NextHome, Inc. v. Jenkins
| Decision Date | 12 April 2021 |
| Docket Number | Case No. 1:20-cv-01210-CCB |
| Parties | NEXTHOME, INC., Plaintiff, v. CRAIG JENKINS, et al Defendants. |
| Court | U.S. District Court — District of Maryland |
This Report and Recommendation addresses Plaintiff NextHome, Inc.'s ("NextHome") Motion for Default Judgment as to Defendant Craig Jenkins and Defendant NXT Home LLC (together, "Defendants"). (ECF No. 17). Defendants have not filed a response and the time to do so has now passed. See Loc. R. 105.2.a (D. Md. 2018). On January 5, 2021, in accordance with 28 U.S.C. § 636 and Local Rules 301 and 302, Judge Blake referred this case to me for a report and recommendation on Plaintiff's Motion for Default Judgment. For the reasons more fully explained below, I respectfully recommend that Plaintiff's Motion for Default Judgment be GRANTED.
NextHome commenced this action against Defendants on May 12, 2020, alleging trademark infringement and false designation of origin and unfair competition in violation of the Lanham Act, 15 U.S.C. §§ 1114 and 1125(a), cybersquatting in violation of the Anticybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d)(1)(a), and Maryland common law claims of trademark infringement and unfair competition. (ECF No. 1). NextHome offers "real estate brokerage and mortgage brokerage services, and owns Federal Trademark Registration No. 2,192,807 for the "NEXTHOME®" trademark ("NEXTHOME Trademark"). Id. at ¶¶ 10; 13. The NEXTHOME Trademark was registered with the U.S. Patent and Trademark Office ("USPTO") on September 29, 1998, and has been in "constant interstate use" since that time. Id. at ¶¶ 13; 16. The NEXTHOME Trademark is "strong," "inherently distinctive," and "represents the exceedingly valuable goodwill of NextHome." Id. at ¶ 17.
Defendant Jenkins created Defendant NXT Home LLC, a limited liability corporation, with its principal place of business in Crofton, Maryland, on August 18, 2018. (ECF No. 1 at ¶¶ 8; 19; 27). Defendants are also in the "mortgage brokerage and lending services," and "real estate marketing" industries. Id. at ¶¶ 20; 27. To promote their services, Defendants established websites with domain names including www.nxthomemortgage.com and www.nexthomesolutions.com. Id. at ¶¶ 20; 28. On December 5, 2019, NextHome sent a letter to Defendant Jenkins "demanding that he cease infringing" the NEXTHOME Trademark. Id. at ¶ 23. Less than two weeks later, and without responding to NextHome's letter, Defendant Jenkins filed an application (No. 88/728587) with the USPTO to register a trademark for "NXT HOME MORTGAGE" for "mortgage brokerage; mortgage lending."1 Id. at ¶ 24. Notwithstanding NextHome's "demands to cease and desist all infringing activities," Defendants refused, and "continue to market, promote, provide, and sell" services similar to that which NextHome offers its customers. Id. at ¶¶ 31-33. At no point did NextHome authorize or license Defendants' actions. Id. at ¶ 29.
Service of process was effected on Defendants on May 1, 2020. (ECF Nos. 8; 9). Defendants did not file an answer or responsive pleading within the requisite time period. UponPlaintiff's Motion for Entry of Default against Defendants (ECF No. 11), the Clerk entered judgment in Plaintiff's favor on July 6, 2020. (ECF No. 14). Plaintiff then filed its Motion for Default Judgment on September 11, 2020, seeking various forms of relief, including (1) a permanent injunction; (2) an order requiring Defendants to transfer to NextHome any domain names incorporating the NEXTHOME Trademark; (3) an order directing Defendants to withdraw USPTO Application No. 88/728587; (4) an order directing Defendants to provide NextHome with a report of its gross sales from January 2018 to present and to appear for a hearing on an accounting of Defendants' profits earned in conjunction with the NEXTHOME Trademark or confusingly similar trademarks; (5) treble damages for deliberate and willful trademark infringement and false designation of origin; (6) costs and attorneys' fees, with pre- and post-judgment interest; and (7) an order requiring Defendants to destroy all materials bearing the NextHome Trademark or confusingly similar trademarks. (ECF No. 17).
Federal Rule of Civil Procedure 55 governs entries of default and default judgments. Rule 55(a) requires that "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default." Where a plaintiff's claim is not "sum certain" or a "sum that can be made certain by computation," the plaintiff "must apply to the court for default judgment" under Rule 55(b)(2). Fed. R. Civ. P. 55(b)(1)-(2).
In determining whether to award a default judgment, the Court accepts as true the wellpleaded factual allegations in the Complaint as to liability. Entrepreneur Media, Inc. v. JMD Entm't Grp., LLC, 958 F. Supp. 2d 588, 593 (D. Md. 2013) (citing Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001)). Nonetheless, the Court must consider whether theunchallenged facts constitute a legitimate cause of action because a party in default does not admit mere conclusions of law. United States v. Redden, No. 09-cv-2688-WDQ, 2010 WL 2651607, at *2 (D. Md. June 30, 2012) (citing Ryan, 253 F.3d at 790). Although the Fourth Circuit has a "strong policy that cases be decided on the merits," United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), default judgment "is appropriate when the adversary process has been halted because of an essentially unresponsive party." S.E.C. v. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005).
If the Court determines that liability is established, the Court must then determine the appropriate amount of damages or other relief. CGI Fin., Inc., v. Johnson, No. 12-cv-1985-ELH, 2013 WL 1192353, at *1 (D. Md. Mar. 21, 2013). In this regard, "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c). The Court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations. Entrepreneur Media, Inc., 958 F. Supp. 2d at 593. A plaintiff's assertion of a sum in a complaint does not make the sum "certain" unless the plaintiff claims liquidated damages; otherwise, the complaint must be supported by affidavit or documentary evidence. Redden, 2010 WL 2651607, at *2. Rule 55(b)(2) provides that "the court may conduct hearings or make referrals . . . when, to enter or effectuate judgment, it needs to . . . determine the amount of damages." The Court is not required to conduct an evidentiary hearing to determine damages; it may rely on affidavits or documentary evidence in the record to determine the appropriate sum. See, e.g., Mongue v. Portofino Ristorante, 751 F. Supp. 2d 789, 795 (D. Md. 2010) (collecting cases).
To state a claim for federal trademark infringement, a plaintiff must prove that (1) it owns a valid mark; (2) the defendant used the mark "in commerce," and without the plaintiff's authorization; (3) the defendant used the mark or imitation thereof "in connection with the sale, offering for sale, distribution, or advertising of goods or services; and (4) the defendant's use of the mark is likely to confuse consumers. Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 152 (4th Cir. 2012) (quoting 15 U.S.C. § 1114(1)(a)); see also People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 364 (4th Cir. 2001) (quoting 15 U.S.C. §§ 1114, 1125(a)).
NextHome has sufficiently demonstrated that it owns a valid trademark: the NEXTHOME Trademark. Registration of a trademark with the USPTO provides the registrant with prima facie evidence of the validity of the mark, the registrant's ownership, and the registrant's exclusive right to use the mark. U.S. Search, LLC v. U.S. Search.com Inc., 300 F.3d 517, 524 (4th Cir. 2002) (citing America Online, Inc. v. AT&T Corp., 243 F.3d 812, 816 (4th Cir. 2001)). The NEXTHOME Trademark bearing Registration No. 2,192,807, is registered to Next Home, Inc., as of September 29, 1998. (ECF No. 17-2 at 82-83). Moreover, the NEXTHOME Trademark is incontestable under 15 U.S.C. § 1065—that is, the "mark has been in continuous use for five consecutive years subsequent to the date of such registration and is still in use in commerce"—because NextHome has made constant interstate use of the mark since September 1997. (ECF Nos. 17-1 at 5; 17-3 at 2).
NextHome also satisfactorily asserts that Defendants used the confusingly similar NXT HOME MORTGAGE mark "in commerce," "in connection with the sale, offering for sale, distribution, or advertising of goods or services," and without authorization. Rosetta Stone Ltd., 676 F.3d at 152 (citing 15 U.S.C. § 1114(1)(a)); (ECF No. 17-1 at 6). Exhibit A, attached to Plaintiff's Complaint, shows the NXT HOME MORTGAGE mark displayed on Defendants' website in furtherance of Defendants' "mortgage brokerage [and] mortgage lending" services. (ECF No. 1-1; see also ECF No. 17-2 at 60-72 (same)). Additionally, Defendants use the mark in the domain name of their website: nxthomemortgage.com. (ECF No. 17-1 at 6). Indeed, Defendants' own application to the USPTO asserts that the NXT HOME MORTGAGE mark was used in commerce as early as June 2018. (ECF No. 17-2 at 12).
To the fourth prong of the analysis, Defendants' use of the NXT HOME MORTGAGE mark is likely to confuse consumers. On this point, to determine the likelihood of confusion, the Court looks to several non-exhaustive factors:
(1) the strength or distinctiveness of the plaintiff's mark; (2) the similarity of the two marks; (3) the similarity of the goods or services the marks identify; (4...
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