Flect LLC v. Lumia Products Co. LLC

Background

Flect alleged that it owned U.S. Patent No. 11,045,689 and U.S. Trademark Registration No. 4,974,318, both connected to its PELVIC CLOCK® exercise product. Flect claimed that Lumia Products Co. LLC and Peter Lei infringed the patent and trademark by making, selling, advertising, distributing, and importing the PELVIC BOWL product. Flect also asserted claims for unfair competition and dilution of a famous mark.

The complaint and summons were delivered to Breella Fox, the manager of a commercial mail receiving agency designated to accept service for both defendants. The defendants did not respond by the January 3, 2022 deadline. The clerk entered defaults on January 7. Defendants’ counsel appeared on January 10 and sought additional time to answer. Flect then moved for default judgment and a permanent injunction.

Legal standard

Because the defendants opposed default judgment, the court treated their opposition as a request to set aside the entries of default under Federal Rule of Civil Procedure 55(c). The court considered whether the default was willful, whether the defendants had potentially meritorious defenses, whether setting aside the defaults would prejudice Flect, and other equitable considerations such as good faith and unfairness.

Court’s analysis

The court first ruled that service was proper. The case documents had been delivered to an agent authorized by appointment or law to receive service for the defendants. The agent’s failure to take additional steps under California law did not invalidate service.

The court nevertheless found that the default was not willful. Based on the defendants’ account, their authorized agent failed to forward the documents to Lei’s residential address. The defendants apparently found the documents before January 10 and obtained counsel three days after the clerk entered default and one week after the response deadline. The court characterized this conduct as negligent or careless, rather than deliberate and inadequately explained.

The court also found that the defendants had offered evidence supporting possible complete defenses. On the trademark-related claims, they argued that consumers would not reasonably confuse PELVIC CLOCK® with PELVIC BOWL because the products had different physical features and branding. They also disputed whether “Pelvic Clock” was famous and argued that “pelvic” was descriptive or generic in this context. On the patent claims, they challenged venue, arguing that neither defendant had the required residence or regular and established place of business in New York.

Finally, the court found no meaningful prejudice to Flect from setting aside the defaults. Although there would be some delay, the court concluded that the delay would not thwart Flect’s recovery or remedy, cause evidence to be lost, make discovery substantially more difficult, or increase the opportunity for fraud or collusion. The court also found that the defendants’ failure to respond was a good-faith mistake and that entering default judgment would be harsh, particularly because the service agent appeared not to have followed the required procedure.

Disposition

The court held that there was good cause to set aside the entries of default. It therefore VACATED the entries of default and DENIED Flect’s motion for default judgment and a permanent injunction. Judge P. Castel directed the clerk to terminate the motion.