Pocket Plus, L.L.C. v. Runner's High, LLC

Decision Date11 January 2022
Docket Number21-CV-4-CJW-MAR
Citation579 F.Supp.3d 1082
Parties POCKET PLUS, L.L.C., Plaintiff, v. RUNNER'S HIGH, LLC, d/b/a Running Buddy, Defendant.
CourtU.S. District Court — Northern District of Iowa

Timothy J. Zarley, Zarley Law Firm PLC, Des Moines, IA, for Plaintiff.

Christine Lebron-Dykeman, Glenn L. Johnson, Michael C. Gilchrist, McKee Voorhees & Sease PLC, Des Moines, IA, for Defendant.

ORDER

C.J. Williams, United States District Judge

I. INTRODUCTION

This matter is before the Court on defendant's motion for attorney fees of $120,7751 (Doc. 65) after the Court granted defendant's motion for summary judgment (Doc. 60).2 Plaintiff timely resisted the motion for attorney fees. (Doc. 72). Defendant filed a reply. (Doc. 74). The Court examined parties' motions and heard oral argument. (Doc. 77). For the following reasons, the Court grants in part defendant's motion by awarding $25,103.75 in attorney fees.

In its discussion, the Court incorporates the factual and procedural background as described in its order granting summary judgment. (Doc. 60). Additional relevant facts are discussed as necessary.

II. DISCUSSION

The Lanham Act permits courts to award attorney fees to "the prevailing party" in "exceptional" cases. 15 U.S.C. § 1117(a). Neither party disputes that defendant is the prevailing party. (Docs. 72, at 5; 74, at 1). But the parties do dispute the legal definition of "exceptional" cases, its application to this case, equitable considerations, and the amount of fees awarded.

The Court finds that this is an "exceptional" case that merits an award of attorney fees due to (1) the substantive strength of the parties' litigating position in view of the facts of the case and (2) plaintiff's unreasonable behavior. Nevertheless, the Court exercises its equitable discretion to reduce the amount awarded to a quarter of the fees requested, because the factors that made this case "exceptional" affect a small fraction of the dispute. In calculating the fees awarded, the Court also reduces the reasonable hourly billing rate, and eliminates some of the hours charged.

A. Defining "Exceptional" Cases

The Court turns first to the definition of an "exceptional" case. An "exceptional" case stands out from others with respect to (1) the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or (2) the unreasonable manner in which the case was litigated. Octane Fitness, LLC v. ICON Health & Fitness, Inc. , 572 U.S. 545, 554, 134 S.Ct. 1749, 188 L.Ed.2d 816 (2014) (applying similar language to the patent statutes); Safeway Transit LLC v. Disc. Party Bus, Inc. , 954 F.3d 1171, 1182 (8th Cir. 2020) (applying the Octane Fitness analysis to Lanham Act claims); Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc. , 908 F.3d 313, 346 (8th Cir. 2018).

District courts may determine whether a case is "exceptional" in the case-by-case exercise of their discretion, considering the totality of the circumstances. Octane Fitness , 572 U.S. at 554, 134 S.Ct. 1749. They 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." Id. at n.6 (citations omitted). Courts need not find the conduct independently sanctionable to find it exceptional. Id. at 555, 134 S.Ct. 1749 ; Safeway Transit , 954 F.3d at 1182–83. But, a case that presents "either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases" to warrant a fee award. Octane Fitness , 572 U.S. at 555, 134 S.Ct. 1749. Courts may award attorney fees "where a [party's] unlawful conduct was willful and deliberate." Safeway Transit , 954 F.3d at 1182–83 (citing First Nat'l Bank in Sioux Falls v. First Nat'l Bank S.D. , 679 F.3d 763, 771 (8th Cir. 2012) (internal quotations omitted)). Even so, courts may decline to award attorney fees in exceptional cases based on the behavior of the prevailing party. Safeway Transit , 954 F.3d at 1183.

Though the Eighth Circuit has not said so, the Federal Circuit has stated repeatedly that district courts may find that a case is "exceptional" based on an examination of an issue "that was neither fully adjudicated nor even fully litigated before the judgment on the merits." Thermolife Int'l LLC v. GNC Corp. , 922 F.3d 1347, 1356–57 (Fed. Cir. 2019). But it is unusual for courts to do so, and courts have "wide latitude ... to refuse to add to the burdens of litigation by opening up issues that have not been litigated but are asserted as bases for a fee award." Thermolife Int'l , 922 F.3d at 1357 (emphasis in original) (citing Spineology, Inc. v. Wright Med. Tech., Inc. , 910 F.3d 1227, 1230 (Fed. Cir. 2018) ). A court's finding that a case is "exceptional" due to non-litigated issues may be entitled to less deference, because "one stated rationale for deference—the district court's distinctive familiarity with the issues relevant to fees due to its extensive work on the merits of the case—is weaker when the award of fees rests on a basis not meaningfully considered before fees were sought after the merits were resolved." Id. A court may need to provide "a fuller explanation" of its assessment of a litigant's position when "[it] focuses on a freshly considered issue than one that has already been fully litigated." Id. In addition, more due process may be needed "when the issue presented as a basis for fees has not previously been litigated." Id.3

In light of Octane Fitness , the Court rejects plaintiff's definition of "exceptional" as requiring "particularly egregious conduct such as bad faith, asserting frivolous claims, or repeatedly engaging in wasteful or irresponsible litigation tactics." (Doc. 72, at 5-6) (collecting cases from D.C. Cir. in 1985, 9th Cir. in 2008 and 2018, 11th Cir. in 2018 and 2020, 3d Cir. in 2009, N.D. Ill. in 1996, S.D.N.Y. in 1999). The Court also rejects plaintiff's assertion that arguable merit on both sides precludes a case from being "exceptional" and that a case is "exceptional" when it was "groundless, unreasonable, vexatious, or was pursued in bad faith." (Doc. 72, at 10) (citing B&B Hardware, Inc. v. Hargis Indus., Inc. , 912 F.3d 445, 454 (8th Cir. 2018) ).

To the extent that plaintiff argues that "exceptional" cases require nothing less than B&B Hardware 's requirement of being "groundless, unreasonable, vexatious, or [ ] pursued in bad faith[,]" the Supreme Court overruled those requirements in Octane Fitness .4 See Octane Fitness , 572 U.S. at 555, 134 S.Ct. 1749. In fashioning its new definition for "exceptional," the Supreme Court considered and expressly overruled the Federal Circuit's test as set out in Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc. , 393 F.3d 1378, 1382 (Fed. Cir. 2005). Specifically, the Supreme Court overruled the requirement for a "vexatious" and "bad faith" showing. Id. at 555, 134 S.Ct. 1749. The Supreme Court also overruled a requirement that the litigation be "objectively baseless," defined as "so unreasonable that no reasonable litigant could believe it would succeed." Id. at 550–51, 134 S.Ct. 1749 (2014). The Court finds that this "objectively baseless" requirement matches B&B Hardware 's requirement that the litigation be "groundless." B&B Hardware 's definition of "exceptional" thus relied on elements already overruled by the Supreme Court.5

B&B Hardware 's definition also does not match other post- Octane Fitness cases in this Circuit. See, e.g., Sturgis Motorcycle Rally, Inc. , 908 F.3d at 346 (evaluating whether a case was "exceptional" with respect to either the substantive strength of a litigating position or the unreasonable manner in which the case was litigated); Safeway Transit , 954 F.3d at 1182–83 (same); SnugglyCat, Inc. v. Opfer Commc'ns, Inc. , 953 F.3d 522, 527 (8th Cir. 2020) (same).

For these reasons, the Court concludes that B&B Hardware 's definition of "exceptional" is not good law. Thus, a case need not be "groundless, unreasonable, vexatious" or "pursued in bad faith," to be "exceptional." B&B Hardware , 912 F.3d at 454. Instead, it need only stand out with respect to the substantive strength of the litigating positions or by unreasonable litigation behavior. Octane Fitness , 572 U.S. at 554, 134 S.Ct. 1749.

B. Unreasonable Conduct

Plaintiff's unreasonable conduct in litigating this case makes this an "exceptional" case that merits attorney fees. That conduct is enough to decide this motion. Before litigation, plaintiff demanded that defendant avoid infringing on their trade dress without specifying the elements of that trade dress. Then, during litigation, plaintiff changed the elements of its trade dress.

First, plaintiff acted unreasonably when it filed the cease-and-desist letters without a description of its trade dress; it is difficult for the Court to see how a cease-and-desist letter is proper or effective when it does not name the elements of the trade dress infringed. The May 4, 2018 letter specified only that plaintiff had "inherently distinctive trade dress" in products like the PocketPlus, and that defendant introduced a new product "worn on one's belt/waist" that was similar to plaintiff's trade dress. (Doc. 70-5). At best defendant could infer that plaintiff claimed a trade dress in "being worn over the waist," but that is an unreasonably broad trade dress. Similarly, plaintiff's September 8, 2020 letter demanded that defendant cease and desist from practicing the "protected trade dress" without specifying the trade dress. (Doc. 70-6, at 2). Likewise, plaintiff's November 2, 2020 letter stated that the trade dress rights "includes the vertical profile," but did not specify any other trade dress element. (Doc. 70-7, at 2). In sum, these letters unreasonably demanded that defendant cease and desist from infringing...

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    ...2015) ; Fair Wind Sailing, Inc. v. Dempster , 764 F.3d 303, 314–15 (3d Cir. 2014) ; Pocket Plus, L.L.C. v. Runner's High, LLC , No. 21-CV-4-CJW-MAR, 579 F.Supp.3d 1082, 1087 (N.D. Iowa Jan. 11, 2022) ("In light of Octane Fitness , the Court rejects plaintiff's definition of ‘exceptional’ as......

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