American Petroleum Institute v. Yatco Energy LLC et al — Court Grants $1 Million Statutory Damages and Permanent Injunction in Trademark Counterfeiting Default Judgment

Background

The American Petroleum Institute (API), a petroleum and natural gas industry association, operates the API 1509 Engine Oil Licensing and Certification System (EOLCS), which authorizes manufacturers to use federally registered certification marks—including the API Starburst (Reg. No. 1,864,428) and the API Donut (Reg. Nos. 1,872,999 and 1,868,779)—only if their engine oils meet specified performance standards. API alleged that Defendants Ahmad Abadi, Ali Tarhini, America Petro, LLC, and Questron Packaging, LLC (the Default Defendants) manufactured and sold substandard motor oil labeled with counterfeit API marks, violating the Lanham Act, 15 U.S.C. §§ 1114(1)(a), 1116(d), and Massachusetts unfair competition law. Questron never completed API licensing; despite 2017 cease-and-desist communications and promises that improper labels were destroyed, API auditors found counterfeit-marked Questron oil in Massachusetts in 2018 and again in 2019.

API filed its complaint on March 3, 2023, asserting seven counts including trademark counterfeiting, infringement, false advertising, and dilution. After the Default Defendants failed to answer, the clerk entered a notice of default on June 28, 2023, and the court granted a preliminary injunction on May 8, 2023. After settling with the non-defaulting defendants, API moved for default judgment on April 16, 2026, seeking judgment only on the federal counterfeiting claim (Count I) while reserving its other claims in case the default were later set aside.

The Court’s Holding

Judge Allison D. Burroughs granted the motion for default judgment, first confirming subject matter jurisdiction under 28 U.S.C. § 1331 and 15 U.S.C. §§ 1114(1)(a), 1116(d), and personal jurisdiction based on affidavits showing proper service of process on the Default Defendants in Michigan. The court found API established trademark counterfeiting of three federally registered marks—the API Starburst and two versions of the API Donut—through prima facie evidence of ownership and registration plus allegations that the Default Defendants used both actual API marks and knock-off imitations without authorization. Because counterfeit marks are designed to imitate genuine marks on identical goods, the court presumed a likelihood of confusion and dispensed with a full factor-by-factor analysis.

The court awarded $1,000,000 in statutory damages under 15 U.S.C. § 1117(c) against the Default Defendants jointly and severally, finding the amount appropriate given the willfulness of the conduct, the defendants' failure to cooperate in discovery, and the need for deterrence. It also granted reasonable attorney's fees under § 1117(a), holding the case exceptional because the infringement was deliberate and deceptive, and permanently enjoined the Default Defendants and those acting in concert with them from using API marks or confusingly similar imitations on any labels, packaging, advertising, or websites, and from claiming to meet any API service category or certification standard without valid tests. API must submit fee documentation within fourteen days; the court did not reach the state-law fee request.

Key Takeaways

• A plaintiff seeking default judgment under Rule 55(b) must still establish subject matter and personal jurisdiction, show the complaint states a claim, and prove entitlement to damages and other relief.
• Where challenged marks are counterfeit and used on identical or substantially identical goods, a likelihood of confusion is presumed and no full multi-factor analysis is required.
• Lanham Act statutory damages range from $1,000 to $200,000 per counterfeit mark per type of goods, or up to $2,000,000 for willful use, weighed against factors including profits reaped, the mark's value, deterrence, and cooperation in discovery.
• Attorney's fees under 15 U.S.C. § 1117(a) are available in exceptional cases—where infringement was malicious, fraudulent, deliberate, or willful—assessed under the totality of the circumstances.
• Defaulting defendants who never appear face joint and several liability for substantial statutory damages, permanent injunctive relief, and attorney's fees, particularly when they continued infringing after cease-and-desist communications.

Why It Matters

The decision illustrates that courts will award the full statutory damages requested against defaulting counterfeiters even without precise evidence of actual damages, relying on the statutory range and deterrence where defendants obstruct discovery by refusing to participate. It reinforces the severe consequences facing manufacturers who falsely affix certification marks signaling compliance with industry safety and performance standards.

The ruling also applies the counterfeit-mark presumption of confusion in this district while acknowledging the First Circuit has not definitively resolved whether § 1114(1)(a) requires likelihood of confusion, aligning instead with the Ninth Circuit's reading of the statute. For certification-program owners, the injunction's specific prohibitions on claiming API service-category compliance without valid testing offer a practical template for protecting certification marks through default judgment.