GOULAS v. MAXMO INC et al
Filing
18
ORDER granting Plaintiff's Third Amended Motion for Default Judgment 15 Signed by District Judge Nancy G. Edmunds. (CBet)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Thomas Goulas ,
Case No. 14-10993
Plaintiff,
Honorable Nancy G. Edmunds
v.
Maxmo, Inc. And Maxmo Foroozan, an
individual,
Defendants.
/
ORDER GRANTING PLAINTIFF’S THIRD AMENDED MOTION FOR DEFAULT
JUDGMENT [15]
Before the Court is Plaintiff Thomas Goulas’s motion for default judgment against
Defendants Maxmo, Inc., and Maxmo Foroozan for infringement of Plaintiff’s “Honey Tree”
restaurant trademark. (Dkt. 15.)
Plaintiff has filed suit for trademark infringement pursuant to 15 U.S.C. § 1114 for
infringing Plaintiff’s “Honey Tree” restaurant trademark, for unfair competition pursuant to
15 U.S.C. § 1125(a), unjust enrichment, common law infringement claims, violation of the
Michigan Consumer Protection Act, Mich. Comp. Laws § 445.901, breach of contract,
breach of guaranty, and for injunctive relief. (Compl.)
I.
Facts
Plaintiff states that, since 1975, he has used and/or licensed the trade name and mark
“Honey Tree” to over twenty three restaurants located in southeastern Michigan, Toledo,
Ohio, and Las Vegas, Nevada. (Comp. ¶ 8.) Plaintiff states that he has used the Honey
Tree name and mark consistently in connection with his restaurant operations and/or in
licensing the Honey Tree name and mark to authorized licensees or related companies.
(Id. ¶ 9.) Plaintiff maintains that the thirty-three year use of the name and mark in
connection with Honey Tree’s goods and services has resulted in the name and mark
becoming widely and favorably known and therefore is a valuable asset to Plaintiff. (Dkt.
10.)
Plaintiff is the principal register of the Honey Tree trademark with the United States
Patent and Trademark Office and has also registered the name in Michigan. (Exs. 1, 2.)
Plaintiff alleges that he has licensed the non-exclusive use of the Honey Tree name
and mark to various restaurants in Michigan. (Compl. ¶ 9.) Plaintiff states that, as a result
of his “extensive and continuous use of the Honey Tree Name and Mark and quality of the
of the Honey Tree’s good and services over the course of 33 years, the Honey Tree Name
and Mark have become widely known and favorably known and valuable assets to
Plaintiff[.]” (Id. ¶ 10.)
Plaintiff states that, on August 25, 2013, he and Defendants executed an agreement
for Defendants to use the Honey Tree trademark name. (Compl. ¶ 16.) Under the licensing
agreement, Defendants were to pay a $1,500.00 signing fee and $1,500.00 monthly royalty
payments for the first six months. (Compl., Ex. 3.) After the first six months, the royalty
rate was to increase to $2,000.00. (Id.)
Shortly after that time, it appears that Defendants defaulted under the agreement by
failing to pay amounts owing.
On December 20, 2013, Plaintiff sent Defendants a notice of default under the August
25, 2013 agreement. (Compl. Ex. 4.) Plaintiff informed Defendants that they owed him
$7,500.00 under the terms of the agreement. (Id.) The notice stated that Defendants had
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thirty days to cure the default or Plaintiff would “immediately file suit to cause [Defendants]
to remove the Honey Tree name and trade marks from [Defendant’s] premises and from
[Defendant’s] advertising. (Id.)
Plaintiff states that Defendants failed to cure the default under the agreement. (Compl.
¶ 20.)
On January 29, 2014, Plaintiff sent Defendants a cease and desist letter for
Defendants’ usage of the Honey Tree name and mark. (Compl., Ex. 5.)
Plaintiff states that he has terminated the agreement and that Defendants therefore
do not have any right to use the Honey Tree name or mark. (Compl ¶ 22.)
Plaintiff alleges that, despite terminating the agreement, Defendants are still using the
Honey Tree name and mark to provide their services at their business operations (a
restaurant) at 160 N. Milford Road, Milford, Michigan. (Compl. ¶¶ 23, 24.)
Plaintiff further alleges that “Defendants’ adoption and use of the [trademark] for its
Milford location . . . is an intentional and obvious attempt to trade on the goodwill
established by Plaintiff [] in the Honey Tree Name and Mark.” (Compl. ¶ 26.)
Plaintiff alleges that Defendants’ unauthorized use of the trademark has “irreparably
injured” him “by confusing consumers, diverting sales, and diluting the distinctiveness of
the [trademark.]” (Compl. ¶ 29.)
Plaintiff claims that Defendants have also failed to pay monies owing under the
agreement. (Compl. ¶ 29.) Plaintiff states that, if Defendants are permitted to continue,
their usage of the trademark will injure Plaintiff, the trademark, and the reputation and
goodwill associated with the trademark. (Id.) Plaintiff represents that Honey Tree has a
“reputation for exceedingly high-quality food and services[.]” (Id.) Plaintiff states that public
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interest weighs in favor of the public being free from confusion, mistake, or deception from
the improper trademark usage. (Id.) Plaintiff claims that Defendants’ usage will likely
“falsely suggest a sponsorship, connection, license, endorsement or association with
Plaintiff, thereby injuring Plaintiff and the public.” (Compl. ¶ 30.)
Plaintiff states that Defendants still owe the restaurant licensing fees as well as the
royalty rates from September, 2013, through February, 2014. (Compl. Ex. 6.)
Plaintiff requests a litany of relief. (Compl. at 10-11.) Among the noteworthy requests
outside of monetary damages, Plaintiff asks that the Court require Defendants “to deliver
for impoundment during the pendency of this action, and for destruction upon entry of
judgment, all products, menus, fixtures, writings, signage, artwork, and other materials that
infringe Plaintiff’s rights, falsely designate source or origin, or otherwise facilitate
Defendants’ unfair competition with Plaintiff[.] Plaintiff requests the Court to order
Defendants to show compliance by filing a report in writing and under oath detailing “the
manner and form in which Defendants have complied with [the Court’s order.]” (Id.) Plaintiff
finally requests that the Court enjoin and restrain from: “using the Honey Name and Mark;
otherwise infringing the Honey Tree Name and Mark, the Honey Tree Registrations and/or
competing unfairly with Plaintiff[].” (Id.)
Plaintiff requests legal fees of $10,165.10, which include the “costs to negotiate and
draft the license agreement, the efforts to collect the licensing fee and royalties . . . and to
prosecute th[e] action.”1 (Pl.’s Mot. ¶ 30.)
1
In his first motion for default judgment, Plaintiff’s counsel represented that he was
requesting $9,500.00 in legal fees, which included costs to negotiate and draft the license
agreement, the efforts to collect the licensing fee and royalties, and to prosecute the action.
(Dkt. 11.)
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On April 4, 2014, Plaintiff requested clerk’s entries of default against Defendants.
(Dkt. 6.) That same day, the clerk’s office entered those defaults. (Dkt. 7, 8.) On May 6,
2014, Plaintiff filed his original motion for default judgment. (Dkt. 11.) After a review of
Plaintiff’s materials, the Court concluded that Plaintiff had not complied with all of the
requirements and produced all of the documentation necessary for a default judgment. So
the Court ordered production of those materials on May 29, 2014. (Dkt. 14.) Plaintiff
complied with the Court’s order on the same day. (Dkt. 15.)
Plaintiff states that the agreement provides for attorneys’ fees. (Pl.’s Mot. ¶ 29.) In
his motion, Plaintiff requests $18,000.00 for license fees and royalties. (Pl.’s Mot. at 11.)
II.
Default judgment standard
Once a plaintiff obtains a Rule 55(a) clerk’s entry of default, a plaintiff may then seek
a default judgment pursuant to Rule 55(b).2 If the plaintiff seeks a judgment for a sum
certain, he may requests a clerk’s default judgment. Fed.R.Civ.P. 55(b)(1). For all other
requests, a plaintiff must apply to a court under Rule 55(b)(2) for relief. To obtain a default
judgment pursuant to Rule 55(b)(2), a plaintiff’s motion and supporting affidavits must
provide:
1. The nature of the claim;
2
Once a default is entered, all the complaint’s well-pleaded allegations are to be
established as true. See Rohn v. Commercial Recovery Systems, Inc., 13-10780, 2013 WL
6195578, at *3 (E.D.Mich. Nov. 26, 2013) (Murphy, J.) (quoting, “[w]hile a default
constitutes an admission of all the facts ‘well pleaded’ in the complaint, it does not admit
any conclusions of law alleged therein, nor establish the legal sufficiency of any cause of
action . . . it remains for the court to consider whether the unchallenged facts constitute a
legitimate cause of action, since a party in default does not admit mere conclusions of
law.”) (citations omitted).
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2. That the return of service was filed with the Court and that service was properly
made on the defendant;
3. A statement that the defendant is not:
a) an infant or incompetent person; or
b) in the military service;
4. The date the Clerk entered a default because the defendant failed to plead or
otherwise defend in accordance with Fed. R. Civ. P. 55(a);
5. The sum certain or the information necessary to allow the computation of a sum
certain; and
6. If an award of interest, costs, or attorney fees is sought, the legal authority and
supporting documentation for interest, costs or attorney fees.
See Fed. R. Civ. P. 55(b); E.D. Mich. L. R. 55.2. “After a court determines that a default
judgment should be entered, it will determine the amount and character of the recovery
awarded.” American Auto. Ass’n v. Dickerson, ___ F.Supp.2d___, 2014 WL 234362, at*2
(E.D.Mich. Jan. 22, 2014) (Borman, J.) (citations omitted).
III.
Analysis
A. Plaintiff’s facts establish that Defendants have infringed upon the Honey
Tree mark and name and are also unfairly competing with Plaintiff by using
the Honey Tree name and mark
The Court undertakes the same analysis for the trademark infringement, unfair
competition, common law trademark infringement, or a violation of the MCPA. Dickerson,
2014 WL 234362, at *2 (citations omitted). The Court “must evaluate the likelihood of
confusion between the two marks.” Id. (citations omitted).
Accepting the well-pleaded facts as true, the Court finds that Defendants have violated
Plaintiff’s rights. Here, Defendants are using Plaintiff’s Honey Tree name and mark without
the authorization to do so. “By using these marks without permission, Defendants are
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falsely representing that Plaintiff has endorsed or approves of their business.” Id. at *3.
“The use of [the Honey Tree name and mark] are likely to create confusion and mislead
consumers into believing that Plaintiff endorses and recommends Defendants’ business.”
Id. The Court further notes that Plaintiff alleges that Defendants’ actions are wilful and
deliberate given that Plaintiff notified them about their unlawful use of the Honey Tree name
and mark.
B. Monetary damages
Plaintiff is entitled to monetary damages. Plaintiff claims that he is entitled to a
$2,000.00 signing fee and the amount necessary to equal the royal rate for all the months
that Defendants have failed to make the $1,500.00 monthly payment. The Court first notes
that the August 26, 2013 letter requests a signing fee of $1,500.00, so the Court will award
that amount for a signing fee. (Compl., Ex. 3.) As for the monthly royalty rate amount, the
Court awards the rate from September, 2013, to May, 2014, or eight months: six months
at $1,500.00, and three months at $2,000.00, $15,000.00. The total monetary award based
on the agreement is therefore $16,500.00.3
C. Injunctive relief
Plaintiff also requests injunctive relief. Plaintiff requests that the Court:
1. order Defendants, their agents, servants, employees, attorneys, and any
and all persons in active concert or participation with them immediately and
permanently to cease and desist from all use of Plaintiff’s marks or any mark
3
Plaintiff claims he is entitled to $18,000.00 in monetary damages. He does not, though,
describe how he calculated that number.
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that resembles, suggests, or intimates that Defendants’ business is approved
or endorsed by Plaintiff;
2. order Defendants to destroy all literature, menus, web sites, domain
names, signs, billboards, labels, prints, packages, wrappers, containers,
advertising materials, stationary, and other items in their possession or
control that contain Plaintiff’s marks or any term, symbol, or logo confusingly
similar to Plaintiff’s mark; and to destroy any and all means in their
possession or control of making any of those infringing items;
3. order Defendants to have deleted or removed from publication, sign,
menu, and/or any advertisements paid for or used by them containing any of
Plaintiff’s marks and any other name, mark, or logo confusingly similar to
them;
4.
order Defendants to permanently delete, destroy, and remove all
electronic content, including all websites, domain names, and other electronic
materials displaying Plaintiff’s marks and any other name, mark, or logo
confusingly similar to them; and
5. order Defendants to file a report under oath within 30 days after the entry
of an injunction setting forth in detail the manner in which Defendants have
complied with the Court’s injunction and orders.
The Lanham Act provides for permanent injunctions to prevent future violations of the
Act. 15 U.S.C. § 1116. “A plaintiff who seeks a permanent injunction must demonstrate:
(1) it has suffered irreparable injury; (2) there is no adequate remedy at law; (3) that
considering the hardships between the plaintiff and defendant; a remedy in equity is
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warranted; and (4) that it is in the public’s interest to issue such an injunction.” Dickerson,
2014 WL 234362, at *4 (citation omitted). But, the Sixth Circuit has held “that no particular
finding of likelihood of . . . irreparable harm is necessary for injunctive relief in trademark
infringement or unfair competition cases.” Id. (citation omitted). Such a finding is not
necessary because “irreparable injury ordinarily follows when a likelihood of confusion or
possible risk to reputation appears from infringement or unfair competition.” Id. (citation
and quotation marks omitted).
Here, the Court finds that a permanent injunction is warranted. Plaintiff has suffered
an irreparable injury in that Defendants are infringing Plaintiff’s Honey Tree mark and
operating with that mark. There is also no adequate remedy at law, since there is a
potential for future harm from continuing infringement. Dickerson, 2014 WL 234362, at *4
(citation omitted). Plaintiff would also suffer hardship in that he faces the possibility of the
loss of goodwill. Id. And finally, as the Dickerson court noted that preventing consumer
confusion is in the public’s interest. Id.
Plaintiff is entitled to the injunctive relief he requests.
D. Attorneys’ fees
Plaintiff asserts that the agreement entitled him to attorneys’ fees. He is correct.
The agreements includes an attorneys’ fees provision. (Agreement, ¶ 16.05.) The
provision states that Defendants are to pay a reasonable attorneys’ fee, costs and
expenses that Plaintiff incurs in successfully enforcing, or obtaining, any remedy arising
from the breach of the agreement. (Id.)
Plaintiff says that he has incurred legal fees of $10,165.10, an amount that includes
the costs to negotiate and draft the license agreement, the efforts to collect the licensing
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fee and royalties, and to prosecute this action. (Pl.’s Mot., Ex. B, Pl.’s Aff. ¶ 24.)
The Court finds that some of fees Plaintiff requests are improper, given the fact that
the agreement provides for an attorneys’ fees award for enforcing the agreement and
prosecuting any wrongs stemming from the agreement, but not entering into the
agreement. Plaintiff has not provided any authority for those fees that happened outside
of enforcing the agreement. The Court therefore removes 13.5 hours from the fee detail.
The total hours expended with that 13.5 hours removed is 16.6 hours. The Court will base
its award on the 16.6 hours, finding those hours a little high, but within the range of being
reasonable. Plaintiff’s counsel requests an hourly rate of $325.00. Plaintiff’s counsel has
not supported that hourly request with any authority that that rate is reasonable. The Court
finds that it is not a reasonable rate. Looking to the 2010 Economics of Law Practice
Attorney Income and Billing Rate Summary Report, the Court finds that an hourly rate of
$325 would put Plaintiff’s counsel at nearly the ninety-fifth percentile.4 Given that Plaintiff’s
counsel has not provided the Court with any information regarding his background or
experience, the Court will award the mean hourly billing rate for intellectual property/trade
secrets attorneys, $268.00 per hour. The attorneys’ fees award would therefore be $
4,448.80. The Court awards the remaining costs and fees of $ 382.60. The total fee award
is therefore $4,831.40.
IV.
Conclusion
For the above-stated reasons, the Court GRANTS Plaintiff’s motion for default
judgment. The Court therefore immediately ORDERS:
4
Available at, http://www.michbar.org/pmrc/articles/0000146.pdf (last visited June 2,
2014).
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1. Defendants, their agents, servants, employees, attorneys, and any and all
persons in active concert or participation with them immediately and
permanently to cease and desist from all use of Plaintiff’s marks or any mark
that resembles, suggests, or intimates that Defendants’ business is approved
or endorsed by Plaintiff;
2. Defendants to destroy all literature, menus, web sites, domain names,
signs, billboards, labels, prints, packages, wrappers, containers, advertising
materials, stationary, and other items in their possession or control that
contain Plaintiff’s marks or any term, symbol, or logo confusingly similar to
Plaintiff’s mark; and to destroy any and all means in their possession or
control of making any of those infringing items;
3. Defendants to have deleted or removed from publication, sign, menu,
and/or any advertisements paid for or used by them containing any of
Plaintiff’s marks and any other name, mark, or logo confusingly similar to
them;
4. Defendants to permanently delete, destroy, and remove all electronic
content, including all websites, domain names, and other electronic materials
displaying Plaintiff’s marks and any other name, mark, or logo confusingly
similar to them;
5. Defendants to file a report under oath within 30 days after the entry of an
injunction setting forth in detail the manner in which Defendants have
complied with the Court’s injunction and orders;
6. Defendants to pay $16,500.00 in monetary damages; and
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7. Defendants to pay $4,831.40 in attorneys’ fees and costs.
So ordered.
s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: June 4, 2014
I hereby certify that a copy of the foregoing document was served upon counsel of record
on June 4, 2014, by electronic and/or ordinary mail.
s/Carol J. Bethel
Case Manager
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