, approved or

connected with or guaranteed or produced under the control and

supervision of Nintendo;

7. Using any logo, trade name or trademark which may be

calculated to falsely represent or which has the effect of falsely

representing that the services or products of third parties are sponsored

by, authorized by, or in any way associated with Nintendo;

8. Otherwise infringing Nintendo’s trademarks or copyrights in

Nintendo’s works or otherwise unfairly competing with Nintendo in

any manner; and

9. Shipping, delivering, distributing, moving, destroying,

returning or otherwise disposing of in any manner, excepting delivery

to Nintendo’s counsel, any products or components or inventory

thereof not manufactured by or for Nintendo, nor authorized by

Nintendo to be sold or offered for sale, which bear any of Nintendo’s

marks or embody any of Nintendo’s works.

The Clerk is directed to enter judgment accordingly.

The Clerk is further directed to notify counsel for the respective

parties of the making of this Order.

A28

Done and dated this 17th day of May, 1993.

Senior U.S. District Judge

A29

JFILED __ LODGED

____RECEIVED —COPY

ENTERED 6/9/93

JUNE 7, 1993

IN THE UNITED STATES DISTRICT COURT

CLERK US DISTRICT COURT

FOR THE DISTRICT OF ARIZONA DISTRICT OF ARIZONA

BY s/ DEPUTY

NINTENDO OF AMERICA INC.., )

)

Plaintiff, YCV 91-300 TUC-JFB

vs. )

NTDEC, NINTENDO ELECTRONIC CO., )AMENDED JUDGMENT

JIMMY YAO, WANG WEN-FU; WANG _ )IN A CIVIL CASE

SU-TANG, CHEN MEI-LIN and MEGA )

SOFT INC.,

Defendants.

Decision by the Court amending JUDGMENT IN A CIVIL

CASE entered by the Clerk of Court for the District of Arizona on

May 19, 1993. This action came to hearing before the Court. The

issues have been heard and a decision has been rendered.

IT IS ORDERED AND ADJUDGED that Plaintiff Nintendo

of America Inc. ("Nintendo") have and recover of Defendants

NTDEC, NINTENDO ELECTRONIC CO., JIMMY YAO, WANG

WEN-FU, WANG SU-TANG, CHEN MEI-LIN and MEGA SOFT,

INC., jointly and severally, the sum of $24,059,062.00, with interest

accruing from the date of this Order at the federal rate. (3.25%)

IT IS FURTHER ORDERED that Plaintiff Nintendo shall

have and recover of Defendants NTDEC, NINTENDO ELECTRONIC

CO., JIMMY YAO, WANG WEN-FU, WANG SU-TANG, CHEN

MEI-LIN and MEGA SOFT, INC., jointly and severally, an award of

attorneys’ fees in the amount of $108,829.00 and costs in the amount

of $709.80.

IT IS FURTHER ORDERED that Defendants NTDEC,

NINTENDO ELECTRONIC CO., JIMMY YAO, WANG WEN-FU,

WANG SU-TANG, CHEN MEI-LIN and MEGA SOFT, INC., and

their respective agents, servants, employees, successors and assigns,

and all of those acting in concert or participation with them, be

permanently enjoined and restrained from, either in the United States,

or elsewhere in the world:

1. Using in any manner any of Nintendo’s trademarks or any

portion thereof, alone or in combination with any other mark which

so resembles any of Nintendo’s marks as to be likely to cause

confusion, deception or mistake in connection with the manufacture,

assembly, distribution, advertisement, promotion, offer for sale and/or

sale of any product not manufactured, distributed, sponsored or sold

by Nintendo;

2. Using in any manner any of Nintendo’s works, characters or

audio-visual materials which so resemble any of Nintendo’s works as

to be likely to be a copy thereof in connection with the manufacture,

assembly, distribution, advertisement, promotion, offer for sale

and/or sale of any product not manufactured, distributed, sponsored or

sold by Nintendo;

3. Using any of Nintendo’s copyrighted video games or

characters or any colorable imitations thereof in the manufacture,

assembly, distribution, advertisement, promotion, offer for sale and/or

sale of any goods or merchandise;

4. Passing off, inducing or enabling others to sell or pass off any

product or item as a product or item produced by Nintendo,

A31

which is not Nintendo’s or not produced under the control or

supervision of Nintendo and approved by Nintendo for sale under any

of Nintendo’s marks and as Nintendo’s works;

5. Falsely representing themselves as being connected with

Nintendo or sponsored by or associated with Nintendo or engaging in

any act that is likely to cause the trade, retailers or members of the

purchasing public to believe that Defendants are associated with

Nintendo or their activities are endorsed or approved by Nintendo;

6. Committing any acts calculated or likely to cause

purchasers to believe falsely that goods sold by Defendants are sold

under the control and supervision of Nintendo or are sponsored by,

approved or connected with or guaranteed or produced under the

control and supervision of Nintendo;

7. Using any logo, trade name or trademark which may be

calculated to falsely represent or which has the effect of falsely

representing that the services or products of third parties are sponsored

by, authorized by, or in any way associated with Nintendo;

8. Otherwise infringing Nintendo’s trademarks or copyrights in

Nintendo’s works or otherwise unfairly competing with Nintendo in

any manner; and

9. Shipping, delivering, distributing, moving, destroying,

returning or otherwise disposing of in any manner, excepting delivery

to Nintendo’s counsel, any products or components or inventory

thereof not manufactured by or for Nintendo, nor

A32

authorized by Nintendo to be sold or offered for sale, which bear

any of Nintendo’s marks or embody any of Nintendo’s works.

The Clerk is directed forthwith to notify counsel for the

respective parties of the making of this order.

Done and dated this 3rd day of June, 1993.

JAMES F. BATTIN

Senior U. S. District Judge

ice alaauibanca

vee

bi eather .

Br ae dt SN MERE ST Ra ee REY ok

A33

FILED __ LODGED

___ RECEIVED —COPY

AUG 25 1993

IN THE UNITED STATES DISTRICT COURT

CLERK US DISTRICT COURT

FOR THE DISTRICT OP ARIZONA DISTRICT OF ARIZONA

BY_s/_ DEPUTY

NINTENDO OF AMERICA INC.,

)

Plaintiff, )CV 91-300 TUC-JFB (WDB)

)

vs. )

)

NTDEC, NINTENDO ELECTRONIC )MEMORANDUM AND ORDER

CO., JIMMY YAO, WANG WEN-FU _ )

WANG SU-TANG, CHEN MEI-LIN )

and MEGA SOFT INC., )

)

Defendants.

Presently pending before the Court is Defendants’ Motion to

Set Aside the June 7, 1993, Amended Default Judgment. Neither

party has requested a hearing on this matter, and the Court deems it

unnecessary to conduct such a hearing. Having carefully

considered the briefs and supporting materials submitted by the

parties, the Court hereby denies Defendants’ motion for the reasons

set forth below.

BACKGROUND

On May 31, 1991, Plaintiff filed a Complaint for

competition against Defendants NTDEC, Nintendo Electronic Co.,

Jimmy Yao, Wang Wen-Fu, Wang Su-Tang, Chen Mei-Lin, and Mega

Soft Inc. Due to Defendants’ failure to respond to discovery requests,

motions to compel, motions for default, and Court Orders, the Court

entered default judgment and assessed damages against Defendants.

ee ee

A ccte es WR Ane pe Ce Seal dt aN Rd al eit oni oni sind nin aia ll ie allel

Ex. DD, Il, Order dated September 15, 1992, Memorandum and

Order dated May 17, 1993, and Judgment entered June 7, 1993.

Pursuant to Rules 55(c)'* 59,° and 60‘, Fed.R.Civ.P.,

Defendants now request that this Court set aside the default judgment

entered on June 7, 1993. Defendants allege that there were errors in

the service of notices regarding default; that they

Although Defendants cite Rule 55(d) on the first page of their

Notice of Motion to set aside June 7, 1993, Amended Default

Judgment, they quote and refer to Rule 55(c) in the text of

their memorandum supporting the motion. Therefore, the

Court will assume that they are referring to Rule 55(c) rather

than 55(d).

Rule 55(c), Fed.R.Civ.P., provides:

For good cause shown the court may set aside entry of default

and, if a judgment by default has been entered, may likewise

set it aside in accordance with Rule 6b).

Rule 59, Fed.R.Civ.P, provides:

A new trial may be granted to all or any of the parties and on

all or part of the issues... ., (2) in an action tried without a

jury, for any of the reasons for which rehearings have

heretofore been granted in suits in equity in the courts of the

United States. On a motion for a new trial in and [sic] action

tried without a jury, the court may open the judgment if

one has been entered, take additional testimony, amend

findings of fact and conclusions of law or make new findings

and conclusions, and direct entry of a new judgment.

Rule 60(b), Fed.R.Civ.P., provides in relevant part:

On motion and upon such terms as are just, the court may

relieve a party or a party’s legal representative from a final

judgment, order, or proceeding for the following reasons: (1)

mistake, inadvertence, surprise, or excusable neglect; . . .

or (6) any other reason justifying relief from the operation

of the judgment. . . .

A35

relied in good faith on "incorrect" advice of counsel; that the Court

has no authority to issue a world-wide injunction; and that the damages

awarded are not supported by the evidence and are extreme.

Plaintiff, on the other hand, contends that Defendants "sat on

their hands” throughout the proceedings, and simply failed to act, on

the assumption that they could disregard civil enforcement of U.S.

intellectual property laws. Plaintiff seriously questions Defendants’

alleged innocence and ignorance of U.S. legal proceedings in light of

the fact that Defendants have been represented by counsel at various

Stages in the proceedings in this case. In Plaintiff's view,the Court

acted within its jurisdiction and entered judgment within its sound

discretion.

DISCUSSION

It is undisputed that where a party refuses to obey discovery

orders, a Court may enter an order “rendering a judgment by default

against the disobedient party;...". Rule 37(b) (2), Fed.R.Civ.P.;

Adriana Int’l, Corp. v. Thoeren, 913 F.2d 1406, 1410 (9th Cir. 1990)

(court did not abuse its discretion in imposing the sanction of default

judgment due to plaintiff's numerous discovery abuses). A Court may

relieve a party from a final default judgment pursuant to Rule 60(b),

Fed.R.Civ.P., which provides for relief from a judgment in certain

circumstances such as mistake, inadvertence, surprise, excusable

neglect, and any other reason justifying relief from the judgment

entered. A district court may, however, deny a Rule 60(b) motion “if

(1) the defendant’s culpable

nu eas SA oa:

at. 8's Ah ey ean SG § Peete

conduct led to the default, (2) the defendant has no meritorious

defense, or (3) the plaintiff would be prejudiced if the judgment is set

aside.” Meadows v, Dominican Republic, 817 F.2d 517, 521 (th

Cir., 1987); see Direct Mail Specialists, Inc. v. Eclat Computerized

Techonologies, 840 F.2d 685, 690 (9th Cir. 1988); Falk v, Allen,

739 F.2d 461, 463 (9th Cir. 1984). “If a default judgment is

entered as the result of a defendant’s culpable conduct, . . . [a court]

need not consider whether a meritorious defense was ‘shown, or

whether plaintiff would suffer prejudice if the judgment were set

aside." Meadows, 817 F.2d at 521. Finally, a court may provide

relief from judgment by granting a new trial pursuant to Rule 59,

Fed.R.Civ.P. With these principles in mind, the Court will address

Defendants’ contentions.

At the outset, the Court notes that the record certainly

demonstrates that Defendants are not as “innocent” or “ignorant” as

they now converiently assert. In fact, they were represented by

counsel at various stages in the proceedings’ and some of the

Defendants even participated, to a limited extent, in discovery’.

5 A Phoenix attorney named Mr. Edmund Y. Nomura appeared

before the Court on June 18, 1991, and accepted service on behalf of

all Defendants in this action. Ex. C & Ex. D to Pl.’s Resp. Mr.

Nomura thereafter filed an answer on July 2, 1991, on behalf of all

Defendants. Ex. E to Pl.’s Resp. On August 14, 1991, Burton M.

Bentley was substituted as attorney of record for Defendants Nintendo

Electronic Co., Jimmy Yao, Wang Wen-Fu, and Mega Soft. Yet, Mr.

Nomura continued to represent Defendants NTDEC, Chen Mei Lin

and Wang Su-Tang. The Court allowed Mr. Bentley to withdraw on

September 11, 1992, and allowed Mr. Nomura to withdraw on

October 2, 1992. Ex. U & Ex. W to Pl.’s Resp.

6 For instance, Mega Soft Inc. replied to Plaintiff's first request

for production of documents (Ex. I to Pl.’s Resp.); Nintendo

Electronic Co. responded to Plaintiff's request for

It appears that Defendants simply chose to take the chance that any

judgment would not be enforceable against them, and/or that without

their participation in the discovery process, Plaintiff would not be able

to prove its claims against Defendants. Having made this choice,

Defendants must now live with the consequences.

L_ALLEGEDLY “DEFECTIVE SERVICE”

Defendants contend that service of the default papers upon

Defendants in this case was defective for several reasons: (1) Plaintiff

did not mail the motions for default to Defendants “in care of" Mr.

Wong; and (2) Plaintiff's purported proofs of service did not explicitly

state that the address used was the “last known address” of

Defendants. The Court disagrees with Defendants’ contentions for

the reasons stated below.

First, the issue relating to the language “in care of Mr. Wong”

arises out of an Order issued by the Court on September 11, 1992. In

that Order, the Court allowed Mr. Burton Bentley, counsel for

Defendants Nintendo Electronics Co., Jimmy Yao, Wang Wen-Fu,

and Mega Soft Inc., to withdraw. The Court expressly provided in

the Order that all further pleadings, motions and documents were to

be served on these Defendants in care of Mr. Wong (Defendants’

designated agent) at 6636 East 26th street, Los Angeles,

California. See Ex. U to Pl.’s Resp. The Court further provided:

[sJhould Henry Wang [sic] change his address or telephone number

or otherwise become unavailable for service without Defendants

first advising and seeking the written authorization of this Court,

and giving written notice to

production of documents (Id.); and Plaintiff took Defendant Wang

Wen-Fu’s deposition in Tucson, Arizona (Ex. J).

A38

Plaintiff, Defendant shall be subject to sanctions by the Court,

including but not limited to entry of default judgment against any or

all of Defendants.

Pursuant to this Order, Plaintiff mailed its motions for default against

Nintendo Electronic Co., Jimmy Yao, Wang Wen-Fu, and Mega Soft

to Mr. Wong at 6636 East 26th Street, Los Angeles, California. See

Exs. Y, U, W, Z, EE, & GG to Pl.’s Resp.’ Thus, each of these

Defendants were served as the Court directed in its September 11,

1992, Order.

The Court finds Plaintiff’s failure to use the specific words "in

care of Mr. Wong" to be of no import. The Court simply intended

that any papers in this action relating to these Defendants be

mailed to Mr. Wong, as Defendants’ designated agent. Clearly, it was

Defendants’ obligation to inform Mr. Wong of his duties, and to

immediately inform the Court of any change in Mr. Wong’s address

or telephone number. Plaintiff was certainly entitled to rely on the

Court’s Order directing papers to be mailed to Mr. Wong and to also

rely on Defendants to properly instruct Mr. Wong as to his duties

regarding the papers in this action. If Defendants did not receive

these papers, as they allege, due to

7 On November 2, 1992, Plaintiff filed a motion for default

against Nintendo Electronic Co. and Jimmy Yao and mailed a copy of

the motion to Mr. Wong pursuant to the Court’s Order. See Ex. Y &

Ex. U. On January 15, 1993, Plaintiff filed its motion for entry of

default against Wang Wen-Fu and mailed it to Mr. Wong as the Court

directed. See Ex. EE & Ex. U to Pl.’s Resp. On February 1, 1993,

Plaintiff filed a motion for default against Mega Soft, which was

mailed to Mr. Wong, again pursuant to the address set forth in the

Court’s Order. See Ex. GG & Ex. U to Pl.’s Resp.

The Court also notes that Plaintiff filed its motion for default

against NTDEC, Chen Mei-Lin and Wang Su-Tang on August 20,

1992. Ex. P to Pl.’s Resp. The motion was properly mailed to Mr.

Nomura, Defendants’ attorney of record on that date.

A39

their failure to instruct Mr. Wong as to his obligations as their

designated agent, Plaintiff is not to blame.

Furthermore, any attempt to argue that Mr. Wong was

unfamiliar with Defendants and their difficulties in this matter is of no

avail. After all, Mr. Bentley, Defendants’ own attorney, expressly

represented to the Court in his motion for withdrawal that Defendants

consented to having all pleadings, motions, and other documents

forwarded to Defendants care of Mr. Wong at 6636 East 26th Street,

Los Angeles, California. See Ex. N. In addition, Mr. Wong was

present with Jimmy Yao and Wang Wen-Fu at the 1991 Summer

Consumer Electronics Show in Chicago (Ex. A to Pl.’s Suppl. Resp.);

Mr. Wong was called by Jimmy Yao when he was arrested in June of

1991 (Ex. B to Pl.’s Suppl. Resp.); and Mr. Wong had a

landlord/tenant relationship with Wang Wen-Fu and Jimmy Yao’s

company, Mega Soft.

Second, Defendants contend that Plaintiff's failure to expressly

state in its certificates of service that the address used was the “last

known address” of the Defendants constitutes defective service. The

Court disagrees.

In the instant case, all Defendants were expressly instructed

to immediately advise the Court of any changes in the addresses or

phone numbers set forth in the Court’s Orders."

8 As stated previously, in allowing Mr. Bentley to withdraw,

the Court ordered all papers to be mailed to Mr. Wong and expressly

ordered Defendants to advise the Court of any changes in Mr. Wong's

address, telephone number, or availability. Ex. U to Pi.’s Resp.

In allowing Mr. Nomura to withdraw, the Court expressly

provided that all pleadings, motions, and other Court documents

A40

Therefore, absent some “update” by Defendants, Plaintiff was

certainly entitled to assume that the addresses set forth in the Court’s

Orders were the “last known." Furthermore, Defendants allegation

that Plaintiff somehow knew of more current addresses and simply did

not use them is not only unfounded but also irrelevant, given the fact

that it was Defendants’ duty to advise the Court and Plaintiff of any

address changes. See Affidavit of Sandra S. Froman and Howard R.

Wine, Ex. D to Pl.’s Suppl. Resp.’

Defendants Nintendo Electronic Co., Jimmy Yao, Wang Wen

Fu, and Mega Soft, Inc. argue that they relied in good faith on Mr.

Bentley’s alleged advice that any judgment obtained in this case

intended for NTDEC, Chen Mei-Lin, and Wang Su-Tang, be served

on these Defendants at the address of NTDEC Electronics Co., 6F

No. 22, Sec. 2, Keelung Road, Taipei, Taiwan, R.O.C. Ex. W to

Pl.’s Resp. The Court also ordered Defendants to furnish the Court

with their addresses and phone numbers and to immediately update the

Court as to any changes. Id.

9 Defendants also assert that Wang Wen-Fu was never served

or given notice of Plaintiff's Motion for Entry of Default because an

envelope containing the motion was sent to NTDEC and returned.

Defendants are apparently confused.

When Plaintiff filed its Motion for Entry of Default against

Defendant Wang Wen-Fu, it mailed the motion to both Mr. Wong,

Wen-Fu’s designated agent, and NTDEC Electronics Co..

Defendants seem to argue that because the envelope mailed to NTDEC

was returned, Wang Wen-Fu never received notice of the motion. This

is incorrect. First, the motion related to Defendant Wang Wen-Fu,

and the envelope sent to Mr. Wong (Wang Wen-Fu’s designated

agent) pursuant to a Court Order, was never returned. Ex. EE to Pl.’s

Resp. The fact that the envelope containing the Motion for Entry of

Default against Wang Wen-Fu was returned from NTDEC is irrelevant

as far as effecting service on Wang Wen-Fu is concerned.

Second, Plaintiff's Motion for Entry of Default against

Defendant NTDEC was filed on August 20, 1992, and was properly

mailed Mr. Nomura, NTDEC’s attorney of record at that time. Ex.

P to Pl.’s Resp. Thus, Plaintiff properly served both motions.

A41

would be unenforceable in Taiwan. They claim that their failure to

answer the Complaint was due to their good faith reliance on this

advice. Defendants apparently forget the fact that Mr. Nomura

accepted service on behalf of all the Defendants on June 18, 1991, and

thereafter filed an answer to the Complaint on behalf of all the

Defendants." Ex. E to Pl.’s Resp. Thus, Defendants did in fact file

an answer to the Complaint in this action, before Mr. Bentley was

even involved in the case."

If Defendants are really arguing that their failure to respond to

motions and Court Orders was due to Mr. Bentley’s alleged advice,

this also does not justify setting aside the default judgment in this case.

Defendants were aware of the existence of this case and were

obligated to inquire and respond accordingly to discovery requests,

motions, and Court Orders. Defendants’ recourse for any incorrect

advice given by Mr. Bentley is against Mr. Bentley. Moreover, there

is nothing in the record before the Court to substantiate Defendants’

assertion that Mr. Bentley told them that any judgment obtained in this

matter would be unenforceable in Taiwan.

10 Defendants attempt to argue that Mr. Nomura was not

authorized to represent the Defendants. Yet, Mr. Nomura appeared

before the Court on June 18, 1991, and signed an acceptance of

service and acknowledgement of authority to act on behalf of the

Defendants. Ex. C & Ex. D to Pl.’s Resp. Defendants have

submitted no credible evidence to support their assertion that Mr.

Nomura was not authorized to represent Defendants.

11 Mgr. Bentley became involved in this action on August 14,

1991, when he was substituted as counsel for Nintendo Electronic Co.,

Jimmy Yao, Wang Wen-Fu and Mega Soft. Ex. H to Pl.’s Resp.

A42

Ii, DAMAGES

Defendants assert that the damages awarded in this case are

speculative and unfounded. However, the Court arrived at the damage

amount awarded only after reviewing many exhibits, hearing the

testimony of witnesses, and carefully considering all the evidence

presented by Plaintiff at the hearing conducted on March 30, 1993.

Defendants did not appear at the hearing, despite the fact that Plaintiff

mailed notices of the hearing to Defendants.'"2 Thus, Defendants

waived their opportunity to appear and rebut Plaintiff's testimony

regarding damages. The Court will not now upset the judgment

entered based on Defendants’ mere blanket assertion that the damages

awarded were “false, uncertain, speculative, vague, unproven,

excessive and inflated."

CONCLUSION

Based on the foregoing, the Court finds it appropriate to deny

Defendants’ motion. As stated previously, default judgment was

entered in this case due to Defendants’ repeated failure to respond to

motions and Court Orders. Defendants have had ample opportunities

to present their arguments long before now and have

12 On January 4, 1993, Plaintiff filed a Notice of Hearing for

Proving up Damages on Default Judgment Pursuant to 55(b)(2),

Fed.R.Civ.P., regarding Defendants NTDEC, Chen Mei-Lin, Wang

Su-Tang, Nintendo Electronic Co., and Jimmy Yao. Ex. BB to Pl.’s

Resp. This Notice was mailed, pursuant to Court Orders, to Mr.

Wong and NTDEC.

On February 16, 1993, Plaintiff filed a Notice of Hearing for

Proving up Damages on Default Judgment Pursuant to 55(b)(2),

Fed.R.Civ.P., advising Defendants Mega Soft and Wang Wen-Fu that

the hearing on damages was set for March 30, 1993. Ex. HH to Pl.’s

Resp. Again, pursuant to Court Orders, Plaintiff mailed the notice to

Henry Wong and NTDEC.

not afforded the Court with a credible excuse as to why they waited

until this late date to finally come forward with their

contentions. The Court will not expend more judicial resources

addressing each and every complaint Defendants now have about what

transpired in this action, since it resulted from Defendants’ own failure

to participate in the proceedings. Therefore, the default judgment of

this Court, entered on June 7, 1993, will stand. Accordingly,

IT IS ORDERED that Defendants’ Motivn to Set Aside the

Amended Judgment Entered on June 7, 1993, is hereby denied.

The Clerk is directed forthwith to notify counsel for the

respective parties of the making of this Order.

Done and dated this th day of August, 1993.

Senior U.S. District Judge

A44

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.