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Chicago IP Litigation Tracking Northern District of Illinois IP Cases

Tag Archives: Default Judgment

No Default Against Non-Existent Corporate Entity

Posted in Trial

RSI Video Techs., Inc. v. Vacant Property Security, LLC, No. 13 C 7260, Slip Op. (N.D. Ill. Mar. 10, 2014) (Holderman, Sen. J.).

 Judge Holderman denied plaintiff RSI’s motion for default judgment against defendant VPS Group, Inc. in this patent case involving security systems.  The other defendants, all various VPS-related entities ultimately responded to the Complaint, except for VPS Group, Inc.  Defendants agreed, and the Court accepted, that VPS Group, Inc. did not answer because it was not a corporate entity.  Instead, “VPS Group” was a designation for a group of related companies.  To avoid confusion or “gamesmanship,” the Court ordered defendants to file a list of all of their affiliated entities to which the Complaints’ subject matter pertained with enough detail to allow RSI to decide whether any of the entities should be joined.  After the disclosure, RSI had two weeks to add any defendants they deemed necessary.

Damages Awarded on Lanham Act Default Judgment

Posted in Damages

O.A. Cargo, Inc. v. OA Cargo Chicago, No. 12 C 5763, Slip OP. (N.D. Ill. Mar. 13, 2014) (Zagel, J.).

Judge Zagel awarded damages in this Lanham Act case after he and Judge Conlon entered default judgment against the defendants.

Pursuant to its “considerable discretion” to award damages based upon a default judgment, the Court awarded the following damages:

  1. Expenses incurred in setting up Defendants’ business – $36,826.24
  2. Franchise fee – $50,000
  3. Ongoing licensing fees of $8,633.33 per month for 16.5 months – $142,449.95 + $35,612.49 = $178,062.44
  4. Attorneys’ fees and costs – $35,816.47
  5.  Statutory interest

The Court did not award damages for the entire 26 month period for which plaintiff sought the ongoing licensing fees.  The Court held that the evidence did not support the full 26 months.  Instead, the evidence supported 16.5 months.  The Court awarded damages for 16.5 months.  The Court also held that there was evidence that defendants’ conduct was willful.  The evidence warranted a 25% increase in the award of ongoing licensing fees, but not the trebling sought by plaintiff.  Finally, the Court denied damages based upon plaintiff’s alleged reputational harm because the damages were “insufficiently supported.”

Default Judgment Makes Case Exceptional

Posted in Trial

United States Cellular Corp. v. Hotline Wireless & More, Inc., No. 12 C 5017, Slip Op. (N.D. Ill. Jul. 25, 2012) (Shadur, Sen. J.).  

Judge Shadur entered judgment in favor of plaintiff in this Lanham Act case.  The Court converted its default judgment and temporary restraining order into a final judgment and a permanent injunction.  And the Court held that the case was exceptional, warranting an award of plaintiff’s attorney’s fees and costs.

Pro Se Answer Must Apply With Rules

Posted in Pleading Requirements

Flava Works, Inc. v. Momient, No. 11 C 6306, Slip Op. (N.D. Ill. Aug. 6, 2012) (Shadur, Sen. J.).

 Judge Shadur vacated a default judgment entered against defendant based upon defendant’s explanation for his non-appearance.  But the Court warned that defendant must revise his proposed answer to: 

  • Remove denials of statements for which defendant lacked information and belief; and 
  • Revised his affirmative defenses down from its list of 21. 



Default Judgment Requires Damages Prove-Up

Posted in Local Rules

Brown-Younger v. Lulu.com, No. 12 C 1979, Slip Op. (N.D. Ill. June 15, 2012) (Shadur, Sen. J.).

Judge Shadur acknowledged that pro se plaintiff’s motion for default was timely in this copyright infringement case.  Defendant Barnes & Noble’s deadline to answer or otherwise plead had passed, but plaintiff had not provided a prove-up of damages.  The Court, therefore, sought plaintiff’s proposed schedule and procedure for the prove-up. 

Counsel’s Inattentiveness is Not Excusable Neglect

Posted in Trial

Lucasfilm Ltd. v. Skywalker Outdoor, Inc., No. 10 C 733, Slip Op. (N.D. Ill. Mar. 11, 2011) (Conlon, J.).

Judge Conlon denied defendant Skywalker Outdoor’s motion to modify or vacate the default judgment entered in favor of plaintiff Lucasfilm in this Lanham Act dispute. Skywalker Outdoor did not answer Lucasfilm’s complaint and then did not attend the hearing on Lucasfilm’s default motion. The Court entered default judgment after that hearing. First, Skywalker Outdoor received sufficient notice of the hearing – more than the required ten days pursuant to Fed. R. Civ. P. 55(b)(2). Furthermore, Skywalker Outdoor’s claim that it believed its counsel would attend the hearing was irrelevant. Counsel’s inattentiveness is not excusable neglect pursuant to Fed. R. Civ. P. 60(b)(1).

Parties Must Get Counsel or Face Default Judgment

Posted in Local Rules

Am. Taxi Dispatch, Inc. v. Am. GSS Limo, Inc., No. 10 C 5713, Slip Op. (N.D. Ill. Jan. 27, 2011) (Dow, J.).

Judge Dow gave defendants in this trademark infringement suit a deadline for obtaining counsel, or in the case of the individual defendants filing a notice of pro se representation. The Court reminded the defendants that corporate entities may not appear without counsel in federal courts. Finally, the Court warned defendants that they faced a potential default judgment if they did not act by the deadline.

Trading Technologies: “Willful and Intentional” Evidence Fabrication Leads to $1M Fine & Default Judgment

Posted in Discovery

Rosenthal Collins Group, LLC v. Trading Techs. Int’l, Inc., No. 05 C 4088, Slip Op. (N.D. Ill. Feb. 23, 2011) (Coleman, J.).*

Judge Coleman granted defendant/counter-plaintiff Trading Technologies’ ("TT") motion for evidentiary sanctions and default judgment.  Judge Moran previously dismissed plaintiff/counter-defendant Rosenthal Collins Group’s ("RCG") motion for summary judgment regarding the alleged prior art Buist trading program for discovery abuse, ordered RCG to produce additional documents and things related to the Buist program, and ordered RCG to pay certain of TT’s attorney’s — click here for the Blog’s post on that decision.  Initially, the Court the severity of a default judgment as a sanction, calling it "extreme," and noted that the Seventh Circuit required a showing of willfulness, bad faith or fault by a preponderance of the evidence in order to justify dismissing a case.

The Court held that the high standard was met in this case, for at least the following reasons:

  • During his deposition, Buist admitted modifying and overwriting source code in 2006 that he and by extension RCG held out as having been created in 1998 or 1999.  And in the face of clear evidence of these facts, RCG continued to deny them, even calling the claims "libelous," "audacious," and "Oliver Stone-esque."
  • Buist later admitted "wiping" or erasing six of seven zip disks that originally contained the relevant source code and that were later produced by RCG because they allegedly contained the code.  The seventh was also wiped, although there was a dispute regarding whether Buist or others had access to it when it was wiped.  But the Court held that it was "impossible to believe that it is merely coincidence that the seventh disk happened to be wiped on May 2, 2006, which just happened to be the same day that TT was scheduled to inspect it."
  • There was evidence that "virtually every piece of media ordered produced by the Court in May 2007 and July 2008 was wiped, altered, or destroyed after those orders were entered . . . ." (emphasis in original).
  • Even if RCG and its counsel had no knowledge of the destruction of the evidence, the destruction might have been avoided if RCG had timely complied with the Court’s orders to produce the materials.  And regardless, RCG and its counsel should have preserved the evidence by taking custody of it.
  • Buist was RCG’s agent and, therefore, RCG was bound by Buist’s behavior and actions.

Based upon these determinations, the Court found clear and convincing evidence that "RCG, and its counsel, acted in bad faith and with willful disregard for the rules of discovery and this Court’s orders."  And because a monetary sanction alone was not sufficient, the Court entered a default judgment in favor of TT and dismissed RCG’s complaint and struck its defenses to TT’s counterclaim.  The Court also fined RCG $1,000,000 for "egregious conduct before the Court" and ordered RCG’s counsel to pay TT the attorney’s fees and costs related to TT’s motion for default judgment.

*  I have a few earlier opinions from the Trading Technologies cases, but this one was significant enough that I moved it up.  Click here for more on the case in the Blog’s archives.

Post-Default Letter Does Not Alter Judgment

Posted in Federal Rules

Be2, LLC v. Be2.net, No. 10 C 1650, Slip Op. (N.D. Ill. Jul. 12, 2010) (Shadur, Sen., J.).

Judge Shadur denied the individual defendant’s letter request to alter the Court’s default judgment. The Court attached the letter to the opinion to avoid any concerns that the defendant’s communications were ex parte. And the Court left the judgment intact because the defendant’s explanation did not warrant alteration or vacatur of the judgment.

Plaintiff Must Choose Between Lanham Act or Copyright Damages in Default Judgment

Posted in Legal News

Flava Works, Inc. v. Wyche d/b/a DGSource.com, No. 10 C 748, Slip Op. (N.D. Ill. Jun. 28, 2010) (Gottschall, J.).

Judge Gottschall denied plaintiff Flava Works’ motion for default judgment based upon Flava Works’ proof of damages. Flava Works accused defendants (collectively "DGSource") of copyright infringement and Lanham Act false designation of origin based upon a series of websites that allegedly used and sold Flava Works’ copyrighted content. DGSource never answered the complaint, and the Court entered a default order. In response, Flava Works submitted a proof of damages seeking approximately $1.3M. As an initial matter, the Court held that because both claims stem from the same operative facts, Flava Works was required to choose either copyright or Lanham Act damages. Flava Works also had to choose actual or statutory damages to the extent it chose copyright damages. 

With respect to actual damages, the difference between the copyright and Lanham Act claims was that the Lanham Act provided for trebling damages. Regardless of the calculation, Flava Works’ estimates of its losses and DGSource’s profits were "conclusory" and provided without context. For example, Flava Works did not set out how much of DGSource’s website content was infringing and, therefore, would be relevant to a damages calculation. 

Flava Works was not required to present evidence if it chose statutory damages, but without evidence the Court was required to adjust the award down, and the Court noted that it would benefit from additional evidence. The Court also noted that Flava Works was only entitled to statutory damages as to the two registered copyrights. 

Finally, Flava Works did not prove the elements necessary for a permanent injunction. And Flava Works offered no authority for its requested remedy of transferring DGSource’s domain names to Flava Works. 

Bare Denials Not Sufficient to Reverse Default Judgment

Posted in Federal Rules

Lyons Partnership, L.P. v. Welle, No. 08 C 2909, Slip Op. (N.D. Ill. Feb. 22, 2010) (Grady, Sen. J.).

Jude Grady denied defendants’ motion to set aside the Court’s Fed. R. Civ. P. 55(c) default judgment in this case alleging that defendants violated plaintiff’s intellectual property rights in children’s characters Hello Kitty, Bob the Builder and Thomas the Tank Engine, among others. While the defendants acted diligently after default was entered, they did not act diligently prior to the default. Defendants’ "cash flow" problems were not an excuse for failing to appear pro se. Additionally, the defendants did not identify a meritorious defense. Bare denials from defendants’ answer were not sufficient.

Default Ends in Injunction & Award of Defendants’ Gross Sales

Posted in Damages

American Taxi Dispatch, Inc. v. American Metro Tax & Limo Co., __ F. Supp.2d __, 2008 WL 4616855 (N.D. Ill. Oct. 20, 2008) (St. Eve, J.).

 Judge St. Eve permanently enjoined defendants’ (collectively “Metro”) use of trademarks infringing plaintiff American Taxi’s American Taxi marks, and awarded American Taxi damages in the amount of Metro’s gross sales as well as attorney’s fees. American Taxi began using its marks in 1975. Metro incorporated and began using their American Metro Taxi marks in early 2007. American Taxi filed the instant suit for trademark infringement, Lanham Act unfair competition and related state law claims. Metro initially defended itself, but after repeatedly missing deadlines th Court entered a default judgment and allowed American Taxi to submit proofs, which led to this opinion.

Pursuant to Fed. R. Civ. P. 54(c), the award could not exceed in form or amount what was demanded in the pleadings. The Court held that the complaint justified a permanent injunction. American Taxi alleged that Metro’s infringing acts harmed American Taxi’s goodwill, and the Seventh Circuit has held that damage to goodwill can constitute irreparable harm. And American Taxi backed up its complaint with an affidavit detailing actual confusion between the marks. Furthermore, a tailored injunction would not put Metro out of business. In fact, Metro’s owner claimed that Metro had been dissolved. So, the balance of harms weighed in American Taxi’s favor. And finally, there is a public interest in knowing whom they conduct business with, which favored an injunction. The Court, therefore, permanently enjoined Metro and its affiliates, successors and assigns from using its marks or any others that were confusingly similar to the American Taxi marks.

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Counterfeiting Statutory Damages are up to $1M/Trademark

Posted in Damages

Lorillard v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 4844, 2008 WL 1775512 (N.D. Ill. Apr. 17, 2008) (Aspen, J.).

Judge Aspen adopted Magistrate Judge Cole’s Report and Recommendation, denying defendants’ Fed. R. Civ. P. 59(e) motion to alter the Court’s judgment against defendants – click here to read more about that Report and click here to read more about this case in the Blog’s archives. The Court awarded plaintiff Lorillard $2.5M in statutory damages for defendants’ sales of counterfeit cigarettes using Lorillard’s trademarks. Defendants objected to, among other things, a statutory damages award in excess of $1M. Defendants argued that 15 U.S.C. § 1117(c)(2) only allowed $1M in statutory damages per type of goods sold. Because this case only involved one type of goods, cigarettes, defendants argued statutory damages could not exceed $1M. But the Court held that the limitation was $1M per counterfeit mark per type of good. Because Lorillard alleged five counterfeit marks were used, the statutory damages limit was $5M. 

$2.5M Statutory Damages Award Set Without Hearing

Posted in Damages

Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 4844, 2007 WL 2580491 (N.D. Ill. Sep. 10, 2007) (Cole, Mag. J.).

Judge Cole recommended awarding plaintiff $2.5M in statutory damages. The Court had previously entered a Fed. R. Civ. P. 37(b) default judgment against defendants for sales of counterfeit Newport cigarettes in violation of the Lanham Act.* The Court recommended that a damages hearing was not necessary because of defendants’ four year pattern of avoiding discovery obligations leading to a default judgment, including failing to produce damages documents. Having actively avoided producing the information for four years, defendants were not now entitled to seek opportunities to present evidence in their defense. Furthermore, the Court reported that a $2.5 M award was reasonable. $2.5M was half of plaintiff’s estimate of defendants’ infringing sales and it was half of the potential $1M statutory award for each of the five marks defendants infringed.

* For more on this case, see the Blog’s archives.

Fee Petitions Must be Detailed and Supported

Posted in Trial

Lorillard Tobacco Co. v. Montrose Wholesale Candies & Sundries, Inc., No. 03 C 5311 & 03 C 4844, Slip Op. (N.D. Ill. Jul. 27, 2007) (Cole, J.).*

Judge Cole recommended granting plaintiff Lorillard Tobacco’s (“Lorillard”) petition for attorneys fees, but reduced the requested fees by about $80,000. Lorillard received a default judgment against defendants in 2006 and, as a result, brought this petition seeking its fees and costs. The Court’s opinion is an excellent guide for anyone preparing a fee petition. The Court refused to consider Lorillard’s costs because although Lorillard submitted a list of costs, it did not total the costs or discuss them in its petition and supporting declaration. Next, the Court accepted most of the costs for the four attorneys whose billing rates were explained in the supporting declaration, but denies any fees for the other nineteen people whose fees were not explained in the declaration. The Court notes that these nineteen people could be partners, associates or paralegals, but the Court cannot assess the reasonableness of their rates or billed activities without knowing their roles. And even for the four, the Court notes that it would have preferred some explanation of each attorney’s experience in past Lanham Act cases, in order to judge whether the attorneys’ billing rates were commensurate with their experience. 

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