Deckers Outdoor Corporation v. ShoesScandal.com LLC et al

Filing 37

ORDER FOR SUPPLEMENTAL BRIEFING RE PROFITS by Judge Otis D. Wright, II: Plaintiff to file a supplemental brief by October 25, 2013, offering some evidence such as a declaration by an expert regarding ShoeScandals profits based on the revenue report provided by Deckersof what Shoescandals profits actually were. (lc). Modified on 9/26/2013 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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DECKERS OUTDOOR CORP.,
v.

Plaintiff,

Case No. 12-cv-7382 ODW(SHx)
ORDER FOR SUPPLEMENTAL
BRIEFING RE PROFITS

SHOESCANDAL.COM, LLC; and DOES
1–10, inclusive,
Defendants.

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On August 23, 2013, Deckers filed a renewed request for an award of damages

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under 35 U.S.C. § 289, following a default judgment against Defendant ShoeScandal.

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(ECF No. 28.) The Court denied the initial request for damages because the evidence

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of ShoeScandal.com’s profits was too speculative. (ECF No. 27.) In the renewed

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request, Deckers has offered evidence of ShoeScandal’s revenue from sales of the

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infringing boots, however, the Court requires evidence regarding how much profit

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Shoescandal.com generated to be able to rule on Deckers’ motion.

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Under 35 U.S.C. § 289, a design-patent infringer is “liable to the owner to the

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extent of his total profit, but not less than $250.” Nike, Inc. v. Wal-Mart Stores, Inc.,

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138 F.3d 1437, 1439 (Fed. Cir. 1998); 35 U.S.C. § 289. Under normal circumstances,

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“[t]he infringer has the burden of offering a fair and acceptable formula for allocating

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a given portion of overhead to the particular infringing items in issue.” Sunbeam

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Prods., Inc. v. Wing Shing Prods. (BVI) Ltd., 311 B.R. 378, 401 (S.D.N.Y. 2004)

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aff’d, 153 F. App’x 703 (Fed. Cir. 2005). But in a default action, where the infringer

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has failed to produce any profit evidence, the Court must still look to some sort of

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evidence of its profits in order to properly determine the costs to be subtracted from

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revenue. See Nike, 138 F.3d at 1447.

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Upon entry of default, the factual allegations in the complaint are accepted as

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true —except for those pertaining to damages. Televideo Sys., Inc. v. Heidenthal, 826

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F.2d 915, 917–19 (9th Cir. 1987). “Plaintiff is required to prove all damages sought

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in the complaint.” Phillip Morris USA, Inc. v. Castworld Prods., 219 F.R.D. 494, 498

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(C.D. Cal. 2003). If the facts necessary to determine damages are not contained in the

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complaint, or are legally insufficient, they will not be established by default. Cripps v.

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Life Ins. Co. of N. America, 980 F.2d 1261, 1267 (9th Cir. 1992). Fundamental

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fairness, required by the due process of law, limits the scope of relief. Schwarzer, et

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al., California Practice Guide: Federal Civil Procedure Before Trial § 6:131 (2003).

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Deckers seeks ShoeScandal’s profits from the sale of the infringing products

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under § 289. Thus, Deckers must prove up ShoeScandal’s profits that it is claiming.

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Thus far, Deckers has failed to produce any evidence of ShoeScandal’s profits. While

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Plaintiff’s burden in proving up damages is relatively lenient, Philip Morris, 219

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F.R.D. at 498, the Court cannot permit ShoeScandal’s profits to be established by

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default in the absence of any evidence. In order to resolve this action, Deckers must

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provide the Court with some admissible evidence regarding ShoeScandal’s profits.

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In determining damages, a court can rely on the declarations submitted by

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Plaintiff or order a full evidentiary hearing. Fed. R. Civ. P. 55(b)(2). The Court

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therefore ORDERS Plaintiff to file a supplemental brief by October 25, 2013,

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offering some evidence—such as a declaration by an expert regarding ShoeScandal’s

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profits based on the revenue report provided by Deckers—of what Shoescandal’s

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profits actually were.

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IT IS SO ORDERED.

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September 26, 2013

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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