Herrmann Int'l, Inc. v. Herrmann Int'l Eur.

• Decision Date: 06 March 2021
• Docket Number: CIVIL CASE NO. 1:17-cv-00073-MR
• Court: U.S. District Court — Western District of North Carolina
• Parties: HERRMANN INTERNATIONAL, INC. and HERRMANN GLOBAL, LLC, Plaintiffs, v. HERRMANN INTERNATIONAL EUROPE, HERRMANN TECHNOLOGIE, BRAIN RESSOURCES, and LIONEL MARC VUILLEMIN, Defendants.

HERRMANN INTERNATIONAL, INC.
and HERRMANN GLOBAL, LLC, Plaintiffs,
v.
HERRMANN INTERNATIONAL EUROPE,
HERRMANN TECHNOLOGIE, BRAIN RESSOURCES,
and LIONEL MARC VUILLEMIN, Defendants.

CIVIL CASE NO. 1:17-cv-00073-MR

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA ASHEVILLE DIVISION

March 6, 2021

ORDER

THIS MATTER is before the Court on the Plaintiffs' Motion for Default Judgment. [Doc. 68].

I. PROCEDURAL BACKGROUND

On March 7, 2017, the Plaintiffs Herrmann International, Inc. ("HI") and Hermmann Global, LLC ("HG" and collectively the "Plaintiffs") filed this action against the Defendants Herrmann International Europe ("HIE"), Herrmann Technologie ("HT"), Brain Ressources ("BR"), and Lionel Marc Vuillemin ("Vuillemin" and collectively the "Defendants"). [Doc. 1]. The Plaintiffs asserted claims related to the breach of a licensing agreement between the parties (the "License Agreement") and the misuse of the Plaintiffs' intellectual

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property, including claims under the Lanham Act, 15 U.S.C. § 1051 et seq.; the Copyright Act, 17 U.S.C. § 101; claims for trade secret misappropriation under federal and state law, 18 U.S.C. § 1832 et seq. and N.C. Gen. Stat. § 66-152 et seq., respectively; and state law claims for breach of contract, tortious interference with contract, common law trademark infringement, and "alter ego and joint liability." [Id.].

On December 13, 2017, the Defendants acknowledged service of the summons and the Complaint. [Doc. 11]. On February 12, 2018, Defendants filed a motion to dismiss for lack of personal jurisdiction. [Doc. 16]. On September 28, 2018, the Court denied the Defendants' motion to dismiss. [Doc. 23].

On September 6, 2019, the Plaintiffs filed an Amended Complaint against the Defendants. [Doc. 43].

On December 23, 2019, the Plaintiffs filed a Motion for Partial Summary Judgment. [Doc. 51]. The Defendants opposed the Plaintiffs' Motion. [Doc. 56]. On January 30, 2020, the Court entered a text-only order denying the Plaintiffs' Motion for Partial Summary Judgment. [Text-Only Order entered Jan. 30, 2020].

On August 5, 2020, the Defendants' counsel advised the Court that the Defendants were not going to appear for trial. [Doc. 62 at ¶ 6]. On August

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7, 2020, the Defendants' counsel moved to withdraw. [Docs. 63, 64]. On August 11, 2020, the Court entered an order granting the motion to withdraw, directing the Defendants to retain new counsel within 14 days, and directing Defendant Vuillemin to advise the Court if he intended to proceed pro se. [Doc. 65]. After the Defendants failed to respond to the Court's order, the Court directed the Clerk to enter default against the Defendants on August 26, 2020. [Doc. 66]. On August 26, 2020, the Clerk entered a default. [Doc. 67].

On September 4, 2020, the Plaintiffs filed the present Motion for Default Judgment, asking the Court to (1) find the Defendants liable on the claims for breach of contract, trademark and copyright infringement, misappropriation of trade secrets, and tortious interference; (2) find Defendant Vuillemin jointly and severally liable with the other Defendants; (3) award the Plaintiffs a monetary judgment, consisting of unpaid royalties and lost profits, jointly and severally against all the Defendants; (4) enter a permanent injunction enjoining the Defendants from continuing to infringe the Plaintiffs' trademarks and copyrights, using or disclosing the Plaintiffs' trade secretes or falsely claiming an affiliation with the Plaintiffs, Ned Herrmann, or his work, and requiring the Defendants to transfer to the Plaintiffs all trademark registrations, domain names, and domain

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registrations that are confusingly similar to the Herrmann Trademarks; (5) declare that the license agreement between the parties is terminated and that the Defendants have no ownership or interest in the Plaintiffs' trademarks, the Plaintiffs' copyrights, or the Plaintiffs' trade secrets; and (6) award the Plaintiffs attorneys' fees and costs in the amount of $660,192.63. [Doc. 68-1 at 4-5].

II. STANDARD OF REVIEW

Rule 55 of the Federal Rules of Civil Procedure provides for the entry of a default when "a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend." Fed. R. Civ. P. 55(a). Once a defendant has been defaulted, the plaintiff may then seek a default judgment. If the claim is for a sum certain or can be made certain by computation, the Clerk of Court may enter the default judgment. Fed. R. Civ. P. 55(b)(1). In all other cases, the plaintiff must apply to the Court for a default judgment. Fed. R. Civ. P. 55(b)(2).

"The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact . . . ." Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). A defendant, however, "is not held . . . to admit conclusions of law." Ryan, 253 F.3d at 780 (quoting

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Nishimatsu, 515 F.2d at 1206). The Court, therefore, must determine whether the facts as alleged state a claim. GlobalSantaFe Corp. v. Globalsantafe.com, 250 F. Supp. 2d 610, 612 n.3 (E.D. Va. 2003).

"If the court finds that liability is established, it must then turn to the determination of damages." See Ryan, 253 F.3d at 780-81. The court must make an independent determination regarding damages and cannot accept as true factual allegations of damages. S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 422 (D. Md. 2005).

III. FACTUAL BACKGROUND

The well-pleaded factual allegations of the Plaintiffs, deemed admitted as a result of the Defendants' default, establish the following.

Beginning in the early 1960s, Ned Herrmann pioneered the field of brain research as it relates to business management and performance. [Doc. 43 at ¶ 15]. Mr. Herrmann created the first version of the Herrmann Brain Dominance Instrument ("HBDI") assessment, which is a psychometric test that defines and describes the way individuals think. [Id. at ¶ 16]. The Herrmann Thinking Management System ("HTMS") is a web application that allows authorized users to administer the HBDI assessment. [Id. at ¶ 17].

The Plaintiffs are professional services companies that provide assessments of cognitive, behavioral, and personality traits for education,

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business management training, and leadership development. [Id at ¶¶ 1-2]. That includes the HBDI assessment. [Id.]. The Plaintiffs have expended considerable effort, expense, and resources to promote Mr. Herrmann's research through the use of several distinctive trademarks, including "HERRMANN," "HBDI," "HERRMANN BRAIN DOMINANCE INSTRUMENT," "WHOLE BRAIN," and various iterations of the four-color graphic logos shown below (collectively "the Herrmann Trademarks").

Image materials not available for display.

[Doc. 43 at ¶ 18]. The United States Patent and Trademark Office has recognized the enforceability of the Herrmann Trademarks as detailed below:

Registration No.	Trademark	Registration Date
3,317,364	HERRMANN	10/23/2007
3,243,946	HERRMANN BRAIN; DOMINANCE INSTRUMENT	5/22/2007
3,317,363	HBDI	10/23/2007
3,894,545	HBDIINTERACTIVE	12/21/2010
3,339,401	WHOLE BRAIN	11/20/2007
3,343,876	WHOLE BRAIN TECHNOLOGY	11/27/2007
3,422,874	WHOLE BRAIN CREATIVITY	5/6/2008

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3,243,939	THE BUSINESS OF THINKING	5/22/2007
4,856,188	THINKING AGILITY	11/17/2015
4,889,922	THINKCENTERED	1/19/2016
3,887,178	THINKING ACCELERATOR	12/7/2010
3,610,290	ROI	4/21/2009
3,776,400	BRAINBYTES	4/13/2010
3,311,874	[Four-color logo]	10/16/2007
3,894,542	[Four-color logo]	12/21/2010
4,246.661	[Four-color logo]	11/20/2012

[Doc. 43 at ¶ 19]. The Plaintiffs exercise strict control over the quality and nature of services bearing the distinctive Herrmann Trademarks. [Id.].

The Plaintiffs have registered several copyrights, including the following (the "HG Copyrights"):

Registration No.	Title	Registration Date
TX0005649894	Business of thinking: think about; decision making: facilitator; guide.	2002
TX0005634457	Business of thinking: think about; problem solving: participant; workbook.	2002
TX0005634456	Business of thinking: think about; communicating : participant; workbook.	2002
TX0005390546	ABCDs of whole-brain; instructional technology	2001
TX0005388740	Design IT whole-brain way.	2001
TX0005384438	Instructions for using design IT; cards	2001
TX0002868547	Participant survey form of the; Herrmann brain dominance; instrument, HBDI.	1990
TX0002868546	Herrmann participant survey; form.	1981

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TX0002868545	Herrmann 20 questions.	1983
TX0005873051	Business of thinking: think about; problem solving, version 2A.	2002
TX0005649900	Business of thinking: think about; creative thinking: facilitator; guide.	2002
TX0005649899	Business of thinking: start; thinking: facilitator guide.	2002
TX0005649898	Business of thinking: think about; creative thinking: participant; workbook.	2002
TX0005649897	Business of thinking: think about; decision making: participant; workbook.	2002
TX0005649896	Business of thinking: start; thinking: participant workbook.	2002
TX0005649895	Business of thinking: think about; communicating: facilitator; guide.	2002

[Id. at ¶ 24].

The Plaintiffs have developed and used highly confidential, proprietary information (the Plaintiffs' "Trade Secrets"). [Id. at ¶ 25]. Such Trade Secrets include the algorithms underlying the HBDI assessment and the scoring and interpretation of HBDI assessment results; client data consisting of and derived from HBDI assessment results; and software source code, including code for implementing the HBDI assessment and scoring and interpreting HBDI assessment results. [Id.]. The Trade Secrets also include client lists and consulting and training techniques, tools, and materials...