US Ghost Adventures v. Miss Lizzie’s Coffee — Default Establishes Liability but Not Trademark Remedies

Background

US Ghost Adventures operates a museum and bed-and-breakfast at the Lizzie Borden House in Fall River, Massachusetts. In 2023, Joseph Pereira opened Miss Lizzie’s Coffee next door. US Ghost sued the coffee shop and Pereira for trademark infringement, unfair competition, false designation of origin, and dilution, focusing on the Lizzie Borden name and hatchet imagery.

The merits had always appeared difficult. The district court denied a preliminary injunction, and the First Circuit affirmed, because the marks, services, and trade channels differed and the evidence did not show confusion caused by trademark infringement. Miss Lizzie’s also displayed notices denying any affiliation. The litigation nevertheless broke down in discovery. The company failed to retain replacement counsel, while Pereira repeatedly missed obligations and supplied inadequate responses despite warnings and extensions. Defaults were entered against both defendants.

US Ghost then sought a permanent injunction, $63,000 in disgorged profits, $95,000 in lost-business damages, $50,000 for goodwill and employee time, and $31,207 in attorneys’ fees.

The Court’s Holding

Judge Leo T. Sorokin entered default judgment and, as a procedural consequence, treated the well-pleaded trademark claims as establishing liability. The court stressed that it did so reluctantly: default resolved liability because the defendants failed to defend the case, even though the court and the First Circuit had previously found the infringement theory unlikely to succeed on the merits.

Liability did not automatically establish relief. The court denied a permanent injunction because US Ghost did not show irreparable future harm. Miss Lizzie’s had moved away from the property next to the Lizzie Borden House, and there was no indication it would return. The earlier findings also showed that the parties offered different services, used different channels, employed dissimilar marks, and generated any confusion largely because both businesses referenced the same historical figure. Enjoining the coffee shop under those unusual circumstances would not serve the public interest.

The court also denied profits and damages. US Ghost’s estimate of the coffee shop’s profits was speculative, and the businesses were not direct competitors whose sales could be presumed to substitute for one another. Its declining-revenue figures did not connect any loss to the defendants’ conduct. The claimed goodwill loss and employee time rested on an unsupported affidavit rather than documentation.

Finally, the case was not “exceptional” under the Lanham Act merely because liability followed from default. But the defendants’ repeated discovery violations and bad-faith delay justified the requested $31,207 in fees as a procedural sanction under Rule 37 and the court’s inherent authority.

Key Takeaways

• A trademark default can establish liability without proving entitlement to an injunction, profits, or damages.
• Permanent relief still requires evidence of likely future harm; a move away from the disputed location can defeat that showing.
• Lost sales, disgorgement, and goodwill damages require evidence connecting the requested amount to the infringement.
• Discovery misconduct can support a fee sanction even when the underlying trademark case does not qualify as exceptional.

Why It Matters

The opinion separates three questions that are often blurred together: liability, trademark remedies, and litigation sanctions. A defendant that ignores discovery may lose on liability, but a plaintiff still must prove real-world harm and justify equitable relief. Conversely, weak merits do not excuse defiance of court orders.

For businesses, the practical lesson is stark. Procedural defaults can produce an adverse judgment, yet unsupported damages estimates will not become recoverable merely because the other side defaulted. Trademark plaintiffs should preserve sales, customer-confusion, and mitigation evidence from the outset; defendants should treat discovery compliance as independently consequential.