Levitation Arts, Inc. v. Plox, Inc.

Filing 49

REPORT AND RECOMMENDATIONS re 41 Sealed Motion for Default Judgment as to Plox, Inc. filed by Levitation Arts, Inc. Please note that when filing Objections pursuant to Federal Rule of Civil Procedure 72(b)(2), briefing consists solely of the Objections (no longer than ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. (*Objections to R&R due by 6/9/2020). Signed by Judge Jennifer L. Hall on 5/26/2020. (ceg)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
LEVITATION ARTS, INC.,
Plaintiff,
v.

C.A. No. 17-1476-MN

PLOX, INC.,
Defendant.
REPORT AND RECOMMENDATION
Pending before the Court is Plaintiff’s Motion for Default Judgment pursuant to Federal
Rule of Civil Procedure 55(b). (D.I. 41.) I recommend that Plaintiff’s motion be GRANTED-INPART and DENIED-IN-PART.
I.

BACKGROUND

Plaintiff Levitation Arts, Inc. filed this action alleging infringement of United States Patent
No. 7,505,243 (the ’243 patent), entitled “Magnetic Levitation Apparatus.” (D.I. 1.) The ʼ243
patent describes an apparatus that uses magnets to make an object, such as a toy, levitate in air:

(ʼ243 patent, 1:63-2:55, Fig. 6.) According to the specification, “[a] levitated object is interesting

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to observe and can be useful in various applications.” (Id., 1:20-22.)
Plaintiff is the assignee of the ʼ243 patent. (D.I. 1 ¶ 8.) Plaintiff’s Complaint alleges that
Defendant Plox, Inc. has infringed and continues to infringe the ’243 patent by selling, offering
for sale, and importing its Bluetooth-enabled Official Star Wars Levitating Death Star Speaker
(the “Accused Product”):

(Id. ¶¶ 10, 12.)
Plaintiff alleges that the Accused Product “contain[s] each and every element of at least
claims 16, 17, 19, 20, 21, 22, 23, 24, and 25 of the ’243 patent both literally and under the doctrine

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of equivalents.” (Id. ¶ 12.) The Complaint also provides more specific allegations that describe
how the Accused Product meets each limitation of those claims. 1 (Id. ¶¶ 13-21.)
The Complaint alleges that Defendant’s infringement was willful. (Id. ¶ 23.) In support,
the Complaint alleges that Plaintiff sent Defendant “a letter concerning intellectual property
matters” on July 12, 2017. (Id.) The letter “enclosed a hardcopy of the ʼ243 patent, provided a
link to online copies of the prosecution histories of [other] Patents, enclosed a patent claim chart
describing the Accused Products’ infringement of certain claims of the ʼ243 patent on an elementby-element basis, and requested that Plox contact Levitation Arts’ counsel.” (Id.) According to
the Complaint, Defendant’s “infringement . . . persisted” even after it received the letter. (Id.) The
Complaint contains no other allegations regarding willfulness.
Plaintiff filed this action on October 18, 2017. Defendant answered the Complaint on
January 1, 2018, denying infringement and asserting affirmative defenses of non-infringement and
invalidity. (D.I. 8.) On March 22, 2018, the Court entered a Scheduling Order that set trial for

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For example, claim 16 requires, among other things, “a ring magnet disposed in a plane
having a longitudinal axis and a latitudinal axis.” Paragraph 13 of the Complaint alleges the
following regarding that element:
The Accused Product has a ring magnet within the base, which ring
magnet is disposed in a plane having longitudinal and latitudinal
axes.

(D.I. 1 ¶ 13(b).)
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December 2, 2019. (D.I. 12.) The docket indicates that the parties subsequently engaged in some
discovery, including serving each other with infringement and invalidity contentions. (D.I. 15-19,
21, 23. 2) The case was reassigned to the Honorable Maryellen Noreika on September 20, 2018.
On January 8, 2019, Defendant’s then-counsel filed a motion for leave to withdraw. (D.I.
28.) The Court granted the motion on January 23, 2019 and directed Defendant to obtain new
counsel no later than February 22, 2019. (D.I. 32.) Since that order, no attorney has entered an
appearance for Defendant.
On July 9, 2019, Plaintiff filed a motion for default judgment. (D.I. 35.) On October 31,
2019, the Court granted the motion to the extent it was seeking entry of “default” against Defendant
under Federal Rule of Civil Procedure 55(a). (D.I. 36, 37.) The Court denied Plaintiff’s request
for “default judgment” under Rule 55(b). (D.I. 36.) The Court directed Plaintiff to refile an
application for default judgment after entry of default had been entered and served upon
Defendant. (Id.)
On January 14, 2020, Plaintiff filed proof that it served Defendant’s Delaware registered
agent with the Court’s entry of default. (D.I. 38, Ex. A.) Plaintiff also submitted evidence that its
certified letter to Defendant’s last known address in California was returned by the U.S. Postal
Service as undeliverable. (Id., Ex. B.)
On March 2, 2020, Plaintiff refiled its motion for default judgment pursuant to Rule 55(b).
(D.I. 41.)

The motion requests damages for patent infringement, enhanced damages, and

attorney’s fees. (Id.)

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Plaintiff contends that Defendant did not serve non-infringement or invalidity
contentions. (D.I. 41 ¶ 15.) However, the docket reflects that Defendant served Plaintiff with
something called “Defendant’s Invalidity Contentions” on August 31, 2018. (D.I. 21 (Notice of
Service).) Defendant’s invalidity contentions are not in the record before me.
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II.

LEGAL STANDARD

Entry of default judgment is a two-step process. Tristrata Tech., Inc. v. Med. Skin Therapy
Research, Inc., 270 F.R.D. 161, 164 (D. Del. 2010). First, the party seeking a default judgment
must request that the Clerk of Court enter default against the party that has failed to answer the
pleading or otherwise defend itself in the action. Fed. R. Civ. P. 55(a); see also J & J Sports Prod.,
Inc. v. Kim, No. 14-1170, 2016 WL 1238223, at *1 (D. Del. Mar. 29, 2016). After default has
been entered, a plaintiff may obtain a default judgment. Fed. R. Civ. P. 55(b); see also J & J
Sports Prod., 2016 WL 1238223, at *1. If the plaintiff is seeking relief in the form of a sum
certain, it may obtain a default judgment from the Clerk of Court. Fed. R. Civ. P. 55(b)(1); see
also J & J Sports Prod., 2016 WL 1238223, at *1. Otherwise, “the party seeking default judgment
must apply to the court for an entry of default judgment.” Tristrata Tech., 270 F.R.D. at 164.
Courts have discretion over whether to enter a default judgment in a particular case. See
Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984). The court considers three factors when
determining if default judgment is appropriate: “(1) prejudice to the plaintiff if default is denied,
(2) whether the defendant appears to have a litigable defense, and (3) whether defendant’s delay
is due to culpable conduct.” Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000). For
purposes of that determination, “the factual allegations of the complaint, except those relating to
the amount of damages, will be taken as true.” Genedics, LLC v. Meta Co., No. 17-1062, 2019 WL
3802650, at *3 (D. Del. Aug. 13, 2019) (quoting Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149
(3d Cir. 1990)).

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III.

DISCUSSION
A.

Patent Infringement

The relevant factors weigh in favor of entering default judgment on Plaintiff’s patent
infringement claim. First, the well-pleaded allegations of the Complaint establish that Defendant
infringed Plaintiff’s ’243 patent.

In particular, the Complaint contains factual allegations

explaining how the Accused Product meets every element of the asserted claims of the ’243 patent.
(D.I. 1 ¶¶ 13-21.) See also Genedics, 2019 WL 3802650, at *3 (“[I]n a patent infringement case
like this one, the Court here must presume that Defendant has infringed Plaintiff’s patents as was
alleged in Plaintiff’s Complaint.”); Tristrata Tech., Inc. v. Cardinal Health, Inc., No. 02-1290,
2004 WL 2223071, at *1 (D. Del. Sept. 30, 2004). The Complaint also alleges that Defendant
sold, offered for sale, and imported the Accused Product in the United States. (Id. ¶ 10.) Plaintiff
will suffer prejudice if its application for default judgment is denied because it would otherwise
be unable to recover damages for the infringement.
Second, although Defendant’s Answer set forth non-infringement and invalidity defenses,
it has failed to pursue them through active litigation in this case. Third, while the reason for
Defendant’s failure to obtain substitute counsel is unclear, it is clear that Defendant was given
ample time to obtain new counsel and failed to do so.
Based on the foregoing, I conclude that default judgment is appropriate.
B.

Remedy

Finding that default judgment is appropriate, I next turn to the remedy. Plaintiff requests
damages based on a reasonable royalty, enhanced damages under 35 U.S.C. § 284, and attorney’s
fees under 35 U.S.C. § 285.

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Plaintiff requests reasonable royalty damages in the amount of $289,575.00. 3 I do not have
to take as true Plaintiff’s factual allegations regarding the amount of damages. Christ v. Cormick,
Nos. 06-275, 07-060, 2008 WL 4889127, at *1 (D. Del. Nov. 10, 2008). Rather, pursuant to Rule
55(b), I must make a finding as to the amount of damages based on the evidence in the record.
Fed. R. Civ. P. 55(b); see also Christ, 2008 WL 4889127, at *1.
I find that Plaintiff’s request for $289,575.00 is appropriate and supported by the record.
Plaintiff calculated its proposed damages using a simple formula: damages = (price of Accused
Product) × (# of Accused Products sold) × (royalty rate). As to the price of the Accused Product,
Plaintiff submitted evidence supporting its estimation that Defendant sold the Accused Product at
an average price of $179.99. (D.I. 41 ¶¶ 30-32; D.I. 42 ¶¶ 5-9, Exs. B, C.) As to the number of
Accused Products sold, Plaintiff submitted evidence in the form of a sales report produced by
Defendant in this litigation. (D.I. 41 ¶ 30; D.I. 42 ¶¶ 3-4, Ex. A.) As to the reasonable royalty
rate, Plaintiff submitted evidence of an “established royalty” for a license under the ʼ243 patent
for devices that, like the Accused Product, consist of spherical, levitating Bluetooth speakers. (D.I.
41 ¶¶ 28-29; D.I. 43 ¶¶ 3-7, Ex. A.) See Wordtech Sys., Inc. v. Integrated Network Sols., Inc., 609
F.3d 1308, 1319 (Fed. Cir. 2010) (“A reasonable royalty can be calculated from an established
royalty, the infringer’s profit projections for infringing sales, or a hypothetical negotiation between
the patentee and infringer . . . .”). Plugging those variables in to the formula results in a reasonable
royalty of $289,575.00.
Plaintiff also requests that the Court treble its damages under 35 U.S.C. § 284. Unlike the
record in support of reasonable royalty damages, the evidence supporting Plaintiff’s request for

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Plaintiff alleges, and I take as true, that it “has complied with 35 U.S.C. § 287.” (D.I. 1
¶ 22.) See 35 U.S.C. § 287 (limiting damages where a patentee fails to mark the patented article).
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enhanced damages is minimal. After careful consideration, I recommend that the Court exercise
its discretion to not award enhanced damages.
Section 284 provides that “the court may increase the damages up to three times the amount
found or assessed.” 35 U.S.C. § 284. The Supreme Court has directed that enhanced damages
“are not to be meted out in a typical infringement case, but are instead designed as a sanction for
egregious infringement behavior” described as “willful, wanton, malicious, bad-faith, deliberate,
consciously wrongful, flagrant, or—indeed—characteristic of a pirate.” Halo Elecs., Inc. v. Pulse
Elecs., Inc., 136 S. Ct. 1923, 1932 (2016); see also SRI Int’l, Inc. v. Cisco Sys., Inc., 930 F.3d
1295, 1308 (Fed. Cir. 2019), cert. denied, 140 S. Ct. 1108 (2020). That said, the court has
discretion to decline to award enhance damages even in cases where willful infringement is found.
Halo Elecs., 136 S. Ct. at 1933; Idenix Pharm. LLC v. Gilead Scis., Inc., 271 F. Supp. 3d 694, 698
(D. Del. 2017). Thus, even where infringement is willful, the court must still “take into account
the particular circumstances” and make a determination as to whether enhanced damages are
warranted. Halo Elecs., 136 S. Ct. at 1933; see also Idenix Pharm., 271 F. Supp. 3d at 697.
Here, Plaintiff alleges, and I take as true, that Defendant’s infringement was willful. (D.I. 1
¶ 23.) Nevertheless, after carefully reviewing the entirety of the record before me, I cannot
conclude that Defendant’s actions went beyond what this Court encounters in a typical
infringement case. I have carefully reviewed Plaintiff’s Complaint, which attaches the ʼ243 patent
and describes how Defendant’s Accused Product meets each limitation of the asserted claims. The
allegations relevant to willfulness are set forth in one paragraph of the Complaint, which alleges
that Plaintiff sent Defendant a claim chart containing Plaintiff’s infringement contentions and that
Defendant nevertheless continued to infringe. (Id.) Plaintiff’s briefing also points out that
Defendant continued to infringe for five months after Plaintiff filed its Complaint. (D.I. 41 ¶ 38.)

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In my view, those facts, without more, do not warrant enhanced damages. As the Federal
Circuit has explained, “it is the circumstances that transform simple ‘intentional or knowing’
infringement into egregious, sanctionable behavior, and that makes all the difference.” SRI Int’l,
930 F.3d at 1308 (quoting Halo Elecs., 136 S. Ct. at 1936 (Breyer, J., concurring)). The
circumstances in the record before me demonstrate “a typical infringement case,” not “egregious
infringement behavior.” See Halo Elecs., 136 S. Ct. at 1932; see also LF Centennial Ltd. v. Inovex
Furnishings Corp., No. 17-5824, 2019 WL 6655258, at *7 (C.D. Cal. Oct. 2, 2019) (declining to
award enhanced damages on a motion for default judgment, notwithstanding the plaintiff’s
allegation that it sent the defendant notice of infringement prior to filing the complaint and that the
defendant continued to infringe during the pendency of the case); Arnold v. Scales, No. 15-45,
2016 WL 6155173, at *1 (M.D. Ga. Feb. 5, 2016) (finding that the defendant acted willfully but
declining to award enhanced damages in a default judgment). But see Tech. LED Intellectual
Prop., LLC v. Aeon Labs LLC, No. 18-1847, 2020 WL 1528446, at *2–3 (N.D. Cal. Mar. 31, 2020)
(awarding double damages on a default judgment only for post-complaint infringement).
Plaintiff argues that “Defendant’s refusal to appear, participate, or present a litigable
defense to Plaintiff’s claims” weighs in favor of enhanced damages. (D.I. 41 ¶ 39.) Under the
particular circumstances here, I disagree. Plaintiff has not argued that Defendant’s invalidity
positions were weak, nor did Plaintiff submit Defendant’s contentions to the Court for review. The
docket indicates that Defendant initially engaged in some discovery but that it failed to obtain
substitute counsel after Defendant’s original attorney withdrew. Considering all of that, in light
of what turned out to be the amount in controversy—less than $300,000—and in view of the
average cost to defend a patent infringement case—more than $300,000—I cannot say that
Defendant’s abandonment of its defense evidences egregious conduct as opposed to an economic

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decision. Accordingly, I recommend that the Court exercise its discretion to not award enhanced
damages.
Plaintiff also requests that the Court award attorney’s fees under 35 U.S.C. § 285. Section
285 provides that a “court in exceptional cases may award reasonable attorney fees to the
prevailing party.” 35 U.S.C. § 285. “[A]n ‘exceptional’ case is simply one that stands out from
others with respect to the substantive strength of a party’s litigating position (considering both the
governing law and the facts of the case) or the unreasonable manner in which the case was
litigated.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014); see
also SRI International, 930 F.3d at 1310. “The party seeking fees must prove that the case is
exceptional by a preponderance of the evidence, and the district court makes the exceptional case
determination on a case-by-case basis considering the totality of the circumstances.”

SRI

International, 930 F.3d at 1310.
I recommend that the Court exercise its discretion to not award attorney’s fees. Again,
Plaintiff has not argued that Defendant’s invalidity positions were weak, and there is nothing in
the record to suggest that Defendant had an unjustified litigating position. Moreover, other than
its failure to defend, it does not appear that Defendant engaged in unreasonable litigation tactics.
In my view, the failure to defend is not enough to make this case exceptional. See LF Centennial,
2019 WL 6655258, at *8 (declining to award attorney’s fees under 35 U.S.C. § 285 on a default
judgment, notwithstanding the defendant’s failure to secure new counsel after its original counsel
withdrew); Tzu Techs., LLC v. Winzz, LLC, No. 15-5493, 2016 WL 6822754, at *9 (C.D. Cal. June
14, 2016) (“The bare default finding of willful infringement is insufficient evidence of exceptional
circumstances to warrant an attorneys’-fees award. . . . Neither default judgments nor willful
infringement are uncommon in patent-infringement cases.”). I also note that Plaintiff has obtained

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the full amount of its requested reasonable royalty despite having spent far less on attorney’s fees
than it would have if the case had progressed. Accordingly, I recommend that the Court decline
to award attorney’s fees. 4
VI.

CONCLUSION

For the foregoing reasons, I recommend that Plaintiff’s motion for default judgment
pursuant to Federal Rule of Civil Procedure 55(b) be GRANTED-IN-PART and DENIED-INPART. Accordingly I recommend that the Court enter an Order of Default Judgment in favor of
Plaintiff and against Defendant
1. finding that Defendant is liable for infringing Plaintiff’s ’243 patent;
2. awarding Plaintiff compensatory damages in the amount of $289,575.00 based on
a reasonable royalty under 35 U.S.C. § 284;
3. declining to award enhanced damages under 35 U.S.C. § 284; and
4. declining to award attorney’s fees under 25 U.S.C. § 285.
This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(1)(B),(C),
Federal Rule of Civil Procedure 72(b)(1), and District of Delaware Local Rule 72.1. Any
objections to the Report and Recommendation shall be filed within fourteen days and limited to
ten pages. Any response shall be filed within fourteen days thereafter and limited to ten pages.
The failure of a party to object to legal conclusions may result in the loss of the right to de novo
review in the district court.
The parties are directed to the Court’s “Standing Order for Objections Filed Under Fed. R.
Civ. P. 72,” dated October 9, 2013, a copy of which can be found on the Court’s website.

4

Plaintiff’s motion and proposed order do not address pre-judgment interest, postjudgment interest, or costs. (See D.I. 41 at 12, Proposed Order.) Accordingly, this Report and
Recommendation does not address them.
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Dated: May 26, 2020

___________________________________
Jennifer L. Hall
UNITED STATES MAGISTRATE JUDGE

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