Eagles LTD v. Amer Eagle FndtnEagles LTD v. Amer Eagle Fndtn
COUNSEL
ARGUED: James R. Hastings, COLLEN IP, Ossining, New York, for Appellant. Carla J. Christofferson, O‘MELVENY & MYERS, Los Angeles, California, for Appellees. ON BRIEF: James R. Hastings, Jess M. Collen, COLLEN IP, Ossining, New York, for Appellant. Carla J. Christofferson, Daniel M. Petrocelli, O‘MELVENY & MYERS, Los Angeles, California, Michael J. Avenatti, GREEN, BROILLET, PANISH & WHEELER, Santa Monica, California, for Appellees.
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OPINION
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AVERN COHN, District Judge. This is a trademark case. Defendant American Eagle Foundation (AEF) appeals from the district court‘s denial of its motion for attorney‘s fees and costs under
I. BACKGROUND
Plaintiff Eagles, Ltd. (EL) is one of several companies affiliated with the Eagles, a rock and roll band formed in 1971. EL owns the registered trademark and service mark “Eagles.” AEF is a non-profit organization dedicated to protecting American bald eagles. It engages in education and protection activities, as well as selling and promoting music-related products such as a song entitled “Save the Eagle.” AEF uses the Internet domain name “eagles.org” and vanity telephone numbers such as (800) 2-EAGLES.
AEF filed a trademark application for the “American Eagles Records” mark in 1995. EL filed Opposition No. 103,477 in response. Before the PTO ruled on AEF‘s application, EL filed suit in the district court in 1998 against AEF for trademark infringement, dilution, and other causes of action under the Lanham Act. The PTO then suspended its proceedings pending final disposition of the civil action.
The trial was originally scheduled to begin in April 2000 but was delayed and rescheduled for June 2001. The parties then submitted cross motions for summary judgment, which were denied by the district court. On May 29, 2001, less than two weeks before trial was set to begin, EL moved for substitution of counsel and requested a continuance until fall 2001 because important witnesses, including members of the band, would be on tour in Europe during the summer and unavailable to testify. The district court granted the motion for substitution of counsel but denied EL‘s motion for a continuance.
EL then moved for voluntary dismissal of its action pursuant to
II. ANALYSIS
A. District Court‘s Statement of Reasons for Denying Attorney‘s Fees
The district court‘s denial of attorney‘s fees under
When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 43(a) or (d), or a willful violation under section 43(c), shall have been established in any civil action arising under this Act, the plaintiff shall be entitled, subject to the provisions of sections 29 and 32, and subject to the principles of equity, to recover (1) defendant‘s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. The court shall assess such profits and damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant‘s sales
only; defendant must prove all elements of cost or deduction claimed. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. If the court shall find that the amount of the recovery based on profits is either inadequate or excessive the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances of the case. Such sum in either of the above circumstances shall constitute compensation and not a penalty. The court in exceptional cases may award reasonable attorney fees to the prevailing party.
Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys’ fees reasonably incurred because of such conduct.
AEF says that the district court in denying attorney‘s fees abused its discretion because it failed to adequately articulate its reasons. In Israel v. City of Barberton, 936 F.2d 573, No. 90-3268, 1991 U.S. App. LEXIS 32336, at *3 (6th Cir. Apr. 4, 1991) (unpublished), this Court held that “[i]n order to review a discretionary decision [to deny attorney‘s fees], some understanding of the trial court‘s reasons is necessary. Absent a statement of reasons, no meaningful review can be made.” The district court in Israel denied a motion for attorney‘s fees “by a marginal denial” with no hearing or statement of reasons and the case was remanded so that the district court could give its reasons for the denial. Id. at *2, *4. In Morscott, Inc. v. City of Cleveland, 936 F.2d 271, 272 (6th Cir. 1991), this Court held that a district court‘s marginal
Unlike the trial courts in Israel and Morscott, the district court here gave more than a marginal denial without support. The district court‘s order was sufficient because it clearly stated the applicable law and gave the reasons for the denial. Regarding
The court has considered the circumstances of this case and the applicable legal standard and in its discretion concludes that this is not an exceptional case as called for under § 1117(a). Litigation requires strategic and often difficult and costly decisions. However, in the context of this case, such decisions do not qualify it as an “exceptional” case warranting an award of fees.
Regarding
Defendant contends that the conduct ascribed to the plaintiffs satisfies the standard of section 1927. Plaintiffs do not specifically direct their response to this contention but argue[] the case was not pursued in a vexatious, wanton, or oppressive manner. In any event, the court has again considered the circumstances of this case in light of the standard required by § 192[7], and in its discretion finds that an award of fees under this provision is not warranted. Accordingly, defendant‘s motion for costs and fees will be denied in its entirety.
Having handled the case over the course of four years, the district court was in the best position to determine whether the
B. “Exceptional” Case Under 15 U.S.C. § 1117(a)
The district court‘s denial of attorney‘s fees under
Under
In applying
AEF says that these cases have created an artificial bias in favor of prevailing plaintiffs in Lanham Act cases, which violates the party-neutral approach of Fogerty v. Fantasy, Inc., 510 U.S. 517, 534-35 (1994) (“Prevailing plaintiffs and prevailing defendants are to be treated alike, but attorney‘s fees are to be awarded to prevailing parties only as a matter of the court‘s discretion.“). Fogerty, however, did not specify that the standard for prevailing plaintiffs and prevailing defendants had to be identical. Rather, it stated that courts should generally award attorney‘s fees in an even-handed manner. It is difficult to imagine how the standards for
While the circuits differ somewhat as to the test for determining whether a case is “exceptional,” often replacing the term with other adjectives, see, e.g., Ale House Management, Inc. v. Raleigh Ale House, Inc., 205 F.3d 137, 144 (4th Cir. 2000) (“Relevant factors include ‘economic coercion,’ ‘groundless arguments,’ and failure to cite controlling law.“); Scott Fetzer Co. v. Williamson, 101 F.3d 549, 555 (8th Cir. 1996) (“When a plaintiff‘s case is groundless, unreasonable, vexatious, or pursued in bad faith, it is exceptional, and the district court may award attorney‘s fees to the defendant.“), we believe that the “oppressive” standard first followed in Balance Dynamics most closely
The “oppressive” test is similar to the standard applied to prevailing plaintiffs where an award is appropriate if the infringement is “malicious, fraudulent, willful, or deliberate.” See Hindu Incense, 692 F.2d at 1051. Both allow an award of fees where the opposing party abused the protections afforded by the Lanham Act. The standard of law applied by the district court, therefore, did not violate Fogerty‘s party-neutral requirement.
Next, AEF argues that the district court incorrectly applied a heightened “clear and convincing” burden of proof because it cited Finance Investment, 165 F.3d at 533, which required clear and convincing evidence of exceptional circumstances. Although AEF is correct that a “clear and convincing” requirement is not supported by the language of the statute, there is no indication in the district court‘s opinion that it applied a “clear and convincing” burden of proof. Similarly, AEF argues that the district court inappropriately relied on Finance Investment by only considering EL‘s actions in
Finally, AEF argues that the district court applied the wrong standard because it based its denial on a finding that EL brought the action in good faith. AEF says that the district court implicitly required it to prove bad faith on the part of EL to receive attorney‘s fees, which it says is incorrect. See Scotch Whisky Ass‘n v. Majestic Distilling Co., 958 F.2d 594, 599 (4th Cir. 1992) (requiring “‘something less than bad faith‘” to award attorney‘s fees to a prevailing defendant). But see Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 194-95 (2d Cir. 1996) (requiring the defendant to show the plaintiff‘s bad faith). Simply because the district court referred to EL‘s argument that its case was brought in good faith and on the advice of counsel does not mean that it was looking for the opposite. There is no indication that the district court required a showing of bad faith.
EL had colorable legal arguments and legitimate reasons for choosing to dismiss the lawsuit. The district court applied the correct legal standard and in its discretion found that the case was not “exceptional” under
C. Pending PTO Opposition
The district court‘s decision regarding the
EL‘s opposition in the PTO to AEF‘s application for the “American Eagles Records” mark was suspended pending resolution of this case. After the district court dismissed the case with prejudice pursuant to
AEF says that district courts are given clear statutory authority over actions regarding the trademark registration process under
Further, the prospect of dismissal of the PTO opposition was not properly before the district court because AEF raised the issue for the first time in its motion for reconsideration. AEF failed to raise the argument as a counterclaim to the infringement action. Hence, according to the procedural posture of the case and by AEF‘s own admissions, its argument for dismissal is not based on the merits but on an estoppel theory. As the district court correctly pointed out, estoppel issues are ordinarily enforced by awaiting a second action in which they are pleaded and proved by the party asserting estoppel. The PTO, not the district court, must determine the preclusive effect of EL‘s statements.
Even if the issue of estoppel was properly before the district court, however, in light of the PTO‘s expertise and the district court‘s failure to reach the merits of the underlying action in this case, the district court‘s decision was reasonable and not an abuse of discretion.
The district court adequately articulated its reasons for denying attorney‘s fees and costs, applied the correct legal standard for “exceptional” cases under
Accordingly, the district court‘s decision is AFFIRMED.