Nat'l Collegiate Athletic Ass'n v. Kizzang LLC

304 F.Supp.3d 800

NATIONAL COLLEGIATE ATHLETIC ASSOCIATION, Plaintiff,

v.KIZZANG LLC and Robert Alexander, Defendants.

No. 1:17–cv–00712–JMS–MPB

United States District Court, S.D. Indiana, Indianapolis Division.

Signed January 18, 2018

Amie Peele Carter, Daniel E. Pulliam, Faegre Baker Daniels LLP, Indianapolis, IN, Douglas N. Masters, Loeb & Loeb LLP, Chicago, IL, Edward K. Lee, Loeb & Loeb LLP, Los Angeles, CA, for Plaintiff.

Hallie Schneider Borellis, William S. Wyler, Flagel & Papakirk LLC, Hallie Schneider Borellis, Schwartz, Manes, Ruby & Slavin, Cincinnati, OH, James Papakirk, Flagel & Papakirk LLC, Cincinatti, OH, for Defendants.

ORDER

Hon. Jane Magnus–Stinson, Chief Judge

In March 2017, Plaintiff National Collegiate Athletic Association (the "NCAA") initiated this lawsuit against Defendants Kizzang LLC ("Kizzang") and Robert Alexander, the founder and owner of Kizzang, for trademark infringement, trademark dilution, and unfair competition related to Defendants' alleged use of the marks "FINAL 3" and "APRIL MADNESS." On November 7, 2017, the Court denied Defendants' Motion to Dismiss, and granted the NCAA's Request for Entry of Default based on Defendants' failure to timely answer or otherwise plead to the Complaint. [Filing No. 73.] The NCAA has now filed a Motion for Default Judgment, [Filing No. 76 ], and a Motion for Permanent Injunction, [Filing No. 78 ], both of which are now ripe for the Court's decision.

I. BACKGROUND ¹

On March 8, 2017, the NCAA filed its Complaint in which it alleges that Defendants "are in the business of marketing and providing nationwide Internet-based promotions that award prizes for predicting the results of sporting events, including the results of college basketball games played by and between NCAA member schools, and in particular games played during the NCAA's Division I Men's Basketball Championship." [Filing No. 1 at 5.] It alleges that Defendants used the marks FINAL 3 and APRIL MADNESS in connection with their Final Four-based contests and "continue offering goods and services using the FINAL 3 and APRIL MADNESS marks via webpages and mobile-telephone applications...." [Filing No. 1 at 6–7.] The NCAA alleges that Kizzang has applied for federal trademark registration for FINAL 3 and APRIL MADNESS with the United States Patent and Trademark Office ("USPTO"). [Filing No. 1 at 7.]

The NCAA sets forth claims for: (1) trademark infringement under 15 U.S.C. § 1114 ; (2) trademark infringement under 15 U.S.C. § 1125(a) ; (3) trademark dilution under 15 U.S.C. § 1125 ; and (4) unfair competition. [Filing No. 1 at 8–11.] It requests that the Court enter judgment in its favor; order that the USPTO deny Kizzang's application to register the marks Final 3 and April Madness; and permanently enjoin Defendants from using the NCAA's Final Four and March Madness marks "and any colorable imitation or simulation of [them]," doing anything likely to induce the belief that Kizzang's products or services are legitimately connected with or sponsored or approved by the NCAA, and doing anything that is likely to dilute the distinctiveness of the NCAA's FINAL FOUR and MARCH MADNESS marks or that is likely to "tarnish the goodwill associated with those marks." [Filing No. 1 at 11.] The NCAA also requests that the Court order Defendants to recall all products, services, advertising, and promotional materials bearing the NCAA marks and any imitations of them, including FINAL 3 and APRIL MADNESS. [Filing No. 1 at 12.] Additionally, it seeks actual damages, all profits derived by Defendants from the acts complained of, the greater of three times the damages the NCAA has suffered as a result of the acts complained of or three times Defendants' profits, exemplary damages, and attorneys' fees and costs, and requests that Defendants be required to file with the Court a report in writing under oath setting forth the manner and form in which Defendants have complied with the terms of any injunction entered by the Court. [Filing No. 1 at 12.]

The NCAA filed a Motion for Preliminary Injunction on March 9, 2017, requesting that the Court preliminarily enjoin Defendants from the acts set forth in the request for relief contained in the Complaint. [Filing No. 5.] Seven days later, the Court entered a Stipulated Order, submitted on a motion by all parties, ordering that: (1) "[n]either Kizzang or Alexander, nor any of their officers, agents, servants, employees or attorneys, or anyone acting in concert with any of them, will use the marks FINAL 3 (or THREE) or APRIL MADNESS or any similar marks, in connection with any basketball themed contest, promotion or service in 2017"; (2) the NCAA's Motion for Preliminary Injunction is withdrawn without prejudice; and (3) "Defendants, having been served with the Complaint, shall answer by June 15, 2017." [Filing No. 20.] The June 15, 2017 answer deadline was later extended to July 15, 2017. [Filing No. 28.]

The July 15, 2017 deadline came and went without an answer or pleading from Defendants, and on July 21, 2017, the NCAA filed its Request for Entry of Default. [Filing No. 30.] Defendants responded to the Request for Entry of Default on August 10, 2017, [Filing No. 36 ], and filed a Motion to Dismiss or, in the alternative, to transfer the case to the United States District Court for the District of Nevada on August 31, 2017—more than six weeks after the July 15, 2017 responsive pleading deadline, [Filing No. 50; Filing No. 51 ].

On November 7, 2017, the Court denied Defendants' Motion to Dismiss as to Defendants' personal jurisdiction argument, denied as moot the remainder of the Motion to Dismiss, and granted the NCAA's Request for Entry of Default. [Filing No. 73.] Shortly thereafter, the NCAA filed a Motion for Default Judgment, [Filing No. 76 ], and a Motion for Permanent Injunction, [Filing No. 78 ], which are discussed below.²

II. STANDARD OF REVIEW

Rule 55 of the Federal Rules of Civil Procedure sets forth a two-step process for a party seeking default judgment.

McCarthy v. Fuller , 2009 WL 3617740, *1 (S.D. Ind. 2009) ; see also Lowe v. McGraw–Hill Companies, Inc. , 361 F.3d 335, 339 (7th Cir. 2004) ("The Federal Rules of Civil Procedure make a clear distinction between the entry of default and the entry of a default judgment"). First, the plaintiff must obtain an entry of default from the Clerk. Fed. R. Civ. P. 55(a). Second, after obtaining that entry, the plaintiff may seek an entry of default judgment. Fed. R. Civ. P. 55(b).

"A default judgment establishes, as a matter of law, that a defendant is liable to the plaintiff for each cause of action in the complaint." Coach, Inc. v. Tom's Treasure Chest , 2011 WL 4399355, *2 (N.D. Ind. 2011) (finding assertions of Complaint "taken as true" in determining willful infringement in connection with selling knockoff handbags containing Coach marks) (citing O'Brien v. R.J. O'Brien & Assocs., Inc. , 998 F.2d 1394, 1404 (7th Cir. 1993) ). "When a court determines that a defendant is in default, all well-pleaded allegations in the complaint will be taken as true." Coach, Inc. , 2011 WL 4399355 at *2 (citing Black v. Lane , 22 F.3d 1395, 1399 (7th Cir. 1994) ).

III. DISCUSSION

In its Motion for Default Judgment, the NCAA argues that it is entitled to default judgment on liability because, as a result of the Clerk's entry of default, all factual allegations of the complaint are taken as true. [Filing No. 77 at 4.] It sets forth the allegations in the Complaint that it contends support its claims. [Filing No. 77 at 4–15.]

In their response, Defendants reiterate many of the same arguments they made in opposition to the NCAA's Request for Entry of Default. [Filing No. 83.] Specifically, they argue that good cause existed for the default, that they acted quickly to correct the default, and that they have asserted a meritorious defense to the Complaint. [Filing No. 83 at 4–12.] Defendants also argue that they have "demonstrated their ongoing commitment to defending this case," [Filing No. 83 at 12–13 ], and that the NCAA is not entitled to a finding that this is an exceptional case such that it would be entitled to an award of attorneys' fees. [Filing No. 83 at 12–14.]

In reply, the NCAA argues that "Defendants seek to reargue, without justification or leave, the settled issue of whether they should be held in default," and "[t]he Court should give those arguments no consideration." [Filing No. 85 at 2.] It again asserts that it has shown that the factual allegations in the Complaint, which are deemed true for purposes of establishing liability, state claims for relief under the Lanham Act and Indiana common law. [Filing No. 85 at 2.]

At the outset, the Court notes that the issue of whether Defendants are liable is separate and apart from whether the NCAA is entitled to certain relief, such as a permanent injunction. The Court first addresses whether Defendants are liable for trademark infringement, trademark dilution, and unfair competition.

A. Liability

In connection with liability, Defendants reassert the arguments they set forth in response to the NCAA's Request for Entry of Default. [See Filing No. 83 at 4–12.] The Court considered those arguments thoroughly in connection with the NCAA's Request for Entry of Default, [Filing No. 73 ], and will not do so again here. Because Defendants did not show good cause for default,³ that they acted timely to remedy default,⁴ or that they have meritorious defenses—as discussed in the Court's November 7, 2017 Order—Clerk's entry of default was appropriate.

"The basic effect of an entry of default ... is that ‘[u]pon default, the well-pleaded allegations of a complaint relating to liability are taken as true.’ The defaulting party cannot contest the fact of his liability unless the entry of default is vacated under Rule 55(c)." VLM Food Trading Intern., Inc. v. Illinois Trading Co. , 811 F.3d 247, 255 (7th Cir. 2016) (citations omitted); 10 James W.M. Moore et al., MOORE'S FEDERAL PRACTICE §...