Wildflower + Co., Inc. v. Mood Apparel, Ltd.

Background

Wildflower brought claims against Mood Apparel, Ltd. d/b/a Mood Fabrics for copyright infringement and removal of copyright management information under 17 U.S.C. § 1202(b). The complaint concerned four patches identified as Blue Feather, Hamsa, Champagne Bottle, and Unicorn.

Mood was served through the New York Secretary of State on June 24, 2020, but did not respond. The Clerk entered a certificate of default on September 14, 2020. On November 12, 2020, the court entered a default against Mood on liability and referred the case for an inquest to determine damages. After additional steps were taken to notify Mood, Mood’s attorneys appeared, and Mood moved under Federal Rule of Civil Procedure 55(c) to vacate the entry of default. No default judgment had been entered.

Legal standard

Because the court was considering an entry of default rather than a default judgment, it applied Rule 55(c)’s “good cause” standard. The court considered three main factors: whether Mood’s default was willful, whether setting it aside would prejudice Wildflower, and whether Mood had presented a meritorious defense. The court also considered the preference for resolving disputes on their merits.

Discussion

The court did not decide definitively whether Mood’s conduct was willful. It assumed for purposes of the motion that the default was willful, noting evidence that Mood received an email attaching the complaint and that Mood did not adequately explain certain facts, including the alleged removal of infringing content from its website. The court also noted Mood’s explanations that its New York business office had been closed or disrupted during the COVID-19 pandemic, that mail had accumulated, and that its resources were focused on the pandemic response.

The court found that vacating the default would not prejudice Wildflower. Delay alone was insufficient, and Wildflower had not shown that the delay caused loss of evidence, greater difficulty in discovery, or another comparable harm. The court also noted that Mood sought relief about two months after the default was entered and acted reasonably responsively after receiving papers concerning the damages inquest.

For the meritorious-defense requirement, the court held that Mood needed to present a defense that, if proven, would completely defeat at least one independent claim; it did not need to establish the defense conclusively at this stage. Mood argued that the patch designs were generic, in the public domain, and not original works of expression. The court explained that copyright protection requires independent creation and at least a minimal degree of creativity, and it concluded that Mood’s argument could, if proven, rebut the presumed validity of Wildflower’s copyrights and completely defeat the copyright-infringement claim.

Ruling

Judge Gabriel W. Gorenstein granted Mood’s motion to vacate the entry of default. The conclusion states that the Clerk’s default was vacated and ordered Mood to file its response to the complaint within 21 days. The ruling addressed the default and did not decide whether Mood infringed Wildflower’s copyrights or unlawfully removed copyright management information.