Intellectual Property Law

Failure to Defend Can Lead to Default and Finding Infringement was Willful

By Michael Atkins

As STL discussed here, 15 U.S.C. § 1117(c) was amended last fall to double to $2 million the range of statutory damages if a defendant’s counterfeiting is found to be “willful.” So what’s willful? A magistrate judge in the Eastern District of California recently addressed this question in recommending the court award Microsoft Corp. a default judgment against alleged counterfeiter John Marturano.

“Under the Lanham Act, infringement is willful, and thus triggers the enhanced statutory damages limit, if the defendant ‘had knowledge that its actions constitute an infringement.’ A defendant’s continued infringement after notice of his wrongdoing is probative of willfulness.

“Willfulness can also be inferred from a defendant’s failure to defend.”

Not that I’m complaining, but this gets a defaulted defendant two ways. First, the court awards the plaintiff a win because the defendant didn’t defend itself in the action. Then, the court can find the defendant’s failure to defend also supports a finding that the counterfeiting was willful. Seems a little like double-counting to me, but I guess a counterfeiter: (a) shouldn’t engage in counterfeiting, and (b) should defend itself in the litigation.

In applying this framework, the court not surprisingly found the defendant’s selling counterfeit MICROSOFT-branded goods was willful. However, it based its decision on the notice Microsoft sent the defendant rather than the defendant’s failure to defend himself in the case.

“Microsoft has submitted evidence that it sent a letter to Defendant in 2002 explaining that his activities were unlawful. Nevertheless, in 2006, Defendant subsequently continued to distribute infringing software, knowing such acts were unlawful. Therefore, the court finds that Defendant’s violations of the Copyright and Lanham Acts were willful.”

The case cite is Microsoft Corp. v. Marturano, No. 06-1747, 2009 WL 1530040 (E.D. Calif.) (May 27, 2009).

Full post as published by Seattle Trademark Lawyer on June 09, 2009 (boomark / email).