Melodrama Publishing, LLC v. Santiago
1:12-cv-07830
S.D.N.Y.May 19, 2015Background
- Santiago (using the pseudonym “Nisa Santiago”) previously sued Melodrama for copyright claims; that Copyright Action was dismissed with prejudice and Santiago did not oppose dismissal.
- Santiago, through attorney Jeffrey Wooten, obtained a federal trademark registration for the Nisa Santiago mark based on asserted use in commerce; Wooten relied largely on Santiago’s representations and submitted book cover images that displayed Melodrama’s name.
- Melodrama continued selling books under the Nisa Santiago name; after the trademark issued, Wooten sent cease-and-desist letters that caused Amazon to stop distributing Melodrama’s Nisa Santiago e-books for several months, causing lost sales.
- Melodrama filed this Trademark Action seeking cancellation of the registration and damages; the court (Rakoff, J.) granted judgment on the pleadings, canceled the trademark (including on fraud grounds), and referred damages to the magistrate for an inquest.
- At the inquest hearing Wooten testified that he never met Santiago, had not done sufficient due diligence, and was misled by Santiago; the magistrate found Santiago to be the primary wrongdoer and concluded damages should be awarded against her.
- The magistrate calculated lost profits, recommended attorneys’ fees and costs (with modest adjustments to paralegal rate and a percentage cut to post-judgment-preparation hours), and recommended prejudgment interest from a midpoint date at the rate in 26 U.S.C. § 6621(a)(2).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of Santiago trademark | Santiago (via registration) claimed use of the mark in commerce | Melodrama argued Santiago never used the mark and Melodrama had prior use | Trademark cancelled; court found Santiago never used mark in commerce and registration was obtained by fraud |
| Liability for damages from cease-and-desist | Melodrama sought lost profits and fees caused by Santiago’s registration and letters | Santiago (through counsel) initially asserted rights; later counsel withdrew and Santiago did not contest damages | Magistrate found Santiago primarily responsible; damages entered against Santiago alone |
| Calculation of lost profits | Melodrama used 25-month average monthly royalties × months of lost sales to compute $64,365 | Santiago did not participate to contest methodology | Court accepted the approximation as a just and reasonable inference and recommended $64,365 in lost profits |
| Attorneys’ fees and disbursements | Melodrama sought $95,004.12 in fees plus $647.04 costs | Santiago did not contest; court reviewed reasonableness of rates and hours | Magistrate adjusted paralegal rate to $100/hr, reduced a later fee block by 25%, and recommended total fees of $88,181.62 and costs $647.04 |
| Prejudgment interest | Melodrama requested 9% prejudgment interest | No contest; court must choose appropriate rate for an "exceptional" case under §1117(a) | Magistrate awarded prejudgment interest on lost profits from Feb 15, 2013, at the rate in 26 U.S.C. § 6621(a)(2) (statutory rate used as cap) |
Key Cases Cited
- Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105 (2d Cir.) (default-inquest damages may be determined on written proof)
- Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182 (2d Cir. 2008) (lodestar standard and paying-client perspective for reasonable fees)
- Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542 (Sup. Ct. 2010) (discussion endorsing lodestar method and principles for fee awards)
- Millea v. Metro-N. R.R. Co., 658 F.3d 154 (2d Cir. 2011) (reasonable hours × reasonable rates framework)
- I.B. v. N.Y.C. Dep’t of Educ., 336 F.3d 79 (2d Cir. 2003) (hourly rates should match prevailing community rates)
- Blum v. Stenson, 465 U.S. 886 (U.S. 1984) (prevailing-market rates as the benchmark for fee awards)
- Miele v. N.Y. State Teamsters Conference Pension & Ret. Fund, 831 F.2d 407 (2d Cir. 1987) (court may rely on its knowledge of reasonable private firm rates)
- LeBlanc-Sternberg v. Fletcher, 143 F.3d 748 (2d Cir. 1998) (attorney-fee awards may include reasonable out-of-pocket disbursements)
- In re "Agent Orange" Prod. Liab. Litig., 818 F.2d 226 (2d Cir. 1987) (approving across-the-board percentage cuts to trim fee applications)