Opinion
No. 21-CV-4-CJW-MAR
2022-01-11
POCKET PLUS, L.L.C., Plaintiff, v. RUNNER'S HIGH, LLC, d/b/a Running Buddy, Defendant.
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.
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 $120,775 (Doc. 65) after the Court granted defendant's motion for summary judgment (Doc. 60). 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.
Defendant originally asserted in its brief that reasonable attorney fees totaled at least $132,167.25, (Doc. 70, at 6), but later noted that it had "inadvertently included" in that amount "fees for which recovery is not sought." (Doc. 74, at n.6).
Plaintiff has filed a notice of appeal. (Doc. 63). Nevertheless, a court may rule on a motion for award of attorney fees even when the case is pending appeal. Obin v. Dist. No. 9 of Int'l Ass'n of Machinists & Aerospace Workers , 651 F.2d 574, 584 (8th Cir. 1981).
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.
The requirement for additional due process has been satisfied here, as the Court held a hearing on this motion, both parties had opportunity to resist and reply to arguments in this motion, and no party made concrete or persuasive arguments for denial of more discovery. Thermolife Int'l , 922 F.3d at 1357.
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 . 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.
Defendant erroneously asserts that preOctane Eighth Circuit precedent has been abrogated. Although other circuit courts have officially recognized such precedent as abrogated, Tobinick v. Novella , 884 F.3d 1110, 1118 (11th Cir. 2018) ; SunEarth, Inc. v. Sun Earth Solar Power Co., Ltd. , 839 F.3d 1179 (9th Cir. 2016), the Eighth Circuit has not expressly done so.
The Court notes that B&B Hardware 's reliance on "unreasonable" survives and is supported by Octane Fitness 's "unreasonable litigation behavior" element. See Octane Fitness , 572 U.S. at 555, 134 S.Ct. 1749 (2014).
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 on plaintiff's trade dress without identifying the trade dress asserted.
Second, plaintiff acted unreasonably when it changed the elements of its trade dress between the filing of the amended complaint and the resistance to defendant's motion for summary judgment by adding a specific definition of "vertical profile" as being "at least 1 ¾ inches longer than its width." (Doc. 48, at 8). This change required additional time, argument, and analysis in response. Although leave to amend a pleading should be given freely when justice so requires, justice does not require a purportedly infringed party to change the definition and scope of its intellectual property five months after its first amended complaint for infringement of that intellectual property. (Docs. 8, 48). See FED. R. CIV. PRO. 15(a)(2).
The Court does not consider the changes to the trade dress in the cease-and-desist letters, as those letters predated the litigation in arriving at the amount of attorney fees, but does consider it as context for plaintiff's continued unreasonable alteration of its trade dress in litigation over defendant's motion for summary judgment. Nor does it consider the changes to the trade dress between the complaint and the amended complaint. Rule 15(a)(1)(B) permits the party to amend its complaint once as a matter of course within 21 days after service of a required responsive pleading or a particular motion. Fed. R. Civ. Pro. 15(a)(1)(B). Here, defendant did not file a responsive pleading until March 31, 2021. (Doc. 8). Thus, plaintiff was free to amend its complaint before that date.
Plaintiff's asserted reason for the change—to clarify that " ‘vertical profile’ meant something that actually looked vertical , not something that requires a consumer to pull out a tape measure to confirm it"—does not make this conduct any more reasonable. (Doc. 72, at 19). That rationale does not support the specific measurement that plaintiff used. By specifying that one side is "1 ¾ inches longer" than the other, plaintiff opened itself to the suggestion that it adjusted its definition to remain distinctive next to pockets where one side is less than "1 ¾ inches longer" than the other.
At oral argument on defendant's motion for attorney fees, plaintiff raised for the first time that it made a settlement offer to defendant during litigation. Neither party raised this settlement offer in their briefs. Thus, the Court will not consider it here.
Nevertheless, the Court does not find plaintiff's other challenged behavior to be "exceptional." Plaintiff's sporadic cease-and-desist letters did not pose a cloud of litigation, (Doc. 70, at 6), though defendant hardly "snivels" in saying so (Doc. 72, at 16). The Court also does not find plaintiff's statement that there was "no alternative but protracted and expensive litigation" to be anything more than acceptable posturing. (Doc. 70, at 22). Nor does the Court find plaintiff's motion for a stay to be reasonable. (Id. ).
C. Substantive Strength of Parties' Litigating Position
The next question, then, is whether this case is "exceptional" due to "the substantive strength" of the parties' litigating position "considering both the governing law and the facts of the case[ ]." Octane Fitness , 572 U.S. at 554, 134 S.Ct. 1749. "A party's position on issues of law ultimately need not be correct for them to not ‘stand[ ] out,’ or be found reasonable." SFA Sys., LLC v. Newegg Inc. , 793 F.3d 1344, 1348 (Fed. Cir. 2015) (citation omitted) (brackets original). The Court finds that this case is "exceptional" because it is objectively unreasonable on the facts, but not on the governing law.
1. Facts
Several facts make plaintiff's litigating position objectively unreasonable: 1) plaintiff's changing trade dress, 2) the Nite Ize Clip Case Cargo holster's long-time presence in the market, and 3) that plaintiff had not sold the trade dress exclusively long enough to earn the presumption of acquired distinctiveness.
First, the specific elements of plaintiff's trade dress proved to be a moving target. As defendant notes, (Doc. 74, at 5), plaintiff changed the elements of its purported trade dress during the course of the litigation. Plaintiff initially described a portable pocket worn externally on a person's clothing, with magnetic attachment mechanisms, and in a vertical profile. (Doc. 1, at 3). Plaintiff later amended the complaint to drop the magnetic attachment mechanism, and to otherwise recite a trade dress that includes a portable pocket worn externally on a person's clothing, over the hip waistband, having a vertical profile, including a label less than a square inch, and including an illustration and photograph that emphasizes the vertical profile and use on one's hip. (Doc. 5, at 3). Then, in its resistance to defendant's motion for summary judgment, (Doc. 48, at 8–9), plaintiff redefined the original "vertical profile" requirement to one "defined by a pocket having length that is at least 1 ¾ inches longer than its width." (Doc. 48, at 8).
In addition to the unreasonable behavior concerns identified above, the Court finds that this change in elements made plaintiff's case objectively unreasonable; it stands out from other cases in being meritless, and is thus "exceptional." It is objectively unreasonable to expect a factfinder to decide whether a trade dress is distinctive and nonfunctional, and thus deserving of protection, if the asserting party cannot settle on the elements of the appearance that make up the product's signature look. See, e.g., Regal Jewelry Co. v. Kingsbridge Int'l Inc. , 999 F. Supp. 477, 487 (S.D.N.Y. 1998) ("The diverging opinions put forth by plaintiff regarding the limits of its own trade dress undermine its burden to articulate an identifiable trade dress deserving of blanket protection.").
Second, the record directly contradicted plaintiff's claim of distinctiveness. The Nite Ize Clip Case Cargo holster incorporated every element of plaintiff's current trade dress years before plaintiff filed its complaint. (Doc. 60, at 20). In relevant part, the record directly contradicted plaintiff's argument that the Nite Ize Clip Case Cargo holster did not attach "over the waistband[.]" (Docs. 48, at 31; 18-2, at 55). It also directly contradicted plaintiff's argument that the Nite Ize Clip Case Cargo holster did not include an illustration emphasizing a vertical profile or use on one's hip. (Id. ).
Despite plaintiff's contention, (Doc. 72, at 13), the Court found that Nite Ize Clip Case Cargo did include that element of the trade dress. (Doc. 60, at 21).
Third, the record directly contradicted plaintiff's assertion that its trade dress should be presumed distinctive due to its continuous use since 2008. As the Court found previously, for purposes of the Lanham Act, plaintiff did not use the trade dress "in commerce"—that is by selling or transporting the goods in commerce—until 2009. (Doc. 60, at 26). The Court found, based on that contradiction, that plaintiff was not entitled to the presumption of distinctiveness that it claimed. (Id. ).
2. Governing Law
The governing law itself, though, did not make plaintiff's case meritless.
Plaintiff argues that the lack of clarity in precedent shows that this case is not "exceptional" for substantive strength under the governing law. (Doc. 72, at 6). Without revisiting the merits of its decision or opining on the clarity of precedent, the Court notes that plaintiff's legal support for its case was weak, but not so weak as to be "exceptional."
The Court notes that it did comport with precedent in relying upon a single feature of plaintiff's trade dress, contrary to plaintiff's assertion. Frosty Treats, Inc. v. Sony Comput. Entm't Am., Inc. , 426 F.3d 1001, 1007 (8th Cir. 2005) (examining the functionality of "a product feature[.]") (citing TrafFix Devices, Inc. v. Marketing Displays, Inc. , 532 U.S. 23, 32, 121 S.Ct. 1255, 149 L.Ed.2d 164 (2001) ). In particular, the TrafFix Court held that the party asserting trade dress has the burden to establish the nonfunctionality of alleged trade dress features, treated the term "trade dress feature" and "product feature" interchangeably, and then discussed the test for when "a product feature" was functional. TrafFix Devices, Inc. , 532 U.S. at 32, 121 S.Ct. 1255.
Defendant argues that the litigating positions make this an exceptional case by reciting the weaknesses of plaintiff's purported legal case. (Doc. 70, at 8–18). But these are not arguments for why this case is "exceptional" due to the substantive strength of the litigating position due to the governing law. As noted above, in other circuits, a party's position on issues of law ultimately need not be correct for a court to find that those positions are reasonable or that they do not stand out from other cases. SFA Sys. , 793 F.3d at 1348.
Defendant also argues that plaintiff's case is exceptionally weak because plaintiff failed to plead non-functionality as required. (Docs. 70, at 11; 5, at 2). But although defendant raised this argument in its answer, (Doc. 8, at 2), it never raised this argument in its motion for summary judgment (Doc. 21, at 24) nor in its reply brief (Doc. 53). As this is a new issue not raised at the summary judgment stage, the Court declines to consider it on the merits at this stage. As noted above, a district court may find that a case is "exceptional" due to issues that the court did not consider in the final judgment. Thermolife Int'l , 922 F.3d at 1357. Nevertheless, the Court retains discretion to not do so, and considerations of deference and due process may weigh against so considering. Id.
Defendant also asserts that Ms. Doyle's deposition testimony shows that its trade dress claim was objectively meritless as to each asserted feature, and to the totality of the asserted features. (Doc. 70, at 21). Again, the Court finds this to be evidence that makes plaintiff's case weak, but not exceptionally weak.
As plaintiff notes, (Doc. 72, at 18–19), defendant's argument that Ms. Doyle admitted to other companies selling products "incorporating most, if not all, of the claimed trade dress features" does not bear on the question of exclusivity. (Doc. 70, at 13).
The Court does not reach defendant's challenge to the Court's finding that, taking all evidence in the light most favorable to the plaintiff, circumstantial evidence suggests that Running Buddy intentionally copied the POCKET PLUS. (Doc. 70, at 14–15). The Court's analysis of distinctiveness did not turn on that finding. And, the merits of the Court's finding are better suited for appellate review, not for post-final reopening.
Nor does the Court reach defendant's arguments that plaintiff could not show likelihood of confusion, because those issues and that analysis were never before the Court until this motion. (Doc. 70, at 15). Though the Court is not barred from considering these questions, the Court finds it inappropriate to decide them, unbriefed, at this stage. Thermolife Int'l , 922 F.3d at 1357. Likewise with defendant's argument that even if functionality precedent was unclear, plaintiff's trade dress was functional under the most lenient of the standards applied by the Eighth Circuit. (Doc. 74, at 5). Finality suggests that the Court should not re-open its functionality analysis to determine whether plaintiff would have lost under other proffered tests. Again, that is a question for appellate review.
The Court also notes that because it has already found plaintiff's substantive legal position exceptionally weak due to the above facts, it does not reach plaintiff's new legal argument that its trade dress was still substantially exclusive even if not perfectly exclusive due to the lack of similarity of the trade dress or the use and promotion of the third party trade dress, based on a citation to Lovely Skin, Inc. v. Ishtar Skin Care Products, Inc. , 745 F.3d 877, 886 (8th Cir. 2014). (Doc. 72, at 12–14). The issue of whether the trade dress was substantially exclusive even if not perfectly exclusive, in light of those factors, was not raised until now. Thermolife Int'l , 922 F.3d at 1357. In its resistance to summary judgment, plaintiff emphasized that the trade dress was "substantially exclusive" solely because no other third party entity "adopted the entirety of Pocket Plus's trade dress." (Doc. 48, at 30). Plaintiff did not raise the issue of whether exclusivity also depends on the similarities of the trade dresses or the use and promotion of the third party trade dress. (Doc. 72, at 12). Thus, it would be unusual for the Court to consider this issue at this point. Thermolife Int'l , 922 F.3d at 1357. But even on the merits, the Court would not find applicable plaintiff's offered precedent. Lovely Skin, Inc. , 745 F.3d at 886. That case focused on the evidentiary burden needed to overcome a presumption that registered trademarks were substantially exclusive "at the time of their registration." Id. at 885. Here, plaintiff's trade dress was neither registered nor entitled to that presumption.
D. Equitable Discretion
When the Court finds a case "exceptional," it retains discretion to award attorney fees. Safeway Transit , 954 F.3d at 1183. Under Eighth Circuit precedent, a district court may import equitable concerns and consider the prevailing party's own bad acts when considering attorney fees under the Lanham Act, even though attorney fees themselves are not equitable relief. Id.
It is plausible, but not clear, that the Lanham Act permits importing equitable principles for "reasonable attorney fees." Under that Act, the plaintiff can recover "(1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action" subject to "the principles of equity[.]" But not so with reasonable attorney fees. True, this section grants courts discretion in awarding profits, damages, and reasonable attorney's fees. In relevant part, the Court may award reasonable attorney fees "in exceptional cases." Further, the legislative history equates "exceptional cases" with "discretion." Octane Fitness , 572 U.S. 545, n.2, 134 S.Ct. 1749 (2014). But it is not clear that the "principles of equity" apply to the "discretion" inherent in deciding whether cases are "exceptional." Still, the Eighth Circuit has approved of a district court's reliance on the equitable inquiry in the "exceptional cases" inquiry. Safeway Transit LLC v. Disc. Party Bus, Inc. , 334 F. Supp. 3d 995, 1008 (D. Minn. 2018), aff'd, 954 F.3d 1171 (8th Cir. 2020) ("Because this inquiry is equitable by nature, Safeway's own bad acts may not pass without comment."))
As a preliminary matter, plaintiff refers to "unclean hands" when pointing to defendant's conduct as a reason to deny the motion for attorney fees. (Doc. 72, at 20–21). It is unclear whether plaintiff invokes the doctrine of "unclean hands" or uses that phrase as a rhetorical device. To the extent that plaintiff invokes the doctrine, the Court notes that "unclean hands" does not bar attorney fees. The unclean hands doctrine bars a party that acted inequitably from obtaining any equitable relief. Safeway Transit , 954 F.3d at 1181–82. But the Eighth Circuit has not treated the granting of attorney fees as equitable relief. Id. at 1182. Thus, defendant's purported unclean hands would not bar it from obtaining attorney fees.
To the extent that plaintiff invokes "unclean hands" as a rhetorical device to justify reducing the attorney fees awarded to defendant, however, the Court may consider its arguments. Safeway Transit , 954 F.3d at 1183. Here, plaintiff challenges the defendant's conduct, pointing to four things. Defendant moved to file a false-marking counterclaim but never did. (Doc. 72, at 20). Defendant gave plaintiff notice of a deposition with little time and without consulting plaintiff's counsel. (Id. ). Defendant moved for summary judgment before the deposition and filed a supplemental motion after the deposition. (Id. ). And defendant notified plaintiff that it would file a Rule 11 motion but never did. (Id. , at 21).
Plaintiff asserts that defendant did the above acts solely to improperly pressure plaintiff into settling so that defendant could sell its business. (Id. , at 20–21). Defendant does not dispute that it was trying to move quickly so that the suit would not "delay and potentially void the sale of its business." (Doc. 74, at 8). It does dispute the characterization that this behavior was at all improper.
The Court does not find defendant's moving to, yet failing to, file a false-marking counterclaim objectionable in this context. (Doc. 22). The failure to file appears to be a business decision to simplify the issues litigated and cut the costs of litigation. Further, even if the Court grants leave to amend, the party "may" amend but need not do so. FED. R. CIV. P. 15(a)(2).
Nor does the Court find defendant's quick notice of deposition and quick filing of its motion for summary judgment objectionable. A party can file a motion for summary judgment at any time during discovery. FED. R. CIV. P. 56(b). Further, courts have discretion to permit supplemental pleadings even if the original pleading is defective. FED. R. CIV. P. 15(d).
But the Court disapproves of defendant's unfulfilled threat of Rule 11 sanctions. Defendant told plaintiff that it would file a Rule 11 motion if the case was "not dismissed within twenty-one (21) days." (Doc. 72-1, 1). Nevertheless, after twenty-one days in which plaintiff did not change its behavior, defendant did not move for sanctions. To be sure, this conduct appears out of reach of Rule 11, as these communications are not "presented" to the Court. FED. R. CIV. P. 11(c)(2). Yet, as evidenced by defendant's failure to follow through, this threat appears meritless and intended to harass the other party to dismissing the case or settling. Even so, considering the totality of the circumstances, the Court will award attorney fees, because defendant's failure to follow up on its sanctions threat does not outweigh plaintiff's own unreasonable behavior.
In exercising its equitable discretion, however, the Court awards defendant only one-fourth of the requested fees. This reduction is warranted because defendant needs little compensation for plaintiff's limited unreasonable behavior. For one, plaintiff's changing of its trade dress (Doc. 48), only incurred costs in defendant's later filings, late into this case. Further, plaintiff's failure to specify its trade dress in the cease-and-desist letters did not affect the present defense counsel, because present counsel did not represent defendant at the time of receiving the letters. See, e.g. , (Docs. 70-5, 70-6, 70-7). Last, the Court finds defendant's own unreasonable conduct in threatening a motion for sanctions warrants an equitable reduction in the amount of the attorney fees awarded.
E. Calculating Appropriate Attorney Fees
The starting point in determining the amount of attorney fees is the lodestar figure, which is calculated by multiplying the number of hours reasonably expended by the reasonable hourly rate. Hensley v. Eckerhart , 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983) ; see Fish v. St. Cloud State Univ. , 295 F.3d 849, 851 (8th Cir. 2002). Reasonable hourly rates are calculated according to the rate of similar services by lawyers of reasonably comparable skill, experience, and reputation in the relevant community. See Northeast Iowa Citizens for Clean Water v. Agriprocessors, Inc. , 489 F. Supp.2d 881, 901 (N.D. Iowa 2007). The burden rests with defense counsel to show evidence supporting the "reasonableness of the requested attorney's fees." See Coach, Inc. v. Quinn , No. 8:16-CV-338, 2018 WL 2320642, at *3 (D. Neb. May 22, 2018).
1. Hourly Billing Rates
The Court, through its own knowledge of prevailing community rates and the time required to perform this type of litigation, must decide whether such rates are common in the legal community. See Gilbert v. City of Little Rock , 867 F.2d 1063, 1066-67 (8th Cir. 1989) ("The trial judge should weigh the hours claimed against his own knowledge, experience and expertise of the time required to complete similar activities."). The Court finds that defense counsel are not entitled to their requested rates of $425, $400, and $480, (Doc. 70-15, at 5), because defense counsel, based in Des Moines, (Docs. 70-16, 2; 70-17, at 2; 70-18, at 2), did not meet their burden to show the reasonable hourly rate for that legal community.
First, defendant makes nationwide comparisons, not local ones. It states that the hourly rates "charged by MVS attorneys are typical and on the low end of the spectrum." (Doc. 70-1, at 4). It also offers the 2019 American Intellectual Property Law Association Report for the Economic Survey ("AIPLA Report") as evidence that nationally, the average hourly billing rates for partners with 25-34 years of experience range from $424 to $680. That does not tell the Court anything about the reasonable hourly rate for legal work in Des Moines, Iowa.
Defendant also asserts that the fees are reasonable because the total fees requested are in the range of the average total fees in the "Other Central" region—presumably covering Iowa. (Doc. 70-1, at 3). But the AIPLA Report discloses total fees incurred in trademark litigation, including total attorney fees, not the hourly billing rates for Iowa or the Midwest. (Doc. 70-19, at 6). It does not show what is a reasonable hourly billing rate in the legal community at issue here.
As plaintiff noted, the District Court for the Southern District of Iowa found that $300 to $350 was a reasonable hourly rate in Des Moines. Sun Media Sys., Inc. v. KDSM, LLC , 587 F. Supp. 2d 1059, 1078 (S.D. Iowa 2008). The Court recognizes that this case is over thirteen years old, and potentially does not reflect Des Moines's billing rates today. Still, absent any other evidence, the Court must rely on this precedent as evidence of reasonable fees.
In view of the long experience of defendant's counsel, (Docs. 70-16, 2; 70-17, at 2; 70-18, at 2), the Court finds each counselor's reasonable hourly rate to be $350, the highest reasonable rate available in this record.
2. Hours Charged
Defendant expended 295.10 hours on this case between March 5, 2021, and the oral argument on the motion for summary judgment on September 17, 2021. (Doc. 70-15, at 5). Plaintiff asserts that these hours are not reasonable for several reasons. (Doc. 72, at 22). The Court declines to eliminate the cost of preparing supplemental briefings for the motion for summary judgment when defendant filed that motion before conducting a key deposition. (Doc. 72, at 22). For the reasons above, the Court found the supplemental briefing and early motion for summary judgment reasonable. Thus, the Court will not strike these hours. These hours were billed by Mr. Gilchrist for 1.10 hours and 2.60 hours. (Doc. 70-15, at 3).
The Court also declines to eliminate the cost of preparing defendant's letter to plaintiff after the deposition of Sharon Doyle. Plaintiff asserts that defense counsel is not entitled to these costs because the Court purportedly found those deposition-related contentions meritless. (Doc. 72, at 22). But the Court only elected to not consider the portion of that deposition relating to functionality. Pocket Plus, L.L.C. v. Runner's High, LLC , No. 21-CV-4-CJW-MAR, 2021 WL 5048197, at *6 (N.D. Iowa Oct. 12, 2021). It did not speak about the distinctiveness-related testimony that defendant raised in the letter, let alone find that part of the testimony "meritless." Id. Thus, the Court will not eliminate the hours for this letter. These hours were billed by Mr. Gilchrist for 5.10 hours. (Doc. 70-15).
The Court declines plaintiff's invitation to eliminate defendant's hours billed to supplement their discovery responses. The Federal Rules of Civil Procedure provides for parties to supplement their discovery responses. FED. R. CIV. PRO. 26(e)(1)(A). Doing so is not objectionable.
But the Court eliminates the following hours. First, the Court eliminates the costs of attending the hearing on the motion for summary judgment hearing, because the filing fee report indicates that the attendance was made at "no charge." Thus, the Court eliminates 2.40 hours billed by Ms. Lebron-Dykeman, and 2.40 hours billed by Mr. Gilchrist for "participation in oral argument." (Doc. 70-15). Second, the Court eliminates the costs of researching and drafting the letter threatening Rule 11 sanctions, as plaintiff urges. (Doc. 72, at 22). The Court will eliminate these hours because defendant appears to have made this Rule 11 threat only to harass the plaintiff. These hours were incurred by Ms. Lebron-Dykeman for 2.10 and 1.30 hours. (Doc. 70-15).
Ms. Lebron-Dykeman's hours are reduced to 111.60 hours. Mr. Gilchrist's hours are reduced to 162.8 hours. Mr. Johnson's hours remain unchanged at 12.50. In sum, defendant's attorneys expended 286.9 hours. Thus, at the reasonable hourly billing rate of $350, the lodestar figure becomes $100,415. The Court exercises its equitable discretion for the reasons stated and reduces that figure to a quarter of the lodestar, $25,103.75.
117.40 - 2.40 - 2.10 - 1.30 = 111.60.
165.20 - 2.40 = 162.80.
III. CONCLUSION
Defendant's motion for attorney fees (Doc. 65) is granted in part . The Court awards defendant $25,103.75.
IT IS SO ORDERED this 11th day of January, 2022.