1 NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

_____________ No. 11

- 2677

_____________ WORLD ENTERTAINMENT INC; CARMEN TOMASSETTI

v. ANDREA BROWN; GRAND ENTERTAINMENT PRODUCTIONS, LLC; JIM DI RENZO, Andrea Brown; Grand Entert ainment Productions LLC, Appellants

_____________ On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 2

- 09

- cv - 5365 ) District Ju dge: Honorable Norma L. Shapiro

_____________ Submitted Under Third Circuit L.A. R. 34.1(a)

July 9, 2012 Before: FUENTES, HARDIMAN, and ROTH, Circuit Judges

(Opinion Filed: July 30, 2012 )

_____________ OPINION OF THE COURT

_____________ FUENTES, Circuit Judge

. From 2001

- 2008, Andrea Brown was the lead singer of CTO Tribeca, one of
Pl aintiff

- Appellee World Entertainment, Inc.’s ban ds

. Eventually, Brown left the2

company and formed her own company and band. However, she continued to use World Entertainment, Inc.’s registered trademark “CTO.” World Entertainment, Inc. and its president filed t his action against Brown and her company , asserting myriad claims under
federal and state law. Brown ignored service of the summons and complaint and failed to

answer or otherwise appear before the District Court. After the appropriate amount of time, the District Court entered default against her

. After a hearing as to damages , the
Di strict Court awarded World Entertainment $429,997

. Brown appeals, and we will
affirm.
I. Because we write primarily for the parties, we set forth only the fac ts relevant to our conclusion. World Entertainment, I nc. (“World”) is a Philadelphia

- based production company, specializing in weddings , bar/bat mitzvahs and other special events

. Each of World’s band names bears its federally registered trademark “CTO , ” an d many also end with the name of a New York City locale. Andrea Brown was the lead singer of CTO Tribeca, one of World’s bands. In 2008, Brown entered into her own contract with a
World client. She then sent email s to the President of World, Carmen Toma ssetti, and several World employees, accusing Tomassetti of committing a federal crime by invading her personal email account , and claiming he illegally and immorally took credit for other people’s work

. Brown subsequently left World and formed Grand Ente rtainment Productions (“Grand”) and a band called Tribeca Grand, comprised of former CTO Tribeca members. To promote her band, Brown superimposed “Tribeca Grand” over the “ CTO ” mark in a3

video featuring CTO Tribeca that World had pr oduced, and then releas ed the video on the
Internet . She used “CTO” in Internet metatags 1 and paid Google AdWords, an advertising product, and Yahoo ! for the phrase “CTO Tribeca” so Grand would come up
under Internet searches. Brown also posted on the I nternet that World was “ phony” and that they lied to get business. Appellee’s Appendix ( “ App.”) at 112. Despite these actions, Brown acknowledged that World was the owner of “the trademarked name CTO Tribeca.” Appellees App. at 29. In February 2009, counsel for Tomasetti and World (“Plaintiffs ”) sent Brown two
cease and desi st letters demanding she stop using the names “ CTO ” and “ T ribeca. ” S he ignored both requests . Plaintiff s then filed a complaint in the United States District Court on November 13, 2009 against Brown and G rand , alleging trademark infringement and unfair competition under the Lanham Act , 15 U.S.C. § 1125 , and tortious interference
with contractual relations , defamation, unjust enrichment , and breach of contract under
state law. The process server , who reco gnized Brown from previously serving her one of the
cease and desist letter s , testified that, on November 24, 2009, when Brown saw him at the
door of her house to s erve her the complaint , she shut the door, locked it, and closed her garage. Appellee’s App . at 88. The process server knocked again and , after no answer, placed the service papers at the door. Bro wn alleges she was never served. H owever , she admitted in a sworn affidavit submitted in opposition to World’s damages claims that

1 A “metatag” is a code “not visible to web users embedded in a website to attract search engines seeking a corresponding keyword.” Network Aut omation, Inc. v. Advanced Sys. Concepts, Inc. , 638 F.3d 1137, 1146 (9th Cir. 2011).4

she was served o n that date and called her attorney immediately afte r the service. Appellant’s App. at 168. She also allegedly provided her attorney with a copy of the pleadings shortly thereafter. Neither Brown nor her attorney took action and on April 6, 2010, the Di strict Cou rt entered default for Plaintiff s. On May 7, 2010, Brown filed a motion to set aside the default, arguing only that
her defense to Plaintiff s’ violation of trademark claim was meritorious because “the trademark that is referred to is basically a reference to a geographical location which cannot be trademarked.” Appellee’s App. at 55. The registered trademark at issue, however, is “ CTO. ” Brown did not provide a response to the other twelve counts of the complaint. Pointing to Brown’s culpable conduct in refusi ng to accept service and failing

to answer the complaint , as well as her failure to set forth a c omplete and meritorious defense, the Court denied Brown’s motion. After a damages hearing, t he Court found in
favor of World in the amount of $429,997 2 and issued a permanent injunction enjoi ning Brown from using “CTO,” but not “Tribeca.” Brown continued t o infringe upon the

“ CTO ” trademark through the time of the damages hearing, and is allegedly continuing to infringe upon it

. Brown appeale d the Court orders, arguing the Court erred in finding she received service of process, in failing to vacate the default judgment, and in assessing damages. 3

2 In r elevant part, Wor ld’s damages include $176,496 for infringing W orld’s trademark and $184,959 for attorneys’ fees.

3 The District Court had jurisdiction pursuant to 28 U.S.C. § 1331 for Plaintiffs’ Lanham Act claims and supplemental jurisdiction pursuant to 28 U.S.C. § 1367 for Plaintiffs’5 II.

Our review of a District Court’s legal determinations is plenary , VFB LLC v. Campbell Soup Co . et al. , 48 2 F.3d 624, 630 (3d Cir. 2007), while our review of its
factual determinations is for clear error , Fed. R. Civ. P. 52(a). We review the District
Court’s refusal to set aside entry of default for an abuse of discretion. Harad v. Aetna
Cas. & Sur. Co. , 839 F.2d 979, 981 (3d Cir. 1988)

. We also review the District Court’s award of equitable remedies under the Lanham Act for an abuse of discretion

. Banjo Buddies, Inc. v. Renofsky , 399 F.3d 168, 173 (3d Cir. 2005).
A. First, Brown argues that she was not properly served because the process server left the papers at her door and there was no proof she was aware of them , and therefore entry of default judgment was improper

. Because a face

- to

- face encounter and in

- hand delivery are not always nec essary for proper service of process under Rule 4 of the
Federal Rules of Civil Procedure , Brown’s argument lacks merit

. See Gambone v. Lite

Rock Drywall Corp. , 124 F. App’x 78, 79 (3d Cir. 2005) (holding that leaving papers on doorstep after slamming doo r and announcing service was sufficient); 4A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1095 (3d ed. 2002)

. Leaving papers in the defendant’s physical proximity is usually sufficient if (1) defendant
active ly evades service , and (2) there is clear evidence that the defendant actually

state law claims. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291 as an appeal of a final order of the District Court.6

received the papers at issue when allegedly served. See Gambone , 124 F. App’x at 79,
80. Here, both of these requirements are easily met . Shutting and locking the door after recognizing the pr o cess server , and then shutting the garage, and failing to answer
the door after the server knocked again amount s to active evasion of service

. 4 See id. at 80. T hat Brown called her attorney seeking representation after the service and admitted
in a swor n affidavit that she was served show that she actually received the papers when they were served. Thus, Brown was not denied proper service.
B . Further, t he District Court did not abuse its discretion in denying Brown’s motion

to vacate the entry of de fault against her

. A court may set aside entry of default for good cause. Fed. R. Civ. P. 55(c). We have identified three factors a district court must consider in denying a motion to set aside a default: “(1) whether the plaintiff will be prejudiced; ( 2) whether the defendant has a meritorious defense; (3) whether the default was the result of the defendant’s culpable conduct.” United States v. $55,518.05 in United States Currency , 728 F.2d 1 92, 195 (3d Cir. 1984). To show a meritorious
defense , a pla intiff must assert defenses that would constitute a complete defense to the
action. Id. Failure to establish a meritorious defense weighs heavily against setting aside
the default

. See id. at 197 ( declining to consider prejudice and culpability when the

4 The District Court credited the testimony of World’s process server at the e videntiary hearing, noting that Brown’s descriptions of the occurrence were vague and she did not remember details. This finding of fact is not clearly erroneous. See Fed. R. Civ. P. 52(a)(6).7

defendant failed to establish a meritorious defense )

. As to the third consideration, showing “willfulness ” or “bad faith ” on part of the defendant leading to the entry of
default suffices to show culpable conduct. Hritz v. Woma Corp. , 732 F.2d 1178, 118 2

- 1183 (3d Cir. 1984).
Brown established neither a complete nor meritorious defense

. In her motion, Brown only provided a defense to one of the thirteen counts of Defendants’ complaint,
and this one defense was irrelevant. She stated that her defense w as meritorious because Defendants’ trademark rests on a geographical location that cannot be trademarked; however, as the District Court pointed out, the Defendants’ claim rests on their registered trademark, “ CTO. ” The District Court never enjoined Brown from using the geographical term “Tribeca ” because it decided the equities weighed against it. Not only did Brown fail to establish a threshold meritorious defense to Plaintiffs’ claims, but she also engaged in culpab le conduct that resulted in the defa ult. The District Court did not abuse its discretion in determining that Brown’s intentional refusal to accept service and respond to the complaint in a timely manner was culpable conduct because her behavior showed willful disregard for responding to Pla intiffs’ legal communications

. See Nationwide Mut. Ins. Co. , 175 F . App’x 519, 523 (3d Cir. 2006) (finding reckless , willful disregard for repeated legal communications can satisfy the culpable conduct standard). Not only did she fail to respond, but she also continued to in fringe Plaintiffs’
trademark despite Plaintiffs’ cease and desist let ters, the entry of default , and her acknowledgment in writing that the “CTO” trademark belonged to Plaintiffs

. Therefore,8

the District Court properly considered the applicable factors and did not abuse its discretion in denying Brown’s motion to vacate entry of default.
C. Lastly, the District Court did not err in assessing Brown’s damages. U nder the Lanham Act, the plaintiff is entitled to recover “(1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” 15 U.S.C. § 1117(a). The District Court applied the correct five

- factor test in determining whether to disgorge Grand’s profits. The factors include, but are not lim ited to (1) whether the defendant had the intent to confuse or deceive, (2) whether sales have been diverted, (3) the adequacy of other remedies, (4) any unreasonable delay by plaintiff in asserting his rights, (5) the public interest in making the miscond uct unprofitable, and (6) wheth er it is a case of palming off. Banjo Buddies , 399 F.3d at 175

. The District Court did not abuse its discretion in disgorging Grand’s profits
because World’s sales were diverted to Grand , World’s lost profits would be d ifficult to
calculate , and there are no other adequate remedies

. Plaintiffs showed that Brown was using their protected trademark in advertising throug h search engine phrase matching, and thus diverting i nternet traffic to Grand’s website. Further, the D istrict Court
determined that Plaintiffs’ damages were greater than Grand’s profits, but it would be too speculative to calculate the losses caused solely by Grand’s infringement . The Court also held that it was equitable to assume the losses Grand caused Plaintiff could not exceed Grand’s profits, and thus awarded th ose to Plaintiffs

. In making this determination, the District Court relied heavily on Grand’s own documentation. Lastly, without9

disgorgement , Plaintiffs would be effectively uncompensated g iven the fact that Brown continued to infringe Plaintiffs’ trademark despit e Court orders enjoining her

. T his , combined with the speculative nature of determining World’ s lose s , demonstrates that no othe r equitable remedies would be adequate

. See id. at 176 (finding no other adequate
remedies when plaintiff’s losses would be speculative and not disgorging profits would leave plaintiff wholly uncompensated). Thus, the District Court did not abuse its discretion in making these determinations. Finally, t he District Court did not abuse its discretion in awarding attorneys’ fees to Plaintiffs. Under the Lanham Act, attorneys’ fees are available in exceptional cases, 15 U.S.C. § 1117(a), which involve culpable conduct, such as “bad faith, fraud, malice,

or knowing infringement.” Securacomm Consulting, Inc. v. Securacom, Inc. , 224 F.3d 273, 280 (3d Cir. 2000). Brown exhibited bad faith and knowing infringement when she continued to violate Plaintiffs’ trademark despite cease and desis t letters, the entry of
default , and her acknowledgment in writing that the “ CTO ” trademark belonged to
Plaintiff

. Thus, the District Court did not abuse its discretion i n its determination of damages. 5
III. For the foregoing reasons, we will affirm the order and judgment of t he District
Court.

5 With respect to libel, Brown only argues that the District Court made no analysis of the issue and thus damages are inappropriate. This argument lacks merit because the District Court did analyze the issue. Appellant’s App. at 13. Further, Brown provides no arguments against the award of costs, and thus waives this issue. See Travitz v. Ne. Dept. ILGWU Health & Welfare Fund , 13 F.3d 704, 711 (3d Cir. 1994).