Case 2:12-cv-07032-GW-PJW Document 75-1 Filed 06/07/13 Page 1 of 9 Page ID #:533

1 J. Curtis Edmondson, CSB No. 236105

Law Offices of J. Curtis Edmondson
2 Venture Commerce Center
3699 NW John Olsen Place
3
Hillsboro, OR 97124
4 Telephone: (503) 336-3749
Facsimile: (503) 482-7418
5
Attorneys for Plaintiff
6 SOLO INDUSTRIES, INC.

8 UNITED STATES DISTRICT COURT

9 CENTRAL DISTRICT OF CALIFORNIA

10 .
11 \ CASE NO. 2:12-cv-07032-GW-PJW
SOLO INDUSTRIES, INC.,
12 MEMORANDUM OF POINTS AND
Plaintiff, AUTHORITIES IN SUPPORT OF MOTION
13 FOR A COURT ENTRY OF DEFAULT
v. JUDGMENT FOR DAMAGES AND
14 INJUNCTIVE RELIEF AS AGAINST S&S
15 DOWN TOWN HOOKAH CONNECTION, MEMON, INC.
INC., SMOKE TOKES, LLC, FAISAL
16 IQBAL, SANA FAISAL, S&S MEMON, Hon. Judge George H. Wu
INC., RJA WHOLESALER, INC., and DOES Date: June 20, 2013
17 1 through 10, individuals. Time: 8:30 a.m.
Place: Courtroom 10
18 Defendants.
19
_________________________________/
20

21 I. INTRODUCTION
22
This case involves arises from Defendant S&S Memon, Inc.’s (“MEMON”) willful
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trademark infringement of Plaintiff Solo Industries, Inc’s (“Solo”) mark “SOLOPIPE” (Exhibit 1,
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USPTO Reg. No. 3,375,493) and design patent infringement (Exhibit 2, US D 577,150) in
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connection with the MEMON’s sale of products and/or counterfeit products bearing the
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27 “SOLOPIPE” mark. On February 21, 2013, the Court entered a default against MEMON.

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1 Solo markets and sells the Solopipe, a tobacco smoking device, through a select group of

2 resellers and through direct on-line sales. The popularity and unique nature of the Solopipe

3
induced defendant to engage in unlawful counterfeiting and infringement of the device. The sale
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of these counterfeits directly has eroded sales of the legitimate Solopipes, resulting in actual losses
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to Solo.
6
Solo is seeking the following damages from Defendant: (1) $120,000 in actual damages for
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8 the willful infringement of the ‘150 patent; (2) $100,000 in statutory damages pursuant to the

9 Lanham Act for trademark infringement and counterfeiting; and (3) $2,400 for Copyright

10 infringement.

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II. PARTIES
12
Plaintiff SOLOPIPE INDUSTRIES, INC. (hereinafter “SOLO”) is a California
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Corporation whose principal place of business is in Los Angeles County, California. SOLOPIPE
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15 is an owner of USPTO Reg. No. 3,375,493 and Design Patent D577,150. (Complaint, ¶5,

16 Assignment, Exhibit 3).

17 Defendant MEMON, Inc. (hereinafter “MEMON”) is corporate entity located in the County
18 of Los Angeles, State of California. (Complaint, ¶6).

19
III. FACTUAL BACKGROUND
20
Defendant has sold a smoking implement that infringed the embodiments of Design Patent
21
D577,150 and has infringed on the claim of the patent issued. (Bryman Decl at 3). This is
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23 evidenced by actual receipts from 2011 and 2012 that identify the product as “Solopipe”.

24 (Exhibits 5.2 – 5.3). Solo has never sold to Defendant nor has Defendant ever obtained any

25 legitimate Solo product. Id.

26
On August 20, 2012, Plaintiff served the summons and complaint and civil cover sheet on
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Defendant MEMON. (See Dckt 10.)
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1 On October 10, 2012, Plaintiff sent Defendant a copy of its original Request to Enter

2 Default Against MEMON, Inc. (See Dckt 17.)

3
Gary Bryman through the purchase of a counterfeit SOLOPIPE by S&S MEMON
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demonstrate the sale of the counterfeit products. The actual sale of counterfeit products have been
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estimated from these sales. See Exhibits 5.2 – 5.3. P
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8 IV. ARGUMENT

9 Rule 55(b)(2) of the Federal Rules of Civil Procedure requires the plaintiff to apply to a
10 court for a default judgment in all cases where a default judgment may be entered against a minor

11
or incompetent person only if represented by a general guardian, conservator, or other like
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fiduciary who has appeared. If the party against whom a default judgment is sought has appeared
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personally or by a representative, that party or its representative must be served with written notice
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15 of the application at least 7 days before the hearing.

16 The court may conduct hearings or make referrals—preserving any federal statutory right

17 to a jury trial—when, to enter or effectuate judgment, it needs to:

18 (A) conduct an accounting;

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(B) determine the amount of damages;
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(C) establish the truth of any allegation by evidence; or
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(D) investigate any other matter. Fed. R. Civ. P. 55(b)(2).
22

23 (1) Default was entered against defendant MEMON, Inc. on February 21, 2013.

24 (2) Defendant is not a “minor or incompetent person”.

25 (3) Defendant is not “Subject to the Soldiers and Sailor Relief Act of 1990”.
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Notice of the application for default judgment is not required by Federal Rule of Civil
27
Procedure 55(b)(2). Plaintiff will provide notice of this application to defendants.
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1 The factors in determining whether to grant default judgment are: (1) the substantive merits

2 of the plaintiff’s claim; (2) the sufficiency of the complaint; (3) the amount of money at stake; (4)

3
the possibility of prejudice to the plaintiff if relief is denied; (5) the possibility of dispute as to any
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material facts in the case; (6) whether default resulted from excusable neglect; and (7) the public
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policy favoring resolution of cases on the merits. See Eitel v. McCool, 782 F.2d 1470, 1471-72
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(9th Cir. 1986.) All of these factors militate in favor of granting Plainiff’s request.
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8 For the purposes of a default judgment, the well-plead allegations for the complaint are

9 taken as true. TeleVideo Systems, Inc. v. Heidenthal 826 F.2d 915,918 (9th Cir. 1987). The

10 complaint shows egregious, substantive violations of law and prejudice to Plaintiff. Bryman’s

11 testimony shows the loss of his business. Plaintiff’s counsel had made effort to provide notice to

12 Defendant in hopes it would appear. Therefore, the factors establish that this Court should grant

13 Plaintiff’s request.

14 2. Defendant has Infringed Plaintiff’s ‘150 Design Patent by Counterfeiting the

15 Product and Plaintiff should be awarded damages under 35 USC 289 (2)

16 A determination of infringement of a design patent requires the application of the “ordinary

17 observer” test. Egyptian Goddess, Inc. v. Swisa et al., 543 F.3d 665 (2008, Fed. Cir.). Here, in the

18 case of a counterfeited product, there can be no question that the ordinary observer would find

19 infringement. The accused product and the legitimate product are identical. Bryman Decl. at 5.

20 The Patent Act provides for damages for infringement. 35 U.S.C. 284. When the

21 infringement is willful the damages may be trebled. 35 U.S.C. 289.

22 Defendant’s actions are willful. Defendants have voluntarily sold and marketed counterfeit

23 products in violation and disregard of and in Plaintiff’s design patent rights. Such Design Patent

24 rights are not only in the public record, but they are also referenced on Plaintiff’s website (www.

25 solopipe .com). Defendant had notice.

26 Since Defendant has failed to appear, damages must be estimated by the amount of product

27 sold and the actual damages. Here Plaintiff has estimated damages based upon actual historical

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1 sales price of $69.00, historical cost of goods and overhead of $19 per unit for a net loss of $50.00

2 per unit with an estimate of 2,400 units sold by the Defendant since the entity was formed in 2010.

3 Plaintiff would have made these sales as it is the only source of legitimate goods and there are no

4 viable substitutes. Bryman Decl. at 7.

5 3. Plaintiff’s Claims are Sufficiently Plead to Establish a Case of

6 Trademark Infringement under the Lanham Act.
7 This Court should find that the Plaintiff’s Complaint is sufficiently plead to provide a

8 substantial basis for this Court to grant default judgment in favor of Plaintiff.

9 Defendant’s sale of counterfeit products used the “SOLOPIPE” mark on their website for

10 advertising, the packaging of the product also used the “SOLOPIPE” mark. See Exhibits 6.1 – 6.3.

11 3.1. Consumers are Likely to be Confused by Defendant’s Uses of Plaintiff’s

12 “SOLOPIPE” Marks in Connection with the Use of the Mark under the
13 Sleekcraft Factors.
14 The Ninth Circuit has an eight factor test when considering a likelihood of confusion: (1)
15 strength of the mark; (2) proximity or relatedness of the good; (3) similarity of the marks in sight,

16 sound, and meaning; (4) evidence of actual confusion; (5) marketing channels used; (6) type of

17 goods and degree of care likely to be exercised by the purchaser; (7) defendant’s intent in selecting

18 the mark; (8) likelihood of expansion of the product lines. AMF, Inc. v. Sleekcraft Boats, 599

19 F.2d 341, 348-49 (9th Cir. 1979).

20 The MEMON website clearly shows the use of the “SOLOPIPE” mark in connection with
21 the sale of the counterfeit lighters.

22 Marks may be strengthened by extensive advertising, length of time in business, public

23 recognition, and uniqueness. Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1179 (9th

24 Cir. 1988). Since 2007, Plaintiff has invested significant amounts of capital in extensively

25 advertising its renowned “SOLOPIPE” brand. Plaintiff also uses its “SOLOPIPE” mark in

26 connection with a wide array of promotional products. (Bryman Decl at ¶ 1). Due to such efforts,

27 and the high quality of plaintiff’s goods, the “SOLOPIPE” mark enjoys a high degree of consumer

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1 recognition in the smoking community. As a result of widespread use and consumer recognition

2 for many years, plaintiff’s “SOLOPIPE” mark has become famous as a unique identifier of

3 plaintiff’s products and services.

4 The second Sleekcraft Factor is satisfied in that Defendants use of the mark “SOLOPIPE”

5 on counterfeit goods is prima facie evidence that the mark and the goods are related.

6 The third Sleekcraft Factor use of the mark on counterfeit goods is prima facie evidence

7 that the mark and the goods are related.

8 The fourth Sleekcraft Factor is satisfied. Receipts of sales of SOLOPIPE demonstrate that

9 buyers were deliberately confused that MEMON was a legitimate source of goods.

10 The fifth Sleekcraft Factor is satisfied. MEMON’s sales were to the same distributors that

11 would have purchased legitimate SOLOPIPE’S. (See Bryman Declaration at ¶7).

12 With regard to the sixth Sleekcraft Factor. Consumers of smoking implements are unlikely
13 to distinguish between a legitimately source SOLOPIPE and a counterfeit.

14 For the seventh Sleekcraft Factor, Defendant has clearly sought to “free ride” off the good
15 will of the SOLOPIPE brand. This is a situation where a counterfeit mark is used.

16 3.2 Defendants Acted Willfully and in Bad Faith.

17 Defendant was on constructive notice of Plaintiff’s rights to the SOLOPIPE mark, due to
18 plaintiff’s federal trademark registrations. 15 U.S.C. §1072. Moreover, plaintiff provided

19 defendant actual notice of plaintiff’s rights to the SOLOPIPE mark by notifying defendant of their

20 improper and unauthorized use of such mark. Defendant continued to use the mark, thereby

21 further evidencing their willful intent to infringe on plaintiff’s mark.

22 3.3 Defendants are Making Commercial Use of Plaintiff’s SOLOPIPE Mark.

23 Defendants adopted plaintiff’s SOLOPIPE mark and used said mark on their counterfeit

24 products which they either manufactured or sold. Since the allegations of the complaint must be

25 taken as true, defendants have engaged in the sale of counterfeit products bearing the SOLOPIPE

26 mark.

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2 3.4. Plaintiff should be awarded Statutory Damages of $ 100,000.00 for

3 counterfeiting under the Lanham Act.
4 Statutory damages are awardable under 15 U.S.C. 1117(c)(2) in lieu of actual damages. In

5 lieu of actual damages, Plaintiff seeks statutory damages for its Lanham Act counterfeiting claim.

6 Plaintiff has adequately pled that defendant has redirected sales of products from plaintiff’s to

7 defendant’s market by selling counterfeit products bearing the SOLOPIPE mark. Because

8 defendants have failed to appear, the allegations in the complaint must be accepted as true.

9 The Court may award up to one million dollars for counterfeiting. Plaintiff is requesting

10 this Court award $100,000.00 for the willful Counterfeiting of SOLOPIPES. (See K and N

11 Engineering, Inc. v. Bulat, 510 F.3d 1079 (9th Cir., 2007); affirming Plaintiffs’ award of

12 $20,000.00 in statutory damages as a result of $267.00 in sales of the counterfeit product.)

13 Here MEMON is estimated to have sold 7,200 infringing pipes in the last six years. As
14 such, an award of $100,000 in statutory damages for counterfeiting is reasonable under K and N

15 Engineering.

16 3.5. Plaintiff also can be awarded $ 100,000 for False Advertising Claims
17 (Cal Business and Professions Code §17500).
18 A person may pursue a section 17500 claim if he or she “has suffered injury in fact and has
19 lost money or property as a result of a violation of this chapter.” Magic Kitchen LLC, et. al. v.

20 Good Things International Ltd (2007) 153 Call App 4th 1144, fn. 10. Plaintiff has adequately pled

21 an injury due to Defendant’s infringing use of the SOLOPIPE mark. As the evidence shows, the

22 SOLOPIPE mark was placed on the case that holds the infringing device. This case not only holds

23 the product, but also serves as an advertisement for the product thus satisfying a claim for false

24 advertising under B&P 17500.

25 Section 17535 of the California False Advertising Law provides for restitution of amounts

26 “which may have been acquired by means of any practice in this chapter to be declared to be

27 unlawful.” The California Supreme Court has interpreted this language as “unquestionably broad

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1 enough to authorize a trial court to order restitution without requiring the often impossible showing

2 of the individual’s lack of knowledge of the fraudulent practice in each transaction.” Fletcher v.

3 Security Pacific National Bank (1979) 23 Cal. 3d 442, 452.

4 The Restatement of Restitution provides support for our conclusion. Section 151 of the

5 Restatement of Restitution provides: “Where a person is entitled to a money judgment against

6 another because by fraud, duress or other consciously tortuous conduct the other has acquired,

7 retained or disposed of his property, the measure of recovery for the benefit received by the other

8 is the value of the property at the time of its improper acquisition, retention or disposition, or a

9 higher value if this is required to avoid injustice where the property has fluctuated in value or

10 additions have been made to it.” (Rest., Restitution, § 151, p. 598).

11 Here, the evidence is shown that Defendant falsely advertised legitimate SOLOPIPE’s on

12 their websites. See Exhibits 6.1 – 6.3. As such an award equivalent to that provided for in the

13 Lanham Act is appropriate.

14 4.0 Defendant has Infringed Plaintiff’s Copyright and should be awarded damages
15 under 17 USC 504
16 The copyrighted Solopipe Logo is an expressive work that was copied when the case
17 holding the counterfeit pipes were sold and distributed. Plaintiff is the owner of the copyrighted

18 work, is the owner of a copyright certificate, and has not granted a license for the use of the

19 copyrighted work.

20 Under the U.S. Copyright Act, Plaintiff is entitled to actual damages for the unauthorized
21 reproduction of the logo. It is estimated that the value of the logo is approximately $1 for each for

22 each container holding a Solopipe.

23 5.0 Attorney Fees are Appropriated and Reasonable.

24 Plaintiff seeks and award of attorney fees under the U.S. Patent Laws and under State False
25 Advertising laws. 35 U.S.C. §284, B&P 17500. These fees will be brought pursuant to a post-

26 judgment motion. Defendant’s conduct was willful, substantial, and it has refused to engage with

27 the legal process in hopes of evading the consequences of its behavior. Attorney’s fees are

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1 appropriate here.

2 6.0 A Permanent Injunction is Appropriate.

3 Plaintiff’s equitable remedy of a permanent injunction is necessary to prevent the further

4 advertising, offering to sell, and selling of the counterfeit pipes. Levi Strauss & Co. v. Shilon, 43

5 (9th Cir., 1997) 121 F.3d 1309. Absent injunctive relief, Plaintiff will not be able to timely protect

6 its rights from an established and willful infringer.

7 V. CONCLUSION
8 Plaintiff respectfully requests that this Court grants its application for Default Judgment and

9 award actual damages in the amount of $360,000 for design patent infringement, statutory

10 damages of $100,000.00 for counterfeiting under the Lanham Act or, in the alternative, for false

11 advertising, an damages of $7,200.00 for copyright infringement.

12 Plaintiff also requests a permanent injunction to prevent further infringement by the

13 importation, distribution, and sale of counterfeit SOLOPIPES that bear the SOLOPIPE mark

14 and/or infringe Plaintiff’s Design Patent. Plaintiff also requests attorneys’ fees in an amount to be

15 established in a post-judgment motion.

16

17 Dated: June 7, 2013 LAW OFFICES OF J. CURTIS EDMONDSON

18

19 _______________________________
J. Curtis Edmondson
20 Attorney for Plaintiff
SOLO INDUSTRIES, INC.
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