Global Tech Led, LLC v. Hilumz International Corp. et al
Filing
137
OPINION AND ORDER granting in part and denying in part 133 plaintiff's Motion for Default Judgment as set forth herein, the motion is otherwise taken under advisement. The evidentiary hearing on the remaining portions of the motion will b e held on October 2, 2018 at 9:30 a.m. before the undersigned in Fort Myers, Florida. Discovery will be re-opened for sixty (60) days so that plaintiff may pursue information related to the upcoming evidentiary hearing. Plaintiff shall serve a copy of its Motion for Default Judgment and a copy of this Opinion and Order upon representative(s) of defendants within thirty (30) days of the date of this Opinion and Order, and file a certificate of service with the court thereafter. See Opinion and Order for details. Signed by Judge John E. Steele on 5/9/2018. (CMG)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
GLOBAL TECH LED, LLC, a
Florida limited liability
company,
Plaintiff,
v.
Case No:
2:15-cv-553-FtM-29CM
HILUMZ INTERNATIONAL CORP.,
a
Georgia
corporation,
HILUMZ, LLC, and HILUMZ USA,
LLC,
a
Georgia
limited
liability company,
Defendants/Third
Party Plaintiffs
JEFFREY J. NEWMAN, GARY K.
MART,
Third Party Defendants.
OPINION AND ORDER
This matter comes before the Court on Plaintiff’s Motion for
Default Judgment (Doc. #133) filed on January 8, 2018.
has been filed, and the time to do so has passed.
No response
For the reasons
set forth below, Plaintiff’s Motion is granted in part and denied
in part.
I.
Procedural History
The procedural history of this lawsuit is relevant to the
Court’s resolution of Plaintiff’s Motion for Default Judgment and
thus is recounted in some detail:
This case involves a patent infringement dispute between two
business
partners-turned-competitors
in
emitting diode (LED) lighting industry.
the
retrofit
light
In recent years, LED
bulbs have become popular because they have a much longer lifespan
than traditional incandescent bulbs, and the light they emit
produces significantly less heat.
The circuits that provide
electrical current to LED bulbs do, however, produce a considerable
amount of heat.
This has motivated companies that manufacture LED
bulbs to create – and seek patent protection for – apparatuses
that both house the bulb and allow the heat generated by the
circuitry to be dispersed efficiently.
Plaintiff Global Tech LED, LLC (Global Tech) is one such
company.
Global Tech is the assignee of the ownership rights to
United States Patent No. 9,091,424 (the ‘424 Patent), entitled
“LED Light Bulb,” 1 which comprises a retrofit LED apparatus 2 made
up of: a screw connector, which is configured to be screwed into
a receiving socket of an electric light fixture; a bracket, which
is physically attached to the screw connector; and a housing, which
is rotatably coupled to the bracket, and which includes one or
1
Global Tech was assigned all rights to the ‘424 Patent by Gary
K. Mart (Mart) and Jeffrey J. Newman (Newman), who are managing
members of Global Tech and the inventors of the apparatus
encompassed by the ‘424 Patent.
2
The apparatus is “retrofit” because it is designed to replace
conventional bulbs within lighting assemblies with horizontallyoriented receptacles, like certain streetlights.
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more LED units for generating light and one or more electrically
powered cooling devices to remove heat from the vicinity of the
LED units.
(Doc. #1-1, p. 2.)
This design allows the face of the
housing – along with the back-attached fan (or “heat sink”) – to
be rotated “orthogonally” (ninety degrees) from the receptacle’s
connector base.
This, in turn, enables the heat generated by the
circuitry to be dispelled advantageously away from the LED units,
thereby preserving the life of those units.
Plaintiffs contend that this rotatable feature constitutes
the “true innovation” of the ‘424 Patent and is being infringed by
a retrofit LED apparatus (the Retrofit Kit) invented by Defendants
HiLumz International Corp., HiLumz, LLC, and HiLumz USA, LLC
(collectively, Defendants).
On September 15, 2015, Global Tech
filed a Complaint (Doc. #1) accusing Defendants of “making, using
selling, or offering for sale” one or more lighting products that
infringe the claims the ‘424 Patent, either literally or under the
doctrine of equivalents.
(Id. ¶ 36.)
Defendants are also alleged
to have “induced infringement of claims of at least the ‘424 Patent
by having one or more of [their] distributors and other entities
use, sell or offer for sale the Accused Products and others
substantially identical to the Accused Products with knowledge of
the
‘424
Patent.”
(Doc.
#1,
¶
37.)
The
Complaint
seeks
injunctive relief and money damages for Defendants’ willful direct
and indirect patent infringement, in violation of 35 U.S.C. § 271.
- 3 -
Defendants
consistently
defended
denying
this
the
case
for
allegations
almost
of
two
years,
infringement.
Specifically, they argued that (1) any product “substantially
identical” to the Accused Products was sold prior to the issuance
of the ‘424 Patent, and that (2) any Retrofit Kit sold after the
issuance of the ‘424 Patent did not infringe that patent, despite
the orthogonal rotation, because those Kits contained no “screw
connector” component – that is, no connector piece that could be
screwed into an electrical socket and through which electricity
traveled to power the LED units – only a hose clamp that attached
to the outside of the electrical socket through which no power was
conveyed to the units.
Defendants also asserted a number of
affirmative defenses and counterclaims against Global Tech and
filed a third party complaint against Mart and Newman (Doc. #63). 3
Additionally, Defendants moved for a preliminary injunction
against Plaintiffs (Doc. #6), as well as sanctions pursuant to
Rule 11 (Doc. # 64) - both of which Plaintiffs opposed (Docs. ##
22, 70), and both of which the Court denied (Docs. ## 62, 94).
The Court also, upon Global Tech’s Motion (Doc. #71), dismissed
(i) Defendants’ counterclaim seeking a declaratory judgment of
inequitable conduct and patent unenforceability and (ii) three of
3
Although Mart and Newman are third-party defendants in this case,
for purposes of this Order, the Court collectively refers to Global
Tech, Mart, and Newman as “Plaintiffs.”
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the seven factual bases for Defendants’ Lanham Act counterclaim.
The Court denied dismissal of the remaining bases for the Lanham
Act claim and the other three counterclaims (unfair competition,
Florida Deceptive and Unfair Trade Practices Act, and trade libel).
On January 19, 2017, the Court conducted a “Markman” hearing 4
for the purpose of construing the term “screw connector,” as used
in
independent
Specifically,
claims
the
1,
14,
construction
and
18
question
of
the
before
‘424
the
Patent.
Court
was
whether, to be a “screw connector,” the connector piece had to
draw power from the electrical socket, which is what Defendants
argued, 5 or
merely
Plaintiffs argued.
had
to
serve
as
a
support
structure,
as
On May 23, 2017, the Court issued an order
(Doc. #120) accepting in part Plaintiffs’ proposed construction
and rejecting Defendants’ proposed construction.
On June 30, 2017, counsel for Defendants filed a motion to
withdraw on the ground that Defendants were “no longer able and
willing to pay for the attorney’s fees and costs necessary to
pursue their claims and defenses in this civil action.”
#121, p. 2.)
4
(Doc.
The Magistrate Judge granted that motion (Doc. #122)
Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996).
5
Originally, Defendants also argued that a “screw connector” had
to have “external screw threads” and that the receiving socket to
have “internal screw threads,” (Doc. #68, p. 4), but this proposed
construction was withdrawn in advance of the hearing (Doc. #83, p.
7 n.3).
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and directed Defendants to retain counsel on or before August 11,
2017, as is required for corporations under Middle District of
Florida Local Rule 2.03(e).
(Doc. #123.)
Defendants failed to
do so.
On August 28, 2017, the Magistrate Judge issued a Report and
Recommendation (Doc. #124) recommending that a Clerk’s default be
entered
against
counterclaims
prejudice.
Defendants,
and
and
third-party
that
complaint
No objections were filed.
Defendants’
be
dismissed
pending
without
On September 22, 2017, the
undersigned issued an Opinion and Order (Doc. #125) adopting the
Report and Recommendations and ordering the Clerk to enter a
default against Defendants and a judgment dismissing the thirdparty claims.
judgment
A clerk’s entry of default (Doc. #126) and a
dismissing
the
third-party
claims
(Doc.
#127)
were
entered on September 25, 2017.
On January 8, 2018, Global Tech filed the instant Motion for
Default Judgment seeking the following relief: (1) entry of a final
judgment on Global Tech’s claims of willful patent infringement;
(2) an award of damages, consisting of lost profits or, in the
alternative, an award of a reasonable royalty, or a combination of
both; (3) enhanced damages; (4) costs and attorneys’ fees; (5) an
Order requiring Defendants to produce sales and cost-of-goods-sold
records for the Accused Products; and (6) entry of an Order
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permanently enjoining Defendants from making, selling, or offering
to sell the Accused Products.
II.
Default Principles
A. Clerk’s Default
“When a party against whom a judgment for affirmative relief
is sought has failed to plead or otherwise defend, and that failure
is shown by affidavit or otherwise, the clerk must enter the
party’s default.”
Fed. R. Civ. P. 55(a).
The phrase “otherwise
defend” has been interpreted broadly to encompass parties that
have
“vigorously
defended
themselves”
in
litigation
by,
for
example, answering the complaint, asserting affirmative defenses,
moving
to
dismiss,
and
participating
subsequently cease that defense.
in
discovery,
but
who
City of New York v. Mickalis
Pawn Shop, LLC, 645 F.3d 114, 129 (2d Cir. 2011).
In such a case,
the court may either strike the answer or simply treat it as
stricken.
See United States v. $23,000 in U.S. Currency, 356 F.3d
157, 168 (1st Cir. 2004).
Once a clerk’s default has been entered, the defaulting party
is
deemed
to
have
“admit[ted]
the
allegations of fact” in the complaint.
plaintiff's
well-pleaded
Eagle Hosp. Physicians,
LLC v. SRG Consulting, Inc., 561 F.3d 1298, 1307 (11th Cir. 2009).
“[A] defendant’s default does not in itself warrant the court in
entering a default judgment.”
Nishimatsu Const. Co. v. Houston
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Nat. Bank, 515 F.2d 1200, 1206 (5th Cir. 1975). 6
Rather, the
plaintiff “must apply to the court for a default judgment.”
Fed.
R. Civ. P. 55(b)(2).
B. Default Judgment
Part of the court’s task upon an application for a default
judgment is to ensure the sufficiency of the complaint – that is,
to
ensure
that
“Conceptually,
the
then,
plaintiff
a
motion
has
adequately
stated
for default judgment is
reverse motion to dismiss for failure to state a claim.”
a
claim.
like
a
Surtain
v. Hamlin Terrace Found., 789 F.3d 1239, 1245 (11th Cir. 2015).
If the complaint contains well-pleaded allegations of fact as to
each element of the claims on which the plaintiff seeks a judgment,
then the court may, in its discretion, enter judgment on those
claims.
Id.
As for money damages, the Eleventh Circuit has recently
summarized the applicable principles:
Damages in cases of default are governed by
Rule 55. Rule 55(b)(1) permits entry of
judgment by the clerk without a hearing in
cases where “the plaintiff's claim is for a
sum certain or a sum that can be made certain
by computation.” Fed. R. Civ. P. 55(b)(1).
“Rule 55(b)(2), which covers ‘all other
cases,’ requires the district court to hold an
evidentiary hearing ‘to determine the amount’
of losses involved.” S.E.C. v. Smyth, 420 F.3d
6
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.
1981) (en banc), the Eleventh Circuit court adopted as binding
precedent all decisions of the former Fifth Circuit issued prior
to October 1, 1981.
- 8 -
1225, 1231–32 (11th Cir. 2005); see United
Artists Corp. v. Freeman, 605 F.2d 854, 857
(5th Cir. 1979) (“The case law is clear that
a judgment by default may not be entered
without a hearing unless the amount claimed is
a
liquidated
sum
or
one
capable
of
mathematical
calculation.”).
Although
an
evidentiary
hearing
is
not
a
“per
se
requirement,” given the permissive language in
Rule
55(b)(2)
(“The
court
may
conduct
hearings....”),
we
have
stated
that
evidentiary hearings “are required in all but
limited circumstances,” such as when hearing
“any additional evidence would be truly
unnecessary to a fully informed determination
of damages.” Smyth, 420 F.3d at 1232 n.13.
Safari Programs, Inc. v. CollectA Int'l Ltd., 686 F. App’x 737,
746 (11th Cir. 2017).
See also Giovanno v. Fabec, 804 F.3d 1361,
1366 (11th Cir. 2015)(no hearing needed where complaint alleged a
specific amount of damages).
III. Default and Default Judgment In This Case
A. Clerk’s Default
It is clear that a clerk’s default was properly entered
against Defendants pursuant to Rule 55(a).
“[A] corporation is
an artificial entity that can act only through agents, cannot
appear pro se, and must be represented by counsel.”
Palazzo v.
Gulf Oil Corp., 764 F.2d 1381, 1385 (11th Cir. 1985); see also
Rowland v. California Men’s Colony, Unit II Men’s Advisory Council,
506 U.S. 194, 201–02 (1993) (“It has been the law for the better
part of two centuries, for example, that a corporation may appear
in the federal courts only through licensed counsel.”).
- 9 -
By not
obtaining new counsel after their attorneys withdrew, Defendants
failed to “otherwise defend” against Plaintiff’s lawsuit.
See
United States v. Hagerman, 549 F.3d 536, 538 (7th Cir. 2008) (“The
usual course when a litigant not entitled to litigate pro se loses
its lawyer in the midst of the case is to give it a reasonable
opportunity to find a new one, and, if it fails, either to dismiss
the case, or enter a default judgment.” (citations omitted)).
also
Compania
Interamericana
Dominicana
de
Aviacion,
(affirming
district
88
Exp.-Imp.,
F.3d
court’s
948,
default
950
order
S.A.
v.
(11th
Compania
Cir.
against
See
1996)
corporate
defendants who did not timely retain new counsel).
B. Default Judgment
(1)
Infringement
Global Tech asserts claims for direct infringement under 35
U.S.C. § 271(a) and indirect patent infringement under 35 U.S.C.
§ 271(b). 7 (Doc. #1, ¶ 36.)
According to the Complaint,
Defendants . . . have infringed, literally and
under the doctrine of equivalents, claims of
the ‘424 Patent by using, making, selling, and
offering to sell LED lamps, including one or
more of the Accused Products, . . .
7
Global Tech’s Motion asserts that Global Tech is also entitled
to a finding that Defendants have violated Section 271(c), which
concerns the making, use, or sale of the components of a patented
invention. (Doc. #133, p. 9.) This theory of recovery was not
asserted in the Complaint, and thus Global Tech is not entitled to
default judgment on this theory. Fed. R. Civ. P. 54(c) (“A default
judgment must not differ in kind from, or exceed in amount, what
is demanded in the pleadings.”).
- 10 -
(Doc. #1, ¶ 36.)
lamp
products,
designations
of
The Complaint defines “Accused Products” as “LED
including
‘retrofit
those
offered
Kits,’
‘DZ75
under
the
Retrofit
commercial
Kit,’
‘DZ130
Retrofit Kit,’ ‘DZ260 Retrofit Kit,’ ‘DZ185 Retrofit Kit,’ and
‘DZ390 Retrofit Kit.’”
(Id. ¶ 5).
Under the Patent Act, “whoever without authority makes, uses,
offers to sell, or sells any patented invention, within the United
States or imports into the United States any patented invention
during the term of the patent therefor infringes the patent.”
U.S.C. § 271(a).
35
Such “direct infringement,” as it is commonly
called, “require[s] no more than the unauthorized use of a patented
invention.
irrelevant.”
Thus, a direct infringer’s knowledge or intent is
Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S.
754, 764 (2011) (citations omitted).
Plaintiff alleges that
Defendants have engaged in an unauthorized use of Global Tech’s
patented invention. (Doc. #1, ¶¶ 5, 20, 22.)
Global Tech has
sufficiently pled a claim for direct infringement of the ‘424
Patent.
Indirect infringement, in contrast, consists of “inducing
another to infringe a patented invention,” 35 U.S.C. § 271(b), and
does
require
the
inducer’s
knowledge
that
“the
induced
acts
constitute patent infringement.”
Global-Tech Appliances, 563 U.S.
at
that
764.
The
Complaint
alleges
“Defendants
have
induced
infringement of the claims of at least the ‘424 Patent by having
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one or more of its distributors and other entities, use, sell or
offer for sale the Accused Products 8 and others substantially
identical to the Accused Products with knowledge of the ‘424
Patent.”
(Id. ¶ 37).
More specifically, Global Tech alleges that
two authorized distributors/resellers – K&R Weight Systems and
Shine Retrofits – have “sold the Accused Products to Florida
consumers.”
(Id. ¶¶ 6, 7, 8.)
Global Tech alleges further that,
“[u]pon information and belief, Defendants were, and are currently
aware of the fact that the Accused Products infringe upon the’ 424
Patent.” (Id. ¶ 23.)
Although mental conditions may be averred generally, Fed. R.
Civ. P. 9(b), where a cause of action has a scienter requirement,
a “bare assertion” that a defendant has done something “knowingly”
or “willfully” amounts to a “legal conclusion,” not a “well-pleaded
allegation” of fact, and will generally not suffice to support a
default judgment.
Lary v. Trinity Physician Fin. & Ins. Servs.,
780 F.3d 1101, 1107 (11th Cir. 2015) (reversing a default judgment
on a claim requiring a “knowing” violation of a statute where the
complaint contained only a boilerplate recitation of “knowledge”).
The Court is not convinced that the factual allegations in the
Complaint are sufficient to support a default judgment.
8
“Accused Products” is defined in the Complaint as “LED lamp
products” in whose manufacture, distribution, sale, use, and/or
offering for sale Defendants are involved. (Id. ¶ 5).
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(2)
Damages and Other Relief
The Court concludes that under the standards articulated
above it may not grant a default judgment as to damages or the
other
relief
hearing.
defendants
The
to
requested
Court
by
plaintiff
declines
produce
certain
to
without
enter
the
documents,
an
evidentiary
order
compelling
but
will
re-open
discovery so that plaintiff may seek such information.
Accordingly, it is hereby
ORDERED:
1.
Plaintiff’s Motion for Default Judgment (Doc. #133) is
GRANTED in part and DENIED in part as set forth above.
The motion
is otherwise taken under advisement.
2.
The evidentiary hearing on the remaining portions of the
motion will be held on October 2, 2018 at 9:30 a.m. before the
undersigned in Fort Myers, Florida.
3.
plaintiff
Discovery will be re-opened for sixty (60) days so that
may
pursue
information
related
to
the
upcoming
evidentiary hearing.
4.
Plaintiff shall serve a copy of its Motion for Default
Judgment (Doc. #133) and a copy of this Opinion and Order upon the
representative(s) of defendants within thirty (30) days of the
date of this Opinion and Order, and file a certificate of service
with the court thereafter.
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DONE and ORDERED at Fort Myers, Florida, this 9th day of May,
2018.
Copies:
Counsel of Record
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