# AERO AG HOLDINGS, LLC v. SUMMIT FOOTWEAR CO., LTD.

> District Court, D. New Jersey · June 24, 2021

URL: https://www.frixlaw.com/law-library/cases/10271135

## Case

- **Court:** District Court, D. New Jersey
- **Decided:** June 24, 2021
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10271135

## How later opinions describe it (automated extraction)

- finding no willfulness in communication breakdown throughout period during which time to answer was expiring

## Opinion text

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

AERO AG HOLDINGS, LLC,

Plaintiff, Civ. No. 2:20-cv-16655 (WJM)

v.

SUMMIT FOOTWEAR CO., LTD., and OPINION
AEROSFT FOOTWEAR USA LLC,

Defendants.

WILLIAM J. MARTINI, U.S.D.J.:

In this matter, Plaintiff Aero AG Holdings, LLC alleges that Summit Footwear Co.,
LTD and Aerosoft Footwear Co., LTD have engaged in federal trademark infringement,
unfair competition, and trademark dilution. Compl. ¶ 4. On January 14, 2021, the Clerk
of Court entered default as to Defendant Aerosoft Footwear Co., LTD for failure to plead
or otherwise defend. ECF No. 8. Before the Court is Defendant Aerosoft Footwear USA
LLC’s Motion to Vacate Default, ECF No. 9, and Plaintiff Aero AG Holdings, LLC’s
Cross-Motion for Default Judgment, ECF No. 14. The Court reviewed the parties’
submissions and decides the motions without oral argument. Fed. R. Civ. P. 78(b). For
the reasons stated below, the Court GRANTS Defendant Aerosoft Footwear USA LLC’s
motion to vacate default and DENIES Plaintiff Aero AG Holdings, LLC’s Cross-Motion
for Entry of Default Judgment.
I. BACKGROUND1
Plaintiff Aero AG Holdings, LLC (“Aero AG’) filed this trademark infringement
action on November 19, 2020 against Summit Footwear Co., Ltd. (“Summit”) and Aerosoft
Footwear USA LLC (“Aerosoft Footwear”). ECF No. 1. Summit has its principal place
of business in Samutprakarn, Thailand. Compl., ECF No. 1, ¶ 6. Aeroosft Footwear has
its principal place of business in Austin, Texas. Id. at ¶ 7. Aerosoft Footwear is the single
distributor of Summit’s Aerosoft footwear in the United States. ECF No. 9-2, at ¶ 3.

1 The Court accepts as true the facts alleged in the Complaint, ECF No. 1, as well as the
factual representations supported by declarations accompanying Plaintiff’s and Defendant’s
motions, ECF Nos. 9, 14, for purposes of this Opinion.
On October 15, 2013, Summit applied to the United States Patent and Trademark
Office (“PTO”) to register its “aerosoft” trademark for footwear. Compl. ¶ 24. Plaintiff
Aero AG filed a notice of opposition with the PTO Trademark Trial and Appeal Board
(“TTAB”) against Summit’s application on October 6, 2014. Id. at ¶ 27. Defendants report
that the TTAB proceeding is still pending. ECF No. 9-3, ¶ 5. Aero AG and Summit have
so far been unable to resolve the dispute despite efforts. Compl. ¶¶ 28, 29; ECF No. 9-3,
¶ 6. Plaintiff emphasizes that the TTAB proceeding involves only the question of whether
the “aerosoft” mark may be registered at the PTO, not whether Defendants can use the
mark in commerce. Pl.’s Opp. 4.
Plaintiff filed its Complaint in this matter on November 19, 2020. ECF No. 1. On
November 19, 2020, Plaintiff’s counsel emailed the Complaint to Summit’s TTAB counsel
and inquired whether he would accept service on behalf of both defendants and, having
received no response, subsequently followed up on November 24, 2020. ECF No. 13-1,
¶¶ 7, 10. Summit’s TTAB counsel again did not respond. Id. Plaintiff served Defendant
Aerosoft Footwear on December 17, 2020. ECF No. 5. Apparently because of the holiday
and related travel, Mahmood Ali, Aerosoft Footwear’s president, was unable to discuss the
lawsuit with Texas counsel, Anil Ali until December 23, 2020. ECF No. 9-2, ¶ 7. Anil Ali
is the managing attorney at the law firm Anil Ali, P.C., which represents Aerosoft Footwear
in general corporate matters. Id. at ¶ 1-2. Following the Christmas holiday, Aerosoft
Footwear’s Texas counsel wrote to Summit in Thailand by letter on December 29, 2020,
inquiring about Aero AG’s suit. Id. at ¶ 8. Summit’s Thai attorney, in turn, sought advice
from IpHorgan Ltd., the firm that represented it in the TTAB proceeding. ECF No. 9-3, ¶¶
5, 9. In consequence of these communications, Summit agreed to undertake the defense of
Aerosoft on January 15, 2021, and then retained Charles Quinn of the firm McElroy,
Deutsch, Mulvaney & Carpenter to act as co-counsel to defendants on January 20, 2021.
ECF No. 9-3, ¶ 10. Mr. Quinn currently represents Summit and Aerosoft Footwear in this
matter.
On January 13, 2021, Aero AG applied for entry of default, six days after Aerosoft
Footwear’s response to the complaint was due. The Clerk entered a default order against
Aerosoft on January 14, 2021. ECF Nos. 7, 8. Plaintiff states that his interactions with an
individual from the firm Anil Ali, P.C., on January 15, 2021 lead him to believe that the
firm was “reviewing the case” for a “potential client,” when in actuality, Plaintiff’s counsel
believed that the Ali firm already represented Aerosoft Footwear. Pl.’s Opp. 10. On
January 20, 2021, Charles Quinn requested via telephone that Eric Biderman, Plaintiff’s
counsel in this matter, agree to vacate the default against Aerosoft Footwear and, in turn,
offered to accept service on behalf of Summit to relieve Plaintiff the task of effecting
service in Thailand by Letters Rogatory or the Hague Convention. ECF No. 9-4, ¶ 2. Mr.
Quinn and counsel for Plaintiff were unable to reach an agreement. Id. ¶¶ 3-7. On February
23, 2021, Aerosoft Footwear filed its motion to vacate default, ECF No. 9.
II. DISCUSSION
The decision to vacate entry of default is left to the discretion of the this Court.
Moreno v. Tringali, Civil No. 14–4002 (JBS/KMW), 2015 WL 3991161, at *6 (D.N.J.
June 30, 2015) (citing Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d Cir.
1951)). Discretion to set aside entry of default may be for good cause. World Ent. Inc. v.
Brown, 487 F. App'x 758, 761 (3d Cir. 2012); see also Fed. R. Civ. P. 55(c). “Before
imposing the extreme sanction of default, district courts must make explicit factual findings
as to: (1) whether the party subject to default has a meritorious defense, (2) the prejudice
suffered by the party seeking default, and (3) the culpability of the party subject to default.”
Doug Brady, Inc. v. N.J. Bldg. Laborers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J.
2008). “In weighting these factors, district courts must remain mindful that, like dismissal
with prejudice, default is a sanction of last resort.” Id. at 177 (citing Poulis v. State Farm
Fire & Cas. Co., 747 F.2d 863, 867-68 (3d. Cir. 1984)).

A. Defendant Has Sufficiently Asserted a Meritorious Defense

Plaintiff Aero AG argues that Aerosoft Footwear has no meritorious defense
warranting vacatur of the entry of default. A meritorious defense is accomplished when the
“‘allegations of defendant's answer, if established on trial, would constitute a complete
defense to the action.”’ United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195
(3d Cir. 1984) (citations omitted). Aerosoft Footwear primarily argues that there is an
absence of likelihood of confusion between the “Aerosoft” mark and Plaintiff’s
“Aerosoles” mark as a meritorious defense.

To establish likelihood of confusion between competing marks, “this Court looks to
the following ten factors set forth by the Third Circuit, known as the Lapp factors: ‘(1) the
degree of similarity between the owner’s mark and the alleged infringing mark; (2) the
strength of the owner’s mark; (3) the price of the goods and other factors indicative of the
care and attention expected of consumers when making a purchase; (4) the length of time
the defendant has used the mark without evidence of actual confusion arising; (5) the intent
of the defendant in adopting the mark; (6) the evidence of actual confusion; (7) whether
the goods, though not competing, are marketed through the same channels of trade and
advertised through the same media; (8) the extent to which the targets of the parties’ sales
efforts are the same; (9) the relationship of the goods in the minds of consumers because
of the similarity of function; [and] (10) other facts suggesting that the consuming public
might expect the prior owner to manufacture a product in the defendant's market, or that
he is likely to expand into that market.”’ Cambridge Pavers, Inc. v. EP Henry Corp., 407
F. Supp. 3d 503, 508 (D.N.J. 2019) (citing Interpace Corp. v. Lapp, Inc., 721 F.2d 460,
463 (3d Cir. 1983)). Plaintiff provides a comprehensive analysis as to each of these factors.

In a similar likelihood of confusion trademark case involving analysis of the Lapp
factors, Cambridge Pavers, Inc., this Court recently concluded that “such fact-laden
inquiry is more appropriately assessed at the summary judgment stage.” 407 F. Supp at
509. The Court here, on a motion to vacate default, similarly declines to engage in a
comprehensive analysis of all ten factors, and concludes that Defendant has set forth
sufficient evidence to support its contention that there is no likelihood of confusion
between the marks at issue.

For example, as to the second Lapp factor— the strength of the owner’s mark—
Aerosoft Footwear argues that “Aero” is “an extremely weak mark that does not signify
Plaintiff as the source of goods it sells because numerous footwear manufacturers use
common law and registered trademarks incorporating ‘Aero.’” Def.’s Mot. 9. Aerosoft
Footwear proceeds to identify eleven footwear goods that include the term “Aero.” Id. at
9-10. Plaintiff responds, in the context of analyzing the first Lapp factor—the degree of
similarity between the owner’s mark and the alleged infringing mark—that “[v]isually, the
two marks, AEROSOLES and AEROSOFT are identical up to the first six letters of the
marks—not the first four letters as alleged by Aerosoft.” Pl.’s Opp. 14. Just pages later,
however, Plaintiff asserts that “Defendants have marketed their shoes in such a manner to
obscure the latter half of the mark so that the “AERO” or “AEROS” portion of their
AEROSOFT mark (the portion that is identical to Plaintiff’s AERSOLES mark) is the only
part that is visible.” Id. at 16. On reply, analyzing the second Lapp factor regarding
strength of the owner’s mark, Aerosoft Footwear again lists twelve footwear related
products containing the term “aero.” Def.’s Reply, 3-4. Whether Plaintiff’s likelihood of
confusion claim is predicated upon visual confusion stemming from the prefix “aero” as
seen in marketing materials, or the longer term “aeroso,” evidently not the focus of
marketing materials, or both, is at this stage an open question of fact that the Court declines
to resolve.

As a second example, with regard to the sixth Lapp factor—the evidence of actual
confusion—Plaintiff states in its Opposition that it has “provided several examples, at
Paragraph 33 of the Complaint, of instances where consumers have wrongly identified
Defendants’ products as Plaintiff’s,” citing paragraph 15 of Chief Executive Officer of
Aero AG Alison Bergen’s declaration. Pl.’s Opp. 19. Paragraph 15 of Bergen’s
declaration states, “Plaintiff is aware, as cited in Paragraph 33 of the Complaint, of
instances where consumers have wrongly identified Defendants’ products as Plaintiff’s.”
ECF No. 13-20, ¶ 15. In Paragraph 33 of the Complaint, Aero AG asserts conclusively
that “Defendants’ recent expansion of their footwear product line into Plaintiff’s area of
the footwear industry has subsequently resulted in instances of actual consumer confusion
occurring in the marketplace between the AEROSOLES Mark and the AEROSOFT Mark.”
Compl. ¶ 33. Paragraph 33 of Plaintiff’s Complaint, however, contains no references to
actual instances where consumers have wrongly identified Defendants’ products as
Plaintiff’s, only the conclusion that such incidences occurred. Paragraph 34, to which
Plaintiff does not refer, states that “[e]xamples of actual confusion among consumers are
shown below and in the attached Exhibit 5.” Id. at ¶ 34. Three screenshot images of
footwear products called “Rugged Aerosoft Sandals Size 7.5,” “Aerosoft by Aerosole Red
Flip Flops,” and “Aerosoft by Aerosoles Sandal” immediately follow and are replicated in
Exhibit 5. Id. at pp. 20-22. Plaintiff fails to explain why these examples amount to “actual
confusion among consumers.” In its opposition and cross-motion, Plaintiff cites Fotomat
Corp. v. Photo Drive-Thru, Inc., 425 F. Supp. 693, 703 (D.N.J. 1977) for the proposition
that “only likelihood of confusion, not proof of actual confusion is necessary.” Pl.’s Opp.
19. Fotomat Corp., however, predates Lapp, and Lapp explicitly takes into consideration
“actual confusion” as a discrete factor in its larger likelihood-of-confusion analysis.
Whether there are or are not incidences of actual consumer confusion, and to what extent,
could be material to the question of whether there is a likelihood of confusion between the
marks at issue. This is a factual question that may be resolved as this litigation continues
beyond the pleadings stage.

B. Defendant is Not Culpable of Causing Entry of Default

The Court considers whether the failure to timely answer by Defendants’ counsel
was culpable. The Third Circuit has defined “culpable conduct” as conduct “taken
wil[l]fully or in bad faith.” Rose Containerline, Inc. v. Omega Shipping Co.,, Civ. No. 10-
4345 (WHW), 2011 WL 1564637, at *3 (D.N.J. Apr. 25, 2011 (citing Chamberlain v.
Giampapa, 210 F.2d 154, 164 (3d Cir. 2000)). Plaintiff has not raised sufficient evidence
to show that counsel for Defendants’ conduct amounted to willfulness or bad faith conduct.
While there was certainly a serious communication breakdown between law firms across
continents and time zones, Plaintiff has raised no evidence that that breakdown arises above
neglect. See Gross v. Stereo Component Systems, Inc., 700 F.2d 120, 124 (1983) (finding
no willfulness in communication breakdown throughout period during which time to
answer was expiring). While the Court entered default on January 14, 2021, Mr. Quinn,
counsel for Defendants, secured as counsel on January 20, 2021, attempted to resolve the
default on January 20, 2021.

C. Plaintiff Will Not Be Prejudiced if Entry of Default is Vacated

Plaintiff predicates its prejudice argument on the prospect that if default judgment
is denied, it could continue to have its trademark impermissibly infringed. To support its
argument, Plaintiff cites to four cases, all of which involved defendants that refused to
participate in litigation: Panda Rest. Grp., Inc. v. Panda Chinese & Japanese Rest., LLC,
Civ. No. 2:12-cv-11718 (WHW-CLW), 2018 WL 5294568, at *2 (D.N.J. Oct. 25, 2018)
(“[n]early a year later, Defendants have failed to make an appearance in this action”); E.A.
Sween Co., Inc. v. Deli Exp. of Tenafly, LLC, 19 F. Supp. 3d 560, 575 (D.N.J. 2014)
(“Defendant was properly served nearly seven months ago, yet failed to appear or defend
itself in any manner.”); Luxottica Grp., S.p.A. v. Shore Enuff, No. CV 16-5847 (RBK-
KMW), 2019 WL 4027547, at *6 (D.N.J. Aug. 27, 2019) (defendants repeatedly failed to
attend court conferences or otherwise defend the case); Ramada Worldwide Inc. v.
Courtney Hotels USA, LLC, No. CIV. 11-896 WHW, 2012 WL 924385, at *2 (D.N.J. Mar.
19, 2012) (“Defendants did not appear in this action or answer the Complaint.”). This is
perplexing. In those cases, because defendants refused to participate, default judgment
represented the only avenue for relief against ongoing trademark infringement. Because
Plaintiff Aero AG has an alternative path open to it—success on the merits against
defendants actively participating in this matter—the Court finds that it will not be
prejudiced if entry of default is vacated.
* * *
The Court is disturbed by counsel for Plaintiff’s apparent willingness to cite to cases
that are obviously distinguishable from this one. The Court views Plaintiff’s cross-motion
for default judgment as an unnecessary attempt to avoid resolving this matter on the merits
because of Defendant’s six-day delay in responding to Plaintiff’s complaint—a defect,
perhaps born of neglect, that could have instead been resolved by reasonable counsel.
Default is a “sanction of last resort,” not first. Doug Brady Inc., 250 F.R.D. at 177. The
Court reminds counsel of its broad power under Civil Rule of Procedure 11(c)(3) to issue
sanctions for conduct proscribed by Rule 11(b).
III. CONCLUSION
For the reasons stated above, the Court GRANTS Defendant Aerosoft Footwear’s
motion to vacate default, ECF No. 9, and DENIES Plaintiff Aero AG’s Cross-Motion for
Entry of Default Judgment, ECF No. 14. An appropriate Order follows.

/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: June 24, 2021

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10271135. Public record. Not legal advice.