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Deere & Co. v. Zhao

United States District Court, Western District of Washington, Seattle

May 6, 2015

DEERE & COMPANY, Plaintiff,
v.
GUOHUI ZHAO and AMERICAN JOHN DEERE PETROLEUM CHEMICAL INDUSTRY GROUP, INC., Defendants.

ORDER

Richard A. Jones, United States District Court Judge

I. INTRODUCTION

This matter comes before the court on the Plaintiff’s motion for a default judgment and permanent injunction. For the reasons stated herein, the court GRANTS the motion (Dkt. # 11) and directs the clerk to enter a default judgment against Defendant American John Deere Petroleum Chemical Industry Group, Inc. That default judgment shall incorporate the permanent injunction set forth in Part III of this order. The court further certifies, in accordance with Rule 54(b) of the Federal Rules of Civil Procedure, that although this order does not dispose of Plaintiff’s claims against Defendant Guohui Zhao, that there is no just reason for delay in entering the default judgment as a final judgment.

No later than May 15, 2015, Plaintiff shall file a statement as to whether it wishes to voluntarily dismiss without prejudice its claims against Guohui Zhao as well as any unnamed defendants.

II. BACKGROUND & ANALYSIS

Plaintiff Deere & Company is the owner of the venerable “John Deere” trademarks. Plaintiff uses those trademarks, which include the name “John Deere” and the iconic image of a leaping deer, to sell a variety of products. Of particular importance to this suit is Plaintiff’s use of the “John Deere” trademarks to sell engine oil and other engine fluids.

Defendant American John Deere Petroleum Chemical Industry Group, Inc. (“Counterfeit John Deere”) is a Washington corporation. It appears that Counterfeit John Deere serves no purpose but to provide a thin veneer of legitimacy to unknown persons who unlawfully use the John Deere trademarks to sell engine oil and engine fluids to customers in China. Plaintiff asserts that Counterfeit John Deere has promoted those falsely-marked products as genuine John Deere products, and has attempted to persuade John Deere customers and Chinese government authorities that legitimately-marked John Deere products are in fact counterfeit. Plaintiff’s complaint includes a copy of a brochure distributed in China by counterfeit John Deere, which shows more than a dozen engine fluids that Counterfeit John Deere is attempting to pass off as legitimate John Deere products. It also includes a screen shot from www.deersh.com, a website whose text is almost entirely in a Chinese dialect. That screenshot includes the heading “John Deal Petrochemical” next to the leaping deer logo as well as several engine fluid products bearing the leaping deer logo. The complaint alleges that Counterfeit John Deere operates the www.deersh.com website.

Although Plaintiff has apparently found no person to answer for the unlawful conduct of Counterfeit John Deere; it has accomplished service of its complaint on Counterfeit John Deere. The Washington Secretary of State lists Guohui Zhao as the registered agent for Counterfeit John Deere, at an address in Everett, Washington. Plaintiff attempted repeatedly to serve Counterfeit John Deere at that address, without success. See Decl. of Non-Service (Dkt. # 7). The Secretary of State lists an alternate address for Mr. Zhao (in his capacity as President, Secretary, Treasurer, and Director of Counterfeit John Deere) in Walnut Creek, California. Plaintiff named Mr. Zhao as a Defendant, and attempted to serve him and Counterfeit John Deere in California. Id. It had no success. Id. Plaintiff thus requested that the Washington Secretary of State accept service on Counterfeit John Deere’s behalf. Id.; see also RCW 23B.05.040 (authorizing Secretary of State to accept service of process where “registered agent cannot with reasonable diligence be found at the registered office”). The Secretary of State did so.

Counterfeit John Deere did not timely answer or otherwise respond to the complaint. At Plaintiff’s request, the court entered default against Counterfeit John Deere on January 28, 2015.

Plaintiff now requests a default judgment on its claims of trademark infringement in violation of the Lanham Act and Washington law, unfair competition in violation of the Lanham Act, and violation of the Washington Consumer Protection Act. Plaintiff does not request monetary damages, but rather declaratory relief and a permanent injunction. The permanent injunction would prohibit Counterfeit John Deere from using John Deere trademarks or misrepresenting that Plaintiff or anyone else has authorized its use of those marks. Plaintiff also requests that the court order the dissolution of Counterfeit John Deere as a Washington Corporation. Plaintiff recognizes that it is highly unlikely that Counterfeit John Deere will comply with this order, and thus requests the court’s assistance in ensuring that the Washington Secretary of State dissolves the corporation.

The court’s role in reviewing a motion for default judgment is not ministerial. It must accept all well-pleaded allegations of the complaint as fact, except facts related to the amount of damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Where those facts establish a defendant’s liability, the court has discretion, not an obligation, to enter a default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980); Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988); Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (stating factors guiding court’s discretion in entering default judgment, a remedy that is “ordinarily disfavored”).

After review of the allegations of the complaint, the evidence attached to the complaint, and the argument and authority Plaintiff offered in its motion for default judgment, the court is convinced that it should exercise its discretion to enter a default judgment. Counterfeit John Deere has violated the Lanham Act both by infringing Plaintiff’s trademarks and by other acts of unfair competition designed to undermine Plaintiff’s commerce.[1] For the same reasons, it has violated Washington’s common law of trademark infringement and Washington’s Consumer Protection Act. See Seattle Endeavors, Inc. v. Mastro, 868 P.2d 120, 124-125, 126-127 (Wash. 1994) (stating elements of common law trademark infringement, explaining how trademark infringement can violate the Consumer Protection Act). The court is convinced that Counterfeit John Deere will not defend itself on the merits, and that even if that were not the case, Counterfeit John Deere is highly unlikely to have a legitimate defense. A default judgment is necessary to vindicate Plaintiff’s trademark rights. That suffices to entitle Plaintiff to a judgment declaring that Counterfeit John Deere is liable to it on each of its four causes of action.

The court is convinced for many of the same reasons that a permanent injunction is appropriate. See eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006) (stating permanent injunction factors). Plaintiff is likely to continue to suffer irreparable injury absent an injunction. Plaintiff is unlikely to extract monetary damages from a Defendant as elusive as Counterfeit John Deere, and those monetary damages are unlikely to compensate Plaintiff for the loss of goodwill and other intangible harm inherent in competing with a counterfeiter. The balance of hardships tips sharply in Plaintiff’s favor, and the public interest favors Plaintiff’s enforcement of its trademarks against a counterfeiter.

Plaintiff is entitled to an injunction prohibiting Counterfeit John Deere from continuing its trademark infringement and other unfair competition. Moreover, because the record suggests no purpose for the corporate existence of Counterfeit John Deere other than to serve as a front for counterfeiting and other unfair competition, Plaintiff is entitled to an injunction ordering Plaintiff to either dissolve the corporation or to change its name to one that does not use the term “John Deere.” As Plaintiff points out, however, Counterfeit John Deere is unlikely to actually comply with the ...


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