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Delta Sigma Theta Sorority, Inc v. Lamith Designs

June 21, 2011

DELTA SIGMA THETA SORORITY, INC.,
PLAINTIFF,
v.
LAMITH DESIGNS, INC.,
DEFENDANT.



The opinion of the court was delivered by: Judge Beryl A. Howell

MEMORANDUM OPINION

In this case, plaintiff Delta Sigma Theta Sorority (hereinafter "Delta") alleges that LaMith Designs, Inc. is infringing its trademarks and service marks*fn1 by offering for sale without authorization merchandise bearing Delta's well-known insignias. Currently before the Court is plaintiff's motion for default judgment, the defendant's motion to vacate the Clerk's entry of default, as well as the defendant's motion to dismiss for lack of personal jurisdiction. For the reasons set forth below, the Court grants the defendant's motion to vacate entry of default and therefore denies the plaintiff's motion for default judgment. The defendant's motion to dismiss is denied, without prejudice, in order to provide the plaintiff with a period of sixty days for jurisdictional discovery. The defendant may re-submit its motion to dismiss following the sixty-day period of jurisdictional discovery.

I.BACKGROUND

Plaintiff Delta Sigma Theta Sorority, Inc. (hereinafter "Delta") is a well-recognized sorority with over 900 chapters across the world. Comp. ¶¶ 10, 12. Founded in 1913 on the campus of Howard University in Washington, D.C., Delta is known not only by its official name, but also as "Delta," "Delta Sigma Theta," "Delta Sorority," and by its representative Greek letter symbols ΔΣΘ. Id. ¶¶ 10-11. According to the plaintiff, "[a]ny iteration of Delta's name or its Greek letter symbols is famous and recognized as a Mark signifying association with Delta." Id.

¶ 11.

Among the trademarks and service marks (hereinafter "Marks") associated with its organization and brand, the plaintiff has registered with the U.S. Patent and Trademarks Office: Delta Sigma Theta (Reg. No. 3,407,876), Delta's Minerva Crest (Reg. No. 3,465,351 and 2,199,610), Delta Sigma Theta Sorority, Incorporated (Reg. No. 2,197,647), the Greek letter symbols ΔΣΘ (Reg. No. 3,416,699 and 2,201,178), and the Delta Torch (Reg. No. 3,557,212). Id. ¶ 15. Delta also states that it owns common law marks, including "Delta" and "Delta Sorority." Id. ¶ 16.

Given its "strong and famous" brand, the plaintiff states that it "vigorously protects its Marks" and employs an individual to monitor and protect its intellectual property. Id. ¶¶ 17-18. Delta receives "hundreds of requests" each year from vendors seeking a license to sell merchandise imprinted with Delta's name and Marks, but only grants a license to those meeting the plaintiff's licensing requirements. Id. ¶ 19.

In order to obtain a license to use Delta's Marks, a vendor must complete an application. Id. ¶ 20. If approved, the vendor must then execute a Licensee Agreement and agree to Delta's Guidelines for Operating, which includes a "Code of Conduct." Id. As part of this process, vendors agree to acquire a license from Delta before "anyone may manufacture, design, make, copy, sell, display, or distribute" items containing Delta's Marks. Id. Vendors further agree to restrict sales of merchandise bearing Delta Marks "solely to Delta members and solely at Delta-approved events." Id.

The plaintiff alleges that defendant LaMith Design, Inc. is selling clothing and merchandise bearing Delta's Marks without license or authorization through its catalog and its website located at www.lamithdesignonline.com. Id. ¶¶ 21-23. According to the plaintiff, the defendant has never contacted the plaintiff to seek a license and is "unlawfully trading on Delta's name, reputation, goodwill, and the strength of member and public association of Delta Marks with Delta." Id. ¶ 22. Among the items the defendant offers for sale are jackets, shoes, scarves, and bags bearing Delta's ΔΣΘ insignia and other Marks. Id. ¶ 23. The defendant does not restrict sale of these items to Delta members. Id.

Upon learning of the defendant's alleged infringing activity, the plaintiff unsuccessfully sought to halt the defendant's sale of Delta merchandise. Id. ¶¶ 25-27. The plaintiff states that "[d]espite having been put on notice that it was infringing on Delta's Marks and directed to cease advertising for sale and selling the infringing merchandise, Defendant continues to advertise and offer for sale merchandise that infringes on Delta's intellectual property rights." Id. ¶ 27.

On January 28, 2010, the plaintiff filed a Complaint seeking injunctive relief to halt the defendant's ongoing violations of its trademark and service mark rights, disgorgement of profits the defendant realized from sale of the infringing goods, and damages for misuse of the plaintiff's Marks. Id. ¶¶ 1-2. Specifically, the plaintiff asserts six causes of action, alleging: infringement of Delta's trademarks under section 32(1) of the Lanham Act, 15 U.S.C. § 1114(1), Federal common law, and District of Columbia common law; dilution of its trademarks under section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c); and unfair competition under Federal and District of Columbia common law. Id. ¶¶ 28-65.

Shortly after filing the Complaint, the plaintiff moved on January 28, 2010, for a preliminary injunction to enjoin the defendant from selling the alleged infringing merchandise and "engaging in activities designed to damage [plaintiff's] reputation and goodwill." Pl.'s Mot. Prelim. Inj., ECF No. 2, at 1. The Court scheduled a hearing on the motion for February 25, 2010, but a day before the scheduled hearing, the plaintiff requested a continuance to allow the parties to explore settlement. Pl.'s Mot. & Mem. P. & A. for Continuance, ECF No. 6, at 1. Before the defendant had filed a responsive pleading or notice of appearance, the plaintiff stated that the owner of defendant LaMith Designs, Ajay Chopra, contacted the plaintiff and "expressed an interest in settling this matter and asked whether it could be resolved without the need for him to contact the Court or retain counsel." Id. at 2. The plaintiff also informed the Court that the defendant "represented that he has discontinued all uses of Delta's Marks." The plaintiff further stated that she informed the defendant, who initially was not proceeding with counsel, that the plaintiff would "ask the Court to delay any scheduled proceedings to allow the parties to explore settlement."*fn2 Id.

The Court twice granted the plaintiff's requests to continue the preliminary injunction hearing from February 25, 2010 to May 7, 2010. Minute Orders dated Feb. 24 and April 6, 2010 (Walton, J.). After the second continuance, the Court cancelled the hearing "in light of representation made by the parties," and the plaintiff did not renew the preliminary injunction motion nor attempt to re-schedule the hearing thereafter. Minute Order dated May 5, 2010 (Walton, J.). The plaintiff explains that parties were engaging "in continuing settlement discussions," which "were ultimately unsuccessful." Pl.'s Mem. P. & A. Supp. Mot. Entry of Default, ECF No. 7, at 2.

In the midst of the settlement discussions, the defendant was served with the Complaint on February 17, 2010. See Return of Service Affidavit, ECF No. 5. The defendant's Answer was therefore due on March 10, 2010. FED. R. CIV. P. 12(a)(1)(A)(i) ("A defendant must serve an Answer . . . within 21 days after being served . . ."). Nevertheless, the plaintiff states, "[b]y agreement between the parties, Defendant's Answer was due on June 1, 2010." Pl.'s Mem. P. &

A. Supp. Mot. Entry of Default, ECF No. 7, at 2; Pl.'s Mot. Entry of Default, ECF No. 7, Ex. 1, Devarieste Curry Aff. (hereinafter "Curry Aff."), ¶ 6 (plaintiff's counsel represents that "[o]n behalf of our clients, [defendant's counsel] and I reached an agreement whereby Defendant's Answer would be due on June 1, 2010 to give the parties additional time to try to reach an agreement."). No motion seeking to extend the time to answer was ever filed nor did the Court grant permission to extend the time for the defendant's Answer. See FED. R. CIV. P. 6(b)(1).

In accordance with the informal agreement between the parties, on June 1, 2010, the defendant submitted to the Clerk of the Court a Motion to Dismiss for Lack of Personal Jurisdiction under FED. R. CIV. P. 12(b)(2). Def.'s Mem. Supp. Mot. Vacate Entry of Default, ECF No. 11, at 1. The defendant's motion to dismiss was also served on plaintiff's counsel. Id. Despite the fact that at this time, the defendant was represented by counsel, the motion to dismiss was signed by "Ajay Chopra, Owner, pro se." Id. According to the plaintiff, the defendant's counsel explained in an email message on June 1, 2010, that "Defendant elected to file the motion to dismiss pro se, rather than retain local counsel." Curry Aff., ECF 7, ¶ 7. On June 23, 2010, the Court denied the defendant leave to file its motion to dismiss because the defendant, a corporation, cannot appear pro se. See In re Greater Se. Cmty. Hosp. Found., Inc. v. Potter, 586 F.3d 1, 4-5 (D.C. Cir. 2009) ("It has been the law for the better part of two centuries . . . that a corporation may appear in the federal courts only through licensed counsel," quoting Rowland v. Cal. Men's Colony, 506 U.S. 194, 201-02 (1993)).

On June 18, 2010, five days prior to the Court denying the defendant leave to file its motion to dismiss, the plaintiff filed a Motion for Entry of Default, stating that because the defendant "failed to file an answer or otherwise respond through licensed counsel by the due date . . . [the] Defendant should be treated as having not appeared at all." Pl.'s Mem. P. & A. Supp. Mot. Entry of Default, ECF No. 7, at 3. Pursuant to Federal Rule of Civil Procedure 55(a), the ...

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