No exceptions

Gotham law and municipal buildingsDid I ever say blogging is dead?  If I did it must have just been a tough week.  There’s lots of great blogging out there, still, by those motivated by ideas and skilled at exposition.  The two most obvious examples of bloggers who still matter, in soft IP, are John Welch and Eric Goldman.  There are others, of course; for sure, however, these two never disappoint.

Here’s what Eric wrote yesterday, the reading of which this morning having given me this fresh, happy outlook  — about blogging, that is; not about the state of IP law:

The federal trademark statute says judges may award attorneys’ fees to the winning party in “exceptional” cases. What does it take for a case to be “exceptional”? Apparently, it has to be pretty egregious conduct, as this long-running money pit of a case illustrates.

1-800 Contacts sued Lens.com for competitive keyword advertising. Through the course of the litigation, we learn the following facts:

  • 1-800 Contacts accrued $650k in legal fees pursuing the case and capped its legal fees at $1.1M before it stiffed its law firm.
  • the defendant Lens.com made less than $21 in profits from its competitive keyword ad buys. 1-800 Contacts also tried to attribute to Lens.com keyword ad buys made by Lens.com’s affiliates, a legal argument the court ultimately rejected.
  • 1-800 Contacts had done the same thing it was suing Lens.com for doing. 1-800 bought Lens.com’s keywords and made about $220k in profit from those keyword ad buys, yet it had duplicitously tried to shut down Lens.com for making less than $21.

To me, this looks like an egregious misuse of the litigation process–exactly the kind of sanctionable behavior that should be considered “extraordinary” enough to make the plaintiff reimburse the defendant for its sizable legal fees. Indeed, the court has harsh words for 1-800 Contacts, including calling 1-800 Contacts’ behavior “troubling” and specifically referencing its hypocrisy for suing over behavior it had itself engaged in. The court also says “1-800 Contacts’ actions raise questions about vexatious suits to defeat competition.”

Nevertheless, the court decides not to award attorneys’ fees. …

It’s clear the judge had distaste for both parties. … Still, given 1-800 Contacts’ condemnable conduct, it’s curious the judge didn’t stick them with a fee shift.

I think this ruling gives us some more insight into the trademark bullying phenomenon. The mockably ridiculous USPTO report on trademark bullying noted that trademark law’s fee shift provision acts as a deterrent against abusive trademark litigation. (For example, it says “the potential for an award of attorneys’ fees is an existing deterrent to misuse of the litigation process in trademark disputes.”) Given how hard it is to get a fee shift in light of a ruling like this, this was just another way in which the USPTO completely understated a very real problem in the field.

Completely understated?  More like completely misstated.  They got it exactly wrong, and, yes, Eric is making one of my favorite points, thank you:  Most trademark defendants with bona fide defenses simply can’t afford to win.  Thus trademark litigation remains a completely rational way to put competitors or other competitive threats (i.e., “unauthorized distributors”) out of business, or at least drain their resources.  Nice.

And it’s even worse in copyright, where there is strong presumption of an award of attorneys’ fees for prevailing plaintiffs and, in Eric’s neighborhood, no chance at all for a defendant to recover, no matter how meritless the claim.

And the PTO goes whistling along.  Good enough, as they say, for government work.  But how about the rest of us?

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Author:Ron Coleman

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2 Responses to “No exceptions”

  1. Brandon
    January 20, 2012 at 9:34 pm #

    Right on.

    Hey can you post that old article of yours, “Go Home,” from the Student Lawyer in 1995? Turns out you were entirely correct. TYIA.

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