Opinion
1:22-cv-00100-RP
07-28-2023
MIGHTY MUG, INC., Plaintiff v. THE INDIVIDUALS, PARTNERSHIPS AND UNINCORPORATED ASSOCIATIONS IDENTIFIED ON SCHEDULE A, Defendants
HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
DUSTIN M. HOWELL UNITED STATES MAGISTRATE JUDGE
Before the Court is Plaintiff Mighty Mug, Inc.'s Motion for Default Judgment, Dkt. 62. After reviewing Mighty Mug's motion and the relevant case law, the undersigned issues the following report and recommendation recommending that Mighty Mug's motion be granted.
I. BACKGROUND
A. Factual Background
This is a trademark infringement case. Mighty Mug manufactures and distributes specialized, “spillproof” drinkware. Dkt. 8, at 4. Mighty Mug holds a trademark registration consisting of the words “Mighty Mug” (the “Mighty Mug Mark”). Id. The mark appears on Mighty Mug's products and is used in connection with Plaintiff's “high-quality spillproof mugs and drinkware.” Id. Mighty Mug states that it has “spent substantial time, money, and other resources developing, advertising, and otherwise promoting” the mark and claims that the mark now has a secondary meaning as an identifier of high-quality goods. Id. at 5-6.
As of filing this Report and Recommendation, it appears that registration for Mighty Mug's mark was canceled on February 24, 2023, because Mighty Mug failed to file an acceptable declaration under section 8. See UNITED  STATES PATENT AND  TRADEMARK OFFICE,https://tsdr.uspto.gov/#caseNumber=4191803&caseSearchType=USAPPLICATIO N&CASETYPE=DEFAULT&SEARCHTYPE=STATUSSEARCH (LAST VISITED JUN. 2, 2023). HOWEVER, LAPSE OF A TRADEMARK DOES NOT NECESSARILY RESULT IN A LOSS OF TRADEMARK RIGHTS. See Crash Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387, 1391 (Fed. Cir. 2010); Mainstream Advert., Inc. v. Moniker Online Servs., LLC, No. 17-CV-22714, 2017 WL 11686847, at *8 (S.D. Fla. Dec. 6, 2017). Further, Defendants failed to answer Plaintiffs' complaint and, therefore, failed to assert that the Mighty Mugs' Trademark had been abandoned.
Mighty Mug filed its Amended Complaint naming Defendants, individuals, partnerships, and unincorporated associations identified in Schedule “A” attached to the amended complaint (collectively “Defendants”). Id. at 1; Dkt. 8-1. Mighty Mug has identified Defendants based on their seller profiles and associated seller ID across several online marketplaces. See Dkt. 8-1. Mighty Mug believes these sellers “either reside and/or operate in foreign jurisdictions” and receive the allegedly counterfeiting products from the same or similar sources. Dkt. 8, at 6.
Mighty Mug maintains that Defendants “are the past and present controlling forces” in the sale of products bearing infringing copies of the Mighty Mug's registered mark. Id. at 7. Mighty Mug states that it has not given Defendants permission or authorization to use its mark for any purpose. Id. at 11. Mighty Mug asserts that Defendants target their business activities towards consumers throughout the United States by stocking their e-commerce stores with allegedly counterfeit products open to purchasers in the United States. Id. According to Mighty Mug, Defendants use Mighty Mug's mark to capture consumers searching for genuine Mighty Mug products. Id. at 10. Mighty Mug asserts that this leads to increased traffic to and search engine exposure for Defendants while devaluing Mighty Mug's mark and legitimate marketplace. Id. at 8.
Mighty Mug seeks injunctive relief against Defendants to halt the use of its mark and seeks statutory damages for alleged violations of sections 1114 and 1125(a) of the Lanham Act. Id. at 1.
B. Procedural Background
After filing its Amended Complaint, Mighty Mug filed ex parte motions seeking authorization for alternate service of process by email or web publication and a Temporary Restraining Order. Dkts. 3, at 1; 4, at 1. The District Court entered an order authorizing alternate service of process. Dkt. 13, at 1. The District Court also granted in part and denied in part Mighty Mug's TRO motion. Dkt. 15, at 1. The TRO was extended three times for good cause shown.
Mighty Mug, through email and web publication, served the Defaulting Defendants (see infra note 3) with the Amended Complaint, TRO, and all other documents filed in this action in April and June 2022. Dkts. 23; 27; 30. Mighty Mug filed a Motion for Preliminary Injunction in August 2022 against Defendants that they were able to serve. Dkt. 44, at 1. Following a hearing, the Court granted Mighty Mug's Motion for Preliminary Injunction. Dkt. 57, at 4.
Mighty Mug has voluntarily dismissed many Defendants from this action. The Clerk of the Court entered Default against the remaining Defendants in October 2022. Dkt. 59. The remaining Defendants have not responded to Mighty Mug's suit and have not appeared before the Court. Accordingly, Mighty Mug now moves for default judgment pursuant to Fed.R.Civ.P. 55(b)(2) against the remaining Defendants, and its motion is unopposed. Dkt. 62, at 1.
Mighty Mug voluntarily dismissed Defendants as numbered on Schedule A: 4, 5, 6, 12, 19, 20, 22, 23, 33, 35, 37, 39, 41, 46, 47, 48, 52, 60, 63, 67, 69, 77, 147, 167, 171, 172, 176, 185, 186, 192, 193, 194, 200, 223, 226, 232, 233. Dkts. 18; 28; 32; 34; 36; 38; 40; 47; 51; 54; 61; 65; 68; 70; 73; 75.
Mighty Mug moved for default judgment against Defendants 20, 22, 41, 52, 67, 172, 176, and 233 before voluntarily dismissing them. Dkts. 65; 68; 70; 73; 75. Accordingly, the motions for default judgment against Defendants 20, 22, 41, 52, 67, 172, 176, and 233 are moot. The remaining Defendants are numbered: 1-3, 10, 13, 16, 18, 21, 24, 25, 27, 28, 32, 36, 38, 40, 4245, 49-51, 53-56, 59, 61, 62, 68, 70-72, 74, 76, 79, 83-171, 173-175, 177-199, 201-225, 227-231, 236-255 (“Defaulting Defendants”).
II. LEGAL STANDARD
Under Rule 55 of the Federal Rules of Civil Procedure, federal courts have the authority to enter a default judgment against a defendant that has failed to plead or otherwise defend itself. Fed.R.Civ.P. 55(a)-(b). That said, “[d]efault judgments are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). A party is not entitled to a default judgment simply because the defendant is in default. Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996). Rather, a default judgment is generally committed to the discretion of the district court. Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977).
In considering Mighty Mug's motion, the Court must determine: (1) whether default judgment is procedurally warranted; (2) whether Mighty Mug's complaint sets forth facts sufficient to establish that it is entitled to relief; and (3) what form of relief, if any, Mighty Mug should receive. United States v. 1998 Freightliner Vin #: 1FUYCZYB3WP886986 , 548 F.Supp.2d 381, 384 (W.D. Tex. 2008); see also J & J Sports Prods., Inc. v. Morelia Mexican Rest., Inc., 126 F.Supp.3d 809, 813 (N.D. Tex. 2015) (using the same framework).
III. DISCUSSION
A. Procedural Requirements
To determine whether entry of a default judgment is procedurally warranted, district courts in the Fifth Circuit consider six factors: “[1] whether material issues of fact are at issue, [2] whether there has been substantial prejudice, [3] whether the grounds for default are clearly established, [4] whether the default was caused by a good faith mistake or excusable neglect, [5] the harshness of a default judgment, and [6] whether the court would think itself obliged to set aside the default on the Defendants motion.” Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
On balance, the Lindsey factors weigh in favor of entering a Default Judgment against the remaining Defendants. Because Defendants have not filed responsive pleading, no material facts are in dispute. See Nishimatsu Const. Co., Ltd. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact.”). Defaulting Defendants' failure to appear and respond has ground the adversary process to a halt, prejudicing Mighty Mug's interest in pursuing its claim for relief. See J & J Sports, 126 F.Supp.3d at 814 (“Defendants' failure to respond threatens to bring the adversary process to a halt, effectively prejudicing Plaintiff's interests.”) (internal citation and quotation marks omitted). The grounds for default are established: Defendants were adequately served through alternative service and have failed to appear and participate, much less timely file a responsive pleading. There is no indication that the default was caused by a good faith mistake or excusable neglect. The undersigned therefore finds that default judgment is procedurally warranted.
B. Sufficiency of Mighty Mug's Complaint
Default judgment is proper only if the well-pleaded factual allegations in Mighty Mug's complaint establish a valid cause of action. Nishimatsu Constr. Co., 515 F.2d at 1206. By defaulting, a defendant “admits the plaintiff's well-pleaded allegations of fact.” Id. In determining whether factual allegations are sufficient to support a default judgment, the Fifth Circuit employs the same analysis used to determine sufficiency under Rule 8. Wooten v. McDonald Transit Assocs., Inc., 788 F.3d 490, 498 (5th Cir. 2015). A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The factual allegations in the complaint need only “be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Wooten, 788 F.3d at 498 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). While “detailed factual allegations” are not required, the pleading must present “more than an unadorned, the-defendant- unlawfully-harmed-me accusation.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). Mighty Mug asserts causes of action against Defendants for Trademark Infringement, False Designation of Origin, and Unfair Competition.
1. Trademark Infringement Claims
Mighty Mug's first claim is for Trademark Infringement and Counterfeiting under the Lanham Act § 1114. Dkt. 8, at 13. To prevail on its claim, Mighty Mug must prove “(1) [it] possess[es] a legally protectable trademark, and (2) [Defendants'] use of this trademark ‘creates a likelihood of confusion as to source, affiliation, or sponsorship.'” Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 450 (5th Cir. 2017) (citations omitted). “A likelihood of confusion means that confusion is not just possible, but probable.” Nat'l Bus. Forms & Printing, Inc. v. Ford Motor Co., 671 F.3d 526, 532 (5th Cir. 2012). In determining whether a likelihood of confusion exists, Fifth Circuit courts often consider the “digits of confusion”: “(1) the type of trademark allegedly infringed, (2) the similarity between the two marks, (3) the similarity of the products or services, (4) the identity of the retail outlets and purchasers, (5) the identity of the advertising media used, (6) the defendant's intent, ... (7) any evidence of actual confusion,” and “(8) the degree of care exercised by potential purchasers.” Id. The “digits” are not exhaustive, and no single factor is dispositive. Id. When a defendant uses a plaintiff's exact mark, “a thorough analysis of the digits of confusion is unnecessary, and a presumption of confusion exists.” Choice Hotels Int'l v. Patel, 940 F.Supp.2d 532, 540 (S.D. Tex. 2013). Trademark infringement claims brought under the Texas common law are analyzed by Fifth Circuit courts using the same standard as applied to Lanham Act claims. See Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 236 (5th Cir. 2010) (“The analysis with respect to [plaintiff's] claims under the Lanham Act will be dispositive of its corresponding claims under Texas law as well.”).
Mighty Mug has demonstrated the elements of its trademark infringement claim. Mighty Mug pleads that it owns a valid and protectable United States Trademark, the Mighty Mug Mark, Registration No. 4,191,803. Dkt. 8, at 4. Mighty Mug also asserts that it used the mark extensively and continuously before Defendants began their alleged counterfeiting activities and has expended substantial resources promoting the mark. Id. at 9. Additionally, Mighty Mug contends that the mark has acquired a secondary meaning as an identifier of high-quality goods and is incontestable. Id. at 4-6.
Mighty Mug claims that Defendants knew of Plaintiff's rights to the Mighty Mug Mark, knew they lacked authority to use the mark, and knew their use of the mark would cause confusion. Dkt. 8, at 9-10. Further, Plaintiffs have provided evidence demonstrating that Defendants used the Mighty Mug Mark in listings for counterfeit products in the item title, description, or product images. See Dkt. 11-2. The infringing products have caused and will continue to cause confusion with Mighty Mug's trademarked products. See Dkt. 15, at 6 (“the digits ... weigh in favor of Plaintiff in showing a likelihood of confusion”); Dkt. 4, at 13-17.
The undersigned, therefore, finds that Mighty Mug's factual allegations and the record before the Court are enough to raise Mighty Mug's right to relief above a speculative level as to Mighty Mug's claim that Defendants violated § 1114 of the Lanham Act and Texas common law trademark infringement. The undersigned finds that default judgment as to Mighty Mug's trademark infringement claims is substantively warranted.
2. False Designation of Origin and Unfair Competition Claims
Mighty Mug's second claim is for false designation of origin under the Lanham Act § 1125(a). Dkt. 8, at 14. To prevail on a false designation of origin claim, Mighty Mug must prove “(1) The defendant made a false or misleading statement of fact about its product or service; (2) The statement either deceived or had the capacity to deceive a substantial segment of potential customers; (3) The deception was material, in that it was likely to influence consumers' purchasing decisions; (4) The product or service is in interstate commerce; and (5) The plaintiff has been or is likely to be injured as a result of the statement at issue.” Pizza Hut, Inc. v. Papa John's Int'l, Inc., 227 F.3d 489, 495 (5th Cir. 2000). Courts use the same standard for likelihood of confusion under the Trademark Infringement portion of the Lanham Act as they do for the Unfair Competition claims under the Lanham Act. Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 483 (5th Cir.2004); see also Matrix Essentials, Inc. v. Emporium Drug Mart, 988 F.2d 587, 592 (5th Cir. 1993) (“As with trademark infringement, the touchstone of a section 1125(a) unfair competition claim is whether the defendant's actions are likely to cause confusion.”). Texas common law unfair competition claims are analyzed under the same standard as claims under the Lanham Act. See Amazing Spaces, Inc., 608 F.3d at 236 n.7 (“A[n] ... unfair competition action under Texas common law presents essentially no difference in issues than those under federal trademark infringement actions.”). Section 1125 is limited in scope, however, to unregistered marks. Id. at 236 n.8.
Mighty Mug asserts that Defendants knew their use of the Mighty Mug Mark was unauthorized and purposefully deceptive. Dkt. 8, 9-10. Mighty Mug has provided evidence demonstrating that Defendants, without permission, used the Mighty Mug Mark in their respective counterfeit product listings either in the title, description, or product images. See Dkt. 11-2. Additionally, Plaintiff asserts that Defendants' infringements diminish the Mighty Mug brand value, flood the search engine results, and decrease the legitimate marketplace for authentic Mighty Mug products. Dkt. 8, at 8, 15. Because Defendants' use of the mark weighs in favor of finding a likelihood of confusion as to Plaintiff's Trademark Infringement claim, the undersigned finds the same holds true for Plaintiff's False Designation of Origin and unfair competition claims. See Dkt. 15, at 6; Matrix Essentials, 381 F.2d at 592. However, because § 1125(a) is limited to unregistered marks, Defendants would only be liable with regard to Mighty Mug's common law unfair competition claim.
The undersigned finds that Mighty Mug's factual allegations and the record before the Court are enough to raise Mighty Mug's right to relief above a speculative level as to Mighty Mug's claim for common law unfair competition. The undersigned finds that default judgment as to Mighty Mug's common law unfair competition claim is substantively warranted.
C. Relief
Federal Rule of Civil Procedure 54(c) states that “[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). In other words, the relief prayed for in a complaint defines the scope of relief available on default judgment. Id.
A defendant's default concedes the truth of the complaint's allegations concerning the defendant's liability but not damages. United States v. Shipco Gen. Inc., 814 F.2d 1011, 1014 (5th Cir. 1987). Ordinarily, damages will not be awarded without a hearing or a demonstration by detailed affidavits establishing the necessary facts. United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979). However, when the damages or costs can be determined with certainty by reference to the pleadings and supporting documents, and when a hearing would not be beneficial, a hearing is unnecessary. James v. Frame, 6 F.3d 307, 310 (5th Cir. 1993). A sum capable of mathematical calculation is one that can be “computed with certainty by reference to the pleadings and supporting documents alone.” Id. at 311.
1. Trademark Damages
A trademark owner may elect to recover statutory damages “not less than $1,000 or more than $200,000 per counterfeit mark,” or if willful, “not more than $2,000,000 per counterfeit mark.” 17 U.S.C. § 1117(c). In its Motion for Default Judgment, Mighty Mug alleges that Defendants acted willfully and seeks statutory damages under the Lanham Act for “$100,000 against each defaulting defendant.” Dkt. 62, at 13; 15 U.S.C. § 1117(c)(1)-(2).
The Lanham Act does not provide the Court with guidance as to how to determine a reasonable amount of damages within the statutory range. Philip Morris USA Inc. v. Lee, 547 F.Supp.2d 685, 695 (W.D. Tex. 2008). To determine the range of the award for both copyright and trademark infringement, courts have considered factors such as: “the willfulness of the defendant's conduct, the deterrent effect of an award on both the defendant and on others, the value of the copyright, whether the defendant has cooperated in providing necessary records to assess the value of the infringing material, and the losses sustained by the plaintiff.” Future World Elecs., LLC v. Over Drive Mktg., LLC, No. 3:12-CV-2124-B, 2013 WL 5925089, at *4 (N.D. Tex. Nov. 5, 2013) (quoting Commercial Law League of Am., Inc. v. George, Kennedy & Sullivan, LLC, No. CIV.A. H-07-0315, 2007 WL 2710479, at *3 (S.D. Tex. Sept. 14, 2007)). A court may also consider “the expenses saved and profits reaped by the infringer.” Future World Elecs., LLC, 2013 WL 5925089, at *4 (quoting Playboy Enter., Inc. v. Webbworld, Inc., 968 F.Supp. 1171, 1176 (N.D. Tex. 1997)).
For determination of willfulness, the Court may look to willfulness in the copyright context. Courts have noted that “the factors relevant to the size of statutory damages under section 504(c) of the Copyright Act are also appropriate to measuring damages under section 1117(c) of the Lanham Act.” Microsoft Corp. v. Software Wholesale Club, Inc., 129 F.Supp.2d 995, 1008 (S.D. Tex. 2000) (citing Sara Lee Corp. v. Bags of New York, Inc., 36 F.Supp.2d 161, 166 (S.D.N.Y. 1999)); see also Commercial Law League, 2007 WL 2710479, at *3 (noting that courts have found guidance in analogous provision for statutory damages in 17 U.S.C. § 504(c)). In the copyright context, the Fifth Circuit has held that a “defendant acts ‘willfully' within the meaning of [the statutory damages provision of the Copyright Act] ... if he knows his actions constitute an infringement; the actions need not have been malicious.” Broadcast Music, Inc. v. Xanthas, Inc., 855 F.2d 233, 236 (5th Cir. 1988). Further, a defendant's default allows a court to infer willfulness. Viahart, LLC v. Chickadee Bus. Sols., LLC, No. 6:19-CV-406-JCB, 2021 WL 6333033, at *14 (E.D. Tex. July 2, 2021), report and recommendation adopted, No. 6:19-CV-00406-RWS, 2022 WL 1262125 (E.D. Tex. Apr. 27, 2022) (citing Rolex Watch U.S.A., Inc. v. Munn, No. 6:19-CV-00323-JCB, 2019 WL 7500499, at *3 (E.D. Tex. Nov. 7, 2019)).
In this case, Defendants used Mighty Mug's mark to facilitate sales of their counterfeiting products by including it in their listing's title, description, or product images. Dkt. 8, at 9. On June 6, 2023, Mighty Mug appeared before the undersigned for an evidentiary hearing. See Dkt. 76. Mighty Mug's founder testified that he made efforts to notify the Defaulting Defendants of their infringing use of the mark. Id. He has contacted many sellers, removing as many as 5,200 listings for products bearing the Mighty Mug Mark. Id. Further, Mighty Mug argued that Defendants' willfulness in using the Mighty Mug Mark was evidenced by some sellers' purposeful rearrangement of the words “mighty” and “mug” within the product listings, suggesting Defendants were trying to capture customers searching for authentic Might Mug products and therefore, wished to divert sales from Mighty Mug. Id. Mighty Mug's founder testified that in addition to adversely affecting Mighty Mug's direct sales, totaling close to three million dollars in 2022, the Defendants' infringements also diminish the value of Mighty Mug's multimillion-dollar licensing program. Id. Defendants' direct copying and use of Mighty Mug's mark demonstrate Defendants knew their activities infringed on Mighty Mug's rights, or at least shows Defendants were willfully blind and/or acted with reckless disregard to Mighty Mug's rights. The undersigned finds Defendants' conduct to be willful under the Lanham Act.
Mighty Mug's Motion for Default Judgment identifies 202 remaining Defaulting Defendants and seeks an award of statutory damages for trademark infringement in the amount of $100,000 per each defaulting Defendant, resulting in a total of $20,200,000 in requested statutory damages. See Dkts. 62, at 13; 62-3, at 3. Mighty Mug argues this damages award adequately compensates Mighty Mug for its injury and deters further counterfeit marks and infringement. Dkt. 62, at 13. However, the Court finds Mighty Mug's requested damages excessive. See Yelp Inc. v. Catron, 70 F.Supp.3d 1082, 1089 (N.D. Cal. 2014) (“While the plaintiffin a trademark infringement case is entitled to damages that will serve as a deterrent, it is not entitled to a windfall.”). Instead, the undersigned finds that an award of $50,000 per mark per Defendant is reasonable, for a total of $10,100,000. See Rovio Ent., Ltd. v. GW Trading LLC, No. 5:13-CV-1079-XR, 2016 WL 4126657, at *6 (W.D. Tex. Aug. 2, 2016) (finding an award of $25,000 per violation for a total of $1,100,000 is “just and appropriate” for willful trademark infringement of the “Angry Birds” mark by defaulting defendant sellers of products bearing the counterfeit mark); BVE Brands v. Does 1-82, No. 1:20-CV-505, RP (W.D. Tex. Jan 14, 2021) (finding the requested statutory damages of $2,000,000.00 to be excessive, finding willfulness and awarding $100,000.00 in statutory damages per mark). This dollar amount is based on Defendants' willful conduct, and failure to cooperate in providing necessary records limiting the undersigned's ability to evaluate the losses sustained by Mighty Mug, the profits reaped by Defendants, or the value of the trademark. It is also based on Mighty Mug's evidence with respect to its sales, licensing business, and the value of the Mighty Mug Mark. Such an amount is sufficient to penalize Defendants' willful conduct and deter Defendants and other sellers from infringing trademarked materials in the future. See Coach, Inc. v. Brightside Boutique, No. 1:11-CA-20 LY, 2012 WL 32941, at *6 (W.D. Tex. Jan. 6, 2012), report and recommendation adopted, No. A-11-CA-020-LY, 2012 WL 13149026 (W.D. Tex. Mar. 16, 2012).
Mighty Mug's Proposed Order on Final Default shows an award of $19,800,000 ($100,000 for each of “198 defaulting defendants”), however the Motion and Order identify the following Defaulting Defendants, totaling 209: 1-3, 10, 13, 16, 18, 20, 21, 24, 25, 27, 28, 32, 36, 38, 4045, 49-56, 59, 61, 62, 67, 68, 70-72, 74, 76, 79, 83-199, 201-225, 227-231, 233, and 236-255, Dkt. 62-4, at 4. Defendants 20, 41, 52, 67, 172, 176, and 233, as identified on Schedule A, were voluntarily dismissed after Mighty Mug moved for default judgment. The remaining Defaulting Defendants are: 1-3, 10, 13, 16, 18, 21, 24, 25, 27, 28, 32, 36, 38, 40, 42-45, 49-51, 53-56, 59, 61, 62, 68, 70-72, 74, 76, 79, 83-171, 173-175, 177-199, 201-225, 227-231, 236-255, totaling 202 Defaulting Defendants. Dkts. 65; 68; 70; 73; 75.
$50,000 for each of the 202 remaining Defaulting Defendants.
2. Attorney's Fees
Mighty Mug also seeks to recover its reasonable and necessary attorney's fees and costs pursuant to section 1117(a) of the Lanham Act. Dkt. 8, at 21. A court may award attorney's fees for a section 1125(a) violation in “exceptional cases.” 15 U.S.C. § 1117(a). The Fifth Circuit views “exceptional cases” as those where defendant's trademark infringement can be characterized as malicious, fraudulent, willful, or deliberate. Tex.a Pig Stands, Inc. v. Hard Rock Cafe Int'l, Inc., 951 F.2d 684, 697 (5th Cir. 1992). Courts in this Circuit have found a case exceptional where the defendant entirely disregards the proceeding leading to a default judgment. See, e.g., Real Estate Edge, LLC v. Campbell, No. 1:17-CV-1093-RP, 2019 WL 830966, at *6 (W.D. Tex. Feb. 21, 2019); Chevron Intellectual Prop., L.L.C. v. Allen, No. 7:08-CV-98-O, 2009 WL 2596610, at *4 (N.D. Tex. Aug. 24, 2009). Courts have discretion to award attorney's fees. Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994).
As the prevailing party on each of the pleaded claims, Mighty Mug is entitled to reasonable attorney's fees and its costs and expenses incurred in bringing this lawsuit pursuant to 15 U.S.C. § 1117(a). Mighty Mug has established it has reasonably incurred $75,801.50 in attorney's fees and $432.25 in litigation costs and expenses. Dkt. 62-1, at 1.
3. Mighty Mug's Request for Permanent Injunction
Mighty Mug also seeks to convert the preliminary injunction that the Court entered on October 7, 2022, Dkt. 57, into a permanent injunction with the same terms. Dkt. 62, at 15. A plaintiff seeking a permanent injunction must generally satisfy a four-factor test: (1) the plaintiff has suffered an irreparable injury; (2) remedies available at law, such as monetary damages, are inadequate compensation; (3) considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) a permanent injunction would not disserve the public interest. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). All four factors weigh in favor of granting a permanent injunction against Defendants.
Mighty Mug has demonstrated that it has suffered an irreparable injury by demonstrating that Defendants have used Mighty Mug's mark to advertise and sell counterfeit products. Further, monetary damages are insufficient as the possibility of harm to Mighty Mug's reputation constitutes irreparable harm sufficient for a permanent injunction. See Valley v. Rapides Parish Sch. Bd., 118 F.3d 1047, 1056 (5th Cir. 1997) (finding irreparable harm based upon potential damage to reputation). The balance of hardships weighs in Mighty Mug's favor because Defendants have not appeared in this lawsuit but continue to use the Mighty Mug Mark. The public interest factor also weighs in favor of an injunction because the public interest and the Lanham Act would be undermined if the Defendants' improper conduct is allowed to continue. Accordingly, a permanent injunction is warranted.
IV. RECOMMENDATION
In accordance with the foregoing discussion, the undersigned RECOMMENDS that the District Court GRANT Mighty Mug's Motion for Default Final Judgment against Defendants, Dkt. 62. Mighty Mug should be awarded statutory damages in the amount of $50,000.00 per mark per Defaulting Defendant, attorneys' fees in the amount of $75,801.50, and $432.25 for costs. Defaulting Defendants should be permanently enjoined from using Mighty Mug's mark. The referral of this case should now be CANCELED.
The undersigned recommends that the District Court grant Mighty Mug's Motion for Default Judgment against Defaulting Defendants 1-3, 10, 13, 16, 18, 21, 24, 25, 27, 28, 32, 36, 38, 40, 42-45, 49-51, 53-56, 59, 61, 62, 68, 70-72, 74, 76, 79, 83-171, 173-175, 177-199, 201225, 227-231, 236-255 identified on Schedule A. Dkt. 8-1.
V. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).