Jane Envy, LLC v. Infinite Classic Inc., 5:14-cv-00083

Plaintiff Jane Envy, LLC filed suit alleging copyright infringement against Infinite Classic Inc. and Baek H. Kim.
Clerk entered default against Defendants on May 19, 2014 after failure to answer or Waiver of Summons was completed.
Plaintiff moved for default judgment on July 11, 2014; the case was referred to Magistrate Judge Primomo for findings.
Defendants relied on counsel representations that local counsel would handle the case; no timely response occurred.
Defendants later retained new local counsel and moved to set aside the default and object to the magistrate’s recommendation.
Court grants the motion to set aside the default, vacates the magistrate’s recommendation as moot, and denies the default judgment.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether to set aside the default under Rule 55(c).	Envy argues default should stand due to willful delay.	Defendants claim lack of willfulness and prompt correction once aware.	Yes; set aside for good cause; defenses meritorious and no willful delay.
Whether Defendants have a meritorious defense to infringement.	Envy contends infringement is clear and damages appropriate.	Works are unoriginal or not sufficiently protected; substantial similarities fall outside protectable elements.	Yes; meritorious defense shown based on originality and scope of protection.
Whether setting aside causes prejudice to Plaintiff.	Delays and costs prejudicial to Plaintiff.	No substantial prejudice beyond required proof at trial.	No substantial prejudice; factors favor setting aside.
Effect of setting aside on Magistrate Judge’s Recommendation.	Recommendation should control absent default.	Recommendation moot if default is set aside.	Recommendation vacated as moot; default judgment denied.

In re Dierschke, 975 F.2d 181 (5th Cir. 1992) (discretionary standard for setting aside default)
United States v. One Parcel of Real Prop., 763 F.2d 181 (5th Cir. 1985) (default judgments disfavored; related considerations)
In re Chinese-Manufactured Drywall Prod. Liab. Litig., 753 F.3d 521 (5th Cir. 2014) (four-factor test for setting aside default; meritorious defense emphasis)
One Parcel of Real Prop., 763 F.2d 183 (5th Cir. 1985) (balance of factors; delay and prejudice considerations)
Jenkens & Gilchrist v. Groia & Co., 542 F.3d 114 (5th Cir. 2008) (meritorious defense standard; context for defense showing)
Seven Elves, Inc. v. Eskenazi, 635 F.2d 396 (5th Cir. 1981) (significance of losses varies by context; damages considerations)