Background
Both parties are China-based companies operating in the online clothing market. Shenzhen Huajie Technology has sold clothing under the “bellelily” trademark at www.bellelily.com since 2017. In 2021, Shenzhen Leyibei Technology began selling similar clothing through www.bellelliy.com — a domain name with the letters “i” and “l” transposed, a classic cybersquatting tactic designed to capture customers who mistype the URL.
Huajie sued in the Northern District of Illinois under the Lanham Act for trademark counterfeiting, false designation of origin, cybersquatting, and violations of the Illinois Uniform Deceptive Trade Practices Act. This was one of the increasingly common “Schedule A” cases in the N.D. Ill. — a controversial pattern of IP litigation involving foreign e-commerce sellers. Leyibei’s counsel withdrew and the company stopped participating, leading to a default.
After obtaining a default judgment establishing liability for willful counterfeiting and cybersquatting, Huajie sought maximum statutory damages: $2 million for willful counterfeiting plus $100,000 for cybersquatting, totaling $2.1 million. Instead, the district court awarded the statutory minimum: $1,000 for counterfeiting and $1,000 for cybersquatting — a total of $2,000 — without explanation.
The Court’s Holding
In a nonprecedential per curiam opinion, the Seventh Circuit affirmed. The majority (Judges Kolar and Maldonado) held that default judgment has two stages: establishing the default, which fixes liability, and the actual entry of judgment, where the plaintiff must still prove up its damages. Huajie’s proposed final judgment was “barebones” — it contained no rationale for maximum damages and did not even reference its earlier summary judgment arguments.
The court rejected Huajie’s argument that the district judge should have “circled back” to the summary judgment briefing to find support for the damages request. “It was Huajie’s job to make its case for maximum damages on default to the district court, not the court’s job to search through the record for support,” the court wrote. Citing Video Views, Inc. v. Studio 21, Ltd., 925 F.2d 1010 (7th Cir. 1991), the majority held that district courts must explain awards greater than the minimum, but when a plaintiff fails to support a higher award, a minimum award requires no special justification.
Judge Pryor dissented, arguing the case should have been vacated and remanded. Her core objection was not that Huajie deserved higher damages, but that the district court’s order was “devoid of any explanation” for its decision, making meaningful appellate review impossible. She argued the majority improperly conflated the plaintiff’s burden to justify its damages request with the court’s independent obligation to explain its exercise of discretion.
Key Takeaways
- Default does not equal maximum damages: The Seventh Circuit reminded plaintiffs that “the race is not over after the entry of default.” A plaintiff holding a default judgment must still affirmatively prove up its damages request with evidence and argument. Simply asking for the maximum is not enough.
- File a proper damages brief: Trademark holders pursuing default judgments should submit a detailed damages memorandum at the final judgment stage, even if earlier filings contain relevant arguments. Courts are not obligated to hunt through the record for support the plaintiff failed to present at the right time.
- Schedule A litigation warning: This case is part of the growing body of law surrounding “Schedule A” trademark cases in the N.D. Ill., where foreign e-commerce defendants frequently default. The decision signals that courts may be skeptical of large damages requests in these cases absent concrete proof of harm.
Why It Matters
This decision is a cautionary tale for brand owners — particularly those pursuing the type of large-scale, foreign-defendant trademark enforcement actions that have proliferated in federal courts. Getting a default judgment is only half the battle. Without a well-supported damages submission, a plaintiff may win on liability but recover only the statutory minimum, turning what seemed like a major win into a pyrrhic victory. The dissent’s concern about unexplained judicial decision-making adds a procedural wrinkle that may surface in future appeals, but for now, the practical lesson is clear: prove your damages at every stage of the case.