Kustom Cycles, Inc. v. Dragonfly Cycle Concepts, LLC

          ORDER

          JEFFREY L. VIKEN CHIEF JUDGE

         INTRODUCTION

         Plaintiffs Kustom Cycles, Inc. (“Klock Werks”) and Bryan Klock allege defendants Dragonfly Cycle Concepts, LLC (“Dragonfly”) and Kevin Martin infringed upon their patent for a motorcycle windshield. (Docket 1). Defendants failed to answer the complaint and the Clerk of Court entered default against them. (Docket 9). On December 20, 2018, plaintiffs moved for default judgment, seeking the court's order finding defendants infringed the patent, a permanent injunction enjoining defendants from infringing the patent, statutory damages, and attorneys' fees. (Docket 11). Despite receiving service of the pleadings, defendants failed to enter an appearance in this case. For the reasons given below, the court enters default judgment in favor of plaintiffs, enters a permanent injunction, and grants statutory damages and attorneys' fees.

         DISCUSSION

         I. Facts

         “Once a default has been entered on a claim for an indefinite or uncertain amount of damages, facts alleged in the complaint are taken as true, except facts relating to the amount of damages, which must be proved in a supplemental hearing or proceeding.” Cutcliff v. Reuter, 791 F.3d 875, 882 (8th Cir. 2015). “A defaulted claim thus precludes a party from contesting the facts in the complaint that establish liability.” Id. Because defendants defaulted on the patent claim at issue here, the court takes all facts in plaintiffs' complaint establishing liability as true.

         In 2009, plaintiff Brian Klock obtained a design patent (Patent No. D586, 275) for his motorcycle windshield. (Docket 1-1). Mr. Klock is the founder and CEO of Klock Werks, which has its principal place of business in Mitchell, South Dakota. (Docket 1 at ¶¶ 5, 9). Klock Werks designs, manufactures and sells custom motorcycle parts. Id. at ¶ 5. Klock Werks sells “Flare” windshields, which are the commercialized version of the patented design. Id. at ¶¶ 9, 13. Defendant Dragonfly manufactures and sells motorcycle parts from its principal place of business in Fullerton, California. Id. at ¶ 7. Defendant Kevin Martin is the sole owner of Dragonfly. Id. Defendants previously sold motorcycle windshields manufactured by Klock Werks, including the Flare windshield, apparently with permission. Id. at ¶¶ 7, 23.

         However, Dragonfly also manufactures and sells a “Flip-Out” batwing motorcycle windshield which “embod[ies] the design” patented by plaintiffs. Id. at ¶¶ 15-18. The Flip-Out windshield is “virtually indistinguishable” from plaintiffs' Flare windshield. Id. at ¶ 24. Dragonfly sells its Flip-Out windshields in Sturgis, South Dakota, at the annual Sturgis Motorcycle Rally.^[1]Id. at ¶ 3. In 2017, a Klock Werks representative purchased a Flip-Out windshield from a Dragonfly staff member in Sturgis. Id. at ¶ 19.

         Defendants knew, or reasonably should have known, that the Flare windshield design was patented because they sold the Flare windshield before creating the Flip-Out windshield. Id. at ¶ 25. Defendants have not licensed the patented design or otherwise obtained permission to manufacture windshields embodying that design. Id. at ¶ 39. Because of defendants' actions, plaintiffs suffered “prior and continued financial loss as well as significant harm to [their] goodwill within the motorcycle industry and [their] ability to control the use and commercial exploitation of [their] patented design.” Id. at ¶ 27. Defendants' infringement was and is “knowing, intentional, and willful.” Id. at ¶ 40.

         II. Legal Standard

         The Patent Act provides that “whoever without authority makes, uses, offers to sell, or sells any patented invention . . . infringes the patent.” 35 U.S.C. § 271(a). “A determination of patent infringement under 35 U.S.C. § 271(a) requires a two step analysis-first, the language of the claim at issue must be interpreted to define its proper scope and, second, the evidence before the court must be examined to ascertain whether the claim has been infringed[.]” Minn. Min. and Mfg. Co. v. Johnson & Johnson Orthopaedics, Inc., 976 F.2d 1559, 1570 (Fed. Cir. 1992).

         The court “may grant injunctions in accordance with the principles of equity to prevent the violation of any right secured by patent[.]” 35 U.S.C. § 283. The Supreme Court set out a “four-factor test” that applies “to disputes arising under the Patent Act”:

A plaintiff must demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.

eBay v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).

         In “exceptional” Patent Act cases, the court “may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285.

[A]n “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.

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014). The moving party in a patent infringement case must establish its “entitlement to fees under § 285 . . . by a preponderance of the ...