Perplexity Solved Solutions v. AI

Background

Perplexity Solved Solutions, Inc. sued Perplexity AI, Inc. for trademark infringement and related claims. Its claims included trademark infringement, unfair competition and false designation of origin, cybersquatting, violations of California’s Unfair Competition Law, common-law trademark infringement and unfair competition, and a request for a declaration concerning trademark registration. Perplexity AI answered and asserted counterclaims seeking cancellation of Perplexity Solved Solutions’ trademark registration based on alleged fraud, non-use, or abandonment. The court had previously dismissed the cybersquatting claim.

Perplexity Solved Solutions’ lawyers moved to withdraw. On August 5, 2025, the court allowed the withdrawal and ordered the corporation to obtain licensed counsel by September 5, 2025. The court warned that failing to do so could lead to default on Perplexity AI’s counterclaims and dismissal of Perplexity Solved Solutions’ claims. No new lawyer appeared by the deadline or by the date of this order. The court also noted that the corporation had sought additional time for case-management proceedings and deadlines instead of obtaining counsel.

Motions and Analysis

Perplexity AI moved to strike Perplexity Solved Solutions’ answer to the counterclaims and direct entry of default. It also moved under Federal Rule of Civil Procedure 41(b) to dismiss Perplexity Solved Solutions’ claims with prejudice for failure to comply with court orders and applicable rules.

The court applied five factors used when deciding whether dismissal or default is appropriate: the public interest in resolving cases promptly, the court’s need to manage its docket, prejudice to the opposing party, the policy favoring decisions on the merits, and whether less severe sanctions were available. The court found that four factors favored dismissal and default. It concluded that the corporation’s failure to obtain counsel delayed the case, wasted court resources, impaired Perplexity AI’s ability to prepare and litigate the case, and continued despite repeated warnings. The court recognized that the policy favoring decisions on the merits weighed against dismissal, but found that the other factors supported the requested actions.

Ruling

Judge Jacqueline Scott Corley granted Perplexity AI’s motion to strike Perplexity Solved Solutions’ answer to the counterclaims and direct entry of default. She also granted Perplexity AI’s motion to dismiss Perplexity Solved Solutions’ complaint with prejudice. The order did not itself enter default judgment on the counterclaims; instead, it directed Perplexity AI to file a motion for default judgment by December 4, 2025. The ruling was based on the corporation’s failure to obtain counsel and comply with the court’s orders, rather than a decision on the underlying trademark dispute.