Gibson Guitar Corp v. Viacom International Inc et al

Filing 51

ORDER by Judge Dean D. Pregerson: denying 40 Viacom Motion for Attorney Fees. (lc). Modified on 7/18/2013. (lc).

1
2

O

3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

CENTRAL DISTRICT OF CALIFORNIA

10
11

GIBSON GUITAR CORP., a
Delaware corporation,

12
Plaintiff,
13
v.
14
15
16
17

VIACOM INTERNATIONAL INC., a
Delaware corporation; JOHN
HORNBY SKEWES & CO., LTD., a
United Kingdom corporation,
Defendants.
____________________________

)
)
)
)
)
)
)
)
)
)
)
)
)
)

Case No. CV 12-10870 DDP (AJWx)
ORDER DENYING MOTION FOR
ATTORNEY'S FEES
[Dkt. No. 40]

18
19

Presently before the court is Defendant Viacom International

20

Inc. ("Viacom")'s Motion for Attorney's Fees. Having considered the

21

parties' submissions, the court adopts the following order.

22

I. Background

23

Gibson Guitar Corp. ("Gibson") owns the Flying V Body Shape

24

Design Trademark, the Flying V Peg-Head Design Trademark, and the

25

word mark FLYING V. Viacom owns trademarks for SpongeBob

26

SquarePants. Defendant John Hornby Skewes & Co. Ltd. ("JHS")

27

promotes and sells products that use the SpongeBob SquarePants

28

marks. Gibson asserts various claims for trademark infringement

1

against Viacom and JHS, alleging that Flying V SpongeBob

2

SquarePants ukuleles have been advertised and distributed without

3

Gibson's authorization.

4

On March 8, 2013, the court granted Viacom's motion to dismiss

5

for failure to state a claim for relief against Viacom. (Dkt. No.

6

24.) The court found that, because of the Defendants' different

7

roles–Viacom is the trademark owner of SpongeBob SquarePants and

8

JHS is the seller and promoter of the ukuleles–the Complaint had to

9

"specify the different roles of each Defendant in order to state a

10

claim against each." (Id. p. 7.) Since Gibson failed to do so, it

11

failed to state a claim.

12

Gibson subsequently filed a First Amended Complaint ("FAC").

13

(Dkt. No. 25.) The FAC alleges that JHS infringed Gibson's Flying V

14

trademarks and that Viacom was contributorily and vicariously

15

liable for the infringement because it "intentionally induced JHS

16

to infringe on Gibson Trademarks by controlling and approving

17

products that infringe on Gibson Trademarks and obtaining license

18

fees for such infringement." (Id. ¶ 40.)

19

On May 17, 2013, the court found that Gibson had not alleged

20

that Viacom acted in any way beyond its function as a licensor of

21

the SpongeBob SquarePants Trademark. (Dkt. No. 36.) The allegation

22

of control did not exceed the control required to maintain a

23

trademark license. (Id.) Therefore, the court granted Viacom's

24

motion to dismiss the FAC with prejudice.

25
26

Viacom filed the instant motion for attorney's fees pursuant
to the Lanham Act.

27
28
2

1
2

II. Legal Standard
The Lanham Act provides that a district court may award

3

attorney's fees to a prevailing party, but only in "exceptional

4

cases." 15 U.S.C. § 1117(a). The courts construe the "exceptional

5

cases" requirement narrowly. Classic Media, Inc. v. Mewborn, 532

6

F.3d 978, 990 (9th Cir. 2008). A case is exceptional "when the

7

non-prevailing party's case is groundless, unreasonable, vexatious,

8

or pursued in bad faith." Gracie v. Gracie, 217 F.3d 1060, 1071

9

(9th Cir. 2000); Halicki Films, LLC v. Sanderson Sales and Mktg.,

10

547 F.3d 1213, 1231 (9th Cir. 2008). "A claim is considered

11

factually groundless where there is 'no reasonable basis to

12

believe' in the factual allegations underlying the claim and is

13

considered legally groundless where there is 'no legal basis' for

14

the claim itself, which instead rests on 'absurd' or 'just short of

15

frivolous' contentions of law." Brown v. Elec. Arts, Inc., 722 F.

16

Supp. 2d 1148, 1152 (C.D. Cal. 2010) (quoting Cairns v. Franklin

17

Mint Co., 115 F.Supp.2d 1185, 1188–89 (C.D.Cal.2000)). Thus, if the

18

claim raises "debatable issues of law and fact," then the case is

19

not an "exceptional" one that warrants an award of attorney's fees.

20

Brown, 722 F. Supp. 2d at 1152 (quoting Stephen W. Boney, Inc. v.

21

Boney Servs., Inc., 127 F.3d 821, 827 (9th Cir.1997)).

22

III. Discussion

23

In its motion for attorney's fees, Viacom argues that both the

24

original Complaint and the FAC were groundless. (Dkt. No. 40-1.)

25

Viacom points out that Gibson withdrew its direct infringement

26

theory against Viacom after the court granted the first motion to

27

dismiss. (Id. pp. 3-4.) Viacom asserts that Gibson, having been

28

made aware that Viacom was a mere trademark licensor, alleged no
3

1

facts in the FAC showing that Viacom had any control over the

2

shapes of the ukuleles manufactured by JHS. (Id. p. 4.) Viacom

3

further argues that because its parent company is a publicly held

4

media company, Gibson had no reason to assume that Viacom was in

5

the business of manufacturing musical instruments. (Dkt. No. 46 p.

6

3.) Viacom also asserts that Gibson's purpose in bringing the

7

secondary infringement claim against Viacom is that Viacom is a

8

deep pocket defendant. (Dkt. No. 40-1 pp. 4-5.)

9

Gibson responds that, through its pre-filing investigation,

10

Gibson obtained a copyright notice sticker inside of the SpongeBob

11

SquarePants ukulele. (Dkt. No. 42 p. 2.) The sticker reveals that

12

Viacom is the owner of the SpongeBob SquarePants copyrights and

13

trademarks and JHS is the distributor of the product. (Id.) Gibson

14

states that because the sticker does not indicate who the

15

manufacturer is, it was reasonable for Gibson to assume that Viacom

16

has control over the manufacture of the ukuleles. (Id.)

17

The court finds that Gibson's case against Viacom is not

18

"exceptional" in the sense of the Lanham Act. The fact that

19

allegations are insufficient to survive a motion to dismiss does

20

not in itself render a complaint groundless under Lanham Act.

21

Brown, 722 F. Supp. 2d at 1152. "Otherwise, every case in which a

22

motion to dismiss a Lanham Act claim was granted would be

23

considered an 'exceptional' case and soon the exceptional would

24

become the ordinary." Id.; see also Newborn v. Yahoo! Inc., 437 F.

25

Supp. 2d 1, 7-8 (D.D.C. 2006) (holding that, even though the case

26

was "wholly without merit," contained "vague allegations," and was

27

dismissed with prejudice, the defendant was not entitled to

28
4

1

attorney's fees under the Lanham Act because the case was not

2

"exceptional").

3

Here, the dismissal of Gibson's allegations does not suffice

4

to show that the Complaint or FAC is so groundless as to warrant

5

the award of attorney fees to Viacom. See Brown, 722 F. Supp. 2d at

6

1152. Indeed, the defendants are "rarely awarded attorney fees in

7

trademark infringement cases." Banff, Ltd. v. Colberts, Inc., 810

8

F. Supp. 79, 80 n. 2 (S.D.N.Y. 1992) (citation omitted); see also,

9

Stephen W. Boney, Inc., 127 F.3d at 827 (holding that the case was

10

not exceptional because no evidence proved that the plaintiff's

11

purpose was other than the legitimate objective of preserving his

12

potential trademark right, even though the defendant asserted that

13

the plaintiff filed the lawsuit to harass the defendant); Blau

14

Plumbing, Inc. v. S.O.S. Fix-It, Inc., 781 F.2d 604, 612 (7th Cir.

15

1986) (holding that even if the plaintiff's case was "weak" and not

16

subject to any trademark protection, the action was not so

17

frivolous as to entitle the defendant to award of attorney fees);

18

Coach, Inc. v. Asia P. Trading Co., Inc., 676 F. Supp. 2d 914, 928

19

(C.D. Cal. 2009) (denying the defendant's request for attorneys'

20

fees because, even though the court found the plaintiffs' arguments

21

unpersuasive, there was no evidence that "in the course of making

22

their arguments plaintiffs misrepresented facts that they knew to

23

be false").

24

Further, the cases relied on by Viacom for an award of fees

25

are distinguishable. Those cases involved both groundless claims

26

and significant expenditure of resources. For example, in Secalt

27

S.A. v. Wuxi Shenxi Const. Mach. Co., Ltd., 668 F.3d 677 (9th Cir.

28

2012), a hoist manufacturer sued its competitor, claiming trade
5

1

dress protection for the exterior appearance of its hoist. Id. at

2

681. The manufacturer failed to provide any legitimate evidence to

3

support its trade dress claim after "almost two years" of

4

discovery, multiple depositions, and substantial document

5

production. Id. at 688. In addition, months before the summary

6

judgment proceedings, in a separate action regarding the same trade

7

dress, a different court had found that there was "an utter failure

8

of evidence" because each of the features of the alleged trade

9

dress served a function in the operation of the hoist. Id. The

10

manufacturer nonetheless continued prosecuting its claims. Id. at

11

687. The Circuit found the case was "a conscious, albeit misguided,

12

attempt to assert trade dress rights in a non-protectable machine

13

configuration" and affirmed the award of attorney's fees in favor

14

of the competitor. Id. at 689.

15

Here, unlike the manufacturer in Secalt S.A. who persisted in

16

pursuing trade dress protection in non-protectable appearance of a

17

machine despite of the lack of evidence after almost two years of

18

discovery and a previous court finding of "utter failure of

19

evidence," id. at 688, Gibson has not conducted discovery because

20

its claims were dismissed at the early pleading stage of the

21

litigation. There is no evidence that Gibson pursued its claims

22

against Viacom for harassment or any other illegitimate purposes,

23

and no prior finding of utter failure of evidence by another court.

24

Thus, the court finds that this case does not meet the

25

"exceptional" requirement as demonstrated in Secalt S.A.

26

This case is also distinguishable from Cairns v. Franklin Mint

27

Co., 292 F.3d 1139 (9th Cir. 2002), when the late Princess Diana's

28

memorial fund sued a private mint for alleged violations of the
6

1

Lanham Act. Id. at 1144. The Ninth Circuit affirmed the summary

2

judgment for the mint on the claims for false advertisement and

3

dilution of trademark. Id. at 1156. The Ninth Circuit affirmed the

4

finding that the dilution of trademark claim was legally groundless

5

and unreasonable because it was based on the "absurd" and "just

6

short of frivolous" contention that the words "Diana, Princess of

7

Wales" would no longer primarily identify the individual, Princess

8

Diana, but instead primarily identify her "charitable and

9

humanitarian services." Id. The Ninth Circuit concluded that, based

10

on these findings, the district court's award of attorney's fees

11

was justified. Id.

12

Here, unlike the contention in Cairns that was found to be

13

"absurd" and "just short of frivolous," id., Gibson's allegations

14

were only found to be insufficient to state a claim against Viacom.

15

While it was frivolous to claim that the words "Diana, Princess of

16

Wales" were being primarily associated with charitable activities

17

rather than the late Princess herself, here, in contrast, it is not

18

inconceivable that Viacom would be involved in or have control over

19

the manufacture of the SpongeBob ukuleles.

20

The attorney's fees provision of 15 U.S.C. §1117 was intended

21

to encourage trademark owners to enforce their trademark rights. S.

22

Rep. No. 93-1400 (1974), reprinted in 1974 U.S.C.C.A.N. 7132, 7136.

23

"Mass demand, mass advertising and the increasingly large variety

24

of goods available make the trademarks of crucial importance to

25

manufacturers, distributors and the consuming public. . . .

26

Effective enforcement of trademark rights is left to the trademark

27

owners and they should, in the interest of preventing purchaser

28

confusion, be encouraged to enforce trademark rights." Id. The
7

1

provision also protects prevailing defendants "against unfounded

2

suits brought by trademark owners for harassment and the like." Id.

3

If the courts were to treat every lawsuit that failed to state a

4

claim as an exceptional case justifying an award of attorney's

5

fees, trademark owners would be reluctant to risk asserting their

6

rights and the public's interest in being free of source confusion

7

would be compromised.

8
9

The court finds that this case is not groundless,
unreasonable, vexatious, or pursued in bad faith. Accordingly, the

10

court finds this case is not an "exceptional" case in which the

11

award of attorney's fees is justified.

12

IV. Conclusion

13

For the reasons stated above, Viacom’s Motion for Attorney's

14

Fees is DENIED.

15

IT IS SO ORDERED.

16
17

Dated: July 18, 2013
DEAN D. PREGERSON
United States District Judge

18
19
20
21
22
23
24
25
26
27
28
8