Mid-State Aftermarket Body Parts v. Mqvp

• Decision Date: 21 June 2005
• Docket Number: No. 4:03CV00733 JLH.,4:03CV00733 JLH.
• Citation: 373 F.Supp.2d 945
• Parties: MID-STATE AFTERMARKET BODY PARTS, INC., Plaintiff/ Counter-Defendant v. MQVP, INC., f/k/a Global Validators, Inc., Defendant/ Counter-Plaintiff.
• Court: U.S. District Court — Eastern District of Arkansas

373 F.Supp.2d 945

MID-STATE AFTERMARKET BODY PARTS, INC., Plaintiff/ Counter-Defendant v. MQVP, INC., f/k/a Global Validators, Inc., Defendant/ Counter-Plaintiff.

No. 4:03CV00733 JLH.

United States District Court, E.D. Arkansas, Western Division.

June 21, 2005.

Andrew Verne Francis, Attorney at Law, Little Rock, AR, Mark Mitchell Grossman, Grossman Law Offices, Chicago, IL, for Plaintiff.

John R. Elrod, Todd Patrick Lewis, Conner & Winters, P.L.L.C., Fayetteville, AR, Lawrence R. Jordan, Joseph H. Heckendorn, Jaffe, Raitt, Heuer & Weiss, P.C., Michael J. Sullivan, Brian M. Ziff, Moheeb H. Murray, Clark Hill PLC, Detroit, MI, for Defendant.

ORDER

HOLMES, District Judge.

The Court has previously entered summary judgment in favor of Mid-State Aftermarket Body Parts, Inc. ("Mid-State") v. MQVP, Inc., f/k/a Global Validators, Inc. ("MQVP") on Mid-State's complaint and on MQVP's amended counterclaim.¹ As the prevailing party, Mid-State has now filed a petition for attorneys' fees pursuant to 15 U.S.C. § 1117, Fed.R.Civ.P. 54(d)(2), and Local R. 54.1(b) (Docket # 107).

The Lanham Act gives the Court discretion to award reasonable attorneys' fees to a prevailing party in "exceptional cases." 15 U.S.C. § 1117(a); Hartman v. Hallmark Cards, Inc., 833 F.2d 117, 123 (8th Cir.1987). An exceptional case is one in which the action was "groundless, unreasonable, vexatious, or was pursued in bad faith," or in which a party's conduct "went beyond the pale of acceptable conduct." Hartman, 833 F.2d at 123; Aromatique, Inc. v. Gold Seal, Inc., 28 F.3d 863, 877 (8th Cir.1994).

Though this action presented unusual, perhaps unique, legal issues, it was not "exceptional" as that term is defined in reference to the issue of whether to award attorneys' fees under § 1117(a). Mid-State argues that attorneys' fees should be awarded because MQVP's threats of litigation and subsequent seven-count counterclaim were groundless and unreasonable. Throughout deliberation on the parties' cross motions for summary judgment, the Court grappled with the unique facts presented in this case. Constrained by the fact that MQVP had registered its mark as a service mark and not a certification mark, the Court ruled in Mid-State's favor. To do otherwise, in the Court's opinion, would have been to allow MQVP to register its mark as a service mark while enforcing it as a certification mark, which would have disregarded the law that renders those marks mutually exclusive, as well as the distinct statutory requirements imposed on certification mark holders. See J. THOMAS MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION § 19.94 (4th Ed.2004); 15 U.S.C. § 1064(5). The complex legal ramifications of MQVP's initial registration thus compelled the outcome in this case. Despite ruling against MQVP, the Court is satisfied that MQVP's purpose prior to and throughout litigation was to vindicate what MQVP believed were its legal rights. Cf. Standard Terry Mills, Inc. v. Shen Mfg. Co., Inc., 626 F.Supp. 1362, 1364 (E.D.Pa.1986). MQVP hired experienced counsel to register its mark. That attorney applied for registration of the mark as a service mark. The United States Patent and Trademark Office granted that application and registered the mark as a service mark. Mid-State then used the mark and refused to desist after requested by MQVP. Mid-State filed this action, and MQVP counterclaimed to enforce the mark. MQVP's decision to attempt to enforce its mark was not an unreasonable decision; and the attempt would have succeeded had the mark been registered as a certification mark. Mid-State's use of the phrase "MQVP parts" was dubious and weighs against an award of attorneys' fees. Cf. id. at 1363; Lurzer GMBH v. Am. Showcase, Inc., 75 F.Supp.2d 98, 102-03 (S.D.N.Y.1998); Reader's Digest Ass'n, Inc. v. Conservative Digest, Inc., 642 F.Supp. 144, 147 (D.D.C.1986).

The Court also disagrees that MQVP engaged in vexatious conduct that "went beyond the pale of acceptable litigant conduct." Aromatique, 28 F.3d at 877. Mid-State asserts that MQVP: (1) improperly contacted the daughter-in-law of the President of Mid-State, Tom Knoedl, by telephone in an attempt to speak to Knoedl's son and subsequently made a threat that "things will get ugly outside the litigation" if Mid-State did not accept settlement; (2) issued two press releases regarding the lawsuit, one published by email to MQVP participants with a link to select pleadings filed in this lawsuit and the second published in Collision Repair Industry Insight, a weekly email newsletter, containing allegedly false and inflammatory statements intended to coerce Mid-State into joining the MQVP program; (3) violated the Court's protective order by referring to information contained in confidential price lists in its second press release and by designating over 16,000 pages of discovery as confidential in what Mid-State labels a "classic warehouse dump;" and (4) needlessly raised Mid-State's litigation costs by serving non-responsive answers, withholding documents, making unreasonable requests related to the delivery of copies, and failing to specify the legal basis for its infringement claim.

These incidents, individually or collectively, do not make this case "exceptional." The Court previously denied as moot Mid-State's motion for protective order from harassment and intimidation based on the alleged improper contact and alleged threat. See Order dated November 1, 2004 (Docket # 60). In ruling on that motion, the Court did not grant Mid-State's request for attorneys' fees, nor is it inclined to do so at this juncture. The Court did not then and does not now accept Mid-State's characterization of those incidents. The Court also denied Mid-State's motion to compel and entry of protective order regarding the first of the press releases outlined. See Memorandum Opinion dated March 16, 2005 (Docket # 98). Mid-State sought no legal recourse against the second press release until the present motion.

Mid-State cites Aromatique, 28 F.3d at 877-79, and Otis Clapp & Son, Inc. v. Filmore Vitamin Co., 754 F.2d 738, 746-47 (7th Cir.1985), arguing that this case is exceptional because of the inflammatory, misleading statements contained in this second press release. In Aromatique, the plaintiff's attorneys had demanded that the defendant cease infringement of their client's trade dress, improperly asserting that the trade dress was federally registered. 28 F.3d at 867. Judge Morris S. Arnold, speaking for the court on the issue of infringement but not for the court on the issue of attorneys' fees,...