IP Law Daily, TRADEMARK—9th Cir.: Lanham Act actual damages allowed when request does not differ in kind, exceed amount sought in pleadings, (Apr 16, 2025)

By Patricia K. Ruiz, J.D.

The court found the plaintiff’s request for actual damages in its motion for default judgment to be consistent with its request for actual damages in its false advertising complaint.

The U.S. Court of Appeals for the Ninth Circuit reversed and remanded a decision by the U.S. District Court for the Central District of California denying the seller of air purifiers and filters actual damages following a default judgment against a competing business. The Ninth Circuit found that the request for actual damages did not differ in kind or exceed in amount what is demanded in the pleadings. Further, the Ninth Circuit held that Federal Rule of Civil Procedure 54(c) presents no bar to awarding actual damages in a default judgment where the complaint sought those damages in an amount to be proven at trial (AirDoctor, LLC v. Xiamen Qichuang Trade Co., Ltd., No. 24-215 (9th Cir. Apr. 11, 2025)).

Lawsuit. AirDoctor, LLC, sells air purifiers and replacement air filters. Xiamen Qichuang Trade Co., Ltd., also sells replacement air filters, primarily via Amazon.com. AirDoctor alleged Xiamen falsely advertised that its air filters were comparable with AirDoctor air purifiers and offered equivalent filtration, thereby diverting sales from AirDoctor’s more effective air filters and harming AirDoctor’s reputation. AirDoctor brought claims of violation of the Lanham Act, California’s Unfair Competition Law, and California’s False Advertising Law, seeking relief including actual, compensatory, consequential, statutory, special, and/or punitive damages, as well as an injunction restraining Xiamen from further false-advertising violations.

District court decision. AirDoctor served the complaint, but Xiamen failed to appear or otherwise file a responsive pleading. AirDoctor moved for default judgment and requested entry of a permanent injunction, actual damages of approximately $2.5 million, and attorney fees of approximately $50,000. Because AirDoctor lacked discovery from Xiamen, it calculated the proposed actual damages using a third-party research tool to approximate the quantity of sales Xiamen made through Amazon.com. AirDoctor calculated the attorney fees using a formula based on the amount of proposed damages, as instructed by the district court’s local rules. The district court granted the motion for default judgment and enjoined Xiamen from advertising that its air filters offered equivalent filtration to AirDoctor’s filters. However, the district court denied the request for actual damages and attorney fees. AirDoctor appealed the order denying damages and attorney fees; Xiamen did not appear on appeal.

Actual damages. Rule 54(c) states that, unlike other final judgments, a default judgment must not differ in kind or exceed in amount what is demanded in the pleadings. Reviewing the district court’s decision de novo, the Ninth Circuit found that AirDoctor’s request for actual damages in its motion for default judgment is consistent with its request for actual damages in its complaint. Thus, a default judgment’s award of such damages would not differ in kind from what is demanded in the pleadings.

Because the complaint did not request a specific amount of damages, the court turned to whether awarding AirDoctor any damages would exceed in amount what is demanded in the pleadings, in violation of Rule 54(c). Citing its own decision in a prior case, the Ninth Circuit determined that Rule 54(c) presents no bar to awarding actual damages in a default judgment where the complaint sought those damages in an amount to be proven at trial. Thus, the Ninth Circuit reversed the denial of the damages award and remanded for further proceedings.

The Case is No. 24-215.

Judge: Berzon, M.

Attorneys: Peter Farnese (Farnese PC) for AirDoctor, LLC.

Companies: AirDoctor, LLC; Xiamen Qichuang Trade Co., Ltd.

Cases: Trademark AlaskaNews ArizonaNews CaliforniaNews HawaiiNews IdahoNews MontanaNews NevadaNews OregonNews WashingtonNews