Exclaim Marketing, LLC v. DIRECTV, LLC
Filing
UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 5:11-cv-00684-FL. Copies to all parties and the district court. [999995051]. [15-2339, 15-2399]
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2339
EXCLAIM MARKETING, LLC,
Plaintiff - Appellant,
v.
DIRECTV, LLC,
Defendant – Appellee,
and
DIRECTV OPERATIONS, LLC; DIRECTV, INCORPORATED,
Defendants.
No. 15-2399
EXCLAIM MARKETING, LLC,
Plaintiff – Appellee,
v.
DIRECTV, LLC,
Defendant – Appellant,
and
DIRECTV, INCORPORATED; DIRECTV OPERATIONS, LLC,
Defendants.
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Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh.
Louise W. Flanagan,
District Judge. (5:11-cv-00684-FL)
Argued:
October 28, 2016
Decided:
December 29, 2016
Before SHEDD, AGEE, and WYNN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Joseph H. Nanney, Jr., MEYNARDIE & NANNEY, PLLC,
Raleigh, North Carolina, for Appellant/Cross-Appellee.
Michael
Ernest Williams, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Los
Angeles, California, for Appellee/Cross-Appellant.
ON BRIEF:
Robert C. Van Arnam, WILLIAMS MULLEN, Raleigh, North Carolina,
for Appellee/Cross-Appellant.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
A
jury
awarded
$760,000.00
to
Exclaim
Marketing,
LLC,
(“Exclaim”) on its North Carolina Unfair and Deceptive Trade
Practices Act (“UDTPA”) claim against DirecTV, LLC, (“DirecTV”)
and
$25,000.00
infringement.
to
DirecTV
on
its
counterclaim
for
trademark
Thereafter, the district court granted DirecTV’s
motions for judgment as a matter of law on the UDTPA claim and
for
an
increased
award
of
profits
under
Exclaim appeals both of these judgments.
the
counterclaim.
In addition, DirecTV
has filed a cross-appeal challenging the district court’s denial
of its motion for attorney’s fees.
For the reasons that follow,
we affirm the judgments of the district court in their entirety.
I.
Exclaim is a nationwide marketing company that, in relevant
part, acts as a liaison between potential satellite television
consumers
and
satellite
television
thousands
of
telephone
numbers
retailers.
that
are
It
then
telephone directories under various listings.
purchases
included
in
Often, a single
Exclaim telephone number will be used in multiple listings in
multiple
directories.
When
a
consumer
calls
the
number,
a
telemarketer at a call center asks some screening questions and
then forwards the call to one of its clients, a retailer of
satellite television.
These retailer-clients pay Exclaim for
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each
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forwarded
call,
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regardless
of
whether
the
consumer
eventually purchases satellite television.
The
providers
retailers
of
in
turn
satellite
I),
134
F.
contracted
television
promote” their services.
(Exclaim
have
to
with
“market,
one
or
more
advertise,
and
Exclaim Mktg., LLC v. DirecTV, LLC
Supp.
3d
1011,
1016
(E.D.N.C.
2015).
DirecTV and Dish Network are the leading satellite television
providers in the United States.
DirecTV’s retailer contracts
regulate how its retailers operate and include a restriction
that DirecTV retailers can only contract with a third party –such as Exclaim –- with DirecTV’s written consent.
DirecTV did
not provide written authorization for its retailers to contract
with Exclaim.
Although most of Exclaim’s telephone directory listings are
identified in generic terms such as “satellite television,” some
of its listings used the name “DirecTV” or a close variant such
as
“Direct
TV”
or
“DIRECTTV.”
When
DirecTV
discovered
the
unauthorized use of its name, the company concluded that was a
violation
of
its
trademark.
Accordingly,
DirecTV
hired
an
outside company to investigate who owned the listings by calling
the numbers associated with them.
employees
also
called
some
of
In addition, one of DirecTV’s
the
listings.
At
times,
the
callers would give the intermediary telemarketer a false name as
part of their conversation.
Once DirecTV identified Exclaim as
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the
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owner
listings,
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of
numbers
DirecTV
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tied
contacted
to
these
Exclaim
allegedly
and
asked
infringing
that
coordinate to have the listings removed or renamed.
Exclaim
Exclaim
took steps to remove some of the listings, but over the course
of
several
years
DirecTV
continued
to
identify
unauthorized
listings owned by Exclaim using DirecTV’s name and its variants.
In 2011, Exclaim filed a lawsuit in North Carolina state
court against DirecTV alleging that it had violated the UDTPA,
N.C. Gen. Stat. § 75-1.1 et seq.
jurisdiction,
DirecTV
removed
On the basis of diversity
the
case
to
the
U.S.
District
Court for the Eastern District of North Carolina and filed a
counterclaim against Exclaim alleging trademark infringement, in
violation of the Lanham Act, 15 U.S.C. § 1114. 1
At
trial,
Exclaim
alleged
UDTPA
violations
arising
from
multiple practices, but the jury found that DirecTV only engaged
in
one
of
them.
Specifically,
the
jury
found
that
DirecTV
“telephoned Exclaim Marketing, LLC’s call center over 175 times
over a six year period, at times using false names.”
J.A. 1743.
It further found that this conduct proximately caused injury to
Exclaim and that Exclaim was entitled to damages in the amount
of $760,000.00.
1
Other claims and counterclaims made in the course of the
litigation were dismissed or otherwise resolved and are not at
issue in this appeal.
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On DirecTV’s counterclaim, the jury found that Exclaim used
DirecTV’s
“trademark
or
a
misspelling
of
the
trademark
in
connection with the sale, offering for sale, distribution or
advertising of products or services,” and that it did so “in a
manner likely to cause confusion, mistake, or deception as to
the source, origin, affiliation, approval, or sponsorship” of
Exclaim’s goods or services.
J.A. 1744.
The jury specifically
found that Exclaim’s conduct was “undertaken with the intent to
confuse or deceive” and awarded DirecTV $25,000.00 for trademark
infringement.
The
J.A. 1746.
issues
on
appeal
arise
from
the
district
court’s
rulings on three post-trial motions filed by DirecTV.
First,
DirecTV renewed its motion for judgment as a matter of law on
Exclaim’s
UDTPA
claim,
contending
that
its
support a UDTPA claim as a matter of law.
conduct
did
not
The district court
granted DirecTV’s motion, concluding that the phone calls to
Exclaim
were
not
“in
or
affecting
commerce,”
nor
did
they
constitute an “unfair or deceptive” practice, both of which were
required to state a UDTPA claim.
1020-25.
Exclaim I, 134 F. Supp. 3d at
Second, DirecTV moved for an increased profits award
on its successful trademark infringement claim, contending that
$25,000.00 was inadequate to account for Exclaim’s wrongdoing.
The
district
court
granted
that
motion
as
awarded less than the amount DirecTV sought.
6
well,
though
it
The district court
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awarded DirecTV $610,560.00 based on a calculation of the profit
Exclaim derived from each infringing number over the course of
Exclaim’s
(Exclaim
infringement.
II),
No.
Sept. 30, 2015).
Exclaim
Mktg.,
5:11-CV-684-FL,
2015
LLC
WL
v.
DirecTV,
5725692
LLC
(E.D.N.C.
Third, DirecTV moved for statutory attorney’s
fees in light of its successful trademark infringement verdict.
The district court denied that motion, concluding no award of
attorney’s fees was warranted because this case did not meet the
statutory requirement of being “exceptional.”
Exclaim Mktg.,
LLC v. DirecTV, LLC (Exclaim III), No. 5:11-CV-684-FL, 2015 WL
5725703 (E.D.N.C. Sept. 30, 2015).
Exclaim noted a timely appeal, as did DirecTV.
We have
jurisdiction under 28 U.S.C. § 1291.
II.
This case presents three issues: (1) whether the district
court
erred
in
granting
DirecTV’s
motion
for
judgment
as
a
matter of law on Exclaim’s UDTPA claim; (2) whether the district
court abused its discretion in increasing the jury’s award of
damages from $25,000.00 to $610,560.00 in profits arising from
DirecTV’s
trademark
infringement
claim;
and
(3)
whether
the
district court abused its discretion in denying DirecTV’s motion
for statutory attorney’s fees as the prevailing party in the
trademark infringement claim.
We address each issue in turn.
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A. UDTPA Claim
In order to establish a claim under the UDTPA, Exclaim had
to
demonstrate
the
following
elements:
“(1)
that
[DirecTV]
engaged in conduct that was in or affecting commerce, (2) that
the conduct was unfair or [deceptive], and (3) that [Exclaim]
suffered
actual
injury
as
a
proximate
result
deceptive statement or misrepresentation.”
of
[DirecTV’s]
See ABT Bldg. Prods.
Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 472 F.3d 99,
122 (4th Cir. 2006). 2
The “occurrence of the alleged conduct,
damages, and proximate cause are fact questions for the jury,”
but “whether [such] conduct was unfair or deceptive is a legal
issue for the court,” as is whether the conduct was “in or
affecting commerce.”
Id. at 123; see also S. Atl. Ltd. P’ship
of Tenn., LP v. Riese, 284 F.3d 518, 534 (4th Cir. 2002); Sara
Lee
Corp.
v.
Carter,
519
S.E.2d
308,
311
(N.C.
1999).
Consistent with these standards, the only issues the district
court
submitted
occurrence
of
injury/damages.
to
the
the
jury
on
individual
the
acts,
UDTPA
claim
proximate
were
the
cause,
and
Each of the jury’s findings was left intact by
the district court when it considered the purely legal issues on
2
We have omitted internal quotation marks, alterations, and
citations here and throughout this opinion, unless otherwise
noted.
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liability raised in DirecTV’s renewed motion for judgment as a
matter of law.
Consequently, we review the district court’s decision to
grant the motion for judgment as a matter of law de novo.
Belk,
Inc. v. Meyer Corp., 679 F.3d 146, 164 (4th Cir. 2012) (stating
that questions of law surrounding a motion for judgment as a
matter of law following a jury trial are reviewed de novo while
the
jury’s
factual
findings
deferential standard).
are
reviewed
under
a
more
Similarly, we apply the same de novo
standard in reviewing the district court’s interpretation of the
UDTPA.
Id.
The unfair or deceptive conduct element of a UDTPA claim is
set out in the alternative, meaning that an act can be either
unfair or deceptive to satisfy this requirement.
“unfair”
when
“a
court
of
equity
would
A practice is
consider
[it
to
be]
unfair,” S. Atl. Ltd. P’ship of Tenn., 284 F.3d at 535, i.e.,
“when it offends established public policy as well as when the
practice
is
immoral,
unethical,
oppressive,
unscrupulous,
substantially injurious to consumers,” id. at 536.
or
A practice
is “deceptive” if it “has the capacity or tendency to deceive.”
Id.
Under either category, “only practices that involve some
type of egregious or aggravating circumstances are sufficient to
violate the U[D]TPA.”
Id. at 535.
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Exclaim contends that DirecTV’s practice was unfair because
placing
more
than
175
calls
oppressive, and unscrupulous.”
to
Exclaim
was
Opening Br. 17.
“unethical,
Exclaim posits
that DirecTV did not adequately communicate with it to remedy
the problematic listings and questions why some of the calls
received were tied to generic listings if the sole purpose of
DirecTV’s
calls
was
to
investigate
potential
infringement.
Exclaim further contends that North Carolina recognizes that an
inequitable
assertion
of
power
can
constitute
an
unfair
practice, and it asserts that is what occurred here given that
DirecTV’s size and resources dwarf Exclaim’s.
We disagree.
The district court correctly held that the evidence does
not
demonstrate
that
aggravatingly unfair.
DirecTV’s
period.
placing
DirecTV’s
conduct
was
egregiously
or
As a reminder, the “practice” at issue is
more
than
175
phone
calls
over
a
six-year
Although the calls to Exclaim’s call centers were not
spread out evenly, that frequency represents roughly 2-3 calls
to Exclaim’s call center each month for six years.
Put another
way, it equals roughly 0.002958% of Exclaim’s total volume of
calls.
Exclaim I, 134 F. Supp. 3d at 1023.
It is questionable whether such a “practice” could ever be
considered “unfair” on its own.
Cf. id. (“Without more factual
specificity in the jury’s verdict, it is impossible to glean any
unfairness from the simple fact of the telephone calls.”).
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the record eliminates any doubt.
that
Exclaim’s
own
publicly
It is not unfair to Exclaim
available
telephone
DirecTV to call Exclaim’s call centers.
listings
led
This is especially true
given that DirecTV had a legitimate business purpose for placing
those calls due to its investigating who owned the phone numbers
associated with listings it reasonably believed infringed on its
trademark.
Indeed,
the
reasonableness
of
its
investigatory
method was admitted by Exclaim’s co-owner, who testified that if
he did not recognize a listing identified as “Exclaim,” he, too,
would call the number to determine who was associated with it.
As
the
district
court
noted,
“The
numbers
were
available and could have been called by anyone.”
Exclaim
emphasizes,
as
it
did
at
public[]ly
Id.
trial,
that
some
unspecified number of calls DirecTV placed to its call center
were associated with generic listings.
the
case,
practice.”
it
does
The
not
record
render
Even assuming that to be
DirecTV’s
demonstrates
conduct
that
some
an
“unfair
numbers
associated with both generic and infringing listings.
were
Moreover,
at the time DirecTV called a listing, it had no way of knowing
that Exclaim owned the associated phone number, so there is no
evidence
that
particular
DirecTV
listing,
was
whether
targeting
it
was
Exclaim
generic
or
by
calling
not.
any
Lastly,
DirecTV’s employee testified that she would occasionally call
generic
listings
for
business
11
reasons
unrelated
to
the
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investigation, such as to identify a retailer’s ad that she did
not recognize in order to determine whether the retailer was in
compliance with the retailer’s contract.
On this record, that
some unspecified number of phone calls may have been placed to
numbers linked solely to generic listings does not undermine the
conclusion that DirecTV’s investigative effort of placing more
than 175 calls to Exclaim’s call center over a six-year period
was
not
an
unfair
practice,
let
alone
an
egregious
or
aggravating one.
Exclaim’s
communication
argument
to
about
resolve
the
DirecTV’s
allegedly
inadequate
infringing
listings
misdirects
attention from the salient inquiry -- whether placing the phone
calls was an unfair practice.
Again, until DirecTV placed the
phone calls, it could not tie Exclaim to any specific infringing
number because Exclaim was not identified on the listing.
The
parties’ communications after a specific number had been tied to
Exclaim are immaterial to whether the practice of placing calls
in the first instance was unfair.
More problematic for Exclaim,
however,
is
even
certain
directories,
that
for
years
DirecTV
listings tied to Exclaim.
and
after
continued
to
republication
find
of
infringing
And so long as the problem remained,
DirecTV acted fairly in calling those numbers to determine who
owned them.
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While an inequitable assertion of power may be part of the
unfair-practice analysis in some cases, it is not at issue here.
The fact of a size disparity between companies, without more, is
not sufficient to demonstrate an unfair practice; rather, courts
examine
what
disparity
the
to
actor
conclude
did
in
that
the
assertion of power was unfair.
combination
exertion
with
of
an
that
size
inequitable
See, e.g., S. Atl. Ltd. P’ship
of Tenn., 284 F.3d at 540 (observing that “manipulations and
assertions
of
controlling
influence”
such
as
exploiting
contractual rights without providing compensation is “precisely
the
kind
of
‘inequitable
assertion[]’
unfair trade practice under the UDTPA).
of
power”
that
is
an
DirecTV may be a larger
business than Exclaim, but nothing in the record indicates that
this
disparity
enabled
complains were unfair.
or
contributed
to
the
acts
Exclaim
As the district court concluded, “[n]o
superior degree of power or advantageous market position was
leveraged” when DirecTV called publicly available phone numbers
to determine who owned them.
Exclaim I, 134 F. Supp. 3d at
1023.
The telephone calls also were not a “deceptive practice”
for
UDTPA
purposes.
Yet
again,
there
is
nothing
inherently
deceptive about the jury’s factual finding that DirecTV placed
the calls.
Cf. id. at 1024 (“[T]he fact of the calls involve[d]
no deception.”).
But even accepting that the premise of being a
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potential consumer or the use of a false name was “deceptive,”
the
record
demonstrates
aggravatingly
that
deceptive.
it
The
was
not
DirecTV
egregiously
employee
at
or
issue
testified based on her past personal experience that she was
often stonewalled in her efforts to identify the owner of the
phone numbers she called.
In particular, when she used her real
name to place calls, telemarketers would be uncooperative or
would be instructed to hang up when recognizing her name from
past
calls.
intrinsically
DirecTV’s
linked
to
use
--
of
and
the
an
false
name
effective
investigating the source of infringing listings.
did
not
constitute
an
egregiously
or
was
means
thus
of
--
As such, it
aggravatingly
deceptive
practice.
For
these
reasons,
the
district
court
did
not
err
in
concluding that DirecTV’s placing more than 175 calls over a
six-year period could not, as a matter of law, constitute an
unfair or deceptive trade practice under the UDTPA.
As such,
DirecTV was entitled to judgment as a matter of law regardless
of
the
jury’s
findings
with
respect
to
other
elements
of
Exclaim’s claim. 3
3
In light of this holding, we need not address the parties’
arguments concerning the district court’s additional grounds for
granting DirecTV’s motion, that the phone calls were not “in or
affecting commerce.”
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B. Trademark Infringement Counterclaim
Exclaim
separately
contends
the
district
court
erred
in
granting DirecTV’s post-judgment motion for increased profits on
its trademark infringement claim.
To establish such a claim,
the Lanham Act provides that a plaintiff –- such as DirecTV –who
establishes
a
violation
of
§
1114(1)(a)
is
entitled
“to
recover (1) defendant’s profits, (2) any damages sustained by
the plaintiff, and (3) the costs of the action.”
1117(a)
(emphasis
added).
The
pertinent
15 U.S.C. §
statute
further
provides:
In assessing profits the plaintiff shall be required
to prove defendant’s sales only; defendant must prove
all elements of cost or deduction claimed. . . . If
the court shall find that the amount of the recovery
based on profits is either inadequate or excessive the
court may in its discretion enter judgment for such
sum as the court shall find to be just, according to
the circumstances of the case.
Such sum . . . shall
constitute compensation and not a penalty.
Id.
This
Court
has
previously
recognized
that
the
statute
“gives little guidance on the equitable principles to be applied
by a court in making an award,” and has “identified six factors
to guide the process” of “weigh[ing] the equities of the dispute
and
exercis[ing]
its
discretion
on
whether
appropriate and, if so, the amount thereof.”
an
award
Synergistic Int’l,
LLC v. Korman, 470 F.3d 162, 174-76 (4th Cir. 2006).
factors
are:
“(1)
whether
the
15
defendant
is
had
the
Those
intent
to
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confuse or deceive, (2) whether sales have been diverted, (3)
the adequacy of other remedies, (4) any unreasonable delay by
the plaintiff in asserting his rights, (5) the public interest
in making the misconduct unprofitable, and (6) whether it is a
case of palming off.”
Id. at 175.
The district court granted DirecTV’s motion based on its
conclusion that the jury’s award of $25,000.00 was insufficient
in light of the infringement at issue.
burden-shifting
analysis,
the
district
Under the statutory
court
observed
that
DirecTV satisfied its burden of proving Exclaim’s total profits,
thereby
shifting
to
Exclaim
the
burden
of
parsing
profits that were unrelated to the infringement.
out
its
Based on the
quite limited evidence put forward by Exclaim on that point, the
district court concluded it had failed to meet its burden to
distinguish between profits attributable to infringement and any
others. 4
Nonetheless, the court concluded that “[i]t would be
inequitable to award DirecTV the entirety of Exclaim’s profits
over
the
relevant
period”
because
4
while
Exclaim
owned
6,000
In its reply brief, Exclaim argues DirecTV did not satisfy
this burden because it demonstrated total profits, while the
statute should be interpreted to require a plaintiff to show
profits relating to the infringing activity.
Because that
argument is raised for the first time in the reply brief, we do
not consider it.
See Cavallo v. Star Enter., 100 F.3d 1150,
1152 n.2 (4th Cir. 1996) (holding that "an issue first argued in
a reply brief is not properly before a court of appeals").
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telephone numbers, only 159 were associated with an infringing
listing.
Exclaim II, 2015 WL 5725692, at *4.
Instead, the
court multiplied the 159 listings by the record evidence as to
the “average profit per month per phone number” (between $75.00
and $80.00 per telephone number) over the entire period during
which Exclaim was infringing DirecTV’s trademark.
that
calculation
method,
the
court
also
district
court
Id.
awarded
Under
DirecTV
$610,560.00.
The
district
profits
award
was
appropriate
Synergistic factors.
conduct
was
noted
willful,
such
an
increased
light
in
that
of
the
relevant
In particular, it found that Exclaim’s
that
injunctive
relief
did
“not
remedy
Exclaim’s usurpation of the good will associated with DirecTV’s
mark
for
the
reasonable
period
considering
at
issue,”
the
that
period
DirecTV’s
of
delay
investigation
was
and
reconciliation, and that the jury’s award had not been adequate
to make future infringement unprofitable.
Id.
The Court reviews the district court’s decision to increase
an award of profits for an abuse of discretion.
Pac. Ins. Co.
v. Am. Nat’l Fire Ins. Co., 148 F.3d 396, 402 (4th Cir. 1998)
(citing Fed. R. Civ. P. 59(e)).
Exclaim contends the district court abused its discretion
because the record shows DirecTV suffered no harm from Exclaim’s
conduct
and,
in
fact,
profited
17
because
many
of
Exclaim’s
Appeal: 15-2339
Doc: 47
referrals
Filed: 12/29/2016
to
retailers
Pg: 18 of 26
resulted
in
new
DirecTV
customers.
Exclaim asserts that the Synergistic factors do not support the
increased award of profits because Exclaim did not act in bad
faith,
it
did
DirecTV’s
there
mark
is
points
not
no
to
divert
adequately
evidence
DirecTV’s
approximately
sales,
four
of
protects
palming
delay
years
infringing listings.
an
injunction
DirecTV’s
off.
in
In
filing
from
against
when
interests,
addition,
suit,
it
using
a
first
and
Exclaim
period
of
learned
of
Lastly, Exclaim argues that anything more
than the jury’s nominal damages award constitutes a windfall and
unlawfully punishes Exclaim rather than compensates DirecTV.
We conclude the district court did not abuse its discretion
in granting DirecTV’s motion for increased profits.
Many of
Exclaim’s arguments ignore the purpose of prohibiting trademark
infringement and the Lanham Act’s plain language, which allows
prevailing
plaintiffs
to
recover
not
just
an
amount
they
suffered in actual damages, but also a share of the defendants’
profits from the infringement.
district
court
has
broad
Cf. 15 U.S.C. § 1117(a).
discretion
to
order to achieve an equitable result.
award
such
relief
The
in
E.g., Burndy Corp. v.
Teledyne Indus., 748 F.2d 767, 772 (2d Cir. 1984).
Here, the district court did not abuse its discretion in
concluding
that
profits award.
the
Synergistic
factors
favored
an
increased
For example, the jury specifically found that
18
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Doc: 47
Exclaim
Filed: 12/29/2016
intended
to
confuse
DirecTV’s trademark.
a
defendant’s
or
deceive
consumers
by
using
See Synergistic, 470 F.3d at 175 (stating
“intent
profits award).
Pg: 19 of 26
to
confuse
or
deceive”
can
support
a
In addition, an injunction did not provide any
relief for Exclaim’s past wrongdoing and would also be unlikely
to
adequately
deter
future
Exclaim’s
past
Exclaim.
Cf. id. at 176.
rejected
Exclaim’s
filing
suit
profits.
an
misconduct
and
its
given
proven
the
scope
profitability
of
for
The district court also reasonably
that
should
DirecTV
not
be
unreasonably
entitled
to
delayed
increased
In so doing, the court observed that DirecTV undertook
extensive
without
and
argument
thus
misconduct
investigation,
litigation,
directories
to
be
and
attempted
had
released
infringement continued.
to
in
Cf. id.
to
resolve
wait
order
for
to
the
new
matter
telephone
determine
whether
The district court thus not
only relied on the proper analysis for determining whether to
award increased profits, but also did not abuse its discretion
in
weighing
the
relevant
circumstances
increased profits were appropriate.
and
concluding
that
Cf. id.
In addition to challenging any increase from the jury’s
award for Exclaim’s infringement, Exclaim also argues that the
record does not support the district court’s decision to award
profits in the amount of $610,560.00.
presented
at
trial
did
not
show
19
It contends the evidence
that
Exclaim
owned
159
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Pg: 20 of 26
infringing phone numbers, but only nine numbers, and that the
district court relied on evidence that was not in the record to
reach the
higher
number.
In
addition,
Exclaim
contends
the
record does not show that it owned all of those numbers for the
entire period of time used to calculate the profits award.
As
such, Exclaim maintains that any increased profits award should
be substantially reduced.
We have reviewed the record and conclude that no reversible
error
occurred.
support
the
Three
district
exhibits
court’s
that
were
attribution
admitted
of
159
at
trial
infringing
numbers to Exclaim: an email in which Exclaim admitted to owning
twenty-nine
DirecTV’s
unique
agent
infringing
prepared
numbers
compiling
and
two
the
spreadsheets
results
of
its
investigation, in which an additional 130 unique numbers were
linked
to
Exclaim.
It
does
appear
that
not
all
of
these
telephone numbers were traced to infringing listings for the
entire
period
for
which
the
district
court
awarded
profits.
Nonetheless, we conclude that the district court did not err in
arriving at its final profits award.
As already noted, the statute authorizes the district court
to
exercise
broad
appropriate award.
that
Exclaim
profits
bore
should
be
equitable
discretion
in
arriving
at
an
Coupled with this discretion is the fact
the
burden
excluded
of
from
20
showing
an
why
award,
certain
yet
it
of
failed
its
to
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present
Doc: 47
Filed: 12/29/2016
relevant
considering
satisfied
an
its
evidence
for
appropriate
statutory
Pg: 21 of 26
the
district
profits
burden
court
award.
of
to
Once
demonstrating
use
in
DirecTV
Exclaim’s
profits for the relevant period of time, the burden shifted to
Exclaim to show what amount of profits were not related to its
infringement.
See 15 U.S.C. § 1117(a).
attempt to meet that burden.
Here, Exclaim made no
Despite Exclaim’s failure on this
point, the district court went out of its way to fashion a more
equitable result for both parties based on Exclaim’s average
profit
per
month
per
phone
number.
Its
calculation
was
a
reasonable estimation of the profits Exclaim unjustly received,
and any minor variation in the precise number of lines per month
does not make the district court’s award an abuse of discretion.
Indeed,
the
district
court
indicated
that
Exclaim’s
profits
relating to the infringing lines might have been even higher.
Exclaim II, 2015 WL 5725692, at *4 (“[DirecTV] is entitled to
Exclaim’s
profits
(emphasis added)).
at
least
in
the
amount
of
$610,560.00.”
Given these circumstances, greater precision
in arriving at the exact award amount was not required.
See,
e.g., Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 177-78 (3d
Cir. 2005) (approving the district court’s attempt to estimate
profits where it was not clear what share came from the wrongful
conduct
versus
other
legitimate
business
conduct
because
calculation arrived at an appropriate ballpark figure).
21
the
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Pg: 22 of 26
C. Attorney’s Fees Cross-Appeal
We next turn to DirecTV’s cross-appeal, in which it argues
the district court erred in denying its motion for attorney’s
fees.
The
“reasonable
Lanham
Act
attorney
fees
“exceptional cases.”
contends
that
authorizes
to
a
the
district
prevailing
15 U.S.C. § 1117(a).
this
case
meets
that
court
to
award
party”
in
In sum, DirecTV
“exceptional”
standard
because the jury specifically found that Exclaim “acted with
‘the intent to confuse or deceive.’”
Response/Opening Br. 60.
We review the district court’s decision on the award of
Lanham Act attorney’s fees for an abuse of discretion.
Newport
News Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d 423,
441 (4th Cir. 2011).
That review leads us to conclude the
district court properly applied the exceptional case analysis
set out in Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
134 S. Ct. 1749 (2014), and expounded upon by this Court in
Georgia-Pacific Consumer Prods. LP v. von Drehle Corp., 781 F.3d
710 (4th Cir. 2015).
In Octane Fitness, the Supreme Court analyzed the same fee
award standard applicable here albeit under the Patent Act.
S.
Ct.
at
1752.
The
Supreme
meaning
of
“exceptional”
Court
indicated
held
that
that
fees
the
should
134
ordinary
only
be
awarded in a case “that stands out from others with respect to
the
substantive
strength
of
a
22
party’s
litigating
position
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Filed: 12/29/2016
Pg: 23 of 26
(considering both the governing law and the facts of the case)
or
the
unreasonable
Factors
to
objective
be
manner
considered
unreasonableness
in
which
include
(both
the
case
was
“frivolousness,
in
the
factual
litigate.”
motivation,
and
legal
components of the case) and the need in particular circumstances
to advance considerations of compensation and deterrence.”
at 1756 & n.6.
district
Id.
Furthermore, the Supreme Court indicated that
courts
should
“determine
whether
a
case
is
‘exceptional’ in the case-by-case exercise of their discretion,
considering the totality of the circumstances.”
Id. at 1756.
This Court applied the Octane Fitness principles to a fee
award
under
§
1117(a)
of
the
Lanham
Act
in
Georgia-Pacific.
There, the Court took care to distinguish that the “exceptional”
case required more than just volitional conduct, else “every
Lanham
Act
defendant
case
could
would
show
qualify
that
it
as
‘exceptional’
unintentionally
or
unless
the
mistakenly
performed the actions later found to be a violation of the Act.”
781 F.3d at 720.
Instead, following Octane Fitness, the Court
set out three circumstances when, “in light of the totality of
the circumstances,” a case may be deemed “exceptional” such that
an award of fees is appropriate.
Those circumstances are:
(1) there is an unusual discrepancy in the merits of
the positions taken by the parties, based on the nonprevailing party’s position as either frivolous or
objectively unreasonable; (2) the non-prevailing party
has litigated the case in an unreasonable manner; or
23
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Pg: 24 of 26
(3) there is otherwise the
circumstances
to
advance
compensation and deterrence.
need in particular
considerations
of
Id. at 721.
Relying on Octane Fitness and Georgia-Pacific, the district
court concluded this case was not “exceptional.”
2015
WL
position
5725703,
was
at
*6-*8.
neither
First,
frivolous
nor
it
found
Exclaim III,
that
objectively
Exclaim’s
unreasonable,
particularly in light of the competing legal arguments and facts
presented
at
trial.
Second,
it
found
Exclaim
did
not
unreasonably litigate the case, pointing out as an example that
Exclaim did not re-litigate issues previously decided.
Lastly,
the court found that the increased profits award had adequately
compensated DirecTV and that a fee award was not needed for
deterrence.
The
holding.
district
court
did
not
abuse
its
discretion
in
so
Indeed, DirecTV does not take issue with any of the
district court’s findings, nor does it otherwise engage with the
analysis
set
out
in
Octane
Fitness
and
Georgia-Pacific.
Instead, it argues that the district court should not have used
that
analysis
and
should
have
relied
on
pre-Octane
Fitness
Fourth Circuit case law stating that fees may be awarded where a
defendant
willfully
infringes
a
plaintiff’s
Georgia-Pacific, 781 F.3d at 719-20.
trademark.
See
But in Georgia-Pacific, we
recognized that Octane Fitness modified our prior analysis and
24
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Doc: 47
“appl[ied]
Filed: 12/29/2016
the
Octane
Fitness
Pg: 25 of 26
standard
when
award of attorneys fees under § 1117(a).”
considering
Id. at 721.
the
In doing
so, we set out the three-part test the district court used in
deciding whether to award fees in this case.
Contrary
to
DirecTV’s
contention,
Id. at 719-21.
nothing
in
either
of
those cases suggests that the Octane Fitness analysis should not
also
apply
when
a
infringement claim.
plaintiff
successfully
prosecutes
an
While the factual background for Octane
Fitness may have been a prevailing defendant, nothing limits the
overarching objectives identified by the Supreme Court to that
context.
Common sense confirms that both parties are equally
capable
of
taking
unreasonable
positions
or
litigation
strategies, just as the particular facts of a case decided in
either
party’s
favor
While
willfulness
may
warrant
remains
part
compensation
of
the
or
deterrence.
totality
of
the
circumstances informing the analysis, after Octane Fitness and
Georgia-Pacific, it does not end there as DirecTV would have us
hold.
In
short,
even
assuming
Exclaim’s
infringement
was
willful, that is no longer sufficient to show that a case is
“exceptional.”
The district court understood and applied the proper test
in determining that this case does not satisfy the applicable
standard.
basis
for
Inasmuch as DirecTV does not otherwise challenge the
the
district
court’s
25
denial
of
its
motion,
the
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Pg: 26 of 26
district court did not abuse its discretion in denying DirecTV’s
motion for attorney’s fees.
III.
For
the
aforementioned
reasons,
the
judgments
of
the
district court are
AFFIRMED.
26
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