United States District Court, C.D. California
ORDER DENYING DEFENDANTS' MOTION FOR ATTORNEYS' FEES AND NON-TAXABLE COSTS (Doc. 217)
JOSEPHINE L. STATON, District Judge.
Before the Court is a Motion for Attorneys' Fees and Non-Taxable Costs filed by Defendants Classmates, Inc. and United Online, Inc. (Mot., Doc. 217.) Plaintiff Memory Lane, Inc. opposed, and Defendants replied. (Opp'n, Doc. 224; Reply, Doc. 226.) The Court finds this matter appropriate for decision without oral argument. Fed.R.Civ.P. 78(b); C.D. Cal. R. 7-15. Accordingly, the hearing set for May 9, 2014 at 2:30 p.m. is VACATED. Having considered the parties' briefing, the Court DENIES Defendants' Motion.
Plaintiff Memory Lane, Inc. filed this action on June 23, 2011 against Defendant Classmates International, Inc. and Defendant Memory Lane, Inc., asserting claims for false designation of origin under the Lanham Act; violation of California Business & Professions Code section 17200; and common law unfair competition. (Compl., Doc. 1.) Plaintiff's claims were premised on Defendants' use of its trademark, "MEMORY LANE." ( See, e.g ., FAC ¶ 32.)
Defendants did not move for summary judgment. Instead, they filed several motions in limine, some of which the Court granted at the Final Pretrial Conference. ( See Reply at 2; Doc. 150.) Defendants disclosed for the first time at the Final Pretrial Conference that they had stopped using the "MEMORY LANE" mark. (Final Pretrial Conference Tr., 3:24-4:2, Doc. 148.)
Following a five-day trial, the jury found that MEMORY LANE was a valid protectable mark in which Plaintiff owned rights, but that Plaintiff had not shown a likelihood of confusion among an appreciable number of consumers due to Defendants' use of the mark. (Doc. 196.) As a result, the jury found in favor of Defendants on all three claims. During the trial, Defendants moved for judgment as a matter of law on the grounds that Plaintiff had failed to prove a likelihood of confusion and that no reasonable jury could award damages. (Doc. 178.) The Court denied the motion. (Doc. 191.)
On March 11, 2014, Defendants filed the present Motion, seeking approximately $2.5 million in attorneys' fees and non-taxable costs. (Mot.; Robinson Decl. ¶¶ 41-42, Doc. 217-1.) Many of the arguments made in Defendants' Motion are similar to those made in Defendants' motion for judgment as a matter of law. (Mot.)
III. LEGAL STANDARD
Section 35(a) of the Lanham Act provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). "[A]ttorney's fees under the Lanham Act may also include reasonable costs that the party cannot recover as the prevailing party.'" Secalt S.A. v. Wuxi Shenxi Const. Mach. Co., Ltd ., 668 F.3d 677, 690 (9th Cir. 2012).
In the context of the Patent Act, the Supreme Court recently held that "an exceptional' case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." See Octane Fitness, LLC v. ICON Health & Fitness, Inc ., ___ S.Ct. ___, 2014 WL 1672251, at *5 (Apr. 29, 2014). "District courts may determine whether a case is exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances." Id .
In the context of the Lanham Act, the Ninth Circuit has noted that the line distinguishing exceptional cases from non-exceptional cases "is especially fuzzy where the defendant prevails due to plaintiff's failure of proof." Secalt , 668 F.3d at 687. However, "[a]n action may be considered exceptional [w]hen a plaintiff's case is groundless, unreasonable, vexatious, or pursued in bad faith." Id . (quotation marks omitted; second alteration in original). Fee shifting is not limited to such circumstances, however, and a case may also be considered "exceptional" "if the plaintiff has no reasonable or legal basis to believe in success on the merits." Id .; cf. Octane Fitness , 2014 WL 1672251, at *6 ("[A] case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award." (citing Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant , 771 F.2d 521, 526 (D.C. Cir. 1985) (interpreting Lanham Act))).
Defendants argue that this case is exceptional because Plaintiff's theory of liability was "baseless" and Plaintiff lacked any viable theory of relief. (Mot. at 2, 9.) The Court addresses each argument in turn, and finds that under the ...