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Cooper v. Greenly Group for Solar Technologies, Ltd.

United States District Court, E.D. Virginia, Alexandria Division

March 23, 2018



          Michael S. Nachmanoff United States Magistrate Judge.

         This matter comes before the Court on Plaintiff's Motion for Default Judgment (Dkt. No. 11). Having reviewed the record and pleadings, the undersigned Magistrate Judge recommends entering default judgment in Plaintiff's favor for the reasons that follow.

         I. Background

         On November 17, 2017, Plaintiff Elizabeth Cooper (“Ms. Cooper”) filed a Complaint against Defendant Greenly Group for Solar Technologies, Ltd. (“Greenly”) seeking (1) a declaratory judgment that non-party Kagan Ceran's (“Mr. Ceran”) transfer of intellectual property to Greenly was fraudulent, (2) the establishment of a constructive trust over these assets for Plaintiff's benefit, and (3) an injunction preventing “further disposition of the patent and patent applications at issue.” Compl. ¶¶ 4, 82 (Dkt. No. 1). Plaintiff states that 30 days before she received her first arbitral award[1] against Mr. Ceran, Mr. Ceran transferred valuable patents to Defendant, an entity in the British Virgin Islands, which prohibited her from accessing them to collect on her award. Id. ¶¶ 1, 18-19; Pl.'s Mem. of Law in Supp. of Mot. for Default J. at 3-4 (Dkt. No. 12); Cooper Decl. ¶ 7 (Dkt. No. 12-1). Plaintiff alleges that the assignment was a fraudulent conveyance and constitutes a violation of the California Uniform Voidable Transactions Act as well as negligent and/or fraudulent concealment on the part of Defendant. Compl. ¶ 2, at 9- 13. Plaintiff requests that this Court direct Defendant to hold the patent rights in constructive trust for Plaintiff and order the U.S. Patent and Trademark Office (“USPTO”) to transfer twelve patent rights, including one patent that was granted on May 28, 2013, to Plaintiff to satisfy her two arbitral awards and judgments[2] against Mr. Ceran. Ex. B at 4-5 (Dkt. No. 19-2).

         II. Procedural History

         On November 29, 2017, Plaintiff mailed via FedEx the Summons and Complaint to Defendant, addressing it to Gwyneth Vanterpool who signed the patent assignment on behalf of Defendant. See Pl.'s Mot. for Service Pursuant to 35 U.S.C. § 293 [hereinafter Pl.'s Mot. for Service] at 2 (Dkt. No. 4); Webb Decl. I ¶¶ 2-3 (Dkt. No. 4-2); Ex. A (Dkt. No. 4-3); Patent Assignment at 5 (Dkt. No. 1-2). On December 1, 2017, a K. Dasent at Harneys Corporate Services Limited (“Harneys”), Defendant's registered agent[3] and the company that incorporated Defendant, signed for the package. See Pl.'s Mot. for Service at 2; Webb Decl. I ¶¶ 4-6; Registry of Corporate Affairs Search at 2 (Dkt. No. 4-6); Proof of Delivery at 2 (Dkt. No. 4-7); Pl.'s Mem. of Law in Supp. of Mot. for Default J. at 2. Accordingly, Defendant, through its registered agent, received the Summons and Complaint in December 2017.

         On December 7, 2017, Plaintiff filed a Motion for Service Pursuant to 35 U.S.C. § 293 (Dkt. No. 4), requesting that the Court find FedEx delivery to Defendant as effective service or allow Plaintiff to serve Defendant by publication under 35 U.S.C. § 293. See Pl.'s Mot. for Service at 1. The Court granted this Motion on December 8, 2017, requiring Plaintiff to publish a copy of the Order in the New York Times International Edition and serve a copy of the Order on Defendant through FedEx International Priority Mail. See Order at 1 (Dkt. No. 5). The Order notified Defendant that within 21 days of its publication in the New York Times International Edition, Defendant must answer or otherwise respond to the Complaint or else “this Court may render a judgment against [D]efendant.” Id. at 2; Pl.'s Mem. of Law in Supp. of Mot. for Default J. at 2.

         On December 12, 2017, Plaintiff served a copy of the Order on Defendant. See Webb Decl. II ¶ 2 (Dkt. No. 6); Ex. A (Dkt. No. 6-1). A FedEx confirmation shows Defendant received the package on December 14, 2017, and K. Dasent signed for it. Webb Decl. II ¶ 3; Proof of Delivery at 2 (Dkt. No. 6-2). Eight days later, the New York Times International Edition published this Court's Order dated December 8, 2017. See Webb Decl. II ¶¶ 4-5; Ex. A (Dkt. No. 7-1); King Email (Dkt. No. 6-3). Plaintiff filed proof of publication on January 10, 2018 (Dkt. No. 7-1). Defendant did not file a response within 21 days of publication (i.e. January 12, 2018) (Dkt. Nos. 5, 8-9). On January 26, 2018, the Clerk entered a default against Defendant (Dkt. No. 10). Thirteen days later, Plaintiffs filed this Motion for Default Judgment (Dkt. No. 11).

         III. Service of Process, Jurisdiction, and Venue

         Pursuant to 35 U.S.C. § 293, “[e]very patentee not residing in the United States may file in the Patent and Trademark Office a written designation stating the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If . . . no person has been designated, the United States District Court for the Eastern District of Virginia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court.” Because Plaintiff complied with this Court's requirements for service, she is found to have properly served the Complaint on Defendant pursuant to 35 U.SC. § 293 and Federal Rule of Civil Procedure 4(h)(1)(B). See Order at 2 (Dkt. No. 5); Webb Decls. II & III (Dkt. Nos. 6-7); Ex. A (Dkt. No. 6-1); Proof of Delivery at 2 (Dkt. No. 6-2); Ex. A (Dkt. No. 7-1).

         This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a)(2), as Plaintiff currently resides in California, Defendant is a British Virgin Islands entity, and the amount in controversy exceeds $75, 000. Compl. ¶ 7; Pl.'s Mem. of Law in Supp. of Mot. for Default J. at 10- 11. On February 16, 2018, the Court ordered Plaintiff to supplement the record to demonstrate that the patent rights in question are valued at more than $75, 000 (Dkt. No. 16). See 28 U.S.C. § 1332. On March 8, 2018, Plaintiff submitted the declaration of Chris Toffales (“Mr. Toffales”), “an operating executive in engineering- and technology-intensive businesses” and a mergers and acquisitions professional, who assesses the value of technology and intellectual property, including patent rights (Dkt. No. 19-1). Based on Mr. Toffales' knowledge and experience, he prices one of the patent rights at issue, United States Patent Application No. 12/597, 151, which claimed priority to U.S. Provisional Patent Application No. 60/913, 997 and was granted on May 28, 2013 as United States Patent No. 8, 449, 940, with the title “Deposition of High-Purity Silicon via High-Surface Area Gas-Solid or Gas Liquid-Interfaces and Recovery via Liquid Phase, ” as worth more than $75, 000. Toffales Decl. ¶¶ 5, 30-31. Mr. Toffales states that the ‘940 Patent provides a process to save silicon manufacturers 18 to 20 percent in costs by producing polysilicon squares instead of rods. Id. ¶¶ 17-19, 31. In 2017, “billions of dollars were spent worldwide” on polysilicon production, 22.5 percent of which is attributed to wasted polysilicon resulting from the manufacture of rods rather than polysilicon squares. Id. ¶¶ 28-29. Given Mr. Toffales' declaration, the Court finds that because one patent within Defendant's possession is valued at more than $75, 000, this Court has subject matter jurisdiction.

         This Court also has personal jurisdiction over Defendant pursuant to 35 U.S.C. § 293, which provides that if a patentee not residing in the United States does not designate an individual in the United States to receive service on the patentee's behalf, this Court “shall have jurisdiction . . . .” Id. ¶ 8. Because Defendant is in the British Virgin Islands and has not registered such a person with the USPTO, this Court has jurisdiction. Id.; Cooper Decl. ¶ 17; Pl.'s Mem. of Law in Supp. of Mot. for Default J. at 7-8, 11. Venue is proper pursuant to 28 U.S.C. § 1391(b)(3) because Defendant is subject to personal jurisdiction in this Court.

         IV. Legal Standard

         Default judgment is appropriate if the well-pled allegations of the complaint establish that the plaintiff is entitled to relief and the defendant has failed to plead or defend within the time frame set out in the rules. Fed.R.Civ.P. 55; see Music City Music v. Alfa Foods, Ltd., 616 F.Supp. 1001, 1002 (E.D. Va. 1985). By defaulting, the defendant admits the plaintiff's well-pled allegations of fact, which then provide the basis for judgment. See Partington v. Am. Int'l Specialty Lines Ins. Co., 443 F.3d 334, 341 (4th Cir. 2006); Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). Nevertheless, “‘[a] court confronted with a motion for default judgment is required to exercise sound judicial discretion in determining whether the judgment should be entered, and the moving party is not entitled to default judgment as a matter of right.'” ReadyCap Lending, LLC v. Servicemaster Prof'l Cleaning, Inc., No. 2:15-cv-451, 2016 WL 1714877, at *2 (E.D. Va. Apr. 12, 2016) (quoting EMI April Music, Inc. v. White, 618 F.Supp.2d 497, 505 (E.D. Va. 2009)). Here, because Defendant has not answered or otherwise timely responded, the well-pled allegations of fact contained in the Complaint are deemed to be admitted.

         V. Analysis

         Having examined the record, the Magistrate Judge finds that the well-pled allegations of fact contained in the Complaint-and supported by Plaintiff's Memorandum of Law in Support of Motion for Default Judgment, declarations, and exhibits-establish that Mr. Ceran fraudulently transferred patent applications to Defendant to avoid collection of these assets by his creditors. See Cooper Decl. ¶ 7. Defendant's receipt of these patent rights is therefore in violation of California Civil Code §§ 3439.04-3439.05. Accordingly, Plaintiff is entitled to default judgment in her favor as detailed below.

         A. Uniform Voidable Transactions Act, California Civil Code § 3439.04

         Pursuant to California's Uniform Voidable Transactions Act, “[a] transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows:

(1) With actual intent to hinder, delay, or defraud any creditor of the debtor.
(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and ...

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