BoxNic Anstalt v. Gallerie degli Uffizi

Filing 53

ORDER granting 50 Motion for Attorney Fees. Defendant is awarded $119,460.50 in attorneys' fees and costs against Plaintiff BoxNic Anstalt. FURTHER ORDERED granting /denying in part 51 Motion to Seal. Defendant shall within 14 days of this order file Exhibit 1 in an unredacted format and lodge Exhibits 2, 3, and 5 for filing under seal by the Clerk of Court pursuant to this order. Signed by Senior Judge David G Campbell on 6/3/20. (MAP)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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BoxNic Anstalt,

No. CV-18-1263-PHX-DGC

Plaintiff/Counterdefendant,

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ORDER

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v.

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Gallerie degli Uffizi,

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Defendant/Counterclaimant.

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This action involves a dispute over the “uffizi.com” domain name and Plaintiff’s

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use of “UFFIZI” trademarks on a website to which the uffizi.com domain name directs

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viewers. Doc. 1. Plaintiff sought a declaratory judgment that its registration and use of

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the uffizi.com domain name does not constitute trademark infringement or unfair

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competition, and that Plaintiff is the rightful registrant of the uffizi.com domain name. Id.

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at 1-2, 6-10. Defendant counterclaimed, alleging cybersquatting, trademark infringement

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and dilution, and unfair competition under the Lanham Act, 15 U.S.C. § 1125. Doc. 19

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at 17-21. Plaintiff failed to comply with its discovery obligations and refused to participate

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in this litigation. See Docs. 41, 43, 44. The Court accordingly entered default judgment

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against Plaintiff on February 5, 2020. Doc. 49.

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Defendant has filed a motion for attorneys’ fees and costs. Doc. 51. No response

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has been filed. For reasons stated below, the Court will grant the motion in part and award

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Defendant a total of $119,460.50.

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I.

Attorneys’ Fees Under the Lanham Act.

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Under 15 U.S.C. § 1117(a), a court may award reasonable attorneys’ fees to the

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“prevailing party” in trademark litigation if the court determines the case to be

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“exceptional.” “A trademark case is exceptional for purposes of an award of attorneys’

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fees when the infringement is malicious, fraudulent, deliberate or willful.” Sealy, Inc. v.

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Easy Living, Inc., 743 F.2d 1378, 1384 (9th Cir. 1984); see also Octane Fitness, LLC v.

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ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014) (“[A]n ‘exceptional’ case is simply

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one that stands out from others with respect to the substantive strength of a party’s litigating

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position (considering both the governing law and facts of the case) or the unreasonable

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manner in which the case was litigated.”).

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Defendant alleges that it holds valid common law trademark rights in the UFFIZI

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mark and its variants. Docs. 19 at 19, 50 at 2. Defendant further alleges that Plaintiff acted

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with a bad faith intent to profit from the UFFIZI marks and the uffizi.com domain name

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that incorporates the marks, that Plaintiff’s unauthorized use in commerce of the domain

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name and marks is misleading and likely to cause consumer confusion, and that this

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unlawful conduct is causing immediate and irreparable harm to Defendant. Id. at 17-22;

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Doc. 50 at 2, 7-8. The Court found these allegations to be sufficient to state claims under

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the Lanham Act for cybersquatting, trademark infringement, unfair competition, and

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trademark dilution, and entered default judgment. See Doc. 49; 15 U.S.C. § 1125(a)-(d).

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Because Plaintiff refused to appear and participate in this litigation – despite repeated

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warnings from the Court – Plaintiff has not challenged any of these allegations.

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The Court finds this case “exceptional” within the meaning of § 1117(a). Plaintiff

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failed to respond to the evidence of its intentional and unauthorized use of the domain name

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and marks. What is more, Plaintiff haled Defendant into court, caused it to incur substantial

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litigation expenses, and then abandoned the case. The case is exceptional because of the

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unreasonable manner in which it was litigated. Octane Fitness, 572 U.S. at 554; see also

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DocRx, Inc. v. DocRx Dispense, Inc., No. CV-14-00815-PHX-PGR, 2015 WL 1778360, at

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*4 (D. Ariz. Apr. 20, 2015) (“an award of reasonable attorneys’ fees pursuant to § 1117(a)

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is appropriate here due [in part] to the defendants’ refusal to defend this action”); HTS, Inc.

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v. Boley, 954 F. Supp. 2d 927, 961 (D. Ariz. 2013) (finding case exceptional where

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defendant “did not defend this action, and the allegations in the Complaint, admitted on

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[defendant’s] default, reflect that his misconduct was willful and malicious.”); Am. Auto.

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Ass’n, Inc. v. Triple A Auto Glass, LLC, No. 11-CV-2464-PHX-PGR, 2012 WL 1107737,

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at *2 (D. Ariz. Apr. 2, 2012) (“Because Defendants’ infringement is willful and they have

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refused to appear and defend, this case is ‘exceptional’”).

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II.

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Reasonableness of Attorneys’ Fees and Costs.
A.

Attorneys’ Fees.

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Defendant’s counsel has submitted a declaration in support of the motion along with

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supporting documents which set forth his team’s qualifications and experience with

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intellectual property cases. See Docs. 50, 50-1. Counsel has provided a chart of hourly

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rates, the total amount billed for each attorney and paralegal, and the specific amount and

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type of work performed on behalf of Defendant. Docs. 50-1 ¶¶ 3-9, 13 (redacted),

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52 ¶¶ 3-9, 13 (under seal). Counsel has also provided an itemized statement of fees and

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expenses. Doc. 52-1 (under seal).

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Counsel and his team of associates and paralegals spent 203.9 hours on this matter

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and seek a total fee recovery of $105,238.00. Id. ¶ 13 (under seal). Defendant was charged

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rates ranging from $695.00 to $725.00 per hour for partner and lead counsel Brian LaCorte,

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$520.00 to $575.00 per hour for Senior Associate Jonathan Talcott, $320.00 to $350.00 per

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hour for Associates Mitchell Turbenson and Jessica Wilson, $290.00 to $300.00 per hour

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for paralegal Irene Winterburn, and $170 per hour for paralegal Tasha Hart. Doc. 52 ¶ 13

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(under seal). In support of these rates, Mr. LaCorte declares that the billing rates presented

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are reasonable given the nature of the action and the skill and experience of the

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professionals involved. See Doc. 50-1.

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Given counsel’s experience, credentials, and the specialized nature of this litigation,

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the Court cannot conclude that the hourly fees for Mr. LaCorte and Mr. Talcott are

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unreasonable. See Kaufman v. Warner Bros. Entm’t Inc., No. CV-16-02248-PHX-JAT,

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2019 WL 2084460, at *12 (D. Ariz. May 13, 2019) (finding reasonable an hourly fee of

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law firm partner with over three decades of experience in intellectual property actions

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ranging from $552.00 to $715.00); see also Jackson v. Wells Fargo Bank, N.A., No. CV-

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13-00617-PHX-SPL, 2015 WL 13567069 at *2 (D. Ariz. Oct. 23, 2015) (citation omitted)

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(“The best indicator of a reasonable hourly rate for a fee-paying client is the rate charged

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by the lawyer to the client.”). But the Court concludes that the fees charged for the other

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associates and for the paralegals are excessive. In its discretion, and based on its experience

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in the Phoenix market and in handling fee applications, the Court will award hourly rates

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of $250.00 for the associates (who have 4-5 years of experience) and $150.00 for the

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paralegals. This will result in a reduction of $2,509.00 in Defendants’ requested fees. The

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Court will award a total of $102,729.00 in professional fees.

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B.

Expert Fee.

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Counsel seeks reimbursement of a non-taxable $6,500.00 expert retainer fee.

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Doc. 50-3 at 2-3. The Ninth Circuit has held that “attorney’s fees under the Lanham Act

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may also include reasonable costs that the party cannot recover as the ‘prevailing party’”

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as long as such costs are reasonably incurred. Secalt S.A. v. Wuxi Shenxi Const. Mach. Co.,

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668 F.3d 677, 690 (9th Cir. 2012) abrogated on other grounds by SunEarth, Inc. v. Sun

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Earth Solar Power Co., 839 F.3d 1179 (9th Cir. 2016); see also Dropbox, Inc. v. Thru Inc.,

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No. 15-CV-01741-EMC, 2017 WL 914273, at *1 (N.D. Cal. Mar. 8, 2017), aff’d, 728 F.

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App’x 717 (9th Cir. 2018) (awarding reasonable expert witness fees of $162,936.00 under

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§ 1117(a)).

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Pursuant to the Court’s order directing the parties to provide expert disclosures by

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December 20, 2019, Defendant hired Jonathan Hochman, an e-commerce and internet

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expert. See Doc. 30 ¶5(a). Even though Defendant’s counsel did not incur fees on Mr.

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Hochman’s services, it was required to and did pay a customary non-refundable retainer in

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the amount of $6,500.00. Docs. 50 at 9, 50-3 at 2-3. Plaintiff, which has not responded to

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the fee application, has provided no basis for the Court to conclude that this retainer amount

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was unreasonable.

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C.

Translation Costs.

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Counsel also seeks reimbursement of document translation fees. Doc. 50 at 9, 50-4

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at 2-7. Given the international nature of the case – concerning trademark infringement

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surrounding an Italian art gallery – counsel provides documentation that his firm spent

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$10,231.50 for translation of various documents from Italian to English, and vice versa, as

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required to meet disclosure and discovery obligations. Doc. 50-4 at 2-7. Again, Plaintiff

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has provided no basis for the Court to find this amount unreasonable. See OmniGen

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Research, LLC v. Yongqiang Wang, No. 6:16-CV-268-MC, 2017 WL 5505041, at *27 (D.

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Or. Nov. 16, 2017) (awarding translation costs because “[u]nder § 1117(a), Plaintiffs may

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recover costs including and in addition to those ‘taxable costs’ permitted under 28 U.S.C.

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§ 1920”).

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D.

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The Court will grant Defendant’s motion and award professional fees of

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$102,729.00, expert fees of $6,500.00, and translation costs of $10,231.50.

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See LRCiv 54.1, 54.2 (setting forth allowable costs and factors to be considered in

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determining whether a fee award is reasonable).

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III.

Conclusion.

Defendant’s Motion to Seal.

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Courts recognize a “general right to inspect and copy public records and documents,

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including judicial records and documents.” Nixon v. Warner Commc’ns, Inc., 435 U.S.

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589, 597 & n.7 (1978). “Unless a particular court record is one ‘traditionally kept secret,’

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a ‘strong presumption in favor of access’ is the starting point.” Kamakana v. City and Cty.

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of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Foltz v. State Farm Mut. Auto.

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Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)).

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presumption, a party seeking to seal a judicial record must articulate “good cause” for

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sealing that outweighs the public policies favoring disclosure. See id. at 1178-79; Pintos

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v. Pac. Creditors Ass’n, 605 F.3d 665, 678 (9th Cir. 2010) (applying “good cause” standard

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to all non-dispositive motions, because such motions “‘are often unrelated, or only

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In order to overcome this strong

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tangentially related, to the underlying cause of action’” (citing Kamakana, 447 F.3d at

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1179)).

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Defendant moves to seal four documents submitted with the motion for attorneys’

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fees, including portions of Mr. LaCorte’s affidavit (Exhibit 1), counsel’s itemized task-

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based statement of fees and expenses (Exhibit 2), an expert fee agreement (Exhibit 3), and

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Defendant’s fee agreement with the Ballard Spahr law firm (Exhibit 5). Doc. 51 at 2-5.

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With respect to the LaCorte affidavit, counsel seeks to seal hourly rates and the time

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spent working on this matter. See Doc. 50-1 at 3-5. Counsel argues that the billing rates

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Ballard Spahr offered Defendant and the amount of time spent on this matter by each

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attorney are “proprietary” and their disclosure to the public “would cause Ballard Spahr

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competitive harm.” Doc. 51 at 4. This justification does not constitute a particularized

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showing of harm necessary to rebut the presumption of public access to court filings.

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“[B]road, conclusory allegations of potential harm” will not suffice. Foltz v. State Farm

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Mut. Auto. Ins. Co., 331 F.3d 1122, 1131 (9th Cir. 2003) (citation omitted). “[I]t is

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commonplace for the number of hours billed and the hourly rate of attorneys to be openly

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filed on court dockets; without this information the final fees award appears to be drawn

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from thin air. Furthermore, this type of information is clearly not privileged.” See Linex

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Techs., Inc. v. Hewlett-Packard Co., No. C 13-159 CW, 2014 WL 6901744, at *1 (N.D.

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Cal. Dec. 8, 2014) (citations omitted); see also Aylus Networks, Inc. v. Apple Inc., No. 13-

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cv-04700-EMC, 2016 WL 1252778, at *2 (N.D. Cal. Mar. 30 2016) (“the number of hours

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spent litigating a case and billing rates are not considered proprietary information”). The

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Court will not seal the LaCorte affidavit. See Doc. 50-1.

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The Court finds good cause to seal counsel’s itemized task-based statement of fees

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and expenses (Exhibit 2), the expert fee agreement (Exhibit 3), and Defendant’s legal

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services agreement with the Ballard Spahr law firm (Exhibit 5).

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With respect to the itemized task-based statement, the Court agrees that the

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individual entries may reveal confidential information, including counsel’s legal strategy

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and client communications that detail legal services rendered throughout this litigation.

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The expert fee agreement contains negotiated terms with Mr. Hochman, including his

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hourly rate and the terms of his work for Defendant. Defendant has provided in unredacted

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form the amount it seeks to recover – a $6,500 non-refundable retainer fee. Docs. 50-3 at 2

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(redacted), 52-2 at 2 (under seal). And similarly, the Court agrees that the legal services

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agreement contains confidential client communications reciting private contractual terms

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of Ballard Spahr’s legal representation of Defendant. Docs. 50-5 (redacted), 52-3 (under

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seal).

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The sealing of these documents will have little effect on the public’s ability to

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understand the issues addressed in this order. The Court will grant the motion to seal with

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respect to Exhibits 2, 3, and 5.

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IT IS ORDERED:

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1.

Defendant’s motion for attorneys’ fees (Doc. 50) is granted.

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2.

Defendant is awarded $119,460.50 in attorneys’ fees and costs against
Plaintiff BoxNic Anstalt.

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3.

Defendant’s motion to seal is granted in part and denied in part as set forth

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above. Defendant shall within 14 days of this order file Exhibit 1 in an

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unredacted format and lodge Exhibits 2, 3, and 5 for filing under seal by the

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Clerk of Court pursuant to this order.

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Dated this 3rd day of June, 2020.

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