Best of 2013: Lanham Act attorneys’ fees: Good to know

First published on June 27, 2013.

The situation with attorneys’ fees in “exceptional cases” under the Lanham Act is, to put it mildly, not clear.   I’ve written about it from time to time here, including, in December, in connection with the important Second Circuit decision in Louis Vuitton v. Ly USA Inc., which held that a prevailing plaintiff in a trademark counterfeiting case may collect both statutory damages and attorneys’ fees.

Well, I say “collect” — I really mean “be awarded.”  In the vast majority of “big” counterfeiting cases, of course, these awards aren’t collected, or collectible, at all (there are exceptions).  Rather, they are “symbolic” victories meant to “send a message” to counterfeiters around the world and make them repent.

Window and statue, Appellate Division First Department CourthouseHaving sent one of those messages myself … back in, oh, 2002 … I must admit I am curious why it hasn’t been received yet, evidently…

Anyway, it always comes down to this:  No one really knows what an exceptional case is, because it’s obviously an entirely subjective test pretty much left to the sound discretion of the District Court. That “standard” is amorphous enough that, outside of big counterfeiting cases, clients should not only never be told that they can get Lanham Act attorneys fees:  They should never even be left with the impression that it’s a creditable probability, and certainly not to the extent that they should include collection of those fees in their budgeting choices for infringement litigation.

All this is by way of linking to Michael Atkins’s recent post on the latest statement on the topic of that elusive “exceptional case,” this one on the other side of the continent, in a Ninth Circuit case called Haas Automation, Inc. v. Denny, No. 11-56991, 2013 WL 2303528 (9th Cir. May 28, 2013):

Courts don’t award attorney’s fees that often in trademark cases.

That’s because the statute only authorizes fees awards in “exceptional” cases.

So what’s that mean?

The Ninth Circuit recently reviewed the standard. . . .

The court didn’t offer much analysis in upholding the district court’s award to the prevailing plaintiff. It just said that “[c]onsidering all of the circumstances of this case, including the jury’s verdict, we agree with the district court that the threshold standard for awarding fees has been met, and further that the district court did not abuse its discretion in awarding attorneys’ fees.”

A little more explanation would have been nice. However, trademark owners still have an important take-away from the decision: it’s important to know the court’s standards when seeking or defending against a claim for attorney’s fees. Most claims won’t cut it, but the cases with egregious facts can.

Just to be a little clearer:  The decision doesn’t say a damned thing about what the facts were that were so egregious.  Moreover, the case is one of those “nothing to look at here, move along” specials, with a footnote that says, “This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.”

Well, I’ll tell you some facts.  First of all, based on PACER, which shows 142 entries, there are a LOT of them.  There were two solid years of litigation — a fact that is clearly unclear in and of itself.  Cutting to the chase, thankfully, there’s a 10-page order and decision on the question of attorneys’ fees (along with the oddly paired question of injunctive relief), which I’ve fetched for you and embedded for your convenience right here.  Here’s the egrege, if you will (citations and confusing over-punctuating omitted):

The parties’ dispute stems over the registration by Defendant Denny of fifteen domain names that incorporate the word “haas.” In 2008, Denny acquired a number of domain names that include the word “haas,” which has been a registered trademark of Haas Automation, Inc.  since 2002. . . .   Plaintiff alleged that Defendant CNCPros sells and services CNC machines that compete with Haas, and the registration of the domain names was intended to divert consumers looking for Haas to its competitors.

After deliberations, the jury returned a verdict in favor of the Plaintiff and against Denny on five domain names, finding that Denny registered those five domain names with the bad faith intent to profit from the “haas” trademark. . . .

A defendant’s bad faith may be considered in the determination of whether a case is exceptional. While a finding of bad faith under the ACPA does not necessarily compel a court to find ‘malicious, fraudulent, willful or deliberate’ conduct, a court could determine that bad faith under the ACPA supports finding such conduct.  In this case, the jury’s verdict establishes that Denny registered five domain names with the bad faith intent and that Denny lacked a reasonable basis to believe the registration of the fifteen domain names was a fair use. The fact that the domain names were not used as live websites does not foreclose a finding that the ACPA violation, which occurred when Denny registered the domain names, was willful, deliberate, malicious or fraudulent. Although Denny testified that he intended to use the domain names to operate websites to actually service Haas products, as opposed to divert consumers to his own products, the Court cannot say that the jury credited this testimony, as the jury still found Denny liable under the ACPA. The Court finds sufficient evidence in the record to establish that this case is “exceptional” and that attorneys’ fees are warranted.

It works for me.  And it worked for the plaintiff, too — to the tune of $285,613.25.  Probably pretty collectible, too.

Clear now?

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Author:Ron Coleman

I write this blog.

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