United States District Court, E.D. Virginia, Alexandria Division
REPORT & RECOMMENDATION
Michael S. Nachmanoff United States Magistrate Judge.
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.
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 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 against Mr. Ceran. Ex. B at 4-5 (Dkt. No.
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 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.
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.
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.
Service of Process, Jurisdiction, and Venue
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).
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
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.
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.
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.
Uniform Voidable Transactions Act, California Civil Code
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 ...