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Amusement Art, LLC v. Life is Beautiful, LLC

United States District Court, C.D. California

May 23, 2017

AMUSEMENT ART, LLC, Plaintiff,
v.
LIFE IS BEAUTIFUL, LLC, et al., Defendants.

          ORDER RE MOTION FOR ATTORNEYS' FEES AND NON-TAXABLE COSTS [DKT. 180]

          DEAN D. PREGERSON, UNITED STATES DISTRICT JUDGE

         Presently before the court is Defendants Life is Beautiful LLC (“LIB”) and Downtown Las Vegas Management LLC's (co llectively “Defendants”) Motion for Attorneys' Fees and Non-Taxable Costs. After reviewing the parties' submissions and hearing oral argument, the court adopts the fo llowing Order.

         I. BACKGROUND

         The court assumes the parties' familiarity with the factual background of this case, which has been set forth in greater detail in the court's summary judgment Order. (See Dkt. 171.) In brief, this case arises out of an intellectual property dispute between Plaintiff Amusement Art and Defendants. Defendant LIB hosts the Life is Beautiful festival in Las Vegas, Nevada-an annual event that features music, art, food, and other programming. When the Life is Beautiful festival was first launched in 2013, one of the logos associated with the event was an image of a heart made of splattered paint. Plaintiff Amusement Art is a company owned by artist Thierry Guetta and his wife Debora Guetta. Amusement Art holds and licenses intellectual property produced by Thierry Guetta. Guetta's first solo art exhibition, held in 2008, was entitled “Life is Beautiful” and Guetta has incorporated that phrase into some of his artwork. Guetta has also previously produced artwork depicting a heart accented by splattered paint design.

         In mid-2013, a common acquaintance introduced LIB to Guetta's business associates and encouraged the two parties to consider possible collaboration. The parties and their business associates engaged in several discussions, including some pertaining to potential intellectual property licensing arrangements with Amusement Art. However, the parties were unable to reach any agreement and Amusement Art ultimately filed the instant suit, asserting claims for trademark infringement, copyright infringement, and various other state and common law claims. (See generally FAC.)

         At issue in this case are Amusement Art's asserted rights to the splashed paint heart design (the “heart design”) and the phrase “Life is Beautiful.” Guetta had registered a copyright for the heart design in 2009 and asserted that Defendants had violated his copyright and trademark rights in the design. (See FAC ¶¶ 20-22.) Between 2011 and 2012, Plaintiffs also filed eight “intent to use” trademark applications with the Patent and Trademark Office (PTO) for the phrase “Life is Beautiful.” (Declaration of Samuel T. Boyd in Support of Motion for Summary Judgment., Exs. 13, 15, 17, 19, 21, 23, 25, & 26.) These applications included Statements of Use, made under penalty of perjury, asserting that AA had actually used the phrase “Life is Beautiful” as a trademark to sell approximately 257 categories of goods within the application classes. (Id., Exs. 14, 16, 18, 20, 22, 24, 27, and 28.) Along with the statements of use, Plaintiff also submitted pictures of various goods with “Life is Beautiful” tags attached to them. In September of 2014, one month before filing this suit, Plaintiff also filed a trademark registration application for the phrase “Life is Beautiful” in the classification for festival and community events. (Id., Ex. 60.)

         After this suit commenced, Defendants determined that a number of the statements of use submitted by Plaintiff were false and that Plaintiff did not actually sell many of the goods for which it obtained trademark registrations. (Id., Ex. 5 (Patrick Guetta Dep.) at 114:14-118:14, 153:1-154:20; Id., Ex. 10 (Debora Guetta Dep.) at 75:21-77:10, 77:17-80:15.) Defendants notified Plaintiff that they intended to seek cancellation of the trademarks on the basis of fraud on the trademark office. (Id., Ex. 39.) Plaintiff then voluntarily surrendered eight of the trademark registrations but retained the 2014 registration in connection with festivals and art events. (Id., Ex. 33)

         On July 5, 2016, Defendants filed Motions for Summary Judgment as to all of Plaintiff's claims and Defendants' counterclaims for cancellation, which the court granted in full. (See Dkt. 171.) As to Plaintiff's trademark claims regarding the phrase “Life is Beautiful, ” the court found that the doctrine of unclean hands barred Plaintiff's suit because Plaintiff secured eight of the nine relevant trademark registrations by making fraudulent statements before the PTO. As to the heart design, the court found that Defendants were entitled to summary judgment on the trademark claim because Plaintiff's own 30(b)(6) representative acknowledged that the design did not function as Plaintiff's trademark and also because the evidence failed to create a triable issue of fact was to the validity and protectability of the mark. Finally, the court granted summary judgment to Defendants on the heart design copyright claim on the ground that no rational jury could find the two images were “virtually identical, ” as is required when asserting a copyright claim based on a ubiquitous image such as a heart design.

         Defendants now move for attorneys' fees and non-taxable costs in the amount of $1, 968, 100.34.

         II. LEGAL STANDARD

         The Lanham Act permits courts to award reasonable attorneys' fees in trademark cases only in “exceptional cases.” 15 U.S.C. § 1117(a). Historically, a case was considered exceptional only when a plaintiff had shown that a defendant engaged in “malicious, fraudulent, deliberate or willful” infringement. Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1409 (9th Cir. 1993). In Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749 (2014), however, the Supreme Court held that an analogous standard under the Patent Act was “unduly rigid and impermissibly encumber[ed] the statutory grant of discretion to district courts.” Id. at 1755. Instead, the Court explained 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.” Id. at 1756. Since Octane Fitness, the Ninth Circuit has clarified that “district courts analyzing a request for fees under the Lanham Act should examine the ‘totality of the circumstances' to determine if the case was exceptional.” SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1181 (9th Cir. 2016) (quoting Octane Fitness, 134 S.Ct. at 1756). Under the “totality of the circumstances” approach, district courts may consider a “‘nonexclusive' list of ‘factors, ' including ‘frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances 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)). The burden of proof for establishing an entitlement to fees is preponderance of the evidence.

         Section 505 of the Copyright Act allows district courts judicial discretion to award attorneys' fees to the prevailing party in a copyright action. 17 U.S.C § 505. In exercising this discretion, the Ninth Circuit has directed courts to consider non-exclusive factors similar to ones that now govern fee awards under the Lanham Act: “‘the degree of success obtained; frivolousness; motivation; objective unreasonableness . . . and the need in 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).

         III. DISCUSSION

         A. Entitlement to Attorneys' Fees

         The threshold question raised by Defendants' motion is whether Defendants should be awarded any fees at all under the Lanham Act or the Copyright Act. As noted above, Plaintiff's Lanham Act claims pertain to the alleged infringement of the “Life is Beautiful” mark and the heart design mark and Plaintiff's copyright claim pertains only to the heart design.

         1. Lanham Act claims

         Defendant argues that the weakness of Plaintiff's claims, the substantive unreasonableness of Plaintiff's position, Plaintiff's litigation strategy, and the need to deter similar actions all counsel in favor of awarding fees incurred in connection with defending the infringement allegations pertaining to both the “Life is Beautiful” mark and the “splashed heart” mark. As to the “Life is Beautiful” claim in particular, Defendants also urge the court to award fees on the ground that Plaintiff's action was premised on fraudulent misstatements.

         Under both the historical test for “exceptional cases, ” see Lindy Pen, 982 F.2d at 1409, and the more relaxed standards of Octane Fitness, see 134 S.Ct. at 1756, a party's motivation or “fraudulent” conduct is archetypal conduct that warrants fee-shifting under the Lanham Act. See S. Rep. No. 1400 (1974), as reprinted in 1974 U.S.C.C.A.N. 7132, 7136 (“It would be unconscionable not to provide a complete remedy including attorney's fees for acts which the courts have characterized as . . . fraudulent.”). Accordingly, courts have routinely found that cases where a Plaintiff engaged in fraud on the trademark office are “exceptional” under the Lanham Act. See, e.g., On Site Energy Co. v. MTU Onsite Energy Corp., No. 10-cv-1671 JS (WDW), 2013 WL 3990919, at *10 (E.D.N.Y. Aug. 2, 2013) (holding that where a “jury definitively held that Plaintiff had obtained registration . . . by fraud . . . [t]his, alone, merit[ed] a finding that this is an exceptional case entitling Defendant to attorneys' fees”); Firehouse Rest. Grp., Inc. v. Scurmont LLC, No. 4:09-cv-00618-RBH, 2011 WL 4943889, at *11 (D.S.C. Oct. 17, 2011) (“the jury's verdict, finding that [plaintiff] committed fraud on the USPTO, renders this case ‘exceptional'”). Defendants ask the court to make a similar finding here.

         In light of the extent of Plaintiff's fraudulent conduct in this case, the court finds that Defendants are entitled to recover attorneys' fees incurred in connection with defending the trademark infringement claims arising from the “Life is Beautiful” mark. As Defendants note, these particular infringement claims were initially based on eight fraudulently-obtained registrations where Defendants claimed the use of the “Life is Beautiful” mark in connection with 257 categories of goods. (Mot. 10.) Plaintiff obtained these registrations by staging photographs and submitting false declarations about using the mark in commerce on goods that they later admitted were never sold. (Id.) Plaintiff responds that court's prior determination that Plaintiff had engaged in fraudulent conduct should not automatically entitle Defendants to attorneys' fees. Specifically, Plaintiff notes that they surrendered the eight fraudulently-obtained registrations and that the infringement claims was ultimately premised on a ninth registration that was not fraudulently-obtained. (Opp'n 10-11.) This effort to minimize the relevance of the fraud does not alter the exceptional nature of this case. As the court explained in its summary judgment Order, Plaintiff attempted to fraudulently “secure a monopoly over most plausible uses of the phrase ‘Life is Beautiful' without actually investing any resources into developing the goodwill of their ...


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