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KX Tech LLC v. Dilmen LLC

United States District Court, D. Connecticut

June 28, 2017

KX TECH LLC
v.
DILMEN LLC, et al.

          REPORT AND RECOMMENDATION

          HON. SARAH A. L. MERRIAM UNITED STATES MAGISTRATE JUDGE

         Plaintiff KX Tech LLC (“plaintiff”) brought this action alleging patent infringement pursuant to 35 U.S.C. §1, et seq. and the Connecticut Unfair Trade Practices Act (“CUTPA”) against defendants Dilmen LLC and Huseyin Dilmen (hereinafter collectively referred to as the “defendants”). [Doc. #1]. On February 15, 2017, Judge Charles S. Haight granted plaintiff's unopposed motion for default judgment, and referred this matter to the undersigned for purposes of conducting an inquest as to the appropriate amount of damages, costs and attorney's fees to be awarded, if any. See Doc. #34 at 9-10. A formal referral for this purpose was entered on February 15, 2017. [Doc. #35]. For the reasons set forth below, the Court recommends that $36, 200.02 be awarded to plaintiff as reasonable attorney's fees and costs.

         I. Procedural Background[1]

         Plaintiff commenced this action against defendants on May 17, 2016, alleging infringement of four of plaintiff's patents. See generally Doc. #1, Complaint. Defendants were served on June 26, 2016. [Doc. ##8, 9]. Defendants filed an Answer to the Complaint on August 18, 2016. [Doc. #20]. On November 2, 2016, counsel for defendants filed a motion to withdraw as attorneys of record because defendants terminated defense counsel's representation and instructed counsel to withdraw their appearances. See Doc. #23 at 1. On November 10, 2016, Judge Haight entered an electronic order regarding the motion to withdraw, stating in pertinent part that:

Defendant Dilmen, LLC is advised to obtain counsel and have them enter an appearance on or before November 23, 2016 and Huseyin Dilmen is advised to either obtain counsel and have them enter an appearance on or before November 23, 2016 or enter a pro se appearance by that date. If Defendants do not do so, then a default judgment may be entered against Defendants once the motion to withdraw is granted by this Court.

Doc. #24 (emphases in original). Defendants failed to comply with Judge Haight's November 10, 2016, Order. As a result, Judge Haight granted the motion to withdraw and cautioned: “Defendants are now left without an appearance entered in this matter and are at risk of default judgment should Plaintiff so move this Court.” Doc. #25.

         On December 14, 2016, plaintiff filed a Motion for Default Entry 55(a) and Motion for Default Judgment against defendants. [Doc. #26]. On December 15, 2016, Judge Haight granted plaintiff's Motion for Default Entry 55(a), and denied, without prejudice, plaintiff's Motion for Default Judgment. [Doc. #28]. On January 11, 2017, plaintiff re-filed its Motion for Default Judgment [Doc. #29], which Judge Haight granted as to liability on February 15, 2017. [Doc. #34]. Judge Haight also enjoined defendants “from making, using, offering for sale or selling any and all goods which infringe on Plaintiff's asserted United States patents[.]” Id. at 9. Judge Haight referred plaintiff's request for damages, costs and attorney's fees to the undersigned for an inquest as to the appropriate amount, if any, to be awarded. See id.; see also Doc. #35. Default judgment as to liability on all of plaintiff's claims was entered against defendants on February 16, 2017. [Doc. #37].

         On February 23, 2017, the undersigned held a telephonic conference with counsel for plaintiff to discuss Judge Haight's referral and the scheduling of an evidentiary hearing. [Doc. ##38, 39]. During this call, the Court directed counsel for plaintiff to file a supplemental memorandum in support of plaintiff's request for damages. See Doc. #40. On March 22, 2017, plaintiff filed a Motion for Hearing on Damages, Costs and Attorney's Fees. [Doc. #42]. On this same date, the Court granted plaintiff's motion and scheduled an evidentiary hearing for April 20, 2017. [Doc. ##43, 44].

         On March 22, 2017, the Court also entered an Order requiring plaintiff to file a pre-hearing memorandum of law. [Doc. #45]. The Court ordered plaintiff to cause a copy of the Order to be served on defendants by April 13, 2017, and for plaintiff to file a proof of service. See Id. at 3.

         Plaintiff timely filed its pre-hearing memorandum of law on April 10, 2017. [Doc. #46]. In its memorandum, plaintiff represented that it elected not to pursue damages, and instead would seek only an award of costs and attorney's fees pursuant to 35 U.S.C. sections 284 and 285. See Id. at 3-4. In light of this representation, and plaintiff's assertion that it intended to solely rely on affidavits and documentary evidence to support its claim for fees and costs, see Id. at 2, on April 12, 2017, the Court issued an Order canceling the April 20, 2017, evidentiary hearing. See Doc. #47. The Court provided defendants until April 28, 2017, to object to the costs and fees sought. See Id. The Court also ordered plaintiff to mail a copy of this Order to defendants at their last known address. See id. Defendants have filed no objection to plaintiff's request for costs and fees.[2]

         II. Discussion

         “When the Court enters a default judgment, it must accept as true all of the factual allegations of the complaint, but the amount of damages are not deemed true.” Tiffany (NJ) Inc. v. Luban, 282 F.Supp.2d 123, 124 (S.D.N.Y. 2003) (internal citation and quotation marks omitted). Accordingly, “[t]he district court must instead conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999) (citation omitted). Such an inquest “involves two tasks: determining the proper rule for calculating damages on such a claim, and assessing plaintiff's evidence supporting the damages to be determined under [Rule 55].” Id.

         “Because the default order entered in this case establishes [defendants'] liability, the only remaining issue is whether [plaintiff] has supplied adequate support for the relief it seeks.” Keystone Glob. LLC v. Auto Essentials, Inc., No. 12CV9077(DLC), 2015 WL 224359, at *3 (S.D.N.Y. Jan. 16, 2015) (internal citations omitted) (collecting cases). “By its terms, [Rule] 55(b)(2) leaves the decision of whether a hearing is necessary to the discretion of the district court.” Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989). A hearing is not necessary as long as the Court “ensure[s] that there was a basis for the damages specified in a default judgment.” Id. When a hearing is not deemed necessary, it is appropriate for the Court to rely “upon detailed affidavits and documentary evidence[.]” Id.; accord Keystone, 2015 WL 224359, at *3 (“The Second Circuit has held that a damages inquest may be held on the basis of documentary evidence alone as long as the court has ensured that there was a basis for the damages specified in the default judgment.” (citing Fustok, 873 F.2d at 40 (internal quotation marks omitted))); IPVX Patent Holdings, Inc. v. Taridium, LLC, No. 12CV5251(KAM)(SMG), 2014 WL 4437294, at *2 (E.D.N.Y. Aug. 6, 2014) (“A court may make this determination based upon evidence presented at a hearing or upon a review of detailed affidavits and documentary evidence.” (collecting cases)), report and recommendation adopted, 2014 WL 4437307 (Sept. 9, 2014); Cadlerock Joint Venture, L.P. v. Prado, No. 07CV1207(JS)(WDW), 2008 WL 4561611, at *2 (E.D.N.Y. Oct. 7, 2008) (“The amount of damages can be determined without a hearing as long as the court satisfies itself, through review of documentary evidence or affidavits, that the amount is reasonable.” (citing Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997))).

         Here, plaintiff has provided two declarations and other documentary evidence supporting its claims for infringement, an award of attorney's fees and costs, and additional details concerning defendants' post-judgment activities. See generally Doc. ##46-2, 46-3. Defendants have not submitted any opposition to the materials provided by plaintiff. Because plaintiff's declarations and documentary submissions provide a basis for an award of the fees and costs sought, no hearing is required. See IPVX Patent Holdings, 2014 WL 4437294, at *2-3.

         A. Exceptional Case

         Plaintiff contends that this case should be deemed “exceptional” in light of “Defendants' conduct, and Defendants' continuing actions to evade detection and enforcement[.]” Doc. #46 at 7. In support of this position, plaintiff specifically relies on: (1) defendants' failure to defend the case; (2) defendants' willful refusal to respond to plaintiff's discovery requests, leaving plaintiff with no basis upon which to support a request for damages; (3) defendants' disregard of two cease and desist letters; and (4) defendants' continued sales of the infringing products under a different name in an attempt to evade plaintiff's cease and desist demand. See Id. at 7-8.

         1. Applicable Law

         “Section 285 of the Patent Act authorizes a district court to award attorney's fees in patent litigation. It provides, in its entirety, that ‘[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.'” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1752 (2014) (quoting 35 U.S.C. §285). Construing section 285, the Supreme Court held

that an “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances.

Id. at 1756 (footnote omitted). In making such a determination, “there is no precise rule or formula” to be followed; rather, the Court should use its “equitable discretion” in light of the above considerations. See Id. (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994)); see also Id. at n.6 (In making this determination, district courts may “consider a ‘nonexclusive' list of ‘factors, ' including ‘frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.'” (citation omitted)).

         “Section 285 demands a simple discretionary inquiry; it imposes no specific evidentiary burden[.] Indeed, patent-infringement litigation has always been governed by a preponderance of the evidence standard[.]” Id. at 1758 (citing Bene v. Jeantet, 129 U.S. 683, 688 (1889)). In determining whether plaintiff has established that this matter is “exceptional, ” for purposes of an award of attorney's fees pursuant to 35 U.S.C. §285, the Court thus applies a preponderance of the evidence standard.

         2. Findings of Fact[3]

         Judge Haight's Ruling on Motion for Default Judgment establishes that defendants infringed plaintiff's patents, and are liable for such infringement. See generally Doc. #34 at 5-7; see also Id. at 7 (“Plaintiff has established its claims of patent infringement, and is entitled to default judgment on each of those claims.”). Accordingly, here, the Court focuses its attention on whether the circumstances of this ...


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