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Rpa International Pty Ltd, Doing Business As v. Compact Intl Inc; Lee Johnson

September 21, 2011

RPA INTERNATIONAL PTY LTD, DOING BUSINESS AS NUFURN PTY LTD; NUFURN INC; DENNIS MICHAEL KRAWCHUK, PLAINTIFFS,
v.
COMPACT INTL INC; LEE JOHNSON, AN INDIVIDUAL; BZ GLOBAL SDN BHD; BZ GLOBAL HK LIMITED; CHEE CHOON CHEAH, AN INDIVIDUAL; KOK CHEONG SOO, AN INDIVIDUAL, DEFENDANTS. CHEE CHOON CHEAH, AN INDIVIDUAL; KOK CHEONG SOO, AN INDIVIDUAL; COMPACT INTL INC; LEE JOHNSON, AN INDIVIDUAL; BZ GLOBAL SDN BHD; BZ GLOBAL HK LIMITED, COUNTER CLAIMANT,
v.
RPA INTERNATIONAL PTY LTD, DOING BUSINESS AS NUFURN PTY LTD; NUFURN INC; DENNIS MICHAEL KRAWCHUK, COUNTER DEFENDANTS.



The opinion of the court was delivered by: Hayes, Judge:

ORDER

The matter before the Court is the Motion for Relief From and/or to Alter, Amend, and/or Vacate Default Judgment filed by Defendants Lee Johnson and Compact International, Inc. (ECF No. 186).

I. Background

On May 26, 2006, Plaintiffs initiated this action by filing the Complaint. (ECF No.1). The Complaint alleged that Plaintiff Dennis Michael Krawchuck owns Plaintiff RPA International Pty Ltd. and Plaintiff Nufurn, Inc. (collectively "Plaintiffs"). The Complaint alleged that Krawchuck is the owner of U.S. Patent No. 6, 969, 113 ("the 113 patent"), entitled "Folding Chair with Metal Inserts," which was issued to Krawchuck on November 29, 2005. Id. at ¶ 4. The Complaint alleged that the 113 patent concerns a resin folding chair invented by Krawchuck known as the "Gladiator chair." Id.

The Complaint alleged that Lee A. Johnson is the president of Compact International, Inc. ("Compact") and Defendants Johnson and Compact infringed Plaintiffs' patent by "importing, using, offering to sell, and/or selling within the United States the resin folding chairs ...." Id. at ¶¶ 26, 30. The Complaint alleged that Defendants Johnson and Compact exhibited the resin folding chairs at the American Rental Association's Rental Show in Florida on February 6 through 9, 2006. The Complaint alleged that Defendants Johnson and Compact purchased the resin folding chairs from Defendants BZG Global Sdn. Bhd, BZ Global Limited, Chee Choon Cheah, and Kok Cheong Soo. The Complaint alleged that Plaintiff's counsel sent a cease and desist letter regarding the infringement to Defendants Johnson and Compact on February 6, 2006. The Complaint asserted a claim of patent infringement against Johnson and Compact and sought relief including lost profits.

On September 13, 2006, all of the Defendants including Johnson and Compact filed an Answer to the Complaint. (Doc. No. 15). Defendants were represented by counsel from Wilson Sonsini Goodrich & Rosati, PC. On October 12, 2006, counsel from Merchant & Gould P.C. entered appearances on behalf of all the Defendants. (ECF Nos. 18-19). On December 21, 2006, an Early Neutral Evaluation Conference was held. (ECF No. 43). On January 29, 2007, a Case Management Conference was held. (ECF No. 52).

On April 19, 2007, Wilson Sonsini Goodrich & Rosati, PC and Merchant & Gould, PC moved to withdraw as counsel for Defendants Johnson and Compact as well as others, and served Defendants Johnson and Compact with the Motion. (ECF No. 65). Prior to filing the Motion to Withdraw, Defendants Johnson and Compact had filed a Motion for Leave to Amend the Answer and Counterclaims which was granted on May 25, 2007. (ECF No. 72). In the order granting the Motion for Leave to Amend, the Court stated: "No later than ten days from the date of this Order, the Compact Defendants shall file the 'Amended Answer, Affirmative Defenses and Counterclaims,'... After the filing of the 'Amended Answer, Affirmative Defenses and Counterclaims,' the Court will rule on the pending Motion to Withdraw." Id. at 9.

On May 31, 2007, ths Court granted the Motion to Withdraw and gave the corporate defendants thirty days to obtain new counsel. (ECF No. 76). The order stated:

Pursuant to Local Civil Rule 83.3(k) and federal common law, '[c]orporations and other unincorporated associations must appear in court through an attorney.' D-Beam Ltd. P'ship v. Roller Derby Skates, Inc., 366 F.3d 972, 973-74 (9th Cir. 2004); see also United States v. High Country Broad. Co., 3 F.3d 1244, 1245 (9th Cir. 1993). Accordingly, Defendants Compact International, Inc., BZ Global Sdn. Bhd., and BZ Global (H.K.) Limited are HEREBY NOTIFIED that they have 30 days from the date this order is filed to obtain new counsel and have counsel file a notice of appearance. Defendants Compact International, Inc., BZ Global Sdn. Bhd., and BZ Global (H.K.) Limited are also notified that if they fail to obtain new counsel and have counsel file a notice of appearance, they may be subject to default proceedings. See High Country Broadcasting, 3 F.3d at 1245.

Id. at 2-3. The Court ordered the Clerk of the Court to mail a copy of the order to Defendants Johnson and Compact. The corporate defendants failed to obtain new counsel.

On July 31, 2007, Plaintiffs filed a Motion for Default Judgment against the corporate defendants including Defendant Compact. (ECF No. 83). Plaintiffs served Defendants Johnson and Compact with the Motion. Defendant Compact did not appear or file an opposition to the motion. On October 17, 2007, this Court entered default against Defendant Compact for failure to obtain new counsel but declined to enter default judgment stating:

On May 31, 2007, the Court ordered the Corporate Defendants to obtain new counsel and have the new counsel file a notice of appearance by July 7, 2007. The record shows that the Corporate Defendants have not filed a notice of appearance through counsel. The Court finds that the Corporate Defendants have failed to comply with the Court's May 31, 2007 Order and have failed to otherwise defend. Therefore, the Court directs entry of default against the Corporate Defendants in accordance with Rule 55(a) of the Federal Rules of Civil Procedure.

The Court finds that a default judgment against the Corporate Defendants is not appropriate at this stage of the proceedings. No damages have been established and there are claims proceeding against the remaining defendants.

IT IS HEREBY ORDERED that the Motion for Default Judgment against Corporate Defendants for failing to comply with the Court's May 31, 2007 Order (Doc. # 83) is DENIED at this stage. The Court directs entry of the Corporate Defendants' DEFAULT pursuant to Rule 55(a) of the Federal Rules of Civil Procedure. (ECF No. 98). On October 19, ...


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