J & J Snack Foods, Corp. v. EarthGrains Co., Civil Action No. 00-6230 (JBS) (D. N.J. 5/9/2003)
| Decision Date | 09 May 2003 |
| Docket Number | Civil Action No. 00-6230 (JBS) |
| Parties | J & J SNACK FOODS, CORP., Plaintiff, v. THE EARTHGRAINS CO., EARTHGRAINS BAKING COMPANIES, INC., and EARTHGRAINS REFRIGERATED DOUGH PRODUCTS, L.P., Defendants. |
| Court | U.S. District Court — District of New Jersey |
William C. Mead, Jr., Esquire, A. Fred Ruttenberg, Esquire, BLANK ROME COMISKY & MCCAULEY LLP, Cherry Hill, New Jersey, Counsel for Plaintiff.
Donald A. Robinson, Esquire, ROBINSON & LIVELLI, Newark, New Jersey, and Richard Lehv, Esquire, Tamar Niv Bessinger, Esquire, Jessica Mann, Esquire, FROSS, ZELNICK, LEHRMAN & ZISSU, P.C., New York, New York, Attorneys for Defendants The Earthgrains Co. (now known as Sara Lee Baking Group, Inc.), Earthgrains Baking Companies, Inc., and Earthgrains Refrigerated Dough Products, L.P.
Under section 35(a) of the Lanham Act, 15 U.S.C. §1117(a), the district court has authority to award attorneys's fees to the prevailing party in certain trademark cases, but only if the case is an "exceptional" case. The prevailing defendants in this trademark infringement and unfair competition case about the use of the "BREAK & BAKE" mark on premade cookie dough have filed the present motion for attorneys' fees and costs pursuant to section 35(a), seeking $263,938.56 in fees and $ 74,269.09 in costs for a total of $338,207.65. They argue that this case was "exceptional" because plaintiff pursued the action when it was clear that its position lacked merit, so they are entitled to fees and costs. This argument requires the Court to determine (1) whether defendants are entitled to attorneys fees because this case was exceptional and (2) whether section 35(a) of the Lanham Act allows an award of costs to prevailing defendants.
The Court has considered the submissions of the parties and has decided that the case, though not exceptional when filed, became exceptional on November 29, 2001. By that time, plaintiff had received this Court's lengthy preliminary injunction opinion of June 27, 20011 that outlined what evidence was necessary for its success on the merits, and plaintiff had obtained its expert report which was devoid of the necessary evidence under the uncontroverted legal standard, yet continued its action. Pursuant to section 35(a), the Court will award defendants $89,600.00 in attorneys' fees for reasonable amounts incurred after the case became exceptional on November 29, 2001. The Court will not award costs, finding that the statute restricts such an award to prevailing plaintiffs.
J & J Snack Foods ("J & J") filed its complaint on December 26, 2000, alleging that defendants, The Earthgrains Co., Earthgrains Baking Companies, Inc., and Earthgrains Refrigerated Dough Products, L.P., ("Earthgrains")2 were infringing its "BREAK & BAKE" trademark by marketing their refrigerated cookie dough as "Break 'n Bake Style" cookies. The extensive factual background of the case has previously been detailed in two published opinions and will not be recounted in full here.3 See J & J Snack Foods Corp. v. The Earthgrains Co., 220 F. Supp. 2d 358 (D.N.J. 2002); J & J Snack Foods Corp. v. The Earthgrains Co., 149 F. Supp. 2d 136 (D.N.J. 2001). The Court will detail the procedural history of the case as pertinent to this motion.
Plaintiff J & J filed this suit based on its trademark right to the use of the "BREAK & BAKE" mark on its frozen cookie dough which it packaged as a sheet of twenty-four round disks of dough that the consumer could "[b]reak apart . . . and bake for delicious cookies."4 The suit was filed when Earthgrains marketed refrigerated cookie dough labeled as "Break 'n Bake Style" that was packaged in a rectangular sheet of dough which was partially scored to form twenty dough cubes.
Plaintiff requested preliminary injunctive relief to enjoin the use of the "BREAK & BAKE" mark. On June 27, 2001, this Court denied the preliminary injunction motion and issued lengthy findings of facts and conclusions of law. Most of the opinion, published as J & J Snack Foods Corp. v. The Earthgrains Co., 149 F. Supp. 2d 136 (D.N.J. 2001), explained the Court's finding that plaintiff was not likely to succeed on the merits of its claims. The Court spelled out the requirements for Lanham Act trademark protection and detailed what plaintiff needed to prove to establish a viable infringement case.5
The Court found that it was unlikely that plaintiff would be able to show that its mark warranted trademark protection because it had not presented evidence that could establish that its mark should be classified as a suggestive mark6 and because it had not shown that its mark, if classified as a descriptive mark,7 had developed a secondary meaning with the consuming public.8 The Court also explained that the mark, even if it was suggestive or descriptive with secondary meaning, was likely still not protectable because plaintiff had not shown anything to indicate that there was a likelihood of confusion between its product and defendants' product.9 Id. at 154-57.
On April 3, 2002, Earthgrains filed a motion for summary judgment. The only difference in plaintiff's case between the preliminary injunction motion and the summary judgment motion was an October 12, 2001 survey of Michael Rappeport, Ph.D. and the accompanying November 28, 2001 deposition testimony of Dr. Rappeport. J & J Snack II, 220 F. Supp. 2d at 361. Dr. Rappeport's survey "suffer[ed] from substantial flaws" and the Court found that it was unreliable and inadmissible. Id. at 372. It failed to properly define suggestive and descriptive marks, even though it was submitted as evidence of the suggestive nature of the "BREAK & BAKE" mark,10 and it did not attempt to replicate the market conditions of the J & J product.11 Id. at 370-71.
After finding the Rappeport survey inadmissible, the Court considered a record that corresponded almost exactly to the record it considered for the preliminary injunction motion; the only difference was some additional evidence submitted by defendants. The Court granted the motion and entered summary judgment for defendants, finding that the "BREAK & BAKE" mark is a descriptive mark with no secondary meaning and that the plaintiffs had not established likelihood of confusion because of the use of the mark on the parties' products. Id. at 380-81.
Defendants then filed the present motion seeking an award of attorneys' fees and costs as a prevailing party pursuant to section 35(a) of the Lanham Act.
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) (emphasis added), and provides that a prevailing "plaintiff shall be entitled . . . to recover . . . the costs of the action." Here, defendants are unquestionably the prevailing party as they were granted summary judgment on all of plaintiff's claims. The two principal issues presented on this motion, therefore, are (A) whether this case was an "exceptional case" that justifies an award of attorneys' fees under the Lanham Act to defendant as the prevailing party, and (B) whether a prevailing defendant is entitled to recover the costs of the action under section 35(a) when it specifically refers to prevailing plaintiffs.
To determine an appropriate award of attorneys fees under section 35(a) of the Lanham Act, the Court must determine (1) whether the case was an exceptional case for which fees are warranted, and (2) if it was exceptional, whether defendants' proposed fees are reasonable and should be awarded.
The Court may only award fees in a Lanham Act case if the case was "exceptional." 15 U.S.C. §1117(a). When the prevailing party is the plaintiff, federal courts, including the Third Circuit, have consistently held that "a district court must make a finding of culpable conduct on the part of the losing party, such as bad faith, fraud, malice, or knowing infringement, before a case qualifies as `exceptional.'" Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44, 47 (3d Cir. 1991).12 The culpable conduct warranting a fee award generally, though not always, involves the willful infringement of a defendant who deliberately attempted to pass off its goods as those of the plaintiff "in order to free ride on the good will built up by the plaintiff." Id. at 49.
However, when the prevailing party is the defendant, as in the present case, the culpable conduct must encompass more than willful infringement because the losing party, the plaintiff, was never accused of any infringement.13 Securacomm Consulting, Inc. v. Securacom Inc., 224 F.3d 273, 280 (3d Cir. 2000). Therefore, when the defendant is the prevailing party, the "culpable conduct will necessarily center on the act of filing the lawsuit" and on the plaintiff's "litigation conduct." Id. at 280-81. Whether the case "qualifies as exceptional ultimately turns on consideration of the equities in full." Id.
Whether the suit is, or is not, exceptional requires a factual determination by the district court because every suit that a plaintiff loses is not "exceptional."14 The court should consider both the objective merits of plaintiff's action (whether it was unjustified,15 groundless,16 or frivolous17) and the plaintiff's subjective conduct throughout the litigation (whether vexatious18 or involving other misconduct19). Id. at 282. The plaintiff does not need to have acted in bad faith for defendant to be awarded fees, though bad faith is an appropriate factor to consider in making the determination. Cairns, 292 F.3d at 1156; S Indus., 249 F.3d at 627; Door Sys., 126 F.3d at 1032. But see Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 194-95 (2d Cir. 1996) ().
The court must focus on the equities of the case when making its decision. For example, it was "exceptional" when the plaintiff...
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