Optigenex, Inc. v. FDL Fulfillment Servs. UG

OPTIGENEX, INC. PLAINTIFF v. FDL FULFILLMENT SERVICES UG,and JOHN DOES Numbers 1 through 99 DEFENDANTS

CIVIL ACTION NO. 3:17-CV-00689-GNS

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY LOUISVILLE DIVISION

April 9, 2020

MEMORANDUM OPINION AND ORDER

This matter is before the Court on Plaintiff's Motion for Default Judgment against Defendant FDL Fulfillment Services UG (DN 52). The motion is now ripe for adjudication. For the reasons that follow, Plaintiff's motion is GRANTED.

I. BACKGROUND

Plaintiff Optigenex, Inc. ("Optigenex") asserts federal law claims of trademark infringement, direct patent infringement, indirect patent infringement, inducement of patent infringement, unfair competition, and false advertising against Defendant FDL Fulfillment Services UG ("FDL"). (First Am. Compl. ¶¶ 4, 52-102, DN 17). Specifically, Optigenex claims that FDL has been manufacturing, marketing, and selling health supplement products containing Optigenex's patented botanical extract of Cat's Claw and bearing Optigenex's distinctive trademark, AC-11, without permission. (First Am. Compl. ¶¶ 7, 11-23).

Optigenex first brought this action on November 16, 2017. (Compl., DN 1). FDL is a German company with its principal place of business in Hamburg, Germany. (First Am. Compl. ¶ 5). Upon the filing of its original Complaint, service was returned executed on March 13, 2018, having been effected on February 12, 2018.¹ (Summons 5, DN 11). Optigenex then filed its First Amended Complaint on September 13, 2018. (First Am. Compl.). It appears that FDL was also successfully served with the First Amended Complaint. (Pl.'s Mot. Default J. ¶ 2, DN 52; Pl.'s Mot. Extension Time 1, DN 23; Pl.'s Notice, DN 20; Pl.'s Summons Request Ex. 2, DN 19-2).

FDL having manifested no appearance in this case, Optigenex moved, on January 23, 2020, for an entry of default pursuant to Fed. R. Civ. P. 55(a), which the Clerk granted. (Pl.'s Mot. Entry Default 2, DN 50; Order, DN 51). Optigenex filed the current motion for default judgment on February 19, 2020 pursuant to Fed. R. Civ. P. 55(b)(2). (Pl.'s Mot. Default J. 2). Specifically, Optigenex seeks a judgment against FDL on the issue of liability and a permanent injunction to prevent FDL from engaging in the activity giving rise to Optigenex's claims in this case. (Pl.'s Mot. Default J. 1; First Am. Compl. 23-24).

II. JURISDICTION

Federal question jurisdiction is afforded over Optigenex's claims against FDL. See 28 U.S.C. § 1331; see also 28 U.S.C. § 1338.

III. DISCUSSION

"Rule 55(b)(2) governs all cases in which the court enters a default judgment." 10A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2684 (rev. 4th ed. Aug. 2019 update). As Wright & Miller note:

When an application is made to the court under Rule 55(b)(2) for the entry of the judgment by default, the district judge is required to exercise sound judicial discretion in determining whether the judgment should be entered. The ability of the court to exercise its discretion . . . is made effective by the two requirements inRule 55(b)(2) that an application must be presented to the court for the entry of judgment and that notice of the application must be sent to any defaulting party who has appeared.

10A Wright & Miller, supra, § 2685 (citations omitted); see Fed. R. Civ. P. 55(b)(2) ("If the party against whom a default judgment has appeared personally . . . that party . . . must be served with written notice of the application [for a default judgment] at least 7 days before the hearing."). Optigenex having successfully served FDL, having applied for and received an entry of default, and now having applied to the Court for default judgment, the question then becomes whether FDL has "appeared" in this action so as to be afforded the requisite notice regarding Optigenex's motion for default judgment.

FDL has not acted in any way to comport with the "appearance" requirement so as to be afforded seven days' notice of Optigenex's motion for default judgment. The only involvement of FDL in this case is its receipt of service; however, the successful execution of service in and of itself does not satisfy the appearance requirement. See, e.g., Baez v. S. S. Kresge Co., 518 F.2d 349, 350 (5th Cir. 1975) (affirming district court's grant of default judgment even though service was properly executed). FDL is therefore not entitled to seven days' notice of Optigenex's motion for default judgment under Fed. R. Civ. P. 55(b)(2).

All that remains is determining whether default judgment should be granted in Optigenex's favor on the issue of liability, it damages, and for the issuance of a permanent injunction. Only if Optigenex's claims asserted against FDL are supported by sufficient factual content in Optigenex's complaint will liability on the part of FDL be established:

The fact that a default is entered does not automatically result in plaintiff recovering what was demanded in the complaint. If the court determines that defendant is in default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true. Liability is not deemed established simply because of the default . . . .

The distinction between defendant's concession, by defaulting, of the facts in plaintiff's complaint and a finding that liability is established is an important one about which there exists some confusion. . . .

. . . Even after default, . . . 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 conclusions of law.

10A Wright & Miller, supra, § 2688.1 (citations omitted). As mentioned, Optigenex asserts six different causes of action against FDL.

Optigenex first asserts a claim for trademark infringement pursuant to 15 U.S.C. § 1114(1)(a). (First Am. Compl. ¶¶ 52-61). Optigenex also asserts a claim of unfair competition pursuant to 15 U.S.C. § 1125(a). (First Am. Compl. ¶¶ 87-94). "The tests for trademark infringement and unfair competition under the Lanham Act are essentially the same." Brown & Brown, Inc. v. Cola, 745 F. Supp. 2d 588, 610-11 (E.D. Pa. 2010) (citing A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000)). "Specifically, to prove trademark infringement and unfair competition, a plaintiff must show that: '(1) [it] held the trademark; (2) [it] did not consent to the defendant's use of that mark; and (3) [the defendant's] use of the mark was likely to cause confusion among relevant customers.'" La Bamba Licensing, LLC v. La Bama Authentic Mexican Cuisine, Inc., 295 F. Supp. 3d 756, 765 (W.D. Ky. 2018) (citations omitted).

Optigenex is an applied sciences company that licenses and markets a proprietary, patented botanical extract of Cat's Claw, which it markets and sells under its AC-11 trademark. (First Am. Compl. ¶ 11). Optigenex owns the AC-11 trademark. (First Am. Compl. ¶ 17; First Am. Compl. Ex. A, DN 17-1; First Am. Compl. Ex. B, DN 17-2). Optigenex asserts that FDL is, without permission, "using a mark identical in sound, meaning, appearance, and commercial impression and otherwise substantially similar to [Optigenex's] Mark in connection with an ingredient of[FDL's] NooCube vitamin supplements and in the marketing and sale of their NooCube vitamin supplements" and on FDL's website which "markets NooCube for use in DNA repair." (First Am. Compl. ¶¶ 22-23). Upon review of Optigenex's trademark and FDL's mark, it does appear that FDL's mark is likely to cause confusion among relevant consumers regarding the origin of AC-11; FDL's NooCube product lists AC-11 as an ingredient and sometimes identifies that ingredient at "Cat's Claw" without any attribution to Optigenex. (First Am. Compl. 8-9). Liability is therefore established regarding Optigenex's trademark infringement and unfair competition² claims against FDL on Optigenex's well-pleaded facts.

Optigenex next asserts direct infringement of patent claims pursuant to 35 U.S.C. § 271(a). (First Am. Compl. ¶¶ 62-71). The owner of a United States patent is entitled to exclude others from making, using, or selling the patented invention in the United States. Decca Ltd. v. United States, 640 F.2d 1156, 1166 (Cl. Ct. 1980) (citing 35 U.S.C. § 154). Optigenex owns four relevant patents pertaining to its direct infringement of patent claims. (First Am. Compl. ¶¶ 24-31). "To state a claim for direct patent infringement, a plaintiff must allege sufficient facts that the accusedproduct contains 'elements identical or equivalent to each claimed element of the patented invention.'" Stuart v. Rust-Oleum Corp., 272 F. Supp. 3d 1019, 1024 (S.D. Ohio 2017) (quoting Warner-Jenkinson Co., Inc. v. Hilton Davis Chem. Co., 520 U.S. 17, 40 (1997)). As mentioned, FDL's NooCube product, sold in the United States, contains an ingredient that it calls "AC-11" and sometimes identifies that ingredient as "Cat's Claw[.]" (First Am. Compl. 8-9 & ¶ 63). FDL's website additionally references "C-MED-100[,]" which is the previous name given by Optigenex to AC-11. (First Am. Compl. ¶ 38). FDL's website provides a detailed description of AC-11 that is almost identical to the way Optigenex describes AC-11 in its patents—namely, as an ingredient that can repair damaged DNA and enhance the DNA repair process. (First Am. Compl. ¶¶ 25, 27, 29, 31, 39-40). Optigenex has established FDL's liability on its direct infringement of a patent claims with well-pleaded facts by showing that FDL's AC-11 is identical or equivalent to Optigenex's AC-11.

Optigenex also asserts indirect infringement of patent claims pursuant to 35 U.S.C. § 271. (First Am. Compl. ¶¶ 72-86). Specifically, Optigenex styles Count III as a claim for "Indirect Infringement of U.S. Patent" and Count IV as "Inducement of Patent Infringement[.]" (First Am. Compl. 18-19). "Indirect Infringement[,]" however, is an umbrella term used to describe two types of indirect infringement of...