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Hydreon Corp. v. JC Brothers, Inc.

United States District Court, D. Minnesota

November 18, 2016

Hydreon Corporation, a Minnesota corporation, Plaintiff,
v.
JC Brothers, Inc., a California corporation, Defendant.

          FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER FOR DEFAULT JUDGMENT AND PERMANENT INJUNCTION

          SUSAN RICHARD NELSON UNITED STATES DISTRICT JUDGE

         The above-entitled matter came on before the Court upon Plaintiff Hydreon Corporation's ("Hydreon") motion for entry of default judgment and permanent injunction against Defendant JC Brothers, Inc. ("Defendant") and request for an award of attorneys' fees and costs under Rule 55 of the Federal Rules of Civil Procedure (ECF No. 15). The Court, having carefully reviewed Hydreon's motion and all of the files, pleadings and proceedings herein, makes the following findings of fact, conclusions of law and order for judgment:

         FINDINGS OF FACT

         I. STATEMENT OF FACTS AND PROCEDURAL HISTORY[1]

         A. BACKGROUND.

         1. This is a patent infringement, trademark counterfeiting and infringement, unfair competition and false designation of origin action arising under the laws of the United States, including the Patent Act, 35 U.S.C. §§271 and 281-285 and the Lanham Act, 15 U.S.C §§ 1114, 1116 and 1125.

         2. Hydreon is a Minnesota corporation that designs, manufactures and markets various products, including patented and trademarked products sold under the brand and registered trademark FakeTV®.

         3. When this action was commenced, Defendant JC Brothers, Inc. (“JCB”) was a California corporation with its registered offices located at 7220 Rosemead Boulevard, Suite 202-7, San Gabriel, CA 91775-1383. JCB purports to be the owner of retail electronics sold under the brand name “Jebsens.” According to the California Secretary of State's website, as of October 6, 2016, JCB's status is “FTB Suspended” and its address had changed to 20895 Currier Rd, Unit B, Walnut California 91789. (ECF No. 18, Perry Decl., ¶3 and ECF No. 18-1, Perry Decl. Ex. 1.) The agent for service of process is identified as Haiming Zhang. (Id.) Jebsens' website indicates the company's “head office” is in China and still shows the original address as its United States offices. (Id.)

         B. HYDREON'S PATENTS.

         4. Hydreon is the assignee and registered owner of the following U.S. Patents:

a. No. 7, 365, 649 titled “Security Device and Methods for Security Device Operation” issued on April 29, 2008 (the “‘649 Patent”);
b. 7, 755, 470 titled “Security Television Simulator” issued on July 13, 2010 (the “‘470 Patent”); and
c. 7, 719, 435 titled “Security Television Simulator with Realistic Emulation of Television Output” issued on May 18, 2010 (the “‘435 Patent”).

         5. The ‘649, ‘470 and ‘435 Patents are collectively referred to as “the Patents” herein.

         C. HYDREON'S TRADEMARK.

         6. Hydreon is also the owner of U.S. Registered Trademark No. 3519470 for the word “FakeTV.” FakeTV® has been registered since October 21, 2008.

         7. Hydreon designs, manufactures, markets, advertises, distributes, and sells in interstate commerce various types of products, including, FakeTV® products. FakeTV® products are security/burglar deterrent devices that are designed to make it appear that people are home watching television when the home is not occupied. The products are small energy efficient devices that project and emit light patterns which simulate real television broadcasts. An example of a Hydreon FakeTV® is depicted below:

         (IMAGE OMITTED)

         8. FakeTV® products have and continue to enjoy significant commercial success. Hydreon primarily sells the products on Amazon.com. Beginning at least as early as 2008, Hydreon and its predecessors-in-interest adopted and began using the FakeTV trademark. Since that time, Hydreon and its predecessors-in-interest have continuously used the FakeTV trademark. FakeTV has been used in interstate commerce in the United States for the purpose of identifying Hydreon's products and for distinguishing goods from the goods of others.

         9. The registration of the FakeTV Mark on the Principal Register with the United States Patent and Trademark Office constitutes prima facie evidence of its validity and is conclusive evidence of Hydreon's exclusive rights to use the FakeTV Mark in commerce in connection with the goods named therein, and commercially related goods. 15 U.S.C. § 1057. The registration of the FakeTV Mark also constitutes constructive notice of Hydreon's ownership and exclusive rights in the FakeTV Mark, 15 U.S.C. § 1072.

         10. Hydreon's products bearing the FakeTV Mark are sold throughout the United States. In accordance with 15 U.S.C. § 1111, the FakeTV Mark is, and has been, displayed on Hydreon's products or on the packaging, marketing, or advertising materials, for such products, and is and was accompanied by the notation “®” to provide notice that the FakeTV Mark is federally registered and protected.

         11. Hydreon has advertised and promoted its products sold under the FakeTV Mark throughout the United States by means of various media, including, but not limited to, the Internet, and other traditional sales channels.

         12. As a consequence of Hydreon's continuous use of the FakeTV Mark throughout the United States, and due to the significant investment of time, money, and efforts, widespread sales, and the high quality of Hydreon's products sold in connection with the FakeTV Mark, the FakeTV Mark has acquired value and are well-known to the consuming public and trade as identifying and distinguishing the source of Hydreon's products.

         13. Hydreon also takes significant steps to protect its valuable intellectual property rights.

         14. Hydreon monitors internet marketplace sites such as Amazon.com and eBay.com for suspected sellers of counterfeit FakeTV merchandise.

         15. Hydreon has purchased sample Jebsens and other brands of FakeTV products from Amazon.com and analyzed to determine their authenticity and found that the devices infringe its patents and trademark as discussed below.

         16. Hydreon investigates suspected manufacturers, distributors, and retailers of unauthorized counterfeit FakeTV products and then takes steps to halt such unauthorized sales, as appropriate.

         D. DEFENDANT'S CONDUCT.

         17. Defendant traffics in counterfeit FakeTVs which infringe one or more claims of all of the Patents by making, using, selling, offering to sell, and/or importing the systems and/or methods covered by one or more claims of the Patents.

         18. Defendant has repeatedly utilized Hydreon's FakeTV Mark or confusingly similar iterations of the Mark in connection with the advertising and sale of its counterfeit products despite notification from Amazon.com and eBay and Hydreon that Defendant's FakeTV products infringe Hydreon's Patents and trademark.

         19. Defendant, without authorization or license from Hydreon, knowingly and willfully used or reproduced Hydreon's FakeTV Mark in connection with its distributing, importing, shipping, advertising, offering for sale, selling, and facilitating the sale of Counterfeit Products in commerce.

         20. In addition to infringing the Patents and the FakeTV® Mark, Defendant has gone so far as to sell a near exact replica of Hydreon's product as depicted in the table below:

         (IMAGE OMITTED)

         21. Defendant made substantial sales of Counterfeit Products in the United States through Amazon and eBay's online stores and offers for sale, sells, distributes, and facilitates the sale of Counterfeit Products via eBay.com, Amazon.com, and other websites as well.

         22. Hydreon became aware of Defendant selling products bearing the FakeTV® Mark in 2012. Hydreon has periodically purchased sample products from Amazon.com. Hydreon confirmed that the samples are Counterfeit Products.

         23. Defendant purchased the Counterfeit Products from a source or sources that are not authorized or licensed by Hydreon to manufacture, offer for sale, or sell the products that infringe Hydreon's patents or bear the FakeTV Mark.

         24. The Counterfeit Products are not genuine FakeTV products. Hydreon did not manufacture, inspect, or package the Counterfeit Products, prior to the unauthorized sale and did not approve the Counterfeit Products for sale or distribution.

         25. Defendant is not authorized by Hydreon to manufacture, advertise, distribute, export, import, ship, sell, offer to sell, or facilitate the sale of any products bearing Hydreon's FakeTV Mark that are not authentic products.

         26. Defendant's infringement of the Patents and use of Hydreon's FakeTV Mark in connection with the advertising, marketing, distribution, import, export, shipping, offering for sale, sale, and facilitation of the sale of Counterfeit Products caused, and in the future are likely to cause, confusion among potential customers who will be deceived into believing that Defendant's Counterfeit Products are authentic products, thus harming the consuming public and irreparably harming Hydreon's valuable reputation and goodwill.

         27. The aforesaid conduct is causing Hydreon irreparable harm, for which ...


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