Indian Motorcycle International, LLC v. Eguia

Background

Plaintiff Indian Motorcycle International, LLC ("IMI") is a motorcycle manufacturer and owner of numerous federally registered trademarks under its INDIAN MOTORCYCLE brand, including the '612, '330, '922, and '856 Marks covering motorcycles, apparel, accessories, and related goods. IMI has continuously used these marks in U.S. commerce since at least the 1990s, and its INDIAN MOTORCYCLE brand dates to 1901.

Defendant Arturo Eguia was a former authorized Indian Motorcycle dealer who, pursuant to a dealer agreement, was licensed to use IMI's marks in connection with promoting and selling Indian Motorcycles. Eguia sold his dealership in or before May 2018, and IMI formally terminated the dealer agreement on May 29, 2018. Defendant Indian Bike Week LLC ("IBW") is a Minnesota limited liability company that Eguia founded in 2022 and manages; it was never authorized to use IMI's marks.

Beginning in 2016, while still an authorized dealer, Eguia began organizing "Indian Bike Week" motorcycle rallies. After the dealer agreement was terminated, Eguia — and later IBW — continued hosting these rallies, advertising them on a website and social media using IMI's marks or nearly identical marks, charging approximately $100 per registrant, and selling branded merchandise.

IMI attempted for years to stop the unauthorized use. In October 2018, IMI sent a cease-and-desist letter. During subsequent discussions, Eguia reportedly admitted to infringing the marks and acknowledged consumer confusion was likely, yet continued using the marks. After a second cease-and-desist letter in June 2019 also failed to stop the conduct, IMI submitted takedown requests to web hosting platforms. Those efforts led Eguia to engage in settlement discussions, and the parties entered a Settlement Agreement on September 17, 2020. Under the Settlement Agreement, Eguia acknowledged IMI's trademark rights, agreed not to use confusingly similar marks, agreed to add a disclaimer of non-affiliation to marketing materials, and agreed to cease selling existing infringing inventory by September 1, 2022. Eguia did not comply with any of these obligations, and his and IBW's infringing conduct continued.

Procedural History

IMI filed suit on May 24, 2024. Defendants appeared through counsel, answered the original complaint, and filed a counterclaim alleging IMI had breached the Settlement Agreement. Defendants actively participated in discovery for several months. In November 2024, defendants' counsel moved to withdraw, citing unpaid fees. On December 6, 2024, United States Magistrate Judge Tony N. Leung granted the withdrawal and ordered defendants to obtain new counsel by January 17, 2025, warning that IBW — as a business entity — cannot appear in federal court without a lawyer and that failure to obtain counsel could result in default judgment.

Neither defendant obtained new counsel. Defendants stopped responding to discovery requests. Eguia did not answer requests for admission served in February 2025. IMI filed an amended complaint on March 10, 2025; neither defendant answered it. IMI applied for entry of default, which the Clerk granted on April 3, 2025. IMI then moved for default judgment.

The court issued two orders to show cause — on July 2 and July 21, 2025 — directing defendants to explain why default judgment should not be entered. Eguia sent emails to the Clerk of Court (not proper legal responses) citing a family emergency that arose on July 9, 2025, and financial difficulty in retaining counsel. He also indicated he was busy planning an unspecified event and suggested he might be able to resume participation by the end of October 2025. While largely nonresponsive to the substance of the show-cause orders, Eguia asserted that IMI, not he, had breached the Settlement Agreement, and that defendants had not infringed the IMI marks. The court took the motion under advisement without a hearing on August 21, 2025.

Legal Standards

Default and default judgment are governed by Federal Rule of Civil Procedure 55. Entry of default by the Clerk is a prerequisite to seeking default judgment from the court. Default judgment is disfavored and courts prefer decisions on the merits, but it is appropriate where a party fails to file a responsive pleading or otherwise ceases defending the lawsuit, particularly where conduct rises to the level of willful violation of court rules, contumacious conduct, or intentional delay (as opposed to minor, marginal non-compliance with deadlines).

Even where default is established, a court must verify that the unchallenged factual allegations constitute a "legitimate cause of action" before entering final judgment. Mere legal conclusions or recitation of elements are insufficient; actual factual allegations must support each element.

Analysis

Entry of Default

The court found both defendants in default. IBW, as a business entity, cannot proceed without legal representation under controlling law in this district. It failed to obtain counsel despite being warned that default judgment would result. IBW also failed to answer the amended complaint, ignored discovery obligations, and did not respond to the show-cause orders.

Eguia, while entitled to represent himself, similarly failed to answer the amended complaint, comply with discovery obligations, or meaningfully respond to the show-cause orders. The court acknowledged Eguia's stated family emergency with sympathy but noted it arose on July 9, 2025 — a week after the first show-cause order and months after his litigation obligations were already overdue. Eguia offered no explanation for his inaction during the roughly eight months between counsel's withdrawal and the show-cause orders. The court found that self-representation does not excuse noncompliance with court orders and applicable rules.

Breach of Contract (Count I — Eguia only)

Under Minnesota law (which governs under the Settlement Agreement's choice-of-law clause), breach of contract requires: (1) contract formation; (2) plaintiff's performance of any conditions precedent; and (3) defendant's breach. All three elements are satisfied. The Settlement Agreement is a valid contract, the validity of which Eguia himself acknowledged by asserting a counterclaim for breach of it. There were no unfulfilled conditions precedent binding on IMI. And the allegations establish multiple breaches: Eguia continued manufacturing and selling infringing merchandise, failed to add the required non-affiliation disclaimer, failed to remove the IMI marks from his website, and failed to confirm cessation of inventory sales by September 6, 2022.

Lanham Act — Trademark Infringement and Unfair Competition (Counts II & III)

To prevail on trademark infringement and unfair competition under the Lanham Act (15 U.S.C. §§ 1114, 1125(a)), IMI must show: (1) valid, protectable trademarks; and (2) likelihood of consumer confusion between its marks and defendants' marks. The court analyzed the Eighth Circuit's six-factor likelihood-of-confusion test:

Four factors weigh heavily for IMI, one for defendants, one neutral. The court found a likelihood of confusion established and granted default judgment on trademark infringement and unfair competition.

Lanham Act — Dilution by Blurring (Count III)

Dilution by blurring under 15 U.S.C. § 1125(c) requires showing: (1) the marks are famous; (2) the marks are distinctive; (3) defendants use the famous marks in commerce; (4) defendants' use began after the marks became famous; and (5) defendants' use caused dilution of the distinctive quality of the marks. The court found all elements satisfied. IMI's brand dates to 1901 and has been marketed worldwide for generations. The marks are federally registered and presumptively distinctive. Defendants used the marks after they had already become famous, and Defendants' persistent use of nearly identical marks in commerce — even after acknowledging IMI's rights — supports a finding of dilution by blurring.

State Law Claims — MDTPA and Common Law Unfair Competition (Counts IV & V)

Claims under the Minnesota Deceptive Trade Practices Act (Minn. Stat. § 325D.44) and Minnesota common law unfair competition are analyzed coextensively with the Lanham Act claims. Because IMI established its federal trademark and unfair competition claims, default judgment on the state law claims follows.

Relief

Permanent Injunction

To obtain a permanent injunction, IMI must show: (1) actual success on the merits; (2) irreparable harm; (3) the balance of harms favors IMI; and (4) the injunction serves the public interest. All four factors were satisfied. Success on the merits is established through the default judgment findings. Irreparable harm is presumed upon a finding of likely confusion in trademark cases, and Eguia himself acknowledged in the Settlement Agreement that a breach would cause IMI irreparable harm. On the balance of harms, defendants made no showing of harm to themselves by defaulting. The public interest favors stopping trademark infringement, which is "inherently contrary to the public interest."

The court issued a permanent injunction barring defendants — and anyone acting in concert with them — from: (a) using any of the IMI marks or confusingly similar marks in connection with motorcycle rallies, apparel, merchandise, or related goods and services (including on social media, websites, and advertising); (b) engaging in conduct causing consumers to believe defendants' products are authorized by or affiliated with IMI; and (c) manufacturing, shipping, or distributing products bearing the IMI marks or confusingly similar marks that are not authorized by IMI. Defendants must destroy all infringing goods and remove all infringing advertising and promotional materials (including online) within 30 days, and submit a sworn written statement of compliance within 45 days.

Disgorgement of Profits — $120,000

The Lanham Act authorizes disgorgement of a defendant's profits (15 U.S.C. § 1117(a)). While an injunction is the preferred Lanham Act remedy, disgorgement may be appropriate to remedy unjust enrichment, compensate the plaintiff, or deter willful infringement. Willfulness is not a prerequisite for disgorgement based on infringement (though it is required for dilution-based disgorgement).

The court noted that Eguia's conduct was plainly willful: he was on notice by October 2018 that his conduct infringed IMI's marks, admitted it, signed an agreement to stop, and continued anyway — and was still promoting a 2026 "Indian Bike Week" rally on his website while this lawsuit remained pending.

IMI's damages calculation was based on requests for admission that Eguia failed to answer, which are therefore deemed admitted under Federal Rule of Civil Procedure 36(a)(3): more than 600 registrants at each of the 2023 and 2024 rallies (at least 1,200 total) each paying a $100 registration fee, yielding at least $120,000 in revenue. Under the Lanham Act, revenue and profits are treated as equivalent until the defendant proves otherwise, and defendants presented no evidence of deductible expenses. The court found $120,000 to be a conservative estimate — it excludes revenue from earlier rallies, the 2025 rally, and merchandise sales. Both defendants are jointly and severally liable (meaning either can be required to pay the full amount).

IMI declined to seek attorney's fees despite acknowledging they may have been available, citing concern for Eguia's financial situation as an individual. The court therefore did not award fees.