Applause Prod. Grp., LLC v. Showtime Events Inc.

APPLAUSE PRODUCTION GROUP, LLC, Plaintiff, v. SHOWTIME EVENTS INC., et al., Defendants.

Case No.: GJH-16-1463

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND Southern Division

May 4, 2017

MEMORANDUM OPINION

Plaintiff Applause Production Group, LLC ("Applause") brings this action against Defendants Showtime Events Inc. ("Showtime") and Amilcar Mendez (collectively, "Defendants"), alleging trademark infringement and unfair competition in violation of the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a), and cybersquatting in violation of the Anticybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d)(1)(a). Now pending before the Court is Plaintiff's Motion for Default Judgment, ECF No. 13. No hearing is necessary. Loc. R. 105.6 (D. Md. 2016). For the following reasons, Plaintiff's Motion for Default Judgment is denied.

I. BACKGROUND

Applause is an entertainment business that provides services such as event production, audio/visual services, themed décor and event management. ECF No. 1 ¶ 8. Applause owns Federal Trademark Registration No. 3,756,459 for the "Showtime Events" trademark ("the '459 trademark") and conducts business under that name. Id. at 1 & ¶ 9; see also ECF No. 1-1.¹ The Showtime Events trademark has been in exclusive and continuous use by Plaintiff since January 1, 1996. Id. ¶ 10. Applause currently has offices in North Carolina, Michigan and Florida and plans to "expand into other markets in the near future." Id. ¶ 8. Applause has expended substantial money and resources in advertising and promoting their mark throughout the United States, resulting in a mark that is "inherently distinctive" and which has "acquired distinctiveness among relevant purchasers." Id. ¶ 11.

Defendant Showtime Events Inc. is a Maryland corporation with its principal place of business in Hyattsville, Maryland and Defendant Mendez, a resident of the State of Maryland, is an officer and managing member of Showtime Events Inc. Id. ¶ 3. Defendants are also in the entertainment industry, promoting and selling event management services in the Washington, D.C., Maryland and Virginia region. Id. ¶ 16; see also ECF Nos. 1-4 & 1-7. Applause alleges that Showtime Events Inc. forfeited its corporate charter in or around 2012 and, since that time, Defendant Mendez has been operating the company as a sole proprietorship. Id. ¶ 4.

On April 26, 2011, Defendants established a website, www.showtimeeventsinc.com, to promote their company. Id. ¶¶ 16, 33; see also ECF No. 1-2. They also established and promoted their company using the names "Showtime Events" or "Showtime Events Inc." on various social media pages, such as Facebook, and event planning websites, such as Wedding Wire and the Knot. Id. ¶¶ 14-17; see also ECF Nos. 1-3, 1-9 & 1-10. Plaintiff alleges that Defendants had actual knowledge of their Showtime Events trademark prior to establishing these websites and listings. Id. ¶ 18.

On March 19, 2014, Applause notified Defendants of their infringing use of the Showtime Events mark and requested that they cease their use of the mark. Id. ¶¶ 28, 34. Defendants allegedly refused, and continued their use of the mark both in their business and on their website. Id.

On August 25, 2014, Plaintiff reached out to the host of Defendants' website, Homestead Technologies, and notified them of Defendants' allegedly infringing use of their mark. Id. ¶ 36. Homestead, in turn, contacted Defendants and requested the removal of the infringing content, which Defendants declined to do. Id. ¶ 37. This process was repeated in January 2016, with Homestead taking the additional step of disabling Defendants' website until the request was complied with. Id. ¶ 38, 39. Defendants removed certain content but continued to retain the domain name and operate social media pages using the Showtime Events mark. Id. ¶ 40.

Plaintiff alleges that the Showtime Events mark, as used by Applause over the past twenty years, is "incontestable, distinctive and has acquired secondary meaning." Id. ¶ 21. They further allege that Defendants' unauthorized use of their mark is likely to cause confusion among potential customers by creating the impression that "Applause itself has offered or endorsed Plaintiff's services." Id. ¶¶ 22, 25. Plaintiff alleged that this infringement is willful and "designed to specifically trade and capitalize upon the substantial goodwill of Applause's trademark," id. ¶ 28, and that this infringement has caused Plaintiff's goodwill to be "damaged." Id. ¶ 27. Plaintiff alleges that Defendants' conduct has caused them harm through lost sales and profits, and forced them to incur the expenses associated with attempting to halt Defendants' actions. ECF No. 13-1 ¶ 41. With respect to their cybersquatting claim, Plaintiff alleges that Defendants' registration of the domain name and continued operation of the website and social media pages demonstrate a bad faith intent to profit from the mark. ECF No. 1 ¶ 41.

On May 16, 2016, Plaintiff filed the instant case, alleging trademark infringement and unfair competition in violation of the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a), and cybersquatting in violation of the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d)(1)(a). ECF No. 1. Defendants were served via a private process server on June 10, 2016. ECF Nos. 7 & 8.

According to the Declaration of Plaintiff's counsel, Caitlin Grant, attached to the Motion for Default, on August 5, 2016, attorney Emily Hanson sent a letter to Plaintiff on behalf of Defendant Mendez expressing his interest in settling the dispute. ECF No. 13-2 at 2-3. Counsel for Plaintiff acknowledged receipt of the letter on August 26, 2016 and replied to Hanson with a draft settlement agreement on August 29, 2016. Id. at 2, 4. Receiving no response, Plaintiff mailed the draft settlement agreement to Defendant Mendez at the address provided by Hanson. Id. at 2, 6. In the letter, Plaintiff warned Mendez that if they did not reach an agreement by September 15, 2016, Plaintiff would move for default judgment. Id. at 6. Again receiving no response, Plaintiff emailed Hanson asking for confirmation that Mendez accepted the terms of settlement. Id.at 7.

As no response was forthcoming with respect to this final attempt to negotiate, ECF No. 13-2 at 2, Plaintiff filed a Motion for Clerk's Entry of Default and a Motion for Default Judgment on September 16, 2016. ECF Nos. 12 and 13. An Order of Default was entered by the Clerk of the Court against Defendants on October 6, 2016. ECF No. 14.

II. STANDARD OF REVIEW

"A defendant's default does not automatically entitle the plaintiff to entry of a default judgment: rather, that decision is left to the discretion of the court." Choice Hotels Intern., Inc. v. Savannah Shakti Carp., No. DKC-11-0438, 2011 WL 51 18328 at * 2 (D. Md. Oct. 25, 2011)(citing Dow v. Jones, 232 F. Supp. 2d 491, 494 (D. Md. 2002)). Although "[t]he Fourth Circuit has a 'strong policy' that 'cases be decided on their merits,'" id. (citing United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir.1993)), "default judgment may be appropriate when the adversary process has been halted because of an essentially unresponsive party[.]" Id. (citing S.E.C. v. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005)). "Upon default, the well-pled allegations in a complaint as to liability are taken as true, although the allegations as to damages are not." Lawbaugh, 359 F. Supp. 2d at 422. When considering a Motion for Default Judgment, the Court "must [then] determine whether [those] allegations . . . support the relief sought in th[e] action." Int'l Painters & Allied Trades Indus. Pension Fund v. Capital Restoration & Painting Co., 919 F. Supp. 2d 680, 685 (D. Md. 2013) (citation and internal quotation marks omitted).

III. DISCUSSION

A. Trademark Infringement²

Plaintiff seeks default judgment on their claim that Defendants' use of the Showtime Events mark infringes on their trademark. "To prove trademark infringement, a plaintiff must show both that it has a valid, protectable trademark and that the defendant's use of a 'reproduction, counterfeit, copy, or colorable imitation [of the mark],' 15 U.S.C. § 1114(1),creates a likelihood of confusion." Petro Stopping Centers, L.P. v. James River Petroleum, Inc., 130 F.3d 88, 91 (4th Cir. 1997) (citing Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 930 (4th Cir. 1995)). The mere use of a trademark is insufficient to establish infringement; instead the key inquiry is the likelihood of confusion. What-A-Burger Of Virginia, Inc. v. Whataburger, Inc. Of Corpus Christi, Texas, 357 F.3d 441, 450 (4th Cir. 2004) (internal citation omitted).

In support of their Motion for Default Judgment, Applause has submitted its registration certificate for the '459 trademark. ECF No. 1-2. When the United States Patent and Trademark Office ("PTO") issues a certificate of registration, "that registration provides the registrant with prima facie evidence of (1) the validity of the mark and its registration, (2) the registrant's ownership, and (3) the registrant's 'exclusive right' to use the mark on or in connection with the goods and services specified in the certificate of registration." U.S. Search, LLC v. U.S. Search.com Inc., 300 F.3d 517, 524 (4th Cir. 2002) (citing Am. Online, Inc. v. AT & T Corp., 243 F.3d 812, 816 (4th Cir. 2001)). Thus, the dispute over Plaintiff's claim of trademark infringement hinges on whether Defendant's use of "Showtime Events Inc." is "likely to confuse an 'ordinary consumer' as to the source or sponsorship of the goods." Anheuser-Busch, Inc. v. L. & L. Wings, Inc., 962 F.2d 316, 318 (4th Cir. 1992) (citations omitted).

To determine if a likelihood of confusion exists, courts in this district generally look to certain factors derived principally from Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1527 (4th Cir. 1984): (1) the strength or distinctiveness of the plaintiff's mark as...