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Brighton Collectibles, Inc. v. Pedre Watch Co., Inc.

United States District Court, Ninth Circuit

January 2, 2014

BRIGHTON COLLECTIBLES, INC., a Delaware Corporation, Plaintiff,
v.
PEDRE WATCH COMPANY, INC., a New York Corporation, et al., Defendants.

ORDER: (1) GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR ATTORNEY'S FEES AND PREJUDGMENT INTEREST; (Doc. No. 112), and (2) GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR COSTS (Doc. No. 115)

ANTHONY J. BATTAGLIA, District Judge.

Before the Court are two motions: (1) Brighton Collectibles, Inc's (hereinafter "Brighton" or Plaintiff) Motion for Attorneys' Fee and Prejudgment Interest pursuant to Federal Rule of Civil Procedure 54(d)(2) and the Copyright Act, 17 U.S.C. § 505 and (2) Pedre Watch Company, Inc.'s (hereinafter Pedre or Defendant) Motion for Costs pursuant to Federal Rule of Civil Procedure 68. (Doc. Nos. 112 and 115.) The Court entertained oral arguments on December 19, 2013. After considering the motions, the respective briefs filed in support and opposition, and the parties' arguments offered during the hearing, the Court GRANTS in part and DENIES in part both motions, with the limitations explained herein.

I. BACKGROUND

On March 30, 2011, Brighton commenced this action against Pedre alleging one claim of copyright infringement. Brighton alleged that Pedre's "Cimarron" watch infringed Brighton's "Laguna" watch copyright. This was not the first time the parties were engaged in a copyright infringement dispute. In 1998, the parties were involved in another litigation over Pedre's alleged infringement of Plaintiff's "Daytona" watch design. (Doc. No. 96 at 3.) Pedre contends that it had never heard of Brighton nor seen Brighton designs until Plaintiff sent its cease-and-desist letter in March 1998. Pedre had obtained the allegedly infringing watch from Full Field Industrial Limited, a Hong Kong company. Pedre voluntarily ceased selling the allegedly infringing watch after Brighton made its objections known. (Doc. No. 102 at 2.) However, Brighton commenced an action in October 1998. According to the Pedre, that action settled to "avoid future litigation costs, " and the parties agreed that the settlement was not to be construed as an admission of liability. ( Id )

In 2008, Pedre purchased the Cimarron watch design, the subject of the current case, from its supplier, Universe Watch Trading Co., Ltd. in Hong Kong. In selecting the design, Pedre's president, Jill Kiviat, specifically told the supplier she "did not want to buy anything that was like Brighton." ( Id. at 5.) The supplier had informed her the Cimarron design was made for a South American customer and was not being sold in the United States. ( Id. ) At that time, Brighton had not offered the Laguna for sale for more than four years. However, Brighton argued that "Pedre simply did a cursory scan of Brighton's website, saw that Brighton was no longer selling the Laguna, and pressed forward." (Doc. No. 96 at 6.)

Pedre then made a single sale of 287 watches to its customer, Coldwater Creek. Coldwater Creek then began to advertise the watch in its nationwide catalogs. (Doc. No. 102 at 3-4.) In September of 2008, Coldwater Creek informed Pedre that Brighton alleged the Cimarron infringed on their copyright. After receiving notice of Brighton's claims, Pedre accepted the return of Coldwater Creek's remaining inventory. A total of 181 units were sold to the public, all remaining units were returned to the manufacturer for destruction. ( Id. at 4.) Brighton filed an action against Coldwater Creek over the Laguna design. That action settled. ( Id. ) Brighton then commenced the instant action against Pedre in this Court.

On September 16, 2011, in an effort to nip the matter in the bud, Pedre offered to submit to an entry of judgment against it pursuant to Rule 68. ( See Doc. No. 115, Ex. 1.) Pedre offered the payment of fifty thousand dollars ($50, 000) as well as an execution of a written agreement that Pedre is no longer selling, and will not sell at any time in the future, the Cimarron watch at issue. ( Id. ) Brighton did not accept the offer and the parties continued with the litigation. A three day trial began on August 19, 2013. The jury returned a verdict for Brighton finding: (1) Brighton did have a valid copyright to the "Laguna" watch design; (2) Pedre copied original elements of the "Laguna" design; (3) the infringement was non-willful; and (4) a judgment of $16, 719.50 was the appropriate amount of statutory damages.

This Court then denied Brighton's Motion for Permanent Injunction after finding Brighton failed to satisfy the traditional four-part test to warrant the need for such equitable relief. (Doc. No. 108.) The Clerk of Court then entered judgment in favor of Plaintiff, Brighton, in the amount of $16, 719.50. (Doc. No. 109.) On November 18, 2013, the parties timely filed post-judgment motions. Brighton now seeks to recover attorneys' fees and prejudgment interest pursuant to the Copyright Act, 17 U.S.C. § 505 and Pedre seeks to recover costs pursuant to Rule 68. The Court addresses each motion in turn.

II. LEGAL STANDARD

A. The Copyright Act of 1976, 17 U.S.C. § 505

Federal Rule of Civil Procedure 54(d)(2) permits a party to claim attorney's fees by motion under a substantive law. Section 505 of the Copyright Act grants district courts the discretion to award reasonable attorney's fees to the prevailing party in a copyright action. 17 U.S.C. § 505. "In copyright infringement cases, generally, the prevailing party is the one who succeeds on a significant issue in the litigation that achieves some of the benefits the party sought in bringing the suit." Wall Data Inc. v. Los Angeles Cnty. Sheriff's Dept., 447 F.3d 769, 787 (9th Cir. 2006).

Prevailing parties are to be awarded their reasonable attorney's fees as a matter of the court's discretion. Fantasy, Inc. v. Fogerty, 94 F.3d 553, 557 (9th Cir. 1996). There is no exact formula and courts are to make their determination under equitable circumstances. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 534, 114 S.Ct. 1023 (1994). The guiding principle for courts is the promotion of the Copyright Act's objectives. Frank Music Corp. v. Metro-Goldwyn-Mayer Inc., 886 F.2d 1545, 1556 (9th Cir. 1989). A plaintiff bears the burden of showing the time spent and that it was "reasonably necessary to the successful prosecution of their copyright claims." Id. at 1557.

A court must first determine whether awarding attorney's fees is appropriate. This is a matter for the district court's discretion and to guide that discretion, the Supreme Court has endorsed the non-exclusive list employed by the Third Circuit in Lieb v. Topstone Industries, Inc., 788 F.2d 151, 156 (3d Cir. 1986). See Fogerty, 510 U.S. at 527. The Ninth Circuit identifies those factors as: (1) the degree of success obtained; (2) frivolousness; (3) motivation; (4) objective unreasonableness; and (5) the need in the particular circumstances to advance considerations of compensation and deterrence. Magnuson v. Video Yesteryear, 85 F.3d 1424, 1432 (9th Cir. 1996) (quoting Jackson v. Axton, 25 F.3d 884, 890 (9th Cir. 1994)).

A court must then determine whether the fees requested are reasonable. "To determine what fee should be awarded, the court must first determine the lodestar, ' which is the number of hours reasonable expended on litigation multiplied by a reasonable rate." United Steelworkers of Am. v. Phelps Dodge Corp., 896 F.2d 403, 406 (9th Cir. 1990). Under this calculation, a court should take into account, either under the reasonable hours component or the reasonable rate component, (1) the novelty and complexity of issues; (2) the special skill and experience of counsel; (3) the quality of representation; (4) the results obtained; and (5) the contingent nature of the fee agreement." Morales v. City of San Rafael, 96 F.3d 359, 364 (9th Cir. 1996). The court may then adjust this amount "on the basis of other considerations." Lytle v. Carl, 382 F.3d 978, 988 (9th Cir. 2004).

B. Rule 68

Rule 68 of the Federal Rules of Civil Procedure shifts to a plaintiff all "costs" incurred subsequent to an offer of judgment not exceeded by ultimate recovery. Fed.R.Civ.P. 68(d) ("If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made."). The purpose of Rule 68 is to encourage settlement and avoid litigation.

Where a statute defines "costs" to include attorney's fees, such fees are to be included as costs for purposes of Rule 68 cost shifting. Marek v. Chesny, 473, U.S. 1, 8-9 (1985) (concluding "that the term costs' in Rule 68 was intended to refer to all costs properly awardable under the relevant substantive statute or other authority.") Thus, a plaintiff who rejects an offer more favorable than what is thereafter recovered at trial will not recover attorney's fees for services performed afterwards. Id.

III. DISCUSSION

The matter of awarding attorney's fees and costs to the respective parties is complicated by the interplay of Rule 68 and § 505. As such, the Court's analysis for each individual motion will necessarily overlap. After a thorough review of the litigation record, relevant case law, and the parties' contentions, the Court has reached a resolution ...


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