215 F. Supp. 3d 626
N.D. Ill.2016Background
- MetroPCS (T-Mobile USA) sued Mark Devor and Sheldon Chase alleging a coordinated scheme to acquire large quantities of specially‑manufactured, subsidized MetroPCS handsets by fraud, unlock/hack them, and resell them (often overseas) in violation of MetroPCS terms and trademarks.
- MetroPCS alleged defendants trafficked handset activation codes/passwords, accessed MetroPCS’s protected computer networks, and used MetroPCS trademarks to market unlawfully obtained handsets.
- MetroPCS’s handset packaging and terms require activation on MetroPCS’s network and prohibit resale; MetroPCS claims defendants knowingly procured devices outside those terms.
- Defendants failed to answer or otherwise defend; the court treated MetroPCS’s well‑pleaded factual allegations as true for liability purposes under Rule 55.
- The court found MetroPCS established liability on claims including federal trademark infringement and false advertising (Lanham Act), CFAA claims (password trafficking and unauthorized access), state torts (tortious interference, conversion, unjust enrichment, fraud), and related conspiracy claims.
- The court entered default judgment awarding monetary relief (including treble Lanham Act damages), attorneys’ fees and costs, and a permanent injunction prohibiting defendants from acquiring, unlocking, trafficking, advertising, or using MetroPCS/T‑Mobile handsets or marks; the judgment was declared non‑dischargeable in bankruptcy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Trademark infringement & false advertising (Lanham Act) | MetroPCS: defendants used MetroPCS Marks to market materially different, unlocked/stolen handsets causing consumer confusion and injury to MetroPCS. | Devor/Chase: no responsive pleadings (default). | Court: default judgment for MetroPCS — marks valid, infringement and false advertising proven; irreparable harm presumed; injunction warranted. |
| Computer Fraud and Abuse Act (password trafficking and unauthorized access) | MetroPCS: handsets contain confidential codes granting access to protected MetroPCS networks; defendants trafficked codes and accessed networks without authorization causing >$5,000 loss. | Defendants: no defense asserted. | Court: default judgment for MetroPCS on CFAA counts; losses exceed statutory threshold. |
| State torts and related claims (tortious interference, conspiracy, fraud, unjust enrichment, conversion, inducing breach) | MetroPCS: defendants conspired, used runners/mules, induced breaches of MetroPCS terms, and retained profits from unlawfully acquired handsets. | Defendants: no defense asserted. | Court: default judgment for MetroPCS on all pleaded state common‑law and statutory claims. |
| Remedies — damages, fees, injunction, sanctions (including non‑dischargeability) | MetroPCS: seeks actual damages, trebled for willful Lanham Act violations, attorneys’ fees and costs, permanent injunction, and findings that judgment is non‑dischargeable. | Defendants: no defense; no mitigation. | Court: awarded $464,436 (trebled Lanham Act damages from $154,812), attorneys’ fees and costs $52,826.56, permanent injunction with detailed prohibitions, $517,262.56 final judgment total, and found judgment non‑dischargeable under 11 U.S.C. §§ 523(a)(2)(A) and (a)(6). |
Key Cases Cited
- CAE, Inc. v. Clean Air Eng’g, Inc., 267 F.3d 660 (7th Cir. 2001) (elements of trademark infringement and likelihood of confusion).
- Wehrs v. Wells, 688 F.3d 886 (7th Cir. 2012) (upon default, well‑pleaded liability allegations are taken as true but damages require proof).
- TracFone Wireless, Inc. v. Anadisk LLC, 685 F.Supp.2d 1304 (S.D. Fla. 2010) (contributory infringement and parties who knowingly facilitate unlawful purpose).
- Eli Lilly & Co. v. Nat. Answers, Inc., 233 F.3d 456 (7th Cir. 2000) (irreparable harm presumed in trademark cases).
- Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6 (7th Cir. 1992) (recognizing presumption of irreparable harm in Lanham Act violations).