PERFECT FIT LLC v. ILFS INC

Filing 21

ORDER ON PLAINTIFF'S MOTION FOR RECONSIDERATION AND ORDER ON PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT 20 MOTION for Reconsideration re 19 Order on Motion for Default Judgment filed by PERFECT FIT LLC, 12 MOTION for Default Judgment MOTION for Entry of Default filed by PERFECT FIT LLC By JUDGE LANCE E. WALKER. (CJD)

UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
PERFECT FIT, LLC

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Plaintiff
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V.
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INMATE LEGAL FORMS SERVICE, )
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INC.
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Defendant
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1:18-CV-00239-LEW

ORDER ON PLAINTIFF’S MOTION FOR RECONSIDERATION AND ORDER
ON PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT
Plaintiff, Perfect Fit, LLC requests the entry of default judgment against Defendant,
Inmate Legal Forms Service, Inc. On January 30, 2019, I denied the request on the ground
that none of the pleadings, including Plaintiff’s motion for default, set forth the amount of
the damages Plaintiff anticipated it would be entitled to as of the hearing date. That ruling
was in error. While a complaint must include a demand for the relief sought, a party is not
required to include an “ad damnum” clause in its complaint that specifies the amount of
damages it seeks, unless the damages are “special damages.” Fed. R. Civ. P. 8(a), 9(g).

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And more to the point, a defendant served with a complaint who fails to answer and who
also fails to make an appearance – such as Defendant herein – is not entitled to notice of
the plaintiff’s application for default judgment. Fed. R. Civ. P. 55(b)(2). Therefore,

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I am not aware of authority indicating that lost profit damages under 15 U.S.C. § 1117(a) are special
damages. In any event, the defense of failure to plead special damages with specificity (failure to state a
claim) is waivable. Fed. R. Civ. P. 12(b). Defendant’s failure to answer constitutes a waiver of its defenses.
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Plaintiff’s failure to articulate a measure of damages in either its amended complaint or its
application for judgment of default does not preclude the award of damages in a default
judgment.

Accordingly, Plaintiff’s Motion for Reconsideration (ECF No. 20) is

GRANTED, and the January 30, 2019 Order on Plaintiff’s Motion for Default Judgment is
VACATED. I turn, therefore, to reconsider Plaintiff’s Motion for Default Judgment (ECF
No. 12).
I.

FACTUAL AND PROCEDURAL BACKGROUND
A. Facts as Alleged in the Amended Complaint
Upon Defendant’s default, Plaintiff’s allegations are “taken as true and ...

considered established as a matter of law.” Libertad v. Sanchez, 215 F.3d 206, 208 (1st
Cir. 2000) (quoting Brockton Sav. Bank v. Peat, Marwick, Mitchell & Co., 771 F.2d 5, 13
(1st Cir. 1985); see also In re Home Rests., Inc., 285 F.3d 111, 114 (1st Cir. 2002) (citing
Franco v. Selective Ins. Co., 184 F.3d 4, 9 n.3 (1st Cir. 1999) (“A party who defaults is
taken to have conceded the truth of the factual allegations in the complaint as establishing
the grounds for liability.”).
Plaintiff is a Maine limited liability company having a principal place of business
in Corinna, Maine. Plaintiff manufactures and sells leather goods, specifically police and
law enforcement shield wallets and accessories. The product line sold by Plaintiff
includes badge/identification wallets, badge/identification cases, key holders, flashlight
holders, handcuff holders, baton holders, glove holders, belts, gloves, equipment bags and
accessories.

Plaintiff advertises its products on a web site, accessed by the URL

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http://www.perfectfitusa.com.

Plaintiff authorizes certain other vendors to resell

Plaintiff’s products over the internet, on their own websites and on Amazon.com.
Plaintiff is the owner of the federal registered trademark “PERFECT FIT.” Plaintiff
also owns the common law trademark “Perfect Fit Shield Wallets.” The common law
mark is associated with Plaintiff’s leather products. Plaintiff advertises its products using
the registered mark and the common law mark, and labels and packages its products using
the marks. Plaintiff has used the marks since at least 1988.
Defendant is a reseller of products based in Bloomfield, New Jersey.

It sells

products on Amazon.com, both as a general retailer and through its own Amazon-hosted
“storefront.” Defendant is not authorized to resell Plaintiff’s products or use Plaintiff’s
marks. Products offered for sale by Defendant on its storefront on Amazon.com include
“NYPD Detective Dress Leather Badge and ID Case by Perfect Fit Shield Wallets,”
“Universal Oval Belt Clip with Pocket and Chain by Perfect Fit Shield Wallets,” “Glove
Holder by Perfect Fit Shield Wallets,” and “Double Glove Holder by Perfect Fit Shield
Wallets.” The “NYPD Detective Dress Leather Badge and ID Case” sold by Defendant
on its storefront on Amazon.com is further described as “Made in the USA by Perfect Fit
with their proud logo embossed on the back.”
Defendant is not authorized by Plaintiff to resell any of Plaintiff’s products offered
for sale on the Defendant’s storefront on Amazon.com or on the Amazon.com general
website. Although Defendant offers Perfect Fit products for sale on its storefront on
Amazon.com and on the Amazon.com general website, in fact customers who attempt to
purchase such products are sold different, inferior products.

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In May 2017, Plaintiff’s agent purchased products from the ILFS storefront on
Amazon.com each of the “Perfect Fit” products identified above. Upon receipt of the order,
Plaintiff determined that the products were manufactured and branded by a third party. The
products also arrived in different packaging. In May 2018, Plaintiff sent Defendant a cease
and desist letter, but Defendant’s conduct did not change.
By using Plaintiff’s marks and filling orders with a third-party product, Defendant
has caused actual confusion and deceived consumers with false descriptions and
designations of origin of its products. Defendant also sells the products using the same
channels of trade as do Plaintiff and its authorized vendors, thereby reducing sales of
Plaintiff’s products. Defendant’s conduct is willful and intentional.
B. Procedural History
On June 14, 2018, Plaintiff filed a Complaint against Defendant, ILFS, Inc. The
Complaint has five counts: 1) Count I, Trademark Infringement; 2) Count II, Trademark
Dilution; 3) Count III, Trademark Infringement; 4) Count IV, Trademark Dilution; 5)
Count V, Deceptive Trade Practice; and 6) Count VI, Passing Off.
On August 3, 2018, Plaintiff filed an Amended Complaint to identify the correct
Defendant as Inmate Legal Forms Service, Inc. Plaintiff served Defendant the Amended
Complaint on August 28, 2018. Defendant failed to file an answer and the Plaintiff filed a
Motion for Default Judgment on December 5, 2018. The Clerk entered default on
December 5, 2018, against Defendant and scheduled a damages hearing for January 17,
2019. At the hearing, the Court heard the testimony of Ryan Levesque and took the matter
under advisement. On January 30, 2019, the Court issued the Order vacated herein. (ECF

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No. 19.) The matter is now before the Court, once more, on Plaintiff’s Motion for Default
Judgment. (ECF No. 12.)
II.

DISCUSSION
A. Legal Standard
Federal Rule of Civil Procedure 55(a) states that when a party against whom a

judgment for affirmative relief is sought fails to plead or otherwise defend, as “made to
appear by affidavit or otherwise,” the clerk shall enter the party’s default.

However,

liability and the amount of damages are not necessarily established as a result of the default.
E.g., Ohio Cent. R.R. Co. v. Central Trust Co. 133 U.S. 83, 91 (1890) (“[I]f [the allegations]
are indefinite, or the demand of the complainant is in its nature uncertain, the requisite
certainty must be afforded by proof”); Danning v. Lavine 572 F.2d 1386, 1388 (9th Cir.
1978) (“[F]acts which are not established by the pleadings . . . or claims which are not
pleaded, are not binding and cannot support the judgment”). Rule 55(b)(2) allows the court
discretion to determine the scope of the damages hearing to be held.
B. Liability
Based on the facts alleged by Plaintiff, there is a factual basis for finding Defendant
liable for trademark infringement and trademark dilution under Maine and federal law.
Am. Compl. Counts I – IV, VI. Similarly, the facts alleged describe a deceptive trade
practice for purposes of the Deceptive Trade Practices Act. Id. Count V. Moreover,
Defendant has not contested that its conduct was willful and intentional, and the Court
accepts it as established that Defendant’s violations of federal and state law were willful
and intentional.

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C. Damages
When liability is found by default, it is appropriate to award remedies authorized in
law or equity. Libertad, 215 F.3d at 208. Unless the claim involves a “sum certain,”
monetary relief awarded through a default judgment must be supported by proof. Fed. R.
Civ. P. 55(b)(2); KPS & Assocs. Inc. v. Designs by FMC, Inc., 318 F.3d 1, 19 (1st Cir.
2003).
On January 17, 2019, the Court conducted a hearing so that Plaintiff could
demonstrate the relief it is due. Plaintiff appeared at the hearing and introduced testimony
through Ryan Levesque, whose testimony was consistent with the attestation recited in his
affidavit (ECF No. 16). Defendant did not appear. Prior to the hearing, Mr. Levesque
submitted an affidavit in which he asserted that Plaintiff “has been damaged in the amount
of $38,466.04, comprised of lost sales during the infringement period, lost future sales, and
attorney fees and costs.” Levesque Aff. ¶ 22. To support his calculation, Mr. Levesque
explained that sales data reflect that Defendant’s infringing sales on Amazon occurred in
the months of March 2018 through July 2018; that Plaintiff’s sales growth had been
consistent through the second half of 2017 and into 2018; that the infringing sales
corresponded with a sudden discontinuation in Plaintiff’s sales growth; that Plaintiff’s sales
were essentially flat between March and April 2018, and experienced a downturn for the
months of June and July 2018; that Plaintiff’s sales revenue returned to an upward
trajectory in August 2018, after the infringing sales ceased; and that it is reasonable to
anticipate that Plaintiff lost $500 in future sales due to customer dissatisfaction with their
receipt of inferior products from Defendant. Id. ¶¶ 16, 17, 20. Mr. Levesque’s testimony

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at the damages hearing was consistent with his affidavit. Given the evidence provided by
Mr. Levesque, based on a preponderance of the evidence standard, I find that Plaintiff has
demonstrated lost sale revenue in the amount of $27,586.40.
In its Motion for Default Judgment, Plaintiff has requested that the Court enter
judgment “in an amount determined by this Court at a testimonial hearing on damages.”
Mot. for Entry of Default and Default J at 2. In its Motion for Reconsideration, Plaintiff
states more specifically that its request for damages is focused on its claims under the
Lanham Act, 15 U.S.C. § 1117 (Counts I & II). Mot. for Reconsideration at 8. In Counts
I and II of the Amended Complaint, Plaintiff alleges trademark infringement and trademark
dilution in violation of 15 U.S.C. § 1125(a) and (c).

As set forth above, Plaintiff’s

allegations, taken as true and established as a matter of law by Defendant’s default,
demonstrate Defendant is liable under both counts.
The Lanham Act provides that a trademark owner may “recover (1) defendant’s
profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” 15
U.S.C. § 1117(a). Additionally, “[i]n assessing damages the court may enter judgment,
according to the circumstances of the case, for any sum above the amount found as actual
damages, not exceeding three times such amount.” Id. Finally, “[t]he court in exceptional
cases may award reasonable attorney fees to the prevailing party.” Id.
In the Amended Complaint, Plaintiff requests an award of Defendant’s profits,
costs, an exemplary award not to exceed three times actual damages, and reasonable
attorney fees. Am. Compl. at 7. However, Plaintiff’s proof at the damages hearing focused
on the damages sustained by Plaintiff and Plaintiff did not attempt to measure Defendant’s

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likely revenue. Specifically, Plaintiff sought to demonstrate damages with evidence of lost
or diverted sales based on its own established sales trends and projections, and evidence
demonstrating disruption of these trends during the period of infringement. Although
Plaintiff requests a damage award based on its evidence of lost or diverted sales revenue,
and that the award be trebled, lost sales are not necessarily the same thing as the “actual
damages” sought in the complaint. Plaintiff’s commercial activity presumably entails
certain costs of production. Additionally, Plaintiff’s presentation reflects that many of its
sales are made by licensed vendors, Am. Compl. ¶ 12, who presumably retain a
commission on their sales, not to mention commissions associated with Plaintiff’s use of
the Amazon online sales platform.
To this date, Plaintiff has not provided the Court with any argument as to why its
lost sales revenue is a proper measure of damages in a trademark action, 2 or why it would
be appropriate to treble the gross sales revenue figure rather than a net profit figure.
Regardless, given the equitable nature of a treble damage award, I order Plaintiff to provide
evidence to account for the costs associated with its sales, which Plaintiff may do by means
of a supplemental affidavit. Additionally, with respect to Plaintiff’s request for an award
of attorney fees, the Court directs Plaintiff’s counsel to submit the documentation necessary
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The Lanham Act permits a plaintiff to recover the defendant’s profits and the plaintiff’s damages. 15
U.S.C. § 1117(a). However, there is authority that “recovery of both plaintiff’s lost profits and
disgorgement of defendant’s profits is generally considered a double recovery under the Lanham Act.”
Nintendo of Am., Inc. v. Dragon Pac. Int’l, 40 F.3d 1007, 1010 (9th Cir. 1994). See also Choice Hotels
Int’l, Inc. v. Key Hotels of Atmore II, LLC, No. 1:16-cv-452, 2017 WL 6945340, at *4 (S.D. Ala. Aug. 18,
2017) (collecting cases). A claim for recovery of a defendant’s profits provides the opportunity to recover
an award based on gross sales revenue when the defendant fails to prove the expenses associated with its
revenue, 15 U.S.C. § 1117(a), but Plaintiff elected not to attempt to establish Defendant’s gross revenue
and instead requested a recovery measured by its own damages. At this stage of the proceedings, the Court
will not reopen the hearing record to permit any supplementation designed to develop a claim for
disgorgement of Defendant’s profits.
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for the Court to perform a proper lodestar analysis, including billing records. Plaintiff is
further directed to file a supplemental memorandum addressing its requests for relief, i.e.,
damages, injunctive relief, and attorney fees based on exceptional circumstances. Plaintiff
will provide these materials on or before March 15, 2019.
III. CONCLUSION
Plaintiff’s Motion for Reconsideration is GRANTED (ECF No. 20). The matter of
Plaintiff’s Motion for Default Judgment will remain under advisement.
SO ORDERED.
Dated this 4th day of March, 2019.
/s/ Lance E. Walker
UNITED STATES DISTRICT JUDGE

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