Nucal Foods, Inc. v. Kaye

Default judgment was appropriate when a cybersquatter registered a domain name that was confusingly similar to a trademark.

Opinion (Kaye): Nucal Foods, Inc. (“Nucal”) has utilized the trademark of “Cal Eggs” for 17 years. In 2011 or 2012, Nucal attempted to register the “Cal Eggs” domain name (www.caleggs.com), but learned that Shawn Kaye (“Kaye”), owned the domain since April, 2011. Nucal sent a cease and desist letter to Kaye in September, 2012, but Kaye did not comply, instead offering to sell the domain to Nucal for $500,000. Nucal served Kaye by mail in November 2012, to which Kaye did not reply. In determining whether to grant default judgment for affirmative relief, the court first considered whether Nucal would suffer prejudice if default judgment was not entered. The court found that it would, since Nucal would be without alternative recourse, and Kaye appeared to have no interest in participating in litigation. Secondly, the court considered the merits of Nucal’s claim and thirdly, the sufficiency of the complaint. The court found Nucal possessed common law trademark of the “Cal Eggs” mark, and that Kaye violated the Anticybersquatting Consumer Protection Act, designed to stop cybersquatting, by registering the confusingly similar domain as Nucal’s tradmark with the sole purpose of profiting from it. Fourth, the court considered the amount of money at stake, and found Nucal justified in seeking $1,000 in statutory damages, the minimum Nucal would be able to recover. Fifth, the court found no possibility of dispute concerning material facts. Sixth, the court determined whether the default was caused by negligence in service on Nucal’s part. The court found Nucal diligent in its duty of service. Seventh, the court found that while it would prefer determining the case on its merits, policy does not preclude default judgments. In considering these factors, the court found the default judgment warranted. Pursuant to the Anti Cyber-Squatting Protection Act, the court awarded Nucal $1,000 in statutory damages and $14,050 in attorneys fees. Further, the court ordered Kaye to relinquish control and turn over to Nucal all rights to the “Cal Eggs” domain name within 30 days of judgment.