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Agio International Co., Ltd. v. Zhejiang Longda Force Co., Ltd

United States District Court, W.D. North Carolina, Asheville Division

March 21, 2019

AGIO INTERNATIONAL COMPANY, LTD., Plaintiff,
v.
ZHEJIANG LONGDA FORCE CO., LTD. and JMH TRADING INTERNATIONAL MANAGEMENT, LLC, d/b/a WORLD SOURCE, Defendants.

          ORDER AND DEFAULT JUDGMENT

          Martin Reidinger, United States District Judge.

         THIS MATTER is before the Court on the Plaintiff's Motion for Default Judgment [Doc. 49].

         I. PROCEDURAL BACKGROUND

         On September 1, 2015, the Plaintiff Agio International Company, Ltd. (“Agio”) filed its original complaint against the Defendant JMH Trading International Management LLC d/b/a World Source (“JMH”), [1] asserting a claim of infringement of U.S. Patent No. 6, 585, 323 (“the ‘323 Patent”). [Doc. 1]. On December 29, 2015, Agio filed an Amended Complaint, adding Zhejiang Longda Force Co. Ltd. (“Longda”), a Chinese company, as a defendant and amending its patent infringement claim to include U.S. Patent 6, 293, 624 (“the ‘624 Patent”). [Doc. 5].

         Longda refused to waive service of process under Federal Rule of Civil Procedure 4(d). Accordingly, Agio initiated formal service of process of the Summons and the Amended Complaint pursuant to the Hague Convention, to which the People's Republic of China is a signatory. [See Doc. 26-1]. Despite Agio's extensive and repeated efforts to effectuate service, Longda failed to file a responsive pleading or otherwise participate in the above-captioned action.

         On February 15, 2017, Agio moved for the entry of default against Longda for failure to answer or otherwise plead in response to Agio's Amended Complaint. [Doc. 26]. On February 16, 2017, pursuant to Federal Rule of Civil Procedure 55(a), the Clerk entered default against Longda. [Doc. 27].

         The claim having been resolved against all other parties, Agio now moves pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure for default judgment against Longda, seeking the following relief: (1) a finding that Longda is liable for patent infringement; (2) an award of compensatory damages based on Agio's lost profits; (3) an award of treble damages based on Longda's egregious and willful infringement; (4) an award of attorney fees on the grounds that this case is “exceptional”; and (5) an award of costs, prejudgment interest, and post-judgment interest.

         II. STANDARD OF REVIEW

         Rule 55 of the Federal Rules of Civil Procedure provides for the entry of a default when “a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend.” Fed.R.Civ.P. 55(a). Once a defendant has been defaulted, the plaintiff may then seek a default judgment. If the plaintiff's claim is for a sum certain or can be made certain by computation, the Clerk of Court may enter the default judgment. Fed.R.Civ.P. 55(b)(1). In all other cases, the plaintiff must apply to the Court for a default judgment. Fed.R.Civ.P. 55(b)(2).

         “The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact....” Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). A defendant, however, “is not held . . . to admit conclusions of law.” Ryan, 253 F.3d at 780 (quoting Nishimatsu, 515 F.2d at 1206). The Court therefore must determine whether the facts as alleged state a claim for relief. GlobalSantaFe Corp. v. Globalsantafe.com, 250 F.Supp.2d 610, 612 n.3 (E.D. Va. 2003).

         III. PLAINTIFF'S FACTUAL ALLEGATIONS

         The well-pleaded factual allegations of Agio's Amended Complaint having been deemed admitted by virtue of Longda's default, the following is a summary of the relevant facts.

         Agio is an industry-leading designer, manufacturer, and distributor of outdoor furniture items, including chairs, tables, and other usable products. [Doc. 5 at ¶ 2]. Agio is the assignee of the '624 Patent and the '323 Patent (collectively, “the patents-in-suit” or “Agio's patents”). [Id. at ¶ 3]. Agio owns all rights, title, and interest in and to the patents-in-suit, including the right to sue for infringement. [Id. at ¶¶ 21-22].

         Longda is also a manufacturer and distributor of outdoor garden furniture, considerable amounts of which are exported to the United States, including to North Carolina. [Doc. 5 at ¶¶ 4-5, 7-8]. For more than fifteen years, Longda has manufactured and distributed sling chairs that infringe Agio's patents. Since May of 2003, Longda has had actual notice of Agio's '624 Patent and has known its sling chairs infringed the '624 Patent but has continued to sell and distribute its infringing sling chairs despite this knowledge. [Id. at ¶¶ 31-33].

         In 2002, Agio filed a complaint in the United States District Court for the Northern District of Illinois for infringement of the '624 Patent. See Agio Int'l Co. v. Hansen Int'l Inc., No. 1:02-cv-06242 (N.D. Ill. Aug. 30, 2002). On April 22, 2003, the Northern District of Illinois issued a Permanent Injunction Order (hereinafter, “the Hansen Permanent Injunction”), enjoining the defendants in that action “from manufacturing, using, selling, offering for sale, promoting, distributing, displaying in any medium or otherwise disposing of” any sling chair “with the same accused structure” that infringes Agio's patent. [Doc. 5-3 at 5]. The Hansen Permanent Injunction also enjoined “those persons in active concert or participation with [the defendants] who receive actual notice of the Permanent Injunction Order….” [Doc. 5 at ¶ 31; Doc. 5-3 at 5].

         While not a named defendant in the Hansen litigation, Longda supplied the infringing furniture at issue in Hansen. [Doc. 5 at ¶ 32]. Agio provided notice of the Hansen Permanent Injunction to Longda in May 2003. [Id.]. Longda nevertheless began selling and supplying infringing chairs to JMH at its facility in Candler, North Carolina. [Id. at ¶ 33; Declaration of John Mark Hudson (“JMH Aff.”), Doc. 50-1 at ¶ 3]. Specifically, between 2011 and 2014, Longda profited by selling to JMH 22, 478 infringing chairs, as well as 1, 626 tables, which tables were sold together with the chairs in question as functional units. [See JMH Aff., Doc. 50-1 at ¶¶ 5, 6].

         Since Agio initiated the above-captioned action, Longda has repeatedly refused to participate in this litigation despite Agio's repeated efforts to put them on notice of the action and prompt Longda to participate. [See Declaration of Craig L. Mytelka (“Mytelka Decl.”), Doc. 51-1]. In February 2016, working with a law firm in China, counsel for Agio provided Longda with translated copies of the Summons, Amended Complaint, and Exhibits, as well as a Waiver of Service Form. [Id. at ¶ 6]. Longda responded that it was not willing to sign the waiver but wished to nonetheless receive any documents related to the case. [Id. at ¶ 7]. Agio made every effort to obtain service under the Hague Convention, and the Chinese law firm later sent a letter warning Longda that Agio would soon commence default proceedings. [Id. at ¶ 10]. Longda's refusal to participate in this litigation continues to the present date.

         III. DISCUSSION

         A. ...


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