Sream Inc. v. Saakshi Enterprises Inc.
1:16-cv-01408
E.D.N.YJun 15, 2017Background
- Sream Inc., exclusive licensee of RooR trademarks since 2011, sued Saakshi Enterprises, Fine Gourmet Deli, and F&B Organic Deli for trademark infringement, counterfeiting, false designation, dilution, and New York unfair competition and consumer-protection claims after purchases of alleged counterfeit RooR products in 2015.
- Complaint filed March 22, 2016; none of the defendants initially answered; Clerk entered certificate of default on September 2, 2016; Sream moved for default judgment on February 22, 2017.
- Saakshi later appeared and opposed default judgment, arguing the default resulted from law-office neglect (not willfulness), it has meritorious defenses (including lack of Sream standing), and vacatur would not prejudice Sream; Fine Gourmet and F&B never appeared.
- Defense counsel inadvertently filed Saakshi’s case papers into a recently closed similar SDNY matter, causing the missed answer deadline; counsel discovered the error only after receiving Sream’s default-motion papers.
- The court applied the Rule 55(c) good-cause test (willfulness, meritorious defenses, prejudice) and resolved doubts in favor of vacatur where appropriate.
- Court vacated the clerk’s default as to Saakshi, denied default judgment against Saakshi, ordered pleadings schedule, but entered default judgment against Fine Gourmet and F&B and referred damages to the magistrate judge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the clerk’s entry of default as to Saakshi should be vacated under Rule 55(c) | Sream sought default judgment and opposed vacatur, arguing procedural posture justified default enforcement | Saakshi: default due to law‑office mistake (not willful); has meritorious defenses; vacatur causes no prejudice | Vacated default as to Saakshi — Rule 55(c) factors favor vacatur (no willfulness, potential defenses, no showed prejudice) |
| Whether Saakshi’s conduct was willful | Default reflects defendants’ inaction warranting judgment | Saakshi: counsel’s filing error was negligent, not deliberate or strategic | Not willful; court found mistake by counsel insufficient to bar vacatur |
| Whether Saakshi presented meritorious defenses (standing/licensing) | Sream asserted it is exclusive licensee with enforcement rights | Saakshi: Sream may lack statutory standing under 15 U.S.C. § 1114 because license may not amount to an assignment; plaintiff did not attach license | Court: Saakshi proffered a potentially complete defense (standing); factor favors vacatur |
| Prejudice to plaintiff from vacatur | Sream: delay and readiness to obtain default judgment justify denying vacatur | Saakshi: plaintiff delayed in moving for judgment and identified no concrete harm from vacatur | Court: no meaningful prejudice shown beyond delay; this factor favors vacatur |
Key Cases Cited
- Pecarsky v. Galaxiworld.com Ltd., 249 F.3d 167 (2d Cir.) (sets Rule 55(c) three‑factor test for vacating defaults)
- S.E.C. v. McNulty, 137 F.3d 732 (2d Cir.) (willfulness requires more than negligence for defaults)
- Am. Alliance Ins. Co. v. Eagle Ins. Co., 92 F.3d 57 (2d Cir.) (filing mistakes by counsel are not necessarily willful defaults)
- Fed. Treasury Enterp. Sojuzplodoimport v. SPI Spirits Ltd., 726 F.3d 62 (2d Cir.) (limits on who may sue under § 1114; differences between registrant and licensee standing)
- Meehan v. Snow, 652 F.2d 274 (2d Cir.) (distinguishes Rule 55(c) standard from Rule 60(b))
- Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir.) (plaintiff delay in seeking default judgment undercuts prejudice claim)