Intellectual Property – Default vacated in patent infringement suit

Where defendants had meritorious defenses to the patent infringement claims, acted promptly after default was entered, there was no prejudice to the plaintiff or history of dilatory action and less drastic sanctions were available, the court vacated the order of default.

Background

On Feb. 25, 2026, the clerk entered default against Iron Force and Montana Post Driver LLC. This matter is before the court on defendants’ motion for leave to file responsive pleadings out of time and to set aside entry of default.

Standard

Courts in the Fourth Circuit are instructed to consider six factors in deciding whether to grant a Rule 55(c) motion: (1) whether the moving party has a meritorious defense; (2) whether the moving party acts with reasonable promptness; (3) the personal responsibility of the defaulting party; (4) the prejudice to the non-moving party; (5) whether there is a history of dilatory action and (6) the availability and effectiveness of less drastic sanctions.

Analysis

First, in response to the allegations in the complaint, defendants allege, in summary, that “the ‘591 Patent is invalid and/or unenforceable (i) as it does not incorporate an enabling disclosure, (ii) as it is anticipated and/or obvious in light of prior art which was used, sold, or offered for sale several years before the priority date of the ‘591 Patent, and (iii) due to inequitable conduct and fraud upon the U.S. Patent and Trademark Office, namely, failure to disclose material prior art during the prosecution of the patent-in-suit.” Because defendants have thus met their burden to identify a meritorious defense, this factor favors finding good cause to set aside the entry of default.

Second, after defendants were served, they entered settlement discussions with plaintiff to resolve the case without litigation. While defendants failed to file an extension request with the court, they filed the motion to set aside default 21 days after the clerk entered default. This is within the accepted range of delay to find that defendants acted reasonably promptly. This factor thus favors finding good cause to set aside the entry of default.

Third, defendants “acknowledge that it was their responsibility to respond to the Complaint in a timely manner,” note that they “were under the impression that the matter would be resolved through negotiation” and contend that they “were working with counsel in an attempt to secure an extension of time to respond.” Plaintiff submits that this factor “should have a neutral impact” on the court’s good cause analysis. The court agrees.

Fourth, defendants have no history of dilatory action, and their filings since they entered this action have been timely. This factor thus favors finding good cause to set aside the entry of default. Fifth, plaintiff argues that it is prejudiced by the delay because defendants’ infringing products will continue to cause lost sales.

But “[i]n the context of a motion to set aside an entry of default, as in other contexts, delay in and of itself does not constitute prejudice to the opposing party.” It is not apparent that the delay would make it harder for plaintiff to present evidence, complete discovery or eventually proceed with a trial, and there is no sign that defendants used the default to collude or to commit fraud.

Further, “no cognizable prejudice inheres in requiring a plaintiff to prove a defendant’s liability, a burden every plaintiff assumes in every civil action filed in every federal court.” This factor does not weigh against finding good cause to set aside default.

Sixth, the court finds that defendants should pay plaintiff’s attorney’s fees and costs in preparing filings related to the default proceedings, including the response to defendants’ motion to set aside, which is an equitable and less drastic remedy than entering default judgment in this case. This factor thus favors finding good cause to set aside the entry of default.

Defendants’ motion for leave to file and to set aside entry of default granted.

Extreme Driver Inc. v. L Fab Enterprises, LLC, Case No. 3:24-cv-00015, April 30, 2026. WDVA at Charlottesville (Yoon). VLW 026-3-194. 9 pp.

Full-Text Opinion

VLW 026-3-194
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