Steven R. Daniels, W. Bryan Farney, Mary C. Jacob, Bryan D. Atkinson and Anthony Beasley, Farney Daniels, LLP, and Alan M. Anderson and Aaron C. Nyquist, Alan Anderson Law Firm LLC, Counsel for Plaintiffs.
MEMORANDUM OPINION AND ORDER
MICHAEL J. DAVIS, Chief District Judge.
This matter is before the Court on Plaintiff's renewed motion for default judgment against Defendant Discovery Toys, LLC.
Plaintiff Reshare Commerce, LLC ("Reshare") brought this action against various defendants, alleging that defendants infringe one of its patents, U.S. Patent No. 6, 594, 641 ("the '641 patent"). The '641 patent is titled a "Computer Facilitated Product Selling System" and is described as "an apparatus and system for allowing customers to purchase boutique or speciality items directly from a supplier or wholesaler." (Ex. A to Complaint.) When the purchaser buys the item online, through the '641 patent, the supplier can credit the local retailer for some or all of the profit from such online sale. (Id.)
Reshare filed a number of cases in this District involving multiple defendants. In this particular case, Reshare originally included nine defendants. Claims against all of the defendants, save one, have since been dismissed with prejudice. The remaining defendant is Discovery Toys, who is the only defendant that did not file an answer or otherwise respond to the complaint.
Reshare had previously sought default judgment against Discovery Toys, but this Court denied the motion as premature - finding that a default judgment, in particular the requested injunctive relief, was potentially inconsistent with the defenses of the defendants remaining in the case at that time. In addition, the Court found that Reshare did not submit sufficient evidence to support its claim for damages. Now that Discovery Toys is the only remaining defendant, Reshare has renewed its motion for default judgment, seeking only damages and attorney's fees.
Specifically, Reshare seeks an order from the Court entering judgment against Discovery Toys for compensatory damages in the amount of $48, 000, enhanced damages for willful infringement, pre-judgment interest at 3.25% from September 12, 2011 to the date of judgment, costs in the amount of $976 and a finding that this case is exceptional and an award of attorney's fees in the amount of $22, 142.50.
II. Default Judgment
Default judgments are not favored in the law. United States ex. rel. Time Equip. Rental & Sales, Inc. v. Harre , 983 F.2d 128, 130 (8th Cir. 1993). It is within the discretion of the Court whether to grant default judgement. Fingerhut Corp. v. Ackra Direct Marketing Corp. , 86 F.3d 852, 856 (8th Cir. 1996). Once default has been entered, the defaulting defendant is deemed to have admitted the factual allegations in the complaint. However, factual allegations as to damages must be proven. Everyday Learning Corp. v. Larson , 242 F.3d 815, 818 (8th Cir. 2001).
A. Reasonable Royalty
In support of the motion for default judgment, Reshare has submitted a declaration from Adam Southam, the CEO of Reshare. In his declaration, he asserts that his company has a three part license structure for companies that have been using the '641 patent prior to licensing which includes: a $48, 000 license inception and/or flat license fee, plus 2.5% of online sales for past and future sales for companies having up to $5, 000, 000 in online sales annually. (Goss Decl., Ex. 11 (Southam Decl. ¶¶ 3, 4).) In addition, Reshare has submitted license agreements entered into with Dermalogica, Pure Romance LLC and Nationwide Mutual Insurance Company to support its claim for $48, 000 inception fee. (Id., Exs. A, B and C.) Based on this evidence, the Court finds that Reshare has demonstrated that it is entitled to an award of $48, 000 as a reasonable royalty.
B. Enhanced Damages
Reshare also seeks enhanced damages for willful infringement. Reshare asserts that by defaulting, Discovery Toys has admitted that it has willfully infringed the '641 patent, entitling Reshare to enhanced damages under 35 U.S.C. § 284. Reshare asserts other district courts have awarded enhanced damages for willful patent infringement against defendants in default, citing to J. Blazek SKLO Prodebrady s.r.p., Civil No. 06-3829 (ADM/JSM) (D. Minn. Nov. 21, 2007) and Jaguar Imps. LLC v. Phoenix Global Ventures, Inc., ...