United States District Court, M.D. Tennessee, Nashville Division
MEMORANDUM AND ORDER
A. TRAUGER, UNITED STATES DISTRICT JUDGE.
18, 2106, Plaintiff The Executive Corporation (TEC) sued
defendants Oisoon, LLC, and Li Jin Xu for appropriating
images from its website and using those images to sell
products similar (or perhaps identical) to those marketed by
TEC. (Doc. No. 1.) TEC alleges two claims against these
defendants: that they removed or altered copyright management
information, in violation of 17 U.S.C. §1202(b), and
that they engaged in false advertising in violation of the
Lanham Act, 15 U.S.C. § 1125(a). (Id. at
PageID# 4-8.) Despite having been served with process (Doc.
Nos. 6, 7), neither defendant has appeared to defend against
these claims. Pursuant to Federal Rule of Civil Procedure
55(a), the Clerk of Court entered default against Oisoon, LLC
on July 15, 2016 (Doc. No. 10) and default against Li Jin Xu
on August 29, 2016 (Doc. No. 15).
moved for default judgment under Federal Rule of Civil
Procedure 55(b) on October 20, 2016. (Doc. No. 18.) After
determining that TEC does not request damages in a sum
certain, the magistrate judge ordered TEC to submit
additional proof to support its damages claim. (Doc. No. 21.)
TEC submitted the affidavit of its president, Stewart Switzer
(Doc. No. 22- 1), and its counsel, Thomas J. Boylan (Doc. No.
22-20), on July 2, 2017. TEC also filed additional evidence
documenting the harms it alleges, including photographs
comparing images from its website to those found on
defendants' site. (Doc. No. 20.) Upon consideration of
these filings, the court hereby WITHDRAWS the reference to
the Magistrate Judge and GRANTS TEC's motion for default
Statement of Facts
following facts are taken from TEC's Verified Complaint
(Doc. No. 1), Switzer's affidavit (Doc. No. 22-1),
Boylan's affidavit (Doc. No. 22-20), and their supporting
documents (Doc. No. 22-2-22-23).
a Tennessee corporation that “operates a promotional
marketing company that designs, advertises and sells logo
branded products via the internet.” (Doc. No. 1,
PageID# 1, 3, ¶ ¶ 1, 9.) TEC markets over 30, 000
branded logo products through its website,
www.theexecutiveadvertising.com. (Doc. No. 22-1,
PageID# 141, ¶ 4.) “TEC's internet site . . .
uses original source coding, text and photographs that have
been created and developed by TEC and are the unregistered
copyrights of [TEC].” (Doc. No. 1, PageID# 3, ¶
Oisoon LLC is a Texas corporation that sells logo branded
products through the website www.oisoon.com. (Doc.
No. 1, PageID# 1, 3, ¶¶ 2, 10.) Defendant Li Jin Xu
is a Texas resident and manager of Oisoon LLC. (Id.
at PageID# 1, ¶ 3.) Oisoon LLC “regularly conducts
and solicits business in [Tennessee] through its interactive
website . . . [and] purposely avails itself of acting in
Tennessee by selling goods and entering into contracts with
residents of Tennessee.” (Id. at PageID# 2,
¶ 5.) Upon information and belief, Defendant Xu
“personally participated in constructing” Oisoon
LLC's website and in the sale of its products.
(Id. at ¶ 6.) Oisoon LLC and Xu (collectively,
Oisoon) conduct business in this judicial district, where
many of the events underlying TEC's claims took place.
(Id. at ¶ 8.)
November and December 2015, TEC became aware of Oisoon's
website, where TEC discovered “many of the exact same
images as TEC's copyrighted images.” (Doc. No. 1,
PageID# 3, ¶ 11; Doc. No 22-1, PageID# 142, ¶ 7.)
Oisoon “[was and is] using those images to sell
products that are similar to those sold by TEC” on its
website, but at lower prices than TEC. (Doc. No. 1, PageID#
3, ¶ 11.) TEC discovered Oisoon's activities when
“customers began contacting [Switzer] about the
disparity in price between the two sites. Many customers
thought the two sites were related or simply wanted [Switzer]
to match Oisoon's lower price.” (Doc. No. 22-1,
PageID# 142, ¶ 7.) TEC matched the price of the products
listed on Oisoon's website in order to retain its
customers' business. (Doc. No. 1, PageID# 4, ¶ 12.)
identified images of 969 of its 2, 999 products that Oisoon
had copied directly from TEC's website to its own,
including supporting text and descriptions. (Doc. No. 22-1,
PageID# 142, ¶ 9.) To claim its proprietary images, TEC
had “embedded some of its website photographs with
copyright management information in the form of the trade
name ‘The Executive Advertising' as a watermark at
the top or in the bottom right hand corner.” (Doc. No.
22-1, PageID# 142, ¶ 5.) Included among the images found
on the Oisoon site were four photographs from TEC's
website with the identifying watermark removed. (Doc. No. 1,
PageID# 3-5; Doc. No. 22-1, PageID# 142-43; Doc. Nos.
22-3-22-8.) Otherwise, all of the data and images reproduced
on Oisoon website were exact duplicates of the images on
TEC's website, “and some even linked to the TEC
website because [Oisoon] copied and pasted without removing
TEC's URL information.” (Doc. No. 22-1, PageID#
143, ¶ 12.) The Oisoon website even contained ten images
taken from TEC's website and published with the TEC
watermark included. (Doc. Nos. 22-10-22-19.)
17, 2016, TEC sent a takedown notice to Oisoon's internet
service provider as contemplated in the Digital Millennium
Copyright Act (DMCA), 17 U.S.C. § 512(c), and a
cease-and-desist letter to Oisoon. (Doc. No. 1, PageID# 4,
¶13; Doc. No. 1-3; Doc. No. 22-1, PageID# 143, ¶
13; Doc. No. 1-4.) In response, Oisoon “removed most,
but not all” of TEC's images from their website
“by August-September 2016.” (Doc. No. 22-1,
PageID# 143, ¶ 13.)
party's default has been entered under Rule 55(a), the
court may enter default judgment. In so doing, the court
treats all well-pleaded allegations of the complaint as true,
except allegations regarding the amount of damages, and must
determine whether those facts state a claim. Thomas v.
Miller, 489 F.3d 293, 299 (6th Cir. 2007);
Zinganything, LLC v. Import Store, 158 F.Supp.3d
668, 672 (N.D. Ohio 2016). Otherwise, the entry of default
judgment is a matter of the court's discretion, guided by
factors including: (1) prejudice to the plaintiff; (2) the
merits of the plaintiff's claim; (3) the complaint's
sufficiency; (4) the amount of money at stake; (5) the
possibility of a dispute concerning material facts; (6)
whether the default was due to excusable neglect; and (7) the
strong policy favoring decisions on the merits. Mucerino
v. Newman, No. 3:14-cv-00028, 2017 WL 387202, at *2
(M.D. Tenn. Jan. 26, 2017) (citing Eitel v. McCool,
782 F.2d 1470, 1472 (9th Cir. 1986); Marshall v.
Bowles, 92 F. App'x 283, 285 (6th Cir. 2004)).
court may conduct a hearing or make a referral to conduct an
accounting, determine the amount of damages, establish the
truth of any allegation by evidence, or investigate any other
matter. Fed.R.Civ.P. 55(b)(2)(A)-(D). The court referred this
matter to the magistrate judge (Doc. No. 19), who ordered TEC
to submit additional evidence in support of its motion (Doc.
No. 21). In light of the evidence TEC submitted in response
(Doc. No. 22), the court finds that no evidentiary hearing is
court must determine that it has jurisdiction over an action
and its parties to render a valid judgment, even when a
defendant is in default. Antoine v. Atlas Turner,
Inc., 66 F.3d 105, 108 (6th Cir. 1995). “Once
default is entered against a defendant, that party is deemed
to have admitted all of the well pleaded allegations in the
Complaint, including jurisdictional averments.”
Ford Motor Corp. v. Cross, 441 F.Supp.2d 837, 846
(E.D. Mich. 2006). The verified complaint alleges this
court's jurisdiction over TEC's claims because they
arise under federal copyright law and the Lanham Act. 28
U.S.C. §§ 1331, 1338(a); 15 U.S.C. § 1121.
Federal question jurisdiction over the action is therefore
the court's jurisdiction over Oisoon LLC and Xu,
“[w]here a federal court's subject matter
jurisdiction over a case stems from the existence of a
federal question, personal jurisdiction over a defendant
exists if the defendant is amenable to service of process
under the [forum] state's long-arm statute and if the
exercise of personal jurisdiction would not deny the
defendant[s] due process.” Bird v. Parsons,
289 F.3d 865, 871 (6th Cir. 2002). Because Tennessee's
long-arm statute has been interpreted to reach the highest
limit of federal due process, “the court need only
determine whether exercising personal jurisdiction violates
constitutional due process.” Bridgeport Music, Inc.
v. Still N The Water Publ'g, 327 F.3d 472, 477 (6th
Cir. 2003). Personal jurisdiction therefore exists if: (1)
the defendant purposefully avails himself of the privilege of
acting in the forum state or causing a consequence in the
forum state, (2) the cause of action arises from the
defendant's activities there, and (3) the acts of the
defendant or consequences caused by the defendant have a
substantial enough connection with the forum state to make
the exercise of jurisdiction over the defendant reasonable.
S. Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374,
381 (6th Cir. 1968).
TEC asserts specific personal jurisdiction over Oisoon LLC
based upon its allegation that Oisoon LLC “regularly
conducts and solicits business in this jurisdiction through
its interactive website” and “purposely avails
itself of acting in Tennessee by selling goods and entering
into contracts with residents of Tennessee.” (Doc. No.
1, PageID# 2, ¶ 5.) “The operation of an Internet
website can constitute the purposeful availment of the
privilege of acting in a forum state . . . ‘if the
website is interactive to a degree that reveals specifically
intended interaction with residents of the state.'”
Bird, 289 F.3d at 874 (quoting Neogen Corp. v.
Neo Gen Screening, Inc., 282 F.3d 883, 890 (6th
Cir.2002)). The court “distinguishes between
interactive websites, where the defendant establishes
repeated online contacts with residents of the forum state,
and websites that are passive, where the defendant merely
posts information on the site.” Cadle Co. v.
Schlichtmann, 123 F. App'x 675, 678 (6th Cir. 2005).
A website through which a company sells its goods, provides
information about its products, and communicates with its
customers is sufficiently interactive to establish its
operators' purposeful availment of a forum state.
Sports Authority Michigan, Inc. v. Justballs, Inc.,
97 F.Supp.2d 806, 814 (E.D. Mich. 2000). TEC's