Grp. One v. GTE GmbH, 20-CV-2205 (MKB) (JRC)

CourtUnited States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
Writing for the CourtMARGO K. BRODIE, UNITED STATES DISTRICT JUDGE
PartiesGROUP ONE LTD., Plaintiff, v. GTE GmbH and RALPH WEIGEL, in his corporate capacity as owner of GTE and in his individual capacity, Defendants.
Docket Number20-CV-2205 (MKB) (JRC)
Decision Date02 September 2022

GROUP ONE LTD., Plaintiff,
v.

GTE GmbH and RALPH WEIGEL, in his corporate capacity as owner of GTE and in his individual capacity, Defendants.

No. 20-CV-2205 (MKB) (JRC)

United States District Court, E.D. New York

September 2, 2022


MEMORANDUM & ORDER

MARGO K. BRODIE, UNITED STATES DISTRICT JUDGE

I. Background .............................................................................................................................. 4

a. Factual background .............................................................................................................. 4

i. Plaintiff's Net System ...................................................................................................... 5

ii. Defendants' allegedly infringing Trinity System and false statements about Plaintiff's Net System ...................................................................................................... 6

iii. Plaintiff's patents and Defendants' knowledge of infringement ...................................... 7

iv. Plaintiff's claims .............................................................................................................. 8

b. Procedural history ................................................................................................................ 9

i. Plaintiff's first motion for a temporary restraining order and preliminary injunction and Defendants' pro se response ........................................................................................ 9

ii. Defendants' motion to dismiss and Plaintiff's Amended Complaint ............................. 12

iii. Plaintiff's second motion for a TRO and PI ................................................................... 13

c. The R&R ............................................................................................................................ 18

i. Service of process........................................................................................................... 18

ii. The default judgment ..................................................................................................... 18

iii. Patent infringement claims ............................................................................................. 19

iv. Lanham Act claims for false advertising and use of false descriptions and false representations ............................................................................................................... 19

v. Tortious interference with prospective business relations under the New York common law ...................................................................................................................... 20

vi. Unfair competition under the New York common law .................................................. 21

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vii. Deceptive trade practices and false advertising under the GBL ................................. 21

viii. Trade libel under the New York common law ........................................................... 22

ix. Remedies ........................................................................................................................ 22

1. Abandoned forms of relief .......................................................................................... 22

2. Permanent injunction and damages for patent infringement claims ........................... 23

3. Non-patent damages under the Lanham Act and New York common law ................ 23

d. Plaintiff's objections to the R&R ...................................................................................... 24

II. Discussion ............................................................................................................................. 25

a. Standards of review........................................................................................................... 25

i. Report and recommendation .......................................................................................... 25

ii. Default judgment ............................................................................................................ 27

b. Unopposed portions of the R&R....................................................................................... 28

c. Default judgment .............................................................................................................. 29

i. Willfulness ..................................................................................................................... 30

ii. Meritorious defense ........................................................................................................ 33

iii. Prejudice ......................................................................................................................... 37

d. Patent infringement claims ............................................................................................... 39

i. Plaintiff's objections ...................................................................................................... 39

ii. Liability .......................................................................................................................... 42

e. Lanham Act claims for false advertising and use of false descriptions and false representations ...................................................................................................................... 50

f. Deceptive trade practices and false advertising under the GBL ....................................... 50

g. Trade libel claim ............................................................................................................... 53

h. Remedies ........................................................................................................................... 55

i. Permanent injunction and patent damages ..................................................................... 55

1. Permanent injunctive relief ......................................................................................... 55

A. Plaintiff is successful on the merits ........................................................................ 57

B. Plaintiff has suffered irreparable injury and remedies available at law are inadequate to compensate Plaintiff ......................................................................... 58

C. The balance of hardships and public interest favor Plaintiff .................................. 59

2. Lost profits based on Plaintiff's patent claims ........................................................... 61

ii. Lost profits based on Plaintiff's non-patent claims ...................................................... 67

1. Judge Cho correctly analyzed lost profits under the Lanham Act, rather than the New York common law ........................................................................................ 67

2. Lost profits analysis .................................................................................................... 68

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i. Plaintiff's request to submit additional evidence.............................................................. 73

III. Conclusion ............................................................................................................................ 74

Plaintiff Group One Ltd. (“Group One”) commenced the above-captioned action on May 15, 2020, against Defendants GTE GmbH (“GTE”) and Ralf Weigel, and filed an Amended Complaint on April 16, 2021, alleging that Defendants infringed Plaintiff's patents for tennis let-detection systems and knowingly spread malicious falsehoods about the capabilities of Plaintiff's systems. (See generally Am. Compl., Docket Entry No. 39; Compl., Docket Entry No. 1.) Plaintiff brings claims of direct, induced, and contributory patent infringement under the Patent Act, 35 U.S.C. § 271(a)-(c); false advertising and use of false descriptions and false representations under section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); tortious interference with prospective business relations and unfair competition under the New York common law; deceptive trade practices and false advertising under sections 349(h) and 350(e)(3) of the New York General Business Law (“GBL”), respectively; and trade libel under the New York common law. (Am. Compl. ¶¶ 61-155.) After initially appearing in the case, Defendants defaulted, and the Clerk of Court entered default against them on June 30, 2021. (Clerk's Entry of Default, Docket Entry No. 46.) On July 9, 2021, Plaintiff moved for default judgment, (Pl.'s Mot. for Default J., Docket Entry Nos. 47-48), and, on July 10, 2021, the Court referred Plaintiff's motion to Magistrate Judge James R. Cho for a report and recommendation, (Order dated July 10, 2021).

By report and recommendation dated February 28, 2022, Judge Cho recommended that the Court (1) deny Plaintiff's motion as to Plaintiff's claims of patent infringement, deceptive trade practices and false advertising under GBL §§ 349 and 350, and trade libel under the New York common law; (2) grant Plaintiff's motion as to its claims of false advertising and use of false descriptions and false representations under the Lanham Act and tortious interference with

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prospective business relations and unfair competition under the New York common law; and (3) deny without prejudice Plaintiff's requests for a permanent injunction and patent infringement damages, and for an award of lost profits in connection with its non-patent claims (the “R&R”). (R&R 32, 36-37, Docket Entry No. 92.) Plaintiff filed objections to the R&R on March 14, 2022. (Pl.'s Objs., Docket Entry No. 95.) Defendants have not filed a response to Plaintiff's objections and the time for doing so has passed. For the reasons discussed below, the Court adopts the R&R in part and grants in part and denies in...

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