Profusion Indus., LLC v. Chem-Tek Sys., Inc.

PROFUSION INDUSTRIES, LLC, PLAINTIFF, v. CHEM-TEK SYSTEMS, INC., DEFENDANT.

CASE NO. 5:16-cv-164

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION

December 9, 2016

JUDGE SARA LIOI

MEMORANDUM OPINION AND ORDER

Presently before the Court is the motion of plaintiff ProFusion Industries, LLC ("plaintiff" or "ProFusion") for default judgment against defendant Chem-Tek Systems, Inc. ("defendant" or "Chem-Tek") pursuant to Fed. R. Civ. P. 55(b)(2) for trademark infringement, violation of the Lanham Act, and violation of the Ohio Deceptive Trade Practices Act. (Doc. No. 9 (Motion for Default Judgment ["Mot."]) at 54.¹) ProFusion seeks injunctive relief pursuant to 15 U.S.C. § 1116, and money damages pursuant 15 U.S.C. § 1117.

For the reasons that follow, plaintiff's motion is granted in part and denied in part.

I. BACKGROUND

In its complaint, plaintiff alleges that defendant has used the KOROSEAL^® trademark in violation of two provisions of the Lanham Act (15 U.S.C. §1125(a) (§ 43(a) of the Lanham Act) and 15 U.S.C. § 1125(d) (§ 43(d) of the Lanham Act)), as well as Ohio's Deceptive Trade Practices Act. (Doc. No. 1 (Complaint ["Comp."]).) Defendant waived service of the summonsand complaint (Doc. No. 6), but then failed to file a responsive pleading or otherwise defend the lawsuit.

Default was entered against Chem-Tek on July 22, 2016. (Doc. No. 8.)² Once default is entered, the defaulting party is deemed to have admitted all of the well-pleaded factual allegations in the complaint regarding liability, including jurisdictional averments. Ford Motor Co. v. Cross, 441 F. Supp. 2d 837, 846 (E.D. Mich. 2006) (citing Visioneering Constr. v. U.S Fid. & Guar., 661 F.2d 119, 124 (6th Cir. 1981)); see also Fed. R. Civ. P. 8(b)(6) ("An allegation—other than one relating to the amount of damages—is admitted if a responsive pleading is required and the allegation is not denied."). The following factual allegations from the complaint are deemed admitted due to defendant's default.

ProFusion is a limited liability company organized and existing under the laws of the state of Delaware, with its principal place of business at 3875 Embassy Parkway, Fairlawn, OH 44333. (Compl. ¶ 1.) Chem-Tek is a corporation organized and existing under the laws of the state of New York, with its principal place of business at 38-D Otis St., West Babylon, New York 11704. (Id. ¶ 2.) This Court has jurisdiction over the claims for trademark infringement and violations of the Lanham Act pursuant to 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331 and 1338,³ and has supplemental jurisdiction over state law claims pursuant to 28 U.S.C. § 1367. (Id. ¶ 3.) Venue is proper in the Northern District of Ohio pursuant to 28 U.S.C. § 1391(b), and/or (c), and 28 U.S.C. § 1400(b) because a substantial part of the events giving rise to the claims occurred in this judicial district. (Id. ¶ 4.)

The B.F. Goodrich Company of Akron, Ohio ("Goodrich"), originally adopted the KOROSEAL^® trademark for a variety of goods in 1939. These goods included synthetic elastomeric material sold in various forms, wall covers and matting for foot traffic, conveyor belting, flexible plastic tubing for surgical and clinical use, upholstery covers, impervious clothing and other applications. (Id. ¶ 5.) Goodrich registered several KOROSEAL^® federal trademark registrations on the principal register of the United States Patent and Trademark Office ("USPTO"). (Id. ¶ 7.) On February 17, 1989, Goodrich assigned Federal Trademark Registrations 441,766 ("'766 Registration") and 441,953 ("'953 Registration") for KOROSEAL^® to RJF International Corporation ("RJF"). On September 1, 1992, RJF received Federal Trademark Registration 1,711,712 ("'712 Registration") on the Principal Register of the USPTO for its KOROSEAL^® trademark for "synthetic elastomeric material sold in web, sheet, flexible film, block or rod form for use in further manufacturing; or in permanent combination with another article in the nature of containers or conduits." Subsequent to the issuance of the '712 Registration, the '766 and '953 Registrations lapsed. (Id. ¶ 8.) Koroseal Interior Products, LLC purchased the '712 Registration from RJF on or about March 14, 2014. Koroseal Interior Products, LLC is the owner of the KOROSEAL^® trademark. (Id. ¶ 9.)

ProFusion is the exclusive licensee of the KOROSEAL^® trademark. (Id.) ProFusion develops and distributes authentic KOROSEAL^® products, including liners that are used to prevent corrosion, abrasion, pitting, or other chemical or mechanical effects in metal, wood, concrete, fiberglass, polypropylene and polyethylene tanks and containments in many sizes and shapes. ProFusion has built significant goodwill in the KOROSEAL^® trademark and continues to build upon that goodwill with its customers. ProFusion has successfully achieved the trust and confidence of its customers and built a solid reputation under the KOROSEAL^® brand.ProFusion has invested extraordinary financial resources and various talents to develop and market its KOROSEAL^® products. (Id. ¶¶ 11-14.)

Chem-Tek is a company that provides plastic fabrication products, including flexible polyvinyl chloride ("PVC") liners, and is a competitor of ProFusion. Beginning January 24, 2013, Chem-Tek registered the domain name www.korosealliners.com to advertise and sell its products, including its competing PVC liners. Chem-Tek also uses the KOROSEAL^® trademark on its webpage advertising both KOROSEAL^® liners and its competing PVC liners. When customers contacted Chem-Tek to purchase KOROSEAL^® products, Chem-Tek would direct customers to a competing liner product even when the customers specifically requested the KOROSEAL^® liner. (Id. ¶¶ 15-18.) Chem-Tek obtained the www.korosealliners.com domain name knowing that the use and/or registration of such name would conflict with ProFusion's rights in the KOROSEAL^® mark, and with the intent to use the domain name in a manner that would cause Chem-Tek to benefit improperly from the reputation and goodwill that ProFusion has developed in its KOROSEAL^® products. (Id. ¶ 20.) Chem-Tek also advertised liners on several third-party websites using the KOROSEAL^® trademark. (Id. ¶ 21.) Chem-Tek never requested or received ProFusion's approval to use the KOROSEAL^® trademark in its website domain name or in connection with Chem-Tek's competing products. (Id. ¶ 22.) Chem-Tek has caused, and will continue to cause, consumer confusion and damage to ProFusion's goodwill and reputation with respect to its genuine KOROSEAL^® products. (Id. ¶¶ 24, 28, 32.)

II. DISCUSSION

A. Default Judgment—Liability

Federal Rule of Civil Procedure 55 governs default and default judgment. Default has been entered by the clerk against defendant Chem-Tek pursuant to Rule 55(a). (Doc. No. 8.)After default has been entered, the Court may enter default judgment against the defendant with or without a hearing. Fed. R. Civ. P. 55(b). Based on the well-pleaded factual allegations in the second amended complaint, the Court concludes that there is a sufficient basis for determining defendant's liability without the need for a hearing.

Even though the well-pleaded factual allegations of the complaint are accepted as true for the purpose of determining liability, the Court must still determine whether those facts are sufficient to state a claim for relief with respect to plaintiff's claims under the Lanham Act and Ohio's Deceptive Trade Practices Act for which the plaintiff seeks default judgment. See J&J Sports Prods., Inc. v. Rodriguez, No. 1:08-CV-1350, 2008 WL 5083149, at *1 (N.D. Ohio Nov. 25, 2008) (citation omitted) ("The Court . . . must determine whether the facts alleged in the Complaint are sufficient to state a claim for relief as to each cause of action for which the plaintiff seeks default judgment.").

1. Claim 1—15 U.S.C. § 1125(a) (Unfair Competition)

Plaintiff's first claim for relief alleges a violation of 15 U.S.C. § 1125(a). Section § 1125(a) provides that:

(a) Civil action

(1) Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which--

(A) is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

The same test is used for trademark infringement and unfair competition—likelihood of consumer confusion. Audi AG v. D'Amato, 469 F.3d 534, 542 (6th Cir. 2006) (citing Two Pesos v. Taco Cabana, 505 U.S. 763, 780, 112 S. Ct. 2753, 120 L. Ed. 2d 615 (1992)). Based upon the factual allegations in the complaint, which are deemed admitted, defendant has used the KOROSEAL^® trademark in advertising, distributing and selling defendant's products in such a way as to cause confusion because (1) consumers are likely to believe that Chem-Tek's products originate from, are sponsored or approved by, or associated with ProFusion, the exclusive licensee of the KOROSEAL^® trademark; or (2) are likely to mistake defendant's products for the genuine KOROSEAL^® products offered for sale by the plaintiff. (Compl. ¶¶ 26-32.) Thus, defendant is liable to plaintiff for unfair competition under 15 U.S.C. § 1125(a), Section 43(a) of the Lanham Act.

Accordingly, plaintiff is entitled to default judgment with respect to its first claim for relief—violation of 15 U.S.C. § 1125(a).

2. Claim ...