DeFries v. MSB Trade Inc

District Court, N.D. Texas·Decided August 2, 2024·No. 3:22-cv-00549·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION KELLIE DEFRIES, § § Plaintiff, § § v. § Civil Action No. 3:22-cv-00549-M § MSB TRADE INC., et al., § § Defendants. § § § MEMORANDUM OPINION AND ORDER Before the Court is Plaintiff’s Motion for Default Judgment. ECF No. 122. Plaintiff seeks entry of default judgment against Defendants alyer, annbay ltd, aoshang, audab store, barney/skd-us, beautychen, deskoti, enzo-missdeer-us, gao yongxue-yongusuus, gu bingding- eyxformula, honoson, jackshen-mooerca us, jinhua cao-ztl fashion, lisihua-jiasheng direct, magic c-moibase gel polish, njqianrou-nanjingqianroubuliaoyouxiangongsi, qiaocrystal-shiny crystal, subay-subay direct, tangsanyuan ba, tatuo us, tianping liu-biutee store, tianshui wang-over the hills, xin huang-angnya nails, xinqitong, xiulin dai-yokilly beauty, xushujun-kang yue trading, yao angela-honey joy beauty & health, zhang zhaoqin-juanzhizong, zhouyanghao, zhujunjie- hzsbass store (collectively, “Defaulting Defendants”). On July 24, 2024, the Court held an evidentiary hearing on the Motion for Default Judgment. Upon review of the Motion and supporting documentation, and for the reasons stated on the record during the hearing, the Court finds that the Motion should be GRANTED IN PART, and that Plaintiff is entitled to a reasonable royalty to compensate for past infringement. Plaintiff’s requests for a permanent injunction, enhanced damages, and pre-judgment interest are DENIED. Plaintiff’s claims against all Defendants other than the Defaulting Defendants are DISMISSED WITH PREJUDICE. Federal Rule of Civil Procedure 55 provides for entry of a default and default judgment when a party against whom judgment for affirmative relief is sought has failed to plead or

otherwise defend. Fed. R. Civ. P 55(a). “Default judgment is proper only if the well-pleaded factual allegations in the . . . Complaint establish a valid cause of action.” United States v. 1998 Freightliner Vin #: 1FUYCZYB3WP886986, 548 F. Supp. 2d 381 (W.D. Tex. 2008); see also Nishimatsu Const. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“There must be a sufficient basis in the pleadings for the judgment.”). After the clerk enters a default, “the plaintiff’s well-pleaded factual allegations are taken as true, except regarding damages.” U.S. For Use of M-Co Constr., Inc. v. Shipco Gen., Inc., 814 F. 2d 1011, 1014 (5th Cir. 1987). In considering a motion for default judgment, the Court will consider (1) whether the entry of default judgment is procedurally warranted, (2) whether a sufficient basis in the pleadings based on the substantive merits for judgment exists, and (3) what form of relief, if any,

a plaintiff should receive. Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998). Here, the Court has considered the factors set forth in Lindsey and concludes that entry of default judgment is procedurally warranted, and that the Defaulting Defendants have been properly served but have not appeared. In addition, the Court has evaluated the allegations in the First Amended Complaint and determines that a substantive basis for judgment exists. Plaintiff is the named inventor on five asserted patents: two utility patents1 and two design patents.2 Specifically, Plaintiff alleges that

1 Specifically, U.S. Patent Nos. 10,308,005 (“’005 patent”) and 10,967,625 (“’625 patent”). Plaintiff no longer seeks recovery as to U.S. Patent 10,675,852 (“’852 patent”). See ECF No. 122 at 5. 2 Specifically, U.S. Patent Nos. D867,838 (“’838 patent”), and D867,839 (“’839 patent”). the Defaulting Defendants have infringed claims 1, 9–11 of the ’005 patent, claim 1 of the ’625 patent, claim 1 of the ’838 patent, and claim 1 of the ’839 patent (collectively, the “asserted claims”). The Court has reviewed the First Amended Complaint and the evidence presented by Plaintiff, including Plaintiff’s testimony at the hearing, and concludes that Plaintiff has

established direct infringement of the asserted claims by the Defaulting Defendants through sales of products associated with the following ASINs,3 the “accused ASINs”: B09TQMRHQ7 B08LPR3JKS B07X632YLD B07DTB2CBR B09TQMC8L5 B08LBL4JMG B07V42WKQZ B07CWB7YFX B09S9N7SF9 B08FTBZG36 B07T7DJ1FV B07CNF6FB1 B09LD4W3RH B08FSJSLFG B07T65M5S5 B07C2TCZHH B09KR9BDBH B08D67VZYC B07QR976Z9 B07BXFSC87 B093H1LCTH B08BC8RJHW B07PXHLNQ4 B07BK1TMH4 B091KZPD17 B08B37BVLC B07PWC7VK3 B077GNC8FT B0912H7RB2 B08B34P513 B07PVHGTPP B076M1F81T B08XXZL83D B088NTNLT1 B07P6G7356 B08XBG4Z46 B085RQKWNF B07KCRGZBN B09TQMRHQ7 B0827VWDS9 B07HQ5NXC9 B08V5MNQR7 B08LPR3JKS B07X632YLD See ECF No. 122-5. The Court proceeds to Plaintiff’s requested relief. Damages for patent infringement are governed by 35 U.S.C. § 284, which provides, in pertinent part, that “the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.” 35 U.S.C. § 284. The patentee bears the burden of proving damages. Dow Chem. Co. v. Mee Indus., Inc., 341 F.3d 1370, 1372, 1381 (Fed. Cir. 2003). “A reasonable royalty is the amount that ‘a person, desiring to manufacture [, use, or] sell a patented article, as a business proposition, would be willing to pay as a royalty and yet be able to make [, use, or] sell the patented article, in the market, at a

3 An “ASIN” is a unique identifier specific to the Amazon.com platform; each product sold on Amazon has a unique ASIN assigned to it. ECF No. 34 (“FAC”) ¶ 42. reasonable profit.’” Applied Med. Res. Corp. v. U.S. Surgical Corp., 435 F.3d 1356, 1361 (Fed. Cir. 2006) (alterations in original) (quoting Trans–World Mfg. Corp. v. Al Nyman & Sons, Inc., 750 F.2d 1552, 1568 (Fed. Cir. 1984)). The Court determines that a reasonable royalty is the appropriate measure of damages in this case.4 Plaintiff requests that the Court enter a reasonable royalty similar to license

agreements previously entered into between Plaintiff and other accused infringers of the asserted claims. Plaintiffs provide a representative license agreement that states, “As long as Defendant wishes to sell application tools identified by [ASIN], or functional and design equivalents thereof, the Defendant shall pay the Plaintiff a royalty rate of $1,000 per month or 3% of gross proceeds per month, whichever is higher. This agreement shall terminate upon Defendant ceasing payments.” ECF No. 122-4 at 2. During the hearing, Plaintiff testified that royalty rates between 3% and 5% of gross proceeds are typical for license agreements in this industry and market. The Court notes that although Plaintiff requests a royalty to be calculated on a per month

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DeFries v. MSB Trade Inc, (N.D. Tex. 2024).

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