Surf's Up LLC v. Rahim
4:14-cv-04706
D.S.C.Nov 14, 2017Background
- Surf’s Up, LLC owns federal trademark Registration No. 3,496,814 for “Surf’s Up Family Fun Center,” which it used operating an amusement/laser-tag facility in Myrtle Beach (opened 2008; closed 2010).
- Defendants (Myrtle Laser Tag, BusinessVentures.com LLC, and Rick Rahim) purchased the property and began operating a substantially similar laser-tag business at the same location beginning in early 2012, using Surf’s Up’s name, logo, and website content.
- Surf’s Up sent a cease-and-desist in May 2012; Defendants continued use. Fire (one owner) obtained a magistrate-court judgment on related website/copyright claims, but trademark claims remained with Surf’s Up.
- Defendants largely failed to participate in the federal case: defaults were entered against the corporate defendants for lack of counsel and against Rahim for failure to respond; Plaintiff moved for default judgment.
- The magistrate judge accepted Plaintiff’s well-pleaded allegations as true, found Lanham Act liability, and recommended default judgment awarding monetary damages, injunctive relief, attorneys’ fees, and costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability under Lanham Act (15 U.S.C. §1114/§1125) — whether defendants used a registered mark likely to cause confusion | Surf’s Up: defendants used the registered "Surf’s Up Family Fun Center" mark and related logos on websites and ads at the same location, causing consumer confusion | Defendants: no responsive position presented (default) | Court: Plaintiff established a valid mark and likelihood of confusion; liability found under the Lanham Act |
| Monetary damages / disgorgement of profits — appropriate measure and quantum | Surf’s Up: may rely on its historical revenue to estimate defendants’ sales/profits; requests $1,605,208.33 (assumes $575,000 annual sales over 5.58 years and 50% profit margin) | Defendants: provided no sales/cost evidence (no participation) | Court: In default posture, historical sales are a reasonable proxy; awarded $1,605,208.33 (sales reduced by 50% as reasonable profit estimate) |
| Permanent injunctive relief — whether equity supports injunction barring further infringing use | Surf’s Up: continued, willful infringement after cease-and-desist and notice suffices for permanent injunction to prevent irreparable harm | Defendants: no responsive position (default) | Court: Traditional injunction factors satisfied; permanent injunction against use, dilution, and related acts recommended |
| Attorneys’ fees and costs under 15 U.S.C. §1117 — whether case is "exceptional" and fee amount reasonable | Surf’s Up: case is exceptional due to willful, continued infringement and nonparticipation; contingency agreement (1/3) exists; seeks at least $200,000 plus $1,536.49 costs | Defendants: no response | Court: Case is exceptional; award of attorneys’ fees of $200,000 and costs $1,536.49 is reasonable (contingency context considered) |
Key Cases Cited
- DIRECTV, Inc. v. Rawlins, 523 F.3d 318 (4th Cir.) (defaulting defendant admits well-pleaded allegations)
- Synergistic Intern., LLC v. Korman, 470 F.3d 162 (4th Cir.) (elements of trademark infringement and factors for Lanham Act damages)
- Lone Star Steakhouse & Saloon, Inc. v. Alpha of Virginia, Inc., 43 F.3d 922 (4th Cir.) (irreparable harm and injunction as preferred remedy in trademark cases)
- Georgia-Pacific Consumer Prods. LP v. von Drehle Corp., 781 F.3d 710 (4th Cir.) (framework for determining exceptional case and awarding fees)
- In re Abrams & Abrams, P.A., 605 F.3d 238 (4th Cir.) (considerations for awarding fees in contingency-fee cases)
- Barber v. Kimbrell's, Inc., 577 F.2d 216 (4th Cir.) (factors for reasonable attorney-fee determinations)
- Mary Kay Inc. v. Ayres, 827 F. Supp. 2d 584 (D.S.C.) (permanent-injunction standards in trademark cases)