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Selee Corp. v. McDanel Advanced Ceramic Technologies, LLC

United States District Court, W.D. North Carolina, Asheville Division

July 21, 2017

SELEE CORPORATION, Plaintiff,
v.
McDANEL ADVANCED CERAMIC TECHNOLOGIES, LLC, Defendant.

          ORDER

          MARTIN REIDINGER UNITED STATES DISTRICT JUDGE.

         THIS MATTER is before the Court on the Plaintiff's Affidavit for Attorneys' Fees and Costs re: Discovery Sanctions [Doc. 94]; Plaintiff's Motion for Attorneys' Fees and Costs [Doc. 97]; and the Defendant's Motion for Judgment as a Matter of Law [Doc. 100].

         I. PROCEDURAL BACKGROUND

         The Plaintiff SELEE Corporation initiated this action on June 30, 2015, asserting claims of trademark infringement, false designation of origin, and trademark dilution under the Lanham Act, 15 U.S.C. § 1051, et seq., as well as claims for unfair competition and false advertising under North Carolina law, against the Defendant McDanel Advanced Ceramic Technologies, LLC, for its alleged use of the Plaintiff's registered mark “engineered ceramics.” [Doc. 1]. The Defendant filed an answer asserting various affirmative defenses and counterclaims for unfair competition, a declaration of non-infringement, cancellation of the Plaintiff's trademark registration, and a declaration of the Defendant's right to fair use of the term “engineered ceramics.” [Doc. 8].

         A Case Management Plan was entered [Doc. 17], and the parties proceeded to engage in discovery. In June 2016, the Plaintiff filed a motion to compel certain discovery from the Defendant and to levy sanctions for the Defendant's destruction of relevant evidence. [Doc. 28]. In August 2016, the Court entered an Order granting the Plaintiff's motion to compel in part, finding that the Defendant had not fulfilled its duty to conduct a reasonable investigation of its electronic files for documents responsive to the Plaintiff's discovery requests. The Defendant was ordered to search all of the electronic data in its possession for all documents relating to the use of the term “engineered ceramics” and to produce such documents to the Plaintiff on or before September 9, 2016. [Doc. 41 at 7, 12].

         On September 9, 2016, the Defendant's counsel submitted a letter to the Court, advising that the Defendant had undertaken a database-wide search, and that a total of 2, 865, 148 documents had been collected and searched, comprising over 790 gigabytes of data, with an additional terabyte of data to be processed in the coming days. Counsel further stated that it anticipated that this round-the-clock document processing would not be completed until September 16, 2016. [Doc. 42]. At the final pretrial conference on October 28, 2016, the parties reported that the Defendant had completed its search and that additional documents had been produced. The Court ordered the Defendant to pay as a sanction the Plaintiff's reasonable attorneys' fees related to prosecuting this discovery issue. The Plaintiff's counsel was directed to file an affidavit in support of such an award following the conclusion of the trial.[1]

         The case proceeded to trial on November 7, 2016. Upon conclusion of the Plaintiff's evidence, the Defendant moved for the entry of judgment as a matter of law, which was denied. Following two days of evidence, the jury returned a verdict in favor of the Plaintiff on the issue of infringement and awarded the Plaintiff $1.00 in damages. [Doc. 91 at 1, 2]. The jury further found that the Defendant's trademark infringement was willful. [Id. at 2]. The Court entered a Judgment in accordance with the jury's verdict on November 23, 2016. [Doc. 99].

         Following entry of the Judgment, the Defendant renewed its motion for judgment as a matter of law pursuant to Rule 50(b) of the Federal Rules of Civil Procedure. [Doc. 100]. The Plaintiff, in turn, filed a motion for an award of attorneys' fees and costs pursuant to the Lanham Act. [Doc. 97]. These matters have been fully briefed and are therefore ripe for disposition.

         II. DISCUSSION

         A. Defendant's Motion for Judgment as a Matter of Law

         1. Standard of Review

         Pursuant to Rule 50(b) of the Federal Rules of Civil Procedure, a district court may grant a judgment as a matter of law “if there is no legally sufficient evidentiary basis for a reasonable jury to find for the non-moving party . . . .” Cline v. Wal-Mart Stores, Inc., 144 F.3d 294, 301 (4th Cir. 1998) (citing Fed.R.Civ.P. 50(b)). The district court must deny a motion for judgment as a matter of law if, “giving the non-movant the benefit of every legitimate inference in his favor, there was evidence upon which a jury could reasonably return a verdict for him.” Cline, 144 F.3d at 301 (quoting Abasiekong v. City of Shelby, 744 F.2d 1055, 1059 (4th Cir. 1984)). In making such a determination, the court cannot re-weigh the evidence or the credibility of the witnesses; rather, the court must “assume that testimony in favor of the non-moving party is credible, unless totally incredible on its face, and ignore the substantive weight of any evidence supporting the moving party.” Cline, 144 F.3d at 301 (internal quotation marks and citation omitted).

         2. Discussion

         In its motion, the Defendant argues that the jury did not have a legally sufficient basis to find infringement of the Plaintiff's trademark under the Lanham Act. Specifically, the Defendant argues that the evidence produced at trial at best demonstrated that the Defendant's use of the term “engineered ceramics” was a “non-trademark” use and therefore did not infringe on the Plaintiff's mark. [Doc. 100-1].

         Viewing the evidence presented at trial in the light most favorable to the Plaintiff, the Court concludes that there is substantial evidence to support the jury's verdict. The Plaintiff presented evidence that it owns a registered trademark for the term “engineered ceramics.” The Plaintiff learned that the Defendant used a confusingly similar variation of the mark in 2014 in connection with its online advertising of competing products for sales to competing customers. The Defendant was given actual notice of Plaintiff's rights in the trademark in 2014 and was asked to cease use of the mark, along with any confusingly similar variations thereof. In response to the Plaintiff's cease and desist letter, the Defendant deliberately chose to continue to use the Plaintiff's mark and in fact increased its use of the mark by switching from a confusingly similar use (“engineered ceramic”) on a general webpage to the exact terms of the mark (“engineered ceramics”) on directly competing product webpages and print advertising.

         From the evidence presented by the Plaintiff, the jury reasonably concluded that the Defendant's use created a likelihood of confusion. See George & Co., LLC v. Imagination Entm't Ltd., 575 F.3d 383, 393 (4th Cir. 2009) (discussing likelihood of confusion factors); Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 463-64 (4th Cir. 1996); Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1527 (4th Cir. 1984). Specifically, the Plaintiff presented evidence that the mark had been in continuous use since the 1960's and was therefore strong; that the Plaintiff and the Defendant were competitors; that the Defendant used the exact terms of the mark; that the Defendant's use was intentional and willful; that the Defendant's use was in connection with advertising the same competing products; and that the Defendant's use was in connection with advertising in the same manner to competing customers.

         The Plaintiff's evidence further provided a substantial basis for the jury's finding that the Defendant's use did not constitute fair use under the Lanham Act. Descriptive, or “classic” fair use arises when a defendant uses a trademark “in its primary, descriptive sense to describe the defendant's goods or services.” Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144, 169 (4th Cir. 2012) (citation and internal quotation marks omitted). Additionally, the defendant must have acted in good faith. See Shakespeare Co. v. Silstar Corp. of Am., Inc., 110 F.3d 234, 240 (4th Cir. 1997). Here, the Plaintiff produced evidence from which the jury reasonably concluded that the Defendant's use of the term “engineered ceramics” was not confined simply to describing its products or services and was intentionally done in disregard for any trademark rights of the Plaintiff.

         For all of these reasons, the Court concludes that there is substantial evidence to support the jury's verdict on infringement. Accordingly, the Defendant's renewed motion for judgment as a matter of law is denied.

         B. Plaintiff's Request for Attorneys' Fees as Discovery Sanction

         The Plaintiff seeks a total of $81, 270.31 in fees and costs incurred in connection with pursuing its discovery motion against the Defendant. The Defendant opposes the Plaintiff's request, arguing that the amount of fees requested is grossly excessive.

         In an Affidavit submitted in support of the Plaintiff's request, attorney John R. Perkins, Jr. states that “Plaintiff billed a significant amount of time in relation to Defendant's failure to [respond to] appropriate discovery in this case beginning as early as April 26, 2016.” [Doc. 94-3 at ¶ 16]. While Perkins states that the billing records submitted in support of the Plaintiff's request are “limited to only that time spent by the designated billing attorney directly on this [discovery] issue” [id. at ¶ 17], the billing records submitted are in fact not so limited. Rather, these billing records, which are in excess of fifty pages, include all of the work performed by its counsel and their staff throughout the course of this litigation. The Court will not pore over fifty pages of billing records in order to discern which of the hours claimed related to the one discovery issue for which fees were allowed. Moreover, if the Plaintiff's claimed amount of fees is to be accepted at the hourly rates that they identified ($300-$375 per hour), the Plaintiff's attorneys would have had to have devoted more than 200 hours to this one discovery issue, which is clearly excessive.[2]

         In light of the excessive nature of the claimed fees and the Plaintiff's failure to specifically identify the hours spent on the discovery issue, the Court, in the exercise of its discretion, determines that the demand and discussions regarding the Defendant's inadequate discovery responses, and the preparation of the motion and brief regarding the motion to compel, could easily have been completed in 25 hours. The Court therefore will award the Plaintiff $7, 500.00 in fees and costs related to the discovery issue.

         C. Plaintiff's Request for Attorneys' Fees under the Lanham Act

         The Plaintiff also moves the Court to find that this case is “exceptional” and to award $661, 421.50 in attorneys' fees under the Lanham Act. The Defendant opposes the Plaintiff's motion, arguing that this case is not “exceptional.” Alternatively, the Defendant argues that the Plaintiff's requested fees are excessive.

         Section 1117(a) of the Lanham Act authorizes a plaintiff in a trademark infringement case to recover reasonable attorneys' fees “in exceptional cases.” 15 U.S.C. § 1117(a). The Court may find a case to be “exceptional” if it finds “in light of the totality of the circumstances, that (1) there is an unusual discrepancy in the merits of the positions taken by the parties, based on the non-prevailing party's position as either frivolous or objectively unreasonable; (2) the non-prevailing party has litigated the case in an unreasonable manner; or (3) there is otherwise the need in particular circumstances to advance considerations of compensation and deterrence.” Georgia-Pacific Consumer Prods. LP v. von Drehle Corp., 781 F.3d 710, 721 (4th Cir. 2015) (quoting in part Octane Fitness, LLC v. ICON Health & Fitness, Inc., -- U.S. --, 134 S.Ct. 1749, 1756 n.6 (2014) (other internal citations and quotation marks omitted). A jury's finding of willfulness, without more, is not sufficient to support a finding that a case is “exceptional” within the meaning of § 1117(a). See Exclaim Mktg., LLC v. DirecTV, LLC, 674 F. App'x 250, 260 (4th Cir. 2016).

         1. Frivolous or ...


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