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The Biltmore Company v. Nu U, Inc.

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

January 22, 2018

THE BILTMORE COMPANY, Plaintiff,
v.
NU U, INC., Defendant.

          ORDER

          MARTIN REIDINGER, UNITED STATES DISTRICT JUDGE

         THIS MATTER is before the Court on the Plaintiff's Motion for Attorneys' Fees [Doc. 125]; the Plaintiff's Bill of Costs [Doc.134]; and the Defendant's Motion for Clarification of Judgment and Order [Doc. 132].

         I. PROCEDURAL BACKGROUND

         The Plaintiff, The Biltmore Company (hereinafter “Plaintiff”), initiated this action on December 23, 2015, asserting federal claims for trademark infringement and cyberpiracy, as well as state law claims for unfair and deceptive trade practices, against the Defendant, Nu U, Inc. (hereinafter “Defendant”), for its alleged use of the Plaintiff's registered mark BILTMORE. [Doc. 1].

         On April 5, 2016, with leave from this Court and the Defendant's consent, the Plaintiff filed an Amended Complaint presenting five counts against the Defendant. [Doc. 29]. The Plaintiff alleged in its Amended Complaint that certain uses of BILTMORE by the Defendant infringed upon its federally registered trademarks in violation of 15 U.S.C. §§ 1114 and 1125(a). [Id. at ¶¶ 73-89, 120-34]. The Plaintiff also alleged that the Defendant's use of BILTMORE in connection with wedding related services, retail sales, and retail sales of branded merchandise constituted false designation of origin in violation of 15 U.S.C. § 1125(a). [Id. at ¶¶ 90-119]. The Plaintiff further alleged that the Defendant's use of domain names containing BILTMORE amounted to cybersquatting under 15 U.S.C. § 1125(d). [Id. at ¶¶ 135-39].

         On April 26, 2016, the Defendant filed its Answer and Counterclaims, asserting various affirmative defenses and two counterclaims: (1) a claim for a declaratory judgment of non-infringement pursuant to 28 U.S.C. § 2201 et seq. and (2) a claim for unfair competition and unfair and deceptive trade practices in violation of N.C. Gen. Stat. § 75-1.1, et seq. (“Chapter 75”). [Doc. 7].

         On March 4, 2016, a Case Management Plan was entered and the parties proceeded to engage in discovery. [Doc. 20]. On May 20, 2016, the Plaintiff filed a motion to dismiss the Defendant's counterclaims. [Doc. 35]. On December 30, 2016, the Court granted in part and denied in part Plaintiff's motion to dismiss. [Doc. 35]. In that decision, the Court dismissed Defendant's Chapter 75 counterclaim. [Id.].

         On January 10, 2017, both parties filed motions for summary judgment. [Docs. 61, 63]. On January 27, 2017, the Plaintiff filed a motion to compel certain discovery from the Defendant, which the Court denied as untimely on January 30, 2017. [See Docs. 67, 74]. On March 24, 2017, the Court held a hearing and denied both motions for summary judgment. [See Minute Order dated March 24, 2017].

         On May 15, 2017, the case proceeded to trial. [See Minute entry dated May 15, 2017]. Upon conclusion of the Plaintiff's evidence, both parties made oral motions for the entry of judgment as a matter of law, which were denied. [See Minute entry dated May 17, 2017]. Upon conclusion of the Defendant's evidence, both parties renewed their motions for the entry of judgment as a matter of law, which were denied. [See Minute entry dated May 18, 2017]. Following three days of evidence, the jury returned a verdict in favor of the Plaintiff on the issues of infringement and cybersquatting. [Doc. 123]. The jury further found that the Defendant's trademark infringement was intentional, willful, or in bad faith. [Id.].[1] The Court entered a Judgment in accordance with the jury's verdict on May 25, 2017. [Doc. 124].

         Following entry of the Judgment, the Plaintiff filed a motion for attorneys' fees and costs pursuant to the Lanham Act. [Doc. 125, 134]. The Defendant, in turn, filed a motion for clarification of the Judgment entered May 25, 2017. [Doc. 132].[2] The Defendant also has filed a notice of change in circumstances related to its motion for clarification. [Doc. 146]. These matters have been fully briefed and are therefore ripe for disposition.

         II. DISCUSSION

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

         The Plaintiff moves the Court to find that this case is “extraordinary” and to award $531, 034.42 in attorneys' fees under the Lanham Act. [Doc. 125].[3] The Defendant opposes the Plaintiff's motion, arguing that this case is not “exceptional.” [Doc. 133]. Alternatively, the Defendant argues that the Plaintiff's requested fees are excessive. [Id.].

         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 Objectively Unreasonable

         “A finding that a claim is objectively unreasonable is to be based on ‘an objective assessment of the merits of the challenged claims and defenses.'” Exclaim Mktg., LLC v. DirecTV, LLC, No. 5:11-CV-684-FL, 2015 WL 5725703, at *7 (E.D. N.C. Sept. 30, 2015), aff'd in part, 674 F. App'x 250 (4th Cir. 2016) (quoting Old Reliable Wholesale, Inc. v. Cornell Corp., 635 F.3d 539, 544 (Fed. Cir. 2011) (internal quotations omitted)). Unless an argument or defense is “so unreasonable that no reasonable litigant could believe it would succeed, ” such argument or defense cannot be found to be objectively baseless for purposes of awarding attorney fees.” Exclaim Mktg., 2015 WL 5725703, at *7 (citations omitted).

         Upon careful consideration of the arguments, affirmative defenses and counterclaims asserted by the Defendant throughout the course of litigation, the Court cannot conclude that the Defendant's position was frivolous or objectively baseless. Notwithstanding the jury's verdict, this was a close case on the issue of infringement. Both parties filed motions for summary judgment on various claims and defenses prior to trial, and both motions were denied. The Court's denial of the Plaintiff's summary judgment motion strongly indicates that the defenses asserted by the Defendant were not frivolous or unreasonable. See, e.g., LendingTree, LLC v. Zillow, Inc., 54 F.Supp.3d 444, 459 (W.D. N.C. 2014). For all of these reasons, the Court cannot say that the Defendant was unreasonable in asserting that its use of the Plaintiff's mark did not constitute infringement.

         2. Unreasonable Manner of Litigation

         A party's unreasonable litigation conduct may also warrant a finding that a case is “exceptional” so as to warrant an award of attorneys' fees. See Octane Fitness, 134 S.Ct. at 1757. “Typically, this prong is satisfied where the non-prevailing party engages in some form of egregious conduct, ” such as filing false declarations or attempting to re-litigate issues decided prior to trial. Exclaim Mktg., 2015 WL 5725703 at *8.

         In arguing that the Defendant's litigation conduct as a whole was unreasonable, the Plaintiff relies primarily on the Defendant's discovery conduct and assertion of counterclaims. [Doc. 137]. Specifically, Plaintiff contends that Defendant's broad discovery requests and refusal to produce an un-redacted copy of a report from Defendant's trademark attorney were unreasonable. [Id. at 5-6].

         After careful consideration of the record as a whole, the Court cannot say that this case was litigated in an unreasonable manner. The Plaintiff never sought a protective order regarding the Defendant's discovery requests and the Defendant based its redactions of the report on the assertion of attorney-client privilege.[4] Moreover, the Plaintiff's motion to compel production of an un-redacted version of the report was denied as untimely. [See Docs. 67, 74]. Further, although Defendant's Chapter 75 counterclaim was dismissed, its remaining counterclaim survived both a motion to dismiss and summary judgment. In addition, both parties vigorously and aggressively contested the issues in this case. For all of these reasons, the Court cannot say that the Defendant's litigation conduct was unreasonable.

         3. Compensation or Deterrence

         Finally, the Court considers whether there is a need, based on the particular circumstances of this case, “to advance considerations of compensation and deterrence.” Octane Fitness, 134 S.Ct. at 1756 n.6 (quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994)).

         First, the Court addresses the issue of compensation. While the jury found that the Defendant willfully infringed the Plaintiff's mark, the Plaintiff did not seek an award for damages and there was no evidence that the Plaintiff in fact suffered anything more than nominal harm as a result of the infringement. The Plaintiff also presented no evidence of actual confusion from any member of the purchasing public.

         As for the consideration of deterrence, the Court previously found that the Defendant pursued reasonable -- albeit ultimately unsuccessful --affirmative defenses to the Plaintiff's claim of infringement. This was not a case where the Defendant persisted in litigation even though its defenses were clearly lacking. See, e.g., Design Res., Inc. v. Leather Indus. of America, No. 1:10CV157, 2016 WL 5477611, at *7 (M.D. N.C. Sept. 29, 2016) (“This court recognizes the importance of deterring litigants from pursuing their claims even when the claim has fallen apart following discovery due to a lack of supporting evidence, reinforcing this court's decision to award attorney's fees.”). The Defendant proceeded with a defense that had a reasonable prospect for success before a jury. The deterrence factor in this prong is not for the purpose of deterring the presentation of such reasonable defenses. For all of these reasons, the Court cannot say there is a need to advance considerations of compensation and deterrence.

         Considering all of these factors, the Court concludes that this case is not “exceptional” within the meaning of the Lanham Act, and therefore, the Plaintiff is not entitled to ...


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