United States District Court, E.D. North Carolina, Northern Division
Mart, Inc. has moved for an award of attorneys' fees as a
prevailing party on trademark infringement claims under the
Lanham Act. 15 U.S.C. § 1117(a); Fed.R.Civ.P. 54(d). By
order entered October 3, 2014, the Court, inter
alia, dismissed counterclaims for trademark infringement
and unfair competition brought by L&L Wings, Inc. against
Beach Mart. Beach Mart contends that this successful
disposition of the counterclaims means that it is the
prevailing party for purposes of the Lanham Act's
fee-shifting provisions, and that attorneys' fees should
be awarded to it as this is an exceptional case. 15 U.S.C.
§ 1117(a). L&L Wings has opposed the motion for
attorneys' fees, Beach Mart has filed a reply in support,
and the matter is ripe for ruling.
Court dispenses with a recitation of the procedural and
factual background of this matter and incorporates as if
fully set forth herein its prior orders. The Lanham Act, in
15 U.S.C. § 1117(a), provides that court may in
exceptional cases award reasonable attorney fees to the
prevailing party. A
court may find a case "exceptional" and therefore
award attorneys fees to the prevailing party under §
1117(a) when it determines, 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-Pac. Consumer Prod. LP v. von Drehle Corp.,
781 F.3d 710, 721 (4th Cir. 2015), as amended (Apr.
15, 2015) (internal quotations and citations omitted).
Additionally, "the losing party's conduct need not
have been independently sanctionable or taken in bad faith in
order to merit an award of attorney fees to the prevailing
party under the Lanham Act." Verisign, Inc. v.
XYZ.COMLLC, 891 F.3d 481, 487 (4th Cir. 2018). The party
seeking attorney fees must prove by a preponderance of the
evidence that the case is an exceptional one. Id. at
485. "Awards of attorneys fees under  the Lanham
Act... are not to be made as a matter of course, but rather
as a matter of the court's considered discretion."
Ale House Mgmt., Inc. v. Raleigh Ale House, Inc.,
205 F.3d 137, 144 (4th Cir. 2000).
light of the totality of the circumstances present in this
protracted litigation, the Court does not find that Beach
Mart has satisfied its burden to show that this is an
exceptional case such that attorney fees should be awarded.
Beach Mart appears to focus on the second factor, that the
non-prevailing party litigated the case unreasonably, and
contends that L&L Wings acted in bad faith in pursuit of
its Lanham Act infringement claims. Beach Mart relies on the
Court's order awarding sanctions against L&L Wings
for discovery violations under Fed.R.Civ.P. 37. [DE 233].
However, Beach Mart has already been awarded sanctions for
L&L Wings' discovery violations, and Beach Mart has
failed to persuade the Court that L&L's conduct in
discovery should form the basis of attorney fees related to
the case as a whole. See, e.g., Monster Daddy v. Monster
Cable Prod, Inc., No. CIV.A. 6:10-1170-MGL, 2014 WL
2780331, at *5 (D.S.C. June 19, 2014) ("Although the
Court has made a finding as to the bad faith nature of
Monster Daddy's conduct relative to discovery, the Court
declines to use that order and those proceedings as further
proof of any bad faith or unreasonable conduct on the part of
Monster Daddy as to the case in its entirety and for the
purpose of awarding fees under the Lanham Act."). This
is particularly true where at least some of sanctioned
conduct, withholding the Morrow Agreement, proved to be
"much ado about nothing," as the Court later held
that the Morrow Agreement terminated in 1994, and Beach
Mart's claims premised thereon were dismissed. Selee
Corp. v. McDanel Advanced Ceramic Techs., LLC, No.
1:15-CV-00129-MR, 2017 WL 3122565, at *5 (W.D. N.C. July 21,
Court does not find that L&L Wings' position in the
case was frivolous or objectively unreasonable, nor that
L&L Wings was unreasonable in its manner of litigation.
Finally, no consideration of compensation and deterrence
would be advanced by awarding It attorney fees to Beach Mart
under these circumstances. As this Court has previously
stated, what began as a seemingly benign contract dispute
turned acrimonious and swelled to include multiple claims,
counterclaims, and cross-claims. [DE 301]. Although Beach
Mart technically prevailed on L&L Wings'
counterclaims that were dismissed as a sanction, it by no
means was the clear winner in this case. Moreover, Beach Mart
has not demonstrated a "high degree of
culpability," Ga.-Pac, 781 F.3d at 720 (citing
Tex. Pg. Stands, Inc. v. Hard Rock Cafe Int'l,
Inc. 951 F.2d 684-696-7 (5th Cir. 1992)), on the part of
L&L Wings or that this case "stands out from others
with respect to the substantive strength of a party's
litigation position . . .." Octane Fitness, LLC v.
ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756
having considered the motion under the appropriate standard,
the Court in its discretion finds that Beach Mart has failed
to demonstrate by a preponderance of the evidence that this
is an exceptional case which would warrant an award of
attorneys' fees. Beach Mart's motion [DE 413] is
therefore DENIED. L&L Wings' request for