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Entrepreneur Media, Inc. v. JMD Entertainment Group, LLC.

United States District Court, Fourth Circuit

July 23, 2013

ENTREPRENEUR MEDIA, INC. Plaintiff,
v.
JMD ENTERTAINMENT GROUP, LLC, , Defendants.

MEMORANDUM OPINION

Richard D. Bennett United States District Judge

Plaintiff Entrepreneur Media, Inc. (“EMI”) filed this action against corporate Defendants JMD Entertainment Group, LLC and JMD Entertainment and Media Group (the “corporate Defendants”) and individual Defendant Janice McLean-Deloatch (“Ms. McLean-Deloatch”). Plaintiff’s Complaint (ECF No. 1) alleges federal trademark infringement and federal false designation of origin/unfair competition, pursuant to the Lanham Act, 15 U.S.C. §§ 1114, 1125(a). Pending before this Court are Plaintiff’s Motion for Default Judgment (ECF No. 27) against the corporate Defendants and Defendant Janice McLean-Deloatch’s Motion to Deny Entry of and Request for Entry of Default Order (ECF No. 24), which this Court construes as a Motion to Set Aside Default Judgment. This Court has reviewed the parties’ submissions and no hearing is necessary. See Local Rule 105.6 (D. Md. 2011). For the reasons that follow, Plaintiff’s Motion for Default Judgment (ECF No. 27) is GRANTED and Defendant Janice McLean-Deloatch’s Motion to Deny Entry of and Request for Entry of Default Order (ECF No. 24) is DENIED.

BACKGROUND

Plaintiff Entrepreneur Media, Inc. (“EMI”) filed a Complaint on July 2, 2012 against corporate Defendants JMD Entertainment Group, LLC and JMD Entertainment and Media Group (the “corporate Defendants”) and individual Defendant Janice McLean-Deloatch (“Ms. McLean-Deloatch”) alleging federal trademark infringement and federal false designation of origin/unfair competition pursuant to the Lanham Act, 15 U.S.C. §§ 1114, 1125(a). Compl. ¶ 6, ECF No. 1. EMI is a California corporation that has provided goods and services to businesses, business owners, and prospective business owners for over thirty years. Id. ¶ 10. EMI owns the ENTREPRENEUR® Mark, as well as seven other marks (collectively the “EMI Marks”) that incorporate the term “ENTREPRENEUR.” Id. ¶¶ 25-26. Three of the EMI Marks are incontestable pursuant to 15 U.S.C. § 1065.[1] Id. ¶ 27. EMI has United States federal registrations for all eight of the EMI marks (collectively the “EMI Registrations”). Id. ¶ 25. EMI has conducted the majority of its business using the EMI Marks, including publishing and selling books, e-books, and magazines; conducting educational services including seminars and workshops; operating at least four different websites; and launching applications for mobile devices. Id. ¶¶ 11-12, 14-20. EMI has acquired both fame and goodwill, which have resulted in numerous honors, awards, and co-branding business relationships. Id. ¶¶ 21-24.

The two corporate Defendants JMD Entertainment Group, LLC and JMD Entertainment and Media Group are Maryland business entities. Id. ¶¶ 3-4. Individual Defendant Janice McLean-Deloatch is the president and founder of both corporate Defendants. Id. ¶ 2. The corporate Defendants have used the ENTREPRENEURS EDGE Mark in the course of their business. Id. ¶ 34-38. JMD Entertainment Group, LLC is the applicant of record for the currently pending application for federal registration of the ENTREPRENEURS EDGE trademark, which was filed on November 6, 2009. Id. ¶ 3; Attach. 9, ECF No. 27. EMI alleges that both corporate Defendants’ use of the unregistered ENTREPRENEURS EDGE mark violates EMI’s intellectual property rights. Compl. ¶ 43. Specifically, EMI claims federal trademark infringement and federal false designation of origin/unfair competition. EMI alleges that the ENTREPRENEURS EDGE mark is confusingly similar to the registered EMI Marks, and that as a result of the corporate Defendants’ use of the ENTREPRENEURS EDGE mark, EMI has suffered harm. Id. ¶¶ 49, 51.

On September 26, 2012, EMI served the Complaint (ECF No. 1) on the corporate Defendants. To date, both corporate Defendants remain unrepresented by counsel despite the fact that they, as corporations, may not proceed in this action without counsel. See Local Rule 101.1(a). Since EMI filed its Complaint, Ms. McLean-Deloatch, who is proceeding pro se, has twice sought an extension of time to obtain an attorney and file responsive pleadings. On October 12, 2012, this Court granted a Motion for Continuance (ECF No. 13), which gave the Defendants an additional thirty days to file an answer. On November 13, 2012, Ms. McLean-Deloatch requested a second extension (ECF No. 14), which this Court granted in an Order (ECF No. 17) dated November 29, 2012. This Order extended the Defendants’ deadline for filing responsive pleadings until December 10, 2012. In the Order, this Court specified that Local Rule 101.1(a) requires the two corporate Defendants to retain counsel, and that this Court would entertain appropriate motions for default judgment if there was continued failure by the Defendants to file appropriate pleadings. Order 2, ECF No. 17.

By failing to retain counsel and file an answer, the corporate Defendants have not taken any action in the course of this litigation. On December 13, 2012, EMI filed a Motion for Clerk’s Entry of Default (ECF No. 20) against the two corporate Defendants for their failure to submit an answer in accordance with Local Rule 101.1(a). On December 14, 2012, the Clerk of the Court filed Entry of Default (ECF No. 21). On February 6, 2013, EMI filed the subject Motion for Default Judgment (ECF No. 27). EMI pursues this Motion only against the two corporate Defendants, and not as to individual Defendant Janice McLean-Deloatch.

STANDARD OF REVIEW

Entries of default and default judgments are governed by Rule 55 of the Federal Rules of Civil Procedure. Rule 55(a) provides that “[w]hen a party . . . has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” If, after entry of default, the plaintiff’s complaint does not specify a “sum certain” amount of damages, the court may enter a default judgment against the defendant pursuant to Rule 55(b)(2). In considering a motion for default judgment, this Court accepts as true the well-pleaded factual allegations in the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001). However, “liability is not deemed established simply because of the default . . . and the court, in its discretion, may require some proof of the facts that must be established in order to determine liability.” 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2688 (3d ed. 1998); see also Ryan, 253 F.3d at 780-81. Although the United States Court of Appeals for the Fourth Circuit has a “strong policy that cases be decided on the merits, ” United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), default judgment “is appropriate when the adversary process has been halted because of an essentially unresponsive party, ” S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005).

If the court finds that liability is established, it must then turn to the determination of damages. See Ryan, 253 F.3d at 780-81. The court must make an independent determination regarding damages and cannot accept as true factual allegations of damages. See Lawbaugh, 359 F.Supp.2d at 422. Rule 54(c) of the Federal Rules of Civil Procedure limits the type and amount of damages that may be entered as a result of a party’s default: “[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Where a complaint does not specify an amount, “the court is required to make an independent determination of the sum to be awarded.” Adkins v. Teseo, 180 F.Supp.2d 15, 17 (D.D.C. 2001) (citing S.E.C. v. Mgmt. Dynamics, Inc., 515 F.2d 801, 814 (2d Cir. 1975)). While the court may conduct an evidentiary hearing to determine damages, it is not required to do so; it may rely instead on affidavits or documentary evidence in the record to determine the appropriate sum. See, e.g., Mongue v. Portofino Ristorante, No. WDQ-09-3144, 2010 WL 4629898, at *3-4 (D. Md. May 25, 2010) (collecting cases); see also 10A Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2688 (3d ed. Supp. 2010).

ANALYSIS

By failing to retain counsel and file an answer in accordance with this Court’s Local Rules, Defendants JMD Entertainment Group, LLC and JMD Entertainment and Media Group (the “corporate Defendants”) have failed to defend in this action. Accordingly, the Clerk of the Court has filed an entry of default (ECF No. 21). Default judgment “is appropriate when the adversary process has been halted because of an essentially unresponsive party.” S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005). Plaintiff Entrepreneur Media, Inc. (“EMI”) is therefore entitled to default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). Default judgment is entered in favor of Plaintiff EMI and Defendant Janice McLean-Deloatch’s Motion to Deny Entry of and Request for Entry of Default Order (ECF No. 24), which this Court construes as a Motion to Set Aside Default Judgment is therefore DENIED.

This Court first reviews the allegations supporting the corporate Defendants’ liability and then determines injunctive relief and the appropriate amount of damages. In determining injunctive relief and damages, this Court finds that no evidentiary hearing is necessary and instead relies on the affidavits and other evidence in the record. See, e.g., Mongue, 2010 WL 4629898, at *3-4.

I. Liability

In considering a motion for default judgment, this Court accepts as true the well-pleaded factual allegations in the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001). Nevertheless, this court must determine “whether the well-pleaded allegations . . . support the relief sought in this action. Id. at 780. EMI has brought both a federal trademark infringement claim and a claim of federal false designation of origin/unfair competition. See Compl. ¶ 6 (ECF No. 1).

To state a federal trademark infringement claim, a plaintiff must prove (1) that it owns a valid mark; (2) that the defendant used the mark “in commerce” and without plaintiff's authorization; (3) that the defendant used the mark (or an imitation of it) “in connection with the sale, offering for sale, distribution, or advertising” of goods or services; and (4) that the defendant's use of the mark is likely to confuse consumers. Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 152 (4th Cir. 2012) (citing 15 U.S.C. § 1114(1)(a)); see also People for the Ethical Treatment of Animals v. Doughney, 263 F.3d 359, 364 (4th Cir. 2001) (quoting 15 U.S.C. §§ 1114, 1125(a)). The Fourth Circuit has noted that the test for a false designation of origin/unfair competition claim is essentially the same as the test for trademark infringement. Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922, 930 (4th Cir. 1995).

EMI has successfully made out claims of federal trademark infringement and federal false designation of origin/unfair competition. First, EMI sufficiently claims that it owns a mark. Rosetta Stone Ltd., 676 F.3d at 152 (citing 15 U.S.C. § 1114(1)(a)). EMI has obtained United States federal registrations for the eight EMI Marks including “ENTREPRENEUR, ” “ENTREPRENEUR.COM, ” “ENTREPRENEUR CONNECT, ” “ENTREPRENEUR’S STARTUPS, ” “ENTREPRENERUENESPANOL.COM, ” and “ENTREPRENEUR PRESS.” The federal registrations of the EMI marks constitute prima facie evidence that the marks are valid. Compl. ¶ 28. Moreover, three of the EMI Marks are incontestable pursuant to 15 U.S.C. § 1065 because they have been in continuous use for at least five consecutive years subsequent to the date of their registration and are still in use in commerce.[2] Furthermore, the United States Court of Appeals for the Ninth Circuit, the United States District Court for the Central District of California, and the United States District Court for the Eastern District of Virginia have recognized the EMI Marks at issue as valid, strong, and distinctive. See Entrepreneur Media, Inc. v. Smith, No. CV 98-3607 FMC (CTx), 2004 U.S. Dist. LEXIS 24078 (C.D. Cal. June 23, 2004); Entrepreneur Media, Inc. v. Smith, No. 03-56431, 101 F. App’x 212, 2004 U.S. App. LEXIS 11567 (9th Cir. 2004); Entrepreneur Media, Inc. v. seattleentrepreneur.com, No. 1:11cv0409 (LMB/JFA) (E.D. Va. Dec. 6, 2011) (PACER).

Second, EMI sufficiently claims that the corporate Defendants used the mark “in commerce” and “in connection with the sale, offering for sale, distribution, or advertising of goods or services.” Rosetta Stone Ltd., 676 F.3d at 152 (citing 15 U.S.C. § 1114(1)(a)). EMI asserts that the corporate Defendants use the mark “ENTREPRENEURS EDGE” in the course of business. Compl. ¶ 34. Specifically, EMI alleges that the corporate Defendants not only incorporate this mark in the domain name of their websites, but also have used the mark in connection with their Facebook page, Twitter account, and YouTube channel. Id. ¶¶ 35-38.

Finally, EMI sufficiently claims that the corporate Defendants “used the mark in a manner likely to confuse consumers.” Rosetta Stone Ltd., 676 F.3d at 152 (citing 15 U.S.C. § 1114(1)(a)). The Fourth Circuit has implemented a nine-factor test to determine the likelihood of confusion. Id. (citing George & Co., LLC v. Imagination Entm't Ltd., 575 F.3d 383, 393 (4th Cir. 2009)). These nine factors are (1) the strength or distinctiveness of the plaintiff’s mark as actually used in the marketplace; (2) the similarity of the two marks to consumers; (3) the similarity of the goods or services that the marks identify; (4) the similarity of the facilities used by the markholders; (5) the similarity of advertising used by the markholders; (6) the defendant’s intent; (7) actual confusion; (8) the quality of the defendant’s product; and (9) the sophistication of the consuming public. Id. The Fourth ...


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