Kanga Care LLC v. Gogreen Enters. LLC

• Decision Date: 12 November 2014
• Docket Number: Civil Action No. 13-cv-02770-PAB-BNB
• Parties: KANGA CARE LLC, Plaintiff, v. GOGREEN ENTERPRISES LLC, Defendant.
• Court: U.S. District Court — District of Colorado

KANGA CARE LLC, Plaintiff, v. GOGREEN ENTERPRISES LLC, Defendant.

Civil Action No. 13-cv-02770-PAB-BNB

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

November 12, 2014

Judge Philip A. Brimmer

ORDER

This matter comes before the Court on the Motion for Default Judgment filed by plaintiff Kanga Care LLC ("Kanga Care") [Docket No. 20]. The Court has jurisdiction pursuant to 28 U.S.C. § 1331.

I. BACKGROUND

Due to the Clerk of Court's entry of default, the allegations in plaintiff's complaint, Docket No. 1, are deemed admitted. Olcott v. Del. Flood Co., 327 F.3d 1115, 1125 (10th Cir. 2003). Kanga Care, a Colorado limited liability company, designs and manufactures cloth diapers and diaper accessories. Docket No. 1 at 2, ¶ 9. Kanga Care is the owner of U.S. Patent No. 8,425,483 (the "'483 Patent") titled "Double Gusset Cloth Diaper Along With Method For Making The Same." Id. at 3, ¶ 10; Docket No. 1-1 at 2. Defendant GoGreen Enterprises LLC ("GoGreen"), also a Colorado limited liability company, is a direct competitor of Kanga Care. Docket No. 1 at 3, ¶ 14. GoGreen formerly marketed and sold a product called "Champ Cloth Diapers," which itmarketed as using "Dual Gussets Technology." Docket No. 1 at 3, ¶ 13. Kanga Care asserts that the Champ Cloth Diapers infringe the '483 Patent. Id.

On February 25, 2014, GoGreen, through its representative Joseph Leverich, filed a document titled "Response to Civil Action" stating that it did not at that time offer products for retail or wholesale sale. Docket No. 14 at 1. GoGreen explained that the company was unable to employ an attorney due to financial constraints and requested that the Court accept its response "as intention to resist entry of a default judgment and claim all rights to a jury trial under the Federal Rules of Civil Procedure." Id.

Kanga Care filed a motion for entry of default on May 2, 2014. Docket No. 18. The Clerk of Court found that GoGreen's response violated D.C.COLO.LCivR 11.1(a), which states that "[o]nly unrepresented individual parties and members of this court's bar may appear or sign a pleading, motion, or other document," and D.C.COLO.LAttyR 5(b), which states that corporations may not appear without counsel admitted to the bar of this court. Docket No. 19. Accordingly, the Clerk of Court entered default on May 2, 2014. Id. Kanga Care filed the instant motion on May 13, 2014, and GoGreen has not filed a response.

II. ANALYSIS

In order to obtain a judgment by default, a party must follow the two-step process described in Fed. R. Civ. P. 55. First, the party must seek an entry of default from the Clerk of the Court under Rule 55(a). Second, after default has been entered by the Clerk, the party must seek default judgment according to the strictures of Rule 55(b).See Williams v. Smithson, 1995 WL 365988, at *1 (10th Cir. June 20, 1995) (citing Meehan v. Snow, 652 F.2d 274, 276 (2d Cir. 1981)).

The decision to enter default judgment is "'committed to the district court's sound discretion.'" Olcott, 327 F.3d at 1124 (citation omitted). In exercising that discretion, the Court considers that "[s]trong policies favor resolution of disputes on their merits." Ruplinger v. Rains, 946 F.2d 731, 732 (10th Cir. 1991) (quotation and citations omitted). "The default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party." Id. It serves to protect a plaintiff against "interminable delay and continued uncertainty as to his rights." Id. at 733. When "ruling on a motion for default judgment, the court may rely on detailed affidavits or documentary evidence to determine the appropriate sum for the default judgment." Seme v. E&H Prof'l Sec. Co., Inc., No. 08-cv-01569-RPM-KMT, 2010 WL 1553786, at *11 (D. Colo. Mar. 19, 2010).

A party may not simply sit out the litigation without consequence. See Cessna Fin. Corp. v. Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1444-45 (10th Cir. 1983) ("[A] workable system of justice requires that litigants not be free to appear at their pleasure. We therefore must hold parties and their attorneys to a reasonably high standard of diligence in observing the courts' rules of procedure. The threat of judgment by default serves as an incentive to meet this standard"). One such consequence is that, upon the entry of default against defendant, the well-pleaded allegations in the complaint are deemed admitted. See Olcott, 327 F.3d at 1125; see also Charles Wright, Arthur Miller & Mary Kane, Fed. Prac. & Proc. § 2688 (3d. ed.2010). "Even after default, however, 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 mere conclusions of law." Id. at 63. A court need not accept conclusory allegations. Moffett v. Halliburton Energy Servs., Inc., 291 F.3d 1227, 1232 (10th Cir. 2002). Although "[s]pecific facts are not necessary" in order to state a claim, Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)), the well-pleaded facts must "permit the court to infer more than the mere possibility of misconduct." Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (internal quotation and alteration marks omitted). Thus, even though modern rules of pleading are somewhat forgiving, "a complaint still must contain either direct or inferential allegations respecting all the material elements necessary to sustain a recovery under some viable legal theory." Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008) (quotation and citation omitted).

A. Infringement of the '483 Patent

Plaintiff claims that defendant infringes the '483 patent directly and indirectly. Docket No. 1 at 4, ¶¶ 18, 20.

1. Direct Infringement

The sufficiency of a complaint alleging direct patent infringement is determined by Fed. R. Civ. P. 84 and Form 18. In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1334 (Fed. Cir. 2012). Rule 84 provides that "the forms in the Appendix suffice under these rules and illustrate the simplicity and brevity that these rules contemplate." To state a claim for direct patent infringement, Form 18 requires:"(1) an allegation of jurisdiction; (2) a statement that the plaintiff owns the patent; (3) a statement that defendant has been infringing the patent by making, selling, and using the device embodying the patent; (4) a statement that the plaintiff has given the defendant notice of its infringement; and (5) a demand for an injunction and damages." Bill of Lading, 681 F.3d at 1334 (quotation and alteration marks omitted).

The Court finds that plaintiff's allegations constitute a legitimate cause of action for direct infringement. The complaint identifies a basis for subject matter and personal jurisdiction, Docket No. 1 at 2, ¶¶ 4-5, alleges that plaintiff owns the patent, id. at 3, ¶ 12, alleges that plaintiff put defendant on notice of its infringement prior to bringing suit, id. ¶ 15, and demands injunctive relief and monetary damages. Id. at 4-5. The complaint therefore satisfies all of the requirements of Form 18, and plaintiff has properly stated a claim for infringement.

2. Indirect Infringement

Plaintiff alleges that defendant has indirectly infringed the '483 patent by inducing users of defendant's products to infringe. Docket No. 1 at 4, ¶ 20. 35 U.S.C. § 271(b) states that "[w]hoever actively induces infringement of a patent shall be liable as an infringer." "[B]ecause Form 18 addresses only direct infringement, we must look to Supreme Court precedent for guidance regarding the pleading requirements for claims of indirect infringement." Bill of Lading, 681 F.3d at 1337.

The Supreme Court has noted that "induced infringement under § 271(b) requires knowledge that the induced acts constitute patent infringement." Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011). To survive a motion todismiss, the complaint "must contain facts plausibly showing that [defendant] specifically intended [its] customers to infringe the [patent at issue] and knew that the customer's acts constituted infringement." Bill of Lading, 681 F.3d at 1339. "Specific intent requires a 'showing that the alleged infringer's actions induced infringing acts and that he knew or should have known his actions would induce actual infringements.'" ACCO Brands, Inc. v. ABA Locks Mfr. Co., 501 F.3d 1307, 1312 (Fed. Cir. 2007) (quoting DSU Med. Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1304 (Fed. Cir. 2006)). This standard, though, does not require plaintiff to "prove its case at the pleading stage." Bill of Lading, 681 F.3d at 1339. As the Federal Circuit has made clear, district courts must "draw all reasonable inferences in favor of the [plaintiff]," and the relevant inquiry is whether "there are sufficient facts alleged to render the [plaintiff's] asserted inferences plausible." Id. at 1340.

Here, plaintiff has alleged sufficient facts to satisfy the plausibility standard with respect to its claim for indirect infringement. The complaint alleges that defendant has known of the '483 Patent since at least July 1, 2013, when plaintiff wrote to defendant comparing the Champ Cloth Diapers to the claims of the '483 Patent and defendant persisted in its infringing conduct. Docket No. 1 at 3, ¶¶ 15-16. This allegation supports an inference that any of GoGreen's infringing sales of the Champ Cloth Diapers that occurred after July 1, 2013 were done with the specific intent to induce its customers to infringe the '483 Patent.

B. Permanent Injunction

Plaintiff seeks entry of a permanent injunction enjoining defendant from the manufacture, use, sale, offers for sale, or importation of any products that infringe the '483 Patent. Docket No. 20 at 9; Docket No. 1 at 4-5.

Under the Patent Act, the Court has the authority to grant injunctive relief to prevent further violations of a plaintiff's patent...