312.03 Setting Aside Default Judgment
The standard for setting aside default judgment is stricter than the standard for setting aside a notice of default.
A notice of default may be set aside on a showing of good cause. [ Note 1.] See TBMP § 312.02. However, once default judgment has actually been entered against a defendant pursuant to Fed. R. Civ. P. 55(b), the judgment may be set aside only in accordance with Fed. R. Civ. P. 60(b), which governs motions for relief from final judgment. The stricter standard reflects public policy favoring finality of judgments and termination of litigation. [ Note 2.]
The factors considered in determining a motion to set aside notice of default are also considered in determining a motion for relief from a default judgment entered pursuant to Fed. R. Civ. P. 55. [ Note 3.] Among the factors to be considered in determining a motion to vacate a default judgment for failure to answer the complaint are (1) whether the plaintiff will be prejudiced, (2) whether the default was willful, and (3) whether the defendant has a meritorious defense to the action. [ Note 4.]
However, the showing submitted by the defendant is likely to be viewed with less leniency when defendant seeks relief from default judgment than when defendant seeks to show cause why default judgment should not be entered against it. [ Note 5.]
Nevertheless, because default judgments for failure to timely answer the complaint are not favored by the law, a motion under Fed. R. Civ. P. 55(c) or 60(b) seeking relief from such a judgment is generally treated with more liberality by the Board than are other motions under Fed. R. Civ. P. 60(b) for relief from other types of judgments such as default judgments entered against plaintiffs for failure to prosecute the case. [ Note 6.]
For information concerning motions under Fed. R. Civ. P. 60(b) for relief from final judgment, see TBMP § 544.
NOTES:
1. See Fed. R. Civ. P. 55(c).
2. See Waifersong Ltd. v. Classic Music Vending, 976 F.2d 290, 24 USPQ2d 1632, 1634 (6th Cir. 1992); Jack Lenor Larsen Inc. v. Chas. O. Larson Co., 44 USPQ2d 1950, 1952 (TTAB 1997).
3. ComparePaolo’s Associates L.P. v. Bodo, 21 USPQ2d 1899, 1902-03 (Comm’r 1990), and Fred Hayman Beverly Hills, Inc. v. Jacques Bernier, Inc., 21 USPQ2d 1556, 1557 (TTAB 1991) both of which involved the question whether default judgment should be entered against defendant, with Djeredjian v. Kashi Co., 21 USPQ2d 1613, 1615 (TTAB 1991), and Regatta Sport Ltd. v. Telux-Pioneer Inc., 20 USPQ2d 1154, 1156 (TTAB 1991) both involving relief from default judgment. See also 10A C. WRIGHT, A. MILLER& M. KANE, FEDERAL PRACTICE AND PROCEDURE CIVIL § 2692 (4th ed. April 2021 update); Waifersong Ltd. v. Classic Music Vending, 976 F.2d 290, 24 USPQ2d 1632, 1634 (6th Cir. 1992).
4. See Jack Lenor Larsen Inc. v. Chas. O. Larson Co., 44 USPQ2d 1950, 1952 (TTAB 1997) (motion based on alleged failure to receive correspondence from the Board denied given presumption of receipt of correspondence, passage of 12 years and resulting hardship to third parties); Djeredjian v. Kashi Co., 21 USPQ2d 1613, 1615 (TTAB 1991) (motion granted pending showing of meritorious defense where other two elements were established); Regatta Sport Ltd. v. Telux-Pioneer Inc., 20 USPQ2d 1154, 1155-56 (TTAB 1991) (motion granted; respondent’s employees had limited knowledge of English and were unaware opposition and cancellation were separate proceedings).
5. See Waifersong Ltd. v. Classic Music Vending, 976 F.2d 290, 24 USPQ2d 1632, 1633 (6th Cir. 1992) (while the factors are similar, the methodology for considering the factors in deciding motion under Fed. R. Civ. P. 60(b)(1) and the weight to be accorded them differs); Jack Lenor Larsen Inc. v. Chas. O. Larson Co., 44 USPQ2d 1950, 1952 (TTAB 1997) (a significant factor is the hardship that reopening a judgment may cause to others and whether other actions have been taken in reliance on the judgment); 10A C. WRIGHT, A. MILLER& M. KANE, FEDERAL PRACTICE AND PROCEDURE CIVIL § 2692 (4th ed. April 2021 update).
6. See Information System and Networks Corp. v. United States, 994 F.2d 792, 795 (Fed. Cir. 1993) ("Rule 60(b) is applied most liberally to judgments in default.") (quoting Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 403 (5th Cir. 1981)); Ruiz v. Quarterman, 504 F.3d 523, 532 (5th Cir. 2007) ("[T]his lesser standard of review has been applied most liberally to motions to re-open default judgments").
Compare Djeredjian v. Kashi Co., 21 USPQ2d 1613, 1615 (TTAB 1991) and Regatta Sport Ltd. v. Telux-Pioneer Inc., 20 USPQ2d 1154, 1155 (TTAB 1991) both of which involved default judgments for failure to answer, with CTRL Systems Inc. v. Ultraphonics of North America Inc., 52 USPQ2d 1300, 1303 (TTAB 1999) (motion to set aside judgment denied since opposer is equally as accountable as its counsel for lack of attention to case); Syosset Laboratories, Inc. v. TI Pharmaceuticals, 216 USPQ 330, 332 (TTAB 1982) (motion to set aside judgment against opposer for failure to prosecute denied; incompetent attorney); Marriott Corp. v. Pappy’s Enterprises, Inc., 192 USPQ 735, 736 (TTAB 1976) (motion to set aside judgment for failure to prosecute denied; inattention and carelessness not excusable); Williams v. Five Platters, Inc., 181 USPQ 409, 410 (TTAB 1974) (motion to set aside default judgment for failure to respond to motion for summary judgment denied; carelessness and inattention of counsel), aff’d, 510 F.2d 963, 184 USPQ 744 (CCPA 1975). See also Smart Inventions Inc. v. TMB Products LLC, 81 USPQ2d 1383, 1384 (TTAB 2006) (cancellation respondent’s motion to set aside default judgment on ground that it never received actual or constructive notice of proceeding granted under Fed. R. Civ. P. 60(b)(4) where assignment of mark to respondent recorded before proceeding instituted but notification of proceeding sent to prior owner); 10A C. WRIGHT, A. MILLER & M. KANE, FEDERAL PRACTICE AND PROCEDURE CIVIL § 2693 (4th ed. April 2021 update).