1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 NORDIC NATURALS, INC., Case No. 24-cv-04132-RFL (LJC)

8 Plaintiff,

ORDER TO SHOW CAUSE WHY

9 v. MOTION FOR DEFAULT JUDGMENT

SHOULD NOT BE DENIED IN PART

10 PREMIUM SELLERS LLC, Re: Dkt. No. 17 Defendant. 11

12 I. INTRODUCTION 13 Plaintiff Nordic Naturals, Inc. (Nordic) brought this action against Defendant Premium 14 Seller LLC (Premium), an unauthorized reseller of products bearing Nordic’s trademarks. The 15 Clerk entered Premium’s default after it failed to appear and defend the case, and Nordic now 16 moves for default judgment. 17 Judge Lin referred the matter to the undersigned magistrate judge for a report and 18 recommendation. On the current record, the undersigned is inclined to recommend granting 19 Nordic’s Motion only as to Nordic’s Lanham Act claim for trademark infringement, and with 20 relief limited to an injunction against further infringement. Rather than issuing a report and 21 recommendation at this juncture, however, the undersigned now issues this Order to Show Cause 22 to allow Nordic to address other aspects of the Motion that the undersigned would not recommend 23 granting on the available record, before the matter is returned to Judge Lin’s docket. 24 Accordingly, Nordic is ORDERED TO SHOW CAUSE why its Motion should not be 25 denied in part, by filing a response no later than two weeks from the date of this Order. If Nordic 26 does not file a response by that deadline, the undersigned will issue a report and recommendation 27 for entry of default judgment consistent with this Order. 1 II. BACKGROUND 2 A. Allegations of the Complaint 3 Because a plaintiff’s allegations are taken as true (except as to damages) in resolving a 4 motion for default judgment, this section summarizes the allegations of Nordic’s Complaint as if 5 true. 6 Nordic sells nutritional supplements directly to consumers and through authorized 7 resellers, using trademarks that Nordic has registered with the U.S. Patent and Trademark Office. 8 Compl. (ECF No. 1) ¶¶ 7–8, 11. 9 Nordic sets rules for its authorized resellers to promote quality control and customer 10 service, which “are a fundamental part of a consumer’s decision to purchase a product” in “the 11 highly competitive nutritional supplement market.” Id. ¶¶ 9–10; see id. ¶¶ 44–57. For example, 12 authorized resellers must inspect all products, report any defects to Nordic, refrain from selling 13 damaged or defective products, and cooperate in product recalls. Id. ¶¶ 52, 55. Authorized 14 resellers cannot sell Nordic products through a website they do not own themselves without 15 obtaining Nordic’s written permission. Id. ¶¶ 50, 60–62. They must use images approved by 16 Nordic and keep product descriptions up to date, and may not advertise Nordic products that they 17 do not carry in inventory. Id. ¶ 63. They may not represent products as “new” if the products 18 have been returned or repackaged. Id. ¶ 67. Nordic also places limitations on the use of third- 19 party fulfillment services to ensure that customers’ orders originate from authorized resellers, id. 20 ¶ 68, and prohibits authorized resellers from selling to third parties that the authorized resellers 21 know (or reasonably should know) intend to resell the products, id. ¶ 110. 22 Nordic provides a sixty-day satisfaction guarantee to customers for products sold by 23 Nordic or its authorized resellers. Id. ¶¶ 73–74. Because Nordic cannot ensure the quality of 24 products sold through unauthorized channels, the guarantee does not apply to products sold by 25 unauthorized resellers, thus depriving customers of a benefit that attaches to products sold through 26 authorized channels. Id. ¶¶ 75–76. 27 Premium has sold a high volume of Nordic’s products without permission through the 1 does not comply with Nordic’s quality control requirements. Id. ¶¶ 94–100. 2 Beginning on April 29, 2022 Nordic has sent cease-and-desist letters to two addresses 3 listed on the GeoBelt Amazon storefront, but received no response, and alleges that the names and 4 addresses GeoBelt provided were false. Id. ¶¶ 81–84, 87, 88. Nordic identified a former operator 5 of the storefront who informed Nordic that it was transferred to Premium in 2020. Id. ¶ 85. 6 Nordic continued to send cease-and-desist letters to email addresses and mailing addresses listed 7 on the GeoBelt storefront, and Premium intermittently ceased listing Nordic products, but always 8 resumed selling them later. Id. ¶ 88. Premium has never responded to Nordic’s letters and 9 continued to sell Nordic products as of Nordic’s July 9, 2024 Complaint. Id. ¶ 89. 10 Consumers have written negative reviews of Nordic’s products on online marketplaces 11 after purchasing them from unauthorized resellers (including Premium), “complain[ing] of 12 receiving products that were defective, stuck together, old, damaged, in improper packaging, 13 unsealed or not authentic.” Id. ¶ 37; see id. ¶¶ 38–42, 101–02. Amazon presents such reviews as 14 associated with Nordic’s products rather than the resellers who sold them, thus damaging Nordic’s 15 reputation and customer goodwill. See id. ¶ 43. 16 Although Nordic’s Complaint includes several claims for relief, including trademark and 17 unfair competition claims under both state and federal law, id. ¶¶ 128–90, and its present Motion 18 asserts that Nordic is entitled to judgment on all of those claims, ECF No. 17-1 at 19–20, the 19 Motion grounds Nordic’s arguments for relief solely on a theory of trademark infringement in 20 violation of the Lanham Act, id. at 21, 22–28. This Order therefore focuses on that claim. Nordic 21 contends that Premium’s sales of products bearing Nordic’s trademarks violate the Lanham Act, 22 15 U.S.C. §§ 1114 & 1125(a)(1)(A), because such products materially differ from genuine Nordic 23 products in that they lack Nordic’s guarantee and quality controls. Compl. ¶¶ 128–42. 24 Nordic’s present Motion seeks judgment on all claims asserted, and disgorgement of 25 profits totaling $1,060,362.09. See ECF No. 17-1 at 26; ECF No. 17-7 (Proposed Judgment) ¶¶ 2– 26 3. Nordic seeks a permanent injunction: (1) barring Premium (and others acting in concert with it) 27 from selling (or advertising, importing, exporting, etc.) Nordic products or products bearing 1 it) to destroy or return any Nordic products or products bearing Nordic’s trademarks, id. ¶ 7; 2 (3) requiring Premium (and others acting in concert with it) to “disclose to Nordic the contact 3 information and identities of every individual and entity that has provided the Enjoined Parties 4 with Nordic products and products bearing the Nordic Trademarks,” id. ¶ 8; and (4) requiring 5 Amazon to freeze all funds held in accounts owned or controlled by Premium, id. ¶ 9. 6 III. LEGAL STANDARD 7 A court may enter default judgment on a motion by a plaintiff after the clerk has a entered 8 a defendant’s default. Fed. R. Civ. P. 55(b)(2). After considering threshold issues of jurisdiction 9 and service of process, courts consider the following factors in exercising their discretion to grant 10 or deny default judgment:

11 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff’s substantive claim, (3) the sufficiency of the complaint, 12 (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning material facts, (6) whether the default was due to 13 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 14 15 Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). Courts evaluating a motion for default 16 judgment take the factual allegations of a plaintiff’s complaint as true except as to damages, which 17 must be shown by evidence. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 18 1987). 19 IV. ANALYSIS 20 A. Jurisdiction 21 1. Subject Matter Jurisdiction 22 Federal courts have subject matter jurisdiction over “all civil actions arising under the 23 Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Nordic’s claims under the 24 Lanham Act, a federal statute, fall within that grant of jurisdiction. Although the undersigned is 25 not inclined to reach the merits of Nordic’s claims under state law, those claims fall within the 26 Court’s supplemental jurisdiction because they “are so related to the [federal] claims . . . that they 27 form part of the same case or controversy.” See 28 U.S.C. § 1367(a). The Court therefore has 1 2. Personal Jurisdiction 2 “Where, as here, there is no applicable federal statute governing personal jurisdiction, the 3 district court applies the law of the state in which the district court sits. Because California’s long- 4 arm jurisdictional statute is coextensive with federal due process requirements, the jurisdictional 5 analyses under state law and federal due process are the same.” Schwarzenegger v. Fred Martin 6 Motor Co., 374 F.3d 797, 800–01 (9th Cir. 2004) (citations omitted). Due process requires that a 7 nonresident defendant “have at least ‘minimum contacts’ with the relevant forum such that the 8 exercise of jurisdiction ‘does not offend traditional notions of fair play and substantial justice.’” 9 Id. at 801 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). 10 Personal jurisdiction may be either general or specific. General jurisdiction applies where 11 a defendant is “essentially at home in the forum State,” such that the defendant can be sued in the 12 that state’s courts regardless of any connection between the state and the claims at issue. Daimler 13 AG v. Bauman, 571 U.S. 117, 127 (2014) (citation omitted). Nordic does not assert that Premium 14 is subject to general personal jurisdiction in California. 15 Specific jurisdiction turns on the connection between the claims at issue and the forum 16 state, and can be based either on a defendant’s purposeful availment of the forum state’s law (the 17 test typically applied in contract cases) or on a defendant’s purposeful direction of conduct to the 18 forum state (the test typically applied in tort cases). Ayla, LLC v. Alya Skin Pty. Ltd., 11 F.4th 19 972, 979 (9th Cir. 2021). Under either test, a plaintiff must also show that the claims at issue 20 “arise out of or result from” the defendant’s “forum-related activities,” and that the exercise of 21 jurisdiction is reasonable. Id. (citation omitted). The plaintiff bears the burden of establishing 22 forum-related conduct and that the claims arise from such conduct. Id. If the plaintiff meets that 23 burden, the defendant must present a “compelling case” that exercising jurisdiction would be 24 unreasonable. 25 “Trademark infringement is treated as tort-like for personal jurisdiction purposes,” thus 26 implicating the purposeful direction test. Ayla, 11 F.4th at 979. “[A] defendant purposefully 27 directs its activities toward the forum when the defendant has ‘(1) committed an intentional act, 1 suffered in the forum state.’” Id. at 980 (quoting Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 2 F.3d 1064, 1069 (9th Cir. 2017)). Mere knowledge of a plaintiff’s ties to the forum are not 3 sufficient to show purposeful direction; instead, a defendant must have engaged in “conduct 4 directly targeting the forum.” Id. (quoting Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 5 1218, 1229 (9th Cir. 2011)). 6 “[D]istribution in the forum state of goods originating elsewhere” is an archetypal example 7 of purposeful direction. Schwarzenegger, 374 F.3d at 803 (citing Supreme Court and Ninth 8 Circuit authority). The Ninth Circuit has found personal jurisdiction to be proper in trademark 9 infringement cases based on sales directed to the forum, noting “there is no ‘small percentage of 10 sales’ exception” to that principle, so long as the sales to the forum are not “random, isolated, or 11 fortuitous.” Ayla, 11 F.4th at 981–82 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 12 774 (1984), for the final quotation here); see also Herbal Brands, Inc. v. Photoplaza, Inc., 72 F.4th 13 1085, 1094–95 (9th Cir. 2023) (applying that principle to sales conducted through an Amazon 14 storefront). 15 Nordic alleges that Premium sold “substantial quantities of infringing products bearing 16 Nordic’s trademarks to consumers within California.” Compl. ¶ 5. Taking that allegation as true, 17 Nordic has established purposeful direction sufficient to support this Court exercising personal 18 jurisdiction over Premium, and Nordic’s claims arise from that conduct. As an absent party, 19 Premium has of course made no showing that exercising such jurisdiction would be 20 constitutionally unreasonable, and there is no basis apparent from the record to reach that 21 conclusion. See, e.g., Yelp Inc. v. Catron, 70 F. Supp. 3d 1082, 1094 (N.D. Cal. 2014). The Court 22 therefore has personal jurisdiction over Premium for the purpose of this case. 23 B. Service of Process 24 As another threshold issue, the Court must determine that service of process was proper. 25 Bank of the W. v. RMA Lumber Inc., No. C 07-06469 JSW, 2008 WL 2474650, at *2 (N.D. Cal. 26 June 17, 2008). Service must comply with Rule 4 of the Federal Rules of Civil Procedure, which 27 authorizes service either through several means specifically listed or in any manner allowed by 1 Nordic asserts that “Premium was properly served with process on July 15, 2024, when 2 Nordic’s Complaint and the Court’s Summons were delivered to the individual, over 18 years of 3 age, in charge of the Premium’s private mailbox.” ECF No. 17-1 at 15 (citing ECF Nos. 8, 11). 4 The Clerk denied Nordic’s first application for entry of default for failure to show valid service of 5 process. ECF No. 10. In its second application for entry of default, Nordic argued that it properly 6 served Premium under Florida law, as incorporated by subparts (e)(1) and (h)(1)(A) of Rule 4. 7 ECF No. 11 at 2. The Clerk subsequently entered Premium’s default, ECF No. 12, and the 8 undersigned agrees with the Clerk’s apparent conclusion that service was proper. 9 A plaintiff may serve process on a corporate entity in the United States “in the manner 10 prescribed by Rule 4(e)(1) for serving an individual.” Fed. R. Civ. P. 4(h)(1)(A). Rule 4(e)(1) 11 allows for service by “following state law for serving a summons in an action brought in courts of 12 general jurisdiction in the state where the district court is located or where service is made.” Fed. 13 R. Civ. P. 4(e)(1). Nordic completed service on Premium at a private mailbox facility in Florida. 14 ECF No. 8. The following Florida statutory provision governs service at a private mailbox:

15 If the only address for a person to be served which is discoverable through public records is a private mailbox, a virtual office, or an 16 executive office or mini suite, substituted service may be made by leaving a copy of the process with the person in charge of the private 17 mailbox, virtual office, or executive office or mini suite, but only if the process server determines that the person to be served maintains 18 a mailbox, a virtual office, or an executive office or mini suite at that location. 19 Fla. Stat. § 48.031(6)(a). 20 Nordic has submitted a declaration that the address where it completed service1 is listed on 21 Premium’s corporate documents as Premium’s mailing address and the address of its registered 22 agent, that it is a private mailbox, and that Nordic has not identified any other address for 23 Premium. ECF No. 11-1, ¶¶ 5–7 & p.5. Nordic’s proof of service includes a process server’s 24 declaration that he served process on the person in charge at that private mailbox facility. ECF 25 No. 8. The undersigned is satisfied that such service was proper under Florida law, and thus also 26 under Rule 4. 27 1 C. Eitel Factors 2 Most of the Eitel factors either weigh in favor of default judgment or are inapplicable 3 where, as here, a defendant has failed to appear. With no other avenue apparent to resolve this 4 case, Nordic will be prejudiced if default judgment is not granted because it will be left without a 5 remedy. There is no indication that Premium’s default was due to excusable neglect—as 6 discussed above, Nordic properly served process on Premium—nor that Premium would dispute 7 any material facts. Notwithstanding the strong public policy favoring decisions on the merits, 8 such a decision is not possible when Premium has failed to appear or defend and there is no 9 indication that it intends to do so. 10 The sum of damages sought is significant but does not weigh against granting default 11 judgment to the extent it is supported by evidence and warranted by law, an issue discussed 12 separately below. “The remaining factors, ‘the merits of plaintiff’s substantive claim’ and ‘the 13 sufficiency of the complaint,’ are intertwined where, as here, the case has not advanced beyond the 14 pleading stage.” Dist. Council 16 N. Cal. Health & Welfare Tr. Fund v. Prod. Serv. & Lab., Inc., 15 No. 20-cv-2063-JCS, 2022 WL 17371170, at *7 (N.D. Cal. Sept. 13, 2022), recommendation 16 adopted, 2022 WL 17371142 (N.D. Cal. Oct. 25, 2022). 17 1. Lanham Act Trademark Infringement Claim 18 Nordic’s present Motion focuses primarily on its claim for trademark infringement in 19 violation of the Lanham Act. Nordic does not allege that the Nordic products (or at least all of the 20 products) that Premium sold were counterfeit. Under the “first sale doctrine,” reselling a genuine 21 product manufactured by the plaintiff and bearing the plaintiff’s trademark generally does not 22 constitute infringement. Nordic relies on two exceptions to that doctrine: that Premium failed to 23 uphold Nordic’s quality control measures, and that the products Premium sold were not “genuine” 24 in that they lacked Nordic’s satisfaction guarantee. The undersigned finds the former principle 25 sufficient to support Nordic’s claim, and need not reach the latter.

26 [T]he first sale doctrine . . . establishes that “resale by the first purchaser of the original article under the producer’s trademark is 27 generally neither trademark infringement nor unfair competition.” the Lanham Act notwithstanding the first sale doctrine: “[d]istribution 1 of a product that does not meet the trademark holder’s quality control standards may result in the devaluation of the mark by tarnishing its 2 image.” Id. at 1087 (alteration in original) (internal quotation marks omitted) (recognizing viable claim for Costco’s repackaging of 3 plaintiff’s figurines, which caused chips and other damage); see also Adolph Coors Co. v. A. Genderson & Sons, Inc., 486 F.Supp. 131, 4 132–33 (D. Colo. 1980) (enjoining defendant from purchasing Coors beer in Colorado and reselling it in Maryland because defendant did 5 not refrigerate beer during transport and the sale of skunked beer, an inferior product, harmed Coors’s reputation), cited favorably in 6 Enesco Corp., 146 F.3d at 1085 n.2, 1087. 7 Trader Joe’s Co. v. Hallatt, 835 F.3d 960, 970–71 (9th Cir. 2016); see also ADG Concerns, Inc. v. 8 Tsalevich LLC, No. 18-cv-00818-NC, 2018 WL 4241967, at *4 (N.D. Cal. Aug. 31, 2018), 9 recommendation adopted, 2018 WL 6615139 (N.D. Cal. Nov. 1, 2018). 10 Nordic alleges—and the Court takes as true—that Premium failed to comply with Nordic’s 11 quality control rules and processes. Compl. ¶¶ 94–103; see id. ¶¶ 48–72 (describing Nordic’s 12 quality controls). As a result, customers have left negative reviews of Nordic’s products on 13 Amazon complaining of torn and dented packaging, missing safety seals, fish oil capsules that 14 stick together or break open in the bottle, and unpleasant smells, among other concerns. Id. ¶¶ 39, 15 41. Those reviews exemplify the sort of reputational concerns that underly the quality control 16 exception to the first sale doctrine. See ADG Concerns, 2018 WL 4241967, at * 4 (recommending 17 default judgment on Lanham Act claims based on “customer complaints claiming that products 18 purchased from [the defendant] with the [the plaintiff’s] mark ‘arrived with the expiration date 19 scratched out,’ had a ‘dark substance inside the plastic wrap by the cap,’ and had a ‘different’ 20 consistency from the same item purchased two years earlier). Premium’s unauthorized resale of 21 products bearing Nordic’s trademarks therefore violated the Lanham Act. 22 Nordic also argues that the products Premium sold were not genuine Nordic products 23 because they lacked Nordic’s satisfaction guarantee, which Nordic extends only to its own sales 24 and sales by authorized resellers. Some courts have accepted that distinction as a material 25 difference from genuine products sufficient to support a Lanham Act trademark infringement 26 claim. E.g., Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC, 562 F.3d 1067, 1073 27 (10th Cir. 2009); MOM Enters., Inc. v. Roney Innovations, LLC, No. 20-cv-04850-TSH, 2020 WL 1 dismissed before a district judge considered the recommendation). In affirming a district court’s 2 preliminary injunction based on a difference in warranty terms, however, the Tenth Circuit 3 acknowledged the defendant’s argument that such an approach could “permit any trademark 4 owner to eliminate the resale of its goods, shut down its competitors, and ultimately fix the price 5 of its product simply by limiting its warranty coverage and service commitments to those who buy 6 from it directly.” Beltronics, 562 F.3d at 1074. The Tenth Circuit held that the need to show 7 likelihood of customer confusion tended to ameliorate that concern and relied on evidence that the 8 plaintiff had received warranty inquiries from customers who purchased products from the 9 defendant (notwithstanding the defendant’s purported disclosure that products were not covered 10 by the plaintiff’s warranty). Id. at 1074–75. 11 Because Nordic’s allegations of inadequate quality control by Premium are sufficient to 12 support Nordic’s infringement claim, and Nordic has not suggested that the two theories of 13 infringement support different measures of damages or otherwise alter the relief to which Nordic 14 might be entitled, the Court need not wade into the question of whether Nordic’s somewhat 15 conclusory allegation that “customers who purchase products from Defendants believe they are 16 purchasing genuine Nordic products that come with the Nordic Guarantee” is enough to support 17 that theory of liability. See Compl. ¶ 108. If Nordic believes there is a reason for the Court to 18 resolve the merits of its theory that the lack of an applicable guarantee renders the products non- 19 genuine, Nordic may address that issue in its response to this Order. 20 2. Other Claims 21 As previously noted, Nordic’s present Motion justifies the relief that it seeks only by 22 reference to its claim for trademark infringement in violation of the Lanham Act, even though 23 Nordic also asserts several other claims. See ECF No. 17-1 at 22–28. Entry of default judgment is 24 a matter of a district court’s discretion, see Eitel, 782 F.2d at 1471, and the undersigned is not 25 inclined to recommend entry of default judgment as to redundant claims, even if such claims 26 might be meritorious. If Nordic objects to that approach and believes that entry of default 27 judgment as to additional claims would serve a practical purpose, Nordic is ORDERED TO 1 D. Remedies 2 Nordic seeks disgorgement of profits totaling around one million dollars, an injunction 3 against further infringement, an order requiring Amazon to freeze Premium’s accounts, and an 4 injunction requiring Premium to disclose how it obtained the Nordic products it sold and destroy 5 or return any such products in its possession. This Order addresses those requests in turn. 6 1. Disgorgement 7 Nordic seeks disgorgement of all of Premium’s revenue from the sale of infringing 8 products from February 19, 2022 through October 21, 2024 on the Amazon platform. 9 Nordic quotes 15 U.S.C. § 1117(a) as providing that a trademark owner who prevails on a 10 Lanham Act infringement claim “may recover ‘subject to the principles of equity . . . 11 (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” 12 ECF No. 17-1 at 25 (quoting 15 U.S.C. § 1117(a) (ellipsis in original)). Nordic also accurately 13 notes that the statute requires a plaintiff “to prove defendant’s sales only; defendant must prove all 14 elements of cost or deduction claimed.” 15 U.S.C. § 1117(a). Accordingly, when “a defendant 15 does not present any evidence of its costs and deductions, the plaintiff is awarded the defendant’s 16 total sales as the defendant’s disgorged profits,” including in the context of default judgment. 17 Herbalife Int’l of Am., Inc. v. Healthy1 Inc., No. 2:18-cv-6378-JFW-JC, 2019 WL 7169795, at *6 18 (C.D. Cal. July 8, 2019). 19 Nordic’s quotation omits, however, the portion of § 1117(a) that conditions a disgorgement 20 of profits as “subject to the provisions of sections 1111 and 1114 of this title.” See 15 U.S.C. 21 § 1117(a); cf. ECF No. 17-1 at 25. Section 1111 provides that unless a registrant gives notice that 22 the mark is registered (which may be done through use of the ® symbol), “no profits and no 23 damages shall be recovered under the provisions of this chapter unless the defendant had actual 24 notice of the registration.” 15 U.S.C. § 1111.2 Nordic has not offered evidence, or even alleged, 25 that it displayed ® symbol or an explicit notice of registration on the products at issue, or that 26 Premium otherwise “had actual notice of the registration.” Cf. id. Although Nordic alleges that it 27 1 sent a cease-and-desist letter on April 29, 2022 “to the entity and individual Nordic believed was 2 affiliated with the [GeoBelt] Amazon Storefront” that Nordic later determined was operated by 3 Premium, Compl. ¶ 82, it is not clear that Nordic sent that letter to Premium or that Premium 4 actually received it. Nordic alleges the letter made clear “that Nordic is located in California,” id. 5 ¶ 5, that the storefront’s sale of Nordic products infringed Nordic’s trademarks due to lack of 6 quality controls and the inapplicability of Nordic’s satisfaction guarantee, id. ¶ 87, and that the 7 storefront’s unauthorized resale of Nordic products tortiously interfered with Nordic’s contracts 8 with whatever authorized resellers supplied the storefront with those products, id., but Nordic does 9 not allege that the letter provided notice that Nordic’s trademarks were registered with the Patent 10 and Trademark Office. The same is true of other cease-and-desist letters Nordic alleges it sent in 11 the years since that first one. See id. ¶¶ 83, 88. 12 Even if Nordic had offered such an allegation, notice of registration is a precondition for 13 disgorgement, rather than an element of a claim for trademark infringement. Based on the 14 longstanding rule that damages on default judgment must be supported by evidence, not merely by 15 allegations, see TeleVideo Sys., 826 F.2d at 917–18, the undersigned would require at least some 16 evidentiary basis to support the conclusion that either Nordic provided notice of its trademark 17 registrations or Premium otherwise had actual notice of such registrations. Nordic is ORDERED 18 TO SHOW CAUSE why its request for disgorgement of profits should not be denied for failure to 19 satisfy the notice requirement of 15 U.S.C § 1111. 20 If Nordic can overcome that hurdle, it has offered sufficient evidence of the amount of 21 disgorgement it seeks. In response to a subpoena, Amazon produced data indicating that such 22 sales totaled $1,060,362.09. See generally ECF No. 17-2 (McCormick Decl., and supporting 23 exhibits). At the request of the undersigned, see ECF No. 20, Nordic lodged native Excel versions 24 of the data from Amazon, and the undersigned has confirmed that the total value Nordic seeks is 25 an accurate sum of the sales revenue reflected in that data. As noted above, it is Premium’s 26 burden—and not Nordic’s—to offer evidence of costs or deductions to calculate net profit from 27 the gross sales revenue that Nordic has shown, and as a non-appearing defendant, Premium has 1 it seeks if it can satisfy 15 U.S.C. § 1111’s requirement to show notice of registration. That said, 2 if Nordic relies on its April 2022 cease-and-desist letter or some subsequent communication 3 (rather than notice on the products themselves) to satisfy § 1111, that amount may need to be 4 reduced to exclude sales predating such communications. 5 Section 1117(a) permits a court discretion to adjust the amount of disgorgement upwards 6 or downwards “subject to the principles of equity” and “in its discretion.” 15 U.S.C. § 1117(a). 7 The undersigned is not inclined to exercise that discretion in this case, where Nordic has not 8 sought any increase and Premium has not appeared in the case or provided any basis for a 9 reduction. 10 2. Injunction Against Infringement 11 The Lanham Act allows courts to grant injunctions “to prevent the violation of any right of 12 the registrant of a mark registered in the Patent and Trademark Office.” 15 U.S.C. § 1116(a).

13 Normally, a party seeking a permanent injunction must show “(1) that it has suffered an irreparable injury; (2) that remedies available at law, 14 such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the 15 plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.” 16 eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006); see also La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 17 879 (9th Cir. 2014) (applying eBay factors in trademark infringement case). The Lanham Act adds a statutory layer to the irreparable harm 18 analysis for trademark infringement. The Act benefits trademark holders by creating “a rebuttable presumption of irreparable harm” 19 when a permanent injunction is sought to remedy an established trademark violation. 15 U.S.C. § 1116(a). 20 21 Y.Y.G.M. SA v. Redbubble, Inc., 75 F.4th 995, 1005 (9th Cir. 2023). 22 Courts routinely grant injunctions against further infringement as part of default judgment 23 in Lanham Act cases. E.g., GS Holistic, LLC v. Dukaan Alhanjari Inc., No. 23-cv-00749-CRB, 24 2025 WL 986466, at *7 (N.D. Cal. Apr. 2, 2025); Vietnam Reform Party v. Viet Tan - Vietnam 25 Reform Party, 416 F. Supp. 3d 948, 971 (N.D. Cal. 2019) (granting injunction against further use 26 of marks at issue, but declining to require the defendants to issue corrective notice to other parties 27 to whom they had previously wrongfully asserted ownership of the marks). 1 presumption of irreparable harm; (2) monetary damages are insufficient to prevent future 2 infringement, particularly when Nordic has faced difficulty contacting Premium and anticipates 3 difficulty collecting damages; (3) the balance of hardships weighs in favor of an injunction, 4 particularly when Nordic faces ongoing reputational harm from sales of defective products by 5 Premium and other unauthorized resellers, and when Premium has failed to respond to multiple 6 cease-and-desist letters; and (4) there is no reason to believe an injunction would disserve the 7 public interest. The undersigned therefore intends to recommend GRANTING Nordic’s request 8 for an injunction against Premium’s further unauthorized sales of products bearing Nordic’s 9 marks, regardless of whether Nordic cures the defects identified above regarding its request for 10 disgorgement of revenue. 11 3. Order to Amazon 12 Nordic seeks an order requiring Amazon to freeze funds in Premium’s account to allow for 13 collection of those funds to satisfy Premium’s disgorgement obligations. The Ninth Circuit has 14 held that a preliminary injunction freezing a defendant’s assets falls within a district court’s 15 inherent equitable authority and is appropriate ancillary relief for a Lanham Act claim when a 16 defendant “may hide their allegedly ill-gotten funds if their assets are not frozen.” Reebok Int’l, 17 Ltd. v. Marnatech Enters., Inc., 970 F.2d 552, 563 (9th Cir. 1992). Although the Ninth Circuit’s 18 decision in Reebok appears to have considered a preliminary order directed to the defendant itself, 19 district courts have also authorized orders requiring third parties to freeze assets attributable to an 20 infringing defendant. E.g., Sportswear Co. - S.p.A v. A Cheap Body Shop, No. 1:21-CV-02906- 21 JPB, 2021 WL 6050847, at *3 (N.D. Ga. Dec. 21, 2021); Hand & Nail Harmony, Inc. v. Int’l Nail 22 Co., No. CV 15-02718 SJO (AJWx), 2015 U.S. Dist. LEXIS 67421, at *35–36, *37–38 (C.D. Cal. 23 May 22, 2015). 24 The undersigned therefore intends to recommend that Nordic’s request for an asset freeze 25 order directed to Amazon be GRANTED, if and only if Nordic cures the defects identified above 26 regarding its request for disgorgement of Premium’s revenues. (If Nordic does not cure that 27 defect, there would be nothing to collect, and thus no need to freeze assets.) Because there is no 1 undersigned would recommend that such an order be without prejudice to any argument that 2 Amazon might raise in a motion challenging it. 3 4. Additional Terms of Proposed Injunction 4 Nordic’s proposed order also includes terms that would require Premium to return or 5 destroy any products in its possession bearing Nordic’s marks, and to “disclose to Nordic the 6 || contact information and identities of every individual and entity that has provided the Enjoined 7 || Parties with Nordic products and products bearing the Nordic Trademarks.” ECF No. 17-7 at 3. 8 || Nordic’s Motion does not address those requests in any way. In the absence of any argument or 9 explanation for why those terms are appropriate, the undersigned would be inclined to recommend 10 || that they not be included in any final injunction. Nordic is therefore ORDERED TO SHOW 11 CAUSE why that portion of its proposed order should not be denied. 12 || Vv. CONCLUSION 13 For the reasons discussed above, Nordic is ORDERED TO SHOW CAUSE why its 14 || Motion for Default Judgment should not be denied as to: (1) all claims other than Lanham Act 15 || trademark infringement; (2) Nordic’s request for disgorgement of revenue; and (3) Nordic’s 16 || request for an injunction requiring Premium to disclose its suppliers and return or destroy products 3 17 || bearing Nordic’s marks. Nordic must file a response no later than May 21, 2025 if it wishes to S 18 || pursue other claims or those forms of relief. If Nordic believes there is a reason for the Court to 19 consider its theory that the lack of an applicable guarantee rendered products non-genuine, Nordic 20 || may address that issue as well. 21 Alternatively, if Nordic is content to pursue a judgment consisting solely of its 22 || infringement claim under the Lanham Act and an injunction against further infringement, Nordic 23 may file notice to that effect, and the undersigned will promptly issue a report and 24 || recommendation consistent with the analysis above. 25 IT IS SO ORDERED. 26 Dated: May 7, 2025 7 Zr Arty — ‘A J. CISNEROS 28 ited States Magistrate Judge