Delta V Forensic Engineering, Inc. v. Delta V Biomechanics, Inc., 2:18-cv-02780

Background

Delta V Forensic Engineering (Plaintiff) sued Delta V Biomechanics (Defendant) for trademark infringement over the mark "Delta V." Defendant counterclaimed for cancellation, prior use, non-infringement, and unfair competition.
After discovery, the court granted Defendant’s summary judgment on likelihood of confusion and laches on August 23, 2019, but did not enter a separate final judgment and administratively closed the case; Defendant’s counterclaims remained pending.
In March 2020 Defendant lodged a proposed judgment, voluntarily dismissed its counterclaims without prejudice, and moved for attorneys’ fees (~$849,902) and nontaxable costs; Plaintiff moved to strike the proposed judgment and argued the fee motion was untimely and meritless.
The parties contested (1) whether the MSJ order was a final judgment for Rule 54/58 timing, (2) whether the case was "exceptional" under the Lanham Act to award fees, and (3) whether inherent authority supported fee-shifting; Defendant also sought re-taxing of costs after the clerk had denied its request.
The court approved the proposed judgment and the voluntary dismissal of counterclaims, held Defendant’s fee motion was timely, denied Defendant’s motions for attorneys’ fees and for nontaxable costs (both Lanham Act and inherent authority), denied Plaintiff’s ex parte strike request, and granted Defendant’s motion to re-tax costs (reversing the clerk’s denial).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Timeliness of fee motion / entry of judgment	MSJ order was final; parties treated case as terminated; Rule 58 150-day rule makes fee motion untimely	No separate judgment was entered; counterclaims remained pending; Local Rule 58-6 prevents treating the MSJ docket entry as judgment	Fee motion was timely: MSJ was not a final judgment and 150-day rule did not apply given Local Rule 58-6 and pending counterclaims
Lanham Act fees — whether case is "exceptional"	Plaintiff: claims were reasonable; raised debatable issues of likelihood of confusion	Defendant: Plaintiff’s claims were objectively baseless and litigation conduct was unreasonable/bad faith, warranting fees	Denied: Plaintiff raised debatable factual and legal issues; conduct was problematic but not sufficiently egregious to make the case exceptional
Inherent authority to award fees	Plaintiff: no judicial-process abuse warranting sanction	Defendant: bad-faith litigation conduct and alleged spoliation justify shifting fees under inherent powers	Denied: conduct did not amount to abuse of the judicial process sufficient to shift fees; causal-but-for limitation also not shown
Re-taxing costs / Clerk’s denial & ex parte strike of proposed judgment	Plaintiff sought to strike proposed judgment and argued timeliness; also argued Clerk’s decision should stand	Defendant argued its application to tax costs was timely and clerk erred	Court denied strike, reversed clerk’s denial, granted re-taxing motion and left the clerk to decide costs on the merits

Key Cases Cited

Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400 (9th Cir. 1993) (traditional standard identifying bad-faith willful infringement for fee awards under Lanham Act)
Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014) (Supreme Court relaxed "exceptional" standard; district courts to apply a totality-of-the-circumstances test)
SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179 (9th Cir. 2016) (Ninth Circuit: Lanham Act fees assessed under Octane totality-of-the-circumstances approach)
Fogerty v. Fantasy Inc., 510 U.S. 517 (1994) (list of nonexclusive factors—frivolousness, motivation, objective unreasonableness—useful in fee analyses)
Pom Wonderful LLC v. Hubbard, 775 F.3d 1118 (9th Cir. 2014) (standard and nonexhaustive Sleekcraft factors for likelihood-of-confusion analysis)
AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) (origin of the multi-factor likelihood-of-confusion test)
Casey v. Albertson’s Inc., 362 F.3d 1254 (9th Cir. 2004) (when no separate Rule 58 judgment exists, appellate review looks to whether order was a full adjudication and intended as final)
Bankers Trust Co. v. Mallis, 435 U.S. 381 (1978) (parties may be deemed to waive separate-judgment requirement where conduct and district-court intent show finality)
Fox v. Vice, 563 U.S. 826 (2011) (but-for causation limit on fee awards under courts’ inherent or statutory powers)
Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (inherent power allows fee sanctions for conduct that abuses the judicial process)