Fitbug Limited v. Fitbit, Inc

Filing 121

Order by Hon. Samuel Conti denying 111 motion for attorneys' fees. (sclc2, COURT STAFF) (Filed on 6/5/2015)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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FITBUG LIMITED,
Plaintiff,

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v.

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FITBIT, INC.,
Defendant.

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) Case No. 13-1418 SC
)
) ORDER DENYING MOTION FOR
) ATTORNEYS' FEES AND COSTS
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I.

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INTRODUCTION
Now before the Court is Defendant Fitbit, Inc.'s ("Fitbit")

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motion for attorneys' fees and costs in this trademark infringement

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case.

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summary judgment in Fitbit's favor on Plaintiff Fitbug Limited's

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("Fitbug") trademark infringement claims, finding they were barred

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by laches.

ECF No. 109-1 ("Mot.").

The Court previously granted

See generally ECF No. 96 ("SJ Order").

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In this motion, Fitbit argues that as the prevailing party in

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an "exceptional case[]," it may recover reasonable attorneys' fees

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and costs.

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this case is ordinary and its arguments, even if not successful,

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were reasonable.

See 15 U.S.C. § 1117(a).

Fitbug opposes, arguing that

See ECF No. 115 ("Opp'n").

The motion is fully

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briefed, ECF No. 117 ("Reply"), and appropriate for resolution

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without oral argument under Civil Local Rule 7-1(b).

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reasons set forth below, the motion is DENIED.

For the

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II.

BACKGROUND
This trademark infringement case involves two companies that

Fitbug, founded in 2004, was one of the first entrants into that

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market, and sells its devices predominantly in the United Kingdom.

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United States District Court

manufacture and sell portable electronic fitness tracking devices.

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For the Northern District of California

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Fitbit was founded in March 2007, and has since developed into one

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of the leading providers of such devices both in the United States

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and abroad.

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Fitbug believes that Fitbit's marketing and sale of similar

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devices under a similar name and logo constitutes trademark

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infringement.

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judgment in Fitbit's favor, Fitbug knew or should have known of the

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likelihood of confusion between the marks -- the touchstone of

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trademark infringement -- in 2008, when Fitbit began to market and

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sell (although not yet ship) its devices.

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assert its trademark rights until a cease-and-desist letter in late

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2011 and, after that letter was rebuffed by Fitbit, did not file

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suit until March 29, 2013.

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However, as the Court found in granting summary

Yet Fitbug did not

As the Court found, that delay was unreasonable and prejudiced

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Fitbit, thus rendering Fitbug's claims untimely under the doctrine

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of laches.

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stipulated to the bifurcation of Fitbit's motion for attorneys'

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fees, ECF No. 107 ("Stip."), under Federal Rule of Civil Procedure

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54(d)(2)(C).

After entering judgment in Fitbit's favor, the parties

As a result, this motion only resolves whether Fitbit

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is entitled to shift its fees to Fitbug, with the exact amount of

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fees reserved for later.

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III. LEGAL STANDARD
While the default in civil litigation in the United States is

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the so-called "American Rule" that each party bears its own

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attorneys' fees, the Lanham Act authorizes fee-shifting in

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"exceptional cases . . . ."

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Fitness, LLC

United States District Court

For the Northern District of California

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15 U.S.C. § 1117(a); see also Octane

v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 1756

(2014).
"An action may be considered exceptional '[w]hen a plaintiff's

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case is groundless, unreasonable, vexatious, or pursued in bad

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faith.'"

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677, 687 (9th Cir. 2012) (quoting Stephen W. Boney, Inc. v. Boney

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Servs., 127 F.3d 821, 827 (9th Cir. 1997)); see also Octane

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Fitness, 134 S. Ct. at 1757 ("[A] case presenting either subjective

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bad faith or exceptionally meritless claims may sufficiently set

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itself apart from [typical] cases to warrant a fee award.") (citing

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Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 771 F.2d 521,

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526 (D.C. Cir. 1985)).

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patent context, an "exceptional" case is "simply one that stands

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out from others with respect to the substantive strength of a

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party's litigating position (considering both the governing law and

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the facts of the case) or the unreasonable manner in which the case

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was litigated."

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Georgia-Pacific Consumer Prods. LP v. von Drehle Corp., 781 F.3d

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710, 721 (4th Cir. 2015) (applying this standard to Lanham Act

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claims); Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 315 (3d

See Secalt S.A. v. Wuxi Shenxi Const. Mach. Co., 668 F.3d

As the Supreme Court recently put it in the

Octane Fitness, 134 S. Ct at 1756; see also

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Cir. 2014) (same).
Thus, the Court must review the parties' litigating positions

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and the totality of the circumstances in deciding whether this case

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is exceptional.

See Octane Fitness, 134 S. Ct. at 1756.

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IV.

DISCUSSION
Fitbit believes this case is exceptional because Fitbug knew

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or should have known that laches barred its claims prior to filing

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suit, lacked factual and legal support in arguing against laches,

United States District Court

For the Northern District of California

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and pursued its claims unreasonably, specifically by seeking

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legally and factually unsupported damages.

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arguing that its assessment of the laches defense and its damages

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claims were reasonable, and as a result concludes this case is

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unexceptional.

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Fitbug disagrees,

The Court will address the laches defense first, before

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turning to Fitbug's damages theories.

Because the Court finds the

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case is unexceptional, there is no need to address Fitbit's final

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argument regarding its entitlement to fees for its defense against

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Fitbug's state and common-law claims.

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A.

Laches

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As the Court found in its summary judgment order, Fitbug's

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claims are barred by laches.

"Laches is an equitable time

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limitation on a party's right to bring suit, resting on the maxim

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that one who seeks the help of a court of equity must not sleep on

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his rights," and is a defense both to Lanham Act claims and state

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and common-law claims.

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Inc., 304 F.3d 829, 835 (9th Cir. 2002) (internal citations and

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quotation marks omitted); see also Saul Zaentz Co. v. Wozniak

See Jarrow Formulas, Inc. v. Nutrition Now,

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Travel, Inc., 627 F. Supp. 2d 1096, 1109 (N.D. Cal. 2008).

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is barred by laches if the defendant can show "(1) unreasonable

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delay by plaintiff in bringing suit, and (2) prejudice . . . ."

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Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 997 (9th Cir.

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2006) (citing Couveau v. Am. Airlines, Inc., 218 F.3d 1078 (9th

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Cir. 2000)).

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A claim

While the Court found in Fitbit's favor as to both of these

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prongs, concluding that the laches period began to run in September

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2008, the application of laches here was not so clear-cut as to

United States District Court

For the Northern District of California

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make Fitbug's position unreasonable or this case exceptional.

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After all, in determining whether the length of the delay was

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unreasonable, courts look to the most analogous statute of

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limitations period under state law.

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While the Court doubts the validity of the cases applying the four-

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year limitation periods in California Code of Civil Procedure

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Sections 337 and 343, it is true that up to this point, the Ninth

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Circuit and district courts in California have almost universally

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assumed that four years is the relevant period.

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13-14 (collecting cases); see also Mission Imports, Inc. v. Super.

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Ct., 31 Cal. 3d 921, 931 (Cal. 1982) (stating that "action[s] for

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trademark infringement sound[] in tort"); High Country Linens, Inc.

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v. Block, No. C 01-02180 CRB, 2002 WL 1998272, at *2 (N.D. Cal.

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Aug. 20, 2002) (applying the two-year period for tort claims in

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California Code of Civil Procedure Section 339 based on Mission

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Imports).

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would be presumptively timely so long as it delayed no more than

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four years.

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See Jarrow, 304 F.3d at 837.

See SJ Order at

Thus, Fitbug could have reasonably concluded its claims

Again, while the Court found that Fitbug delayed more than

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four years, Fitbug could have reasonably concluded its delay was

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less than four years.

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"knew or should have known" of the likelihood of confusion between

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its mark and Fitbit's was September 2008, when Fitbit announced its

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products to substantial attention both in the media and at Fitbug.

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However, that was the earliest date from which the Court could have

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measured the laches period.

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have been presumptively timely (at least under the four-year period

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it believes applies) had the Court accepted any other potential

The date on which the Court found Fitbug

In other words, Fitbug's claims would

United States District Court

For the Northern District of California

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start date for laches.

And Fitbug had at least a colorable

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argument that the laches period should have started only roughly a

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year later, when Fitbit first shipped its allegedly infringing

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goods.

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holding that laches is measured from "the date that defendant began

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significantly impacting plaintiff's goodwill and business

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reputation," see National Consumer Engineering, Inc. v. Lockheed

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Martin Corp., No. CV 96-8938 DDP, 1997 WL 363970, at *6 (C.D. Cal.

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Feb. 14, 1997), as that language is inconsistent with subsequent

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Ninth Circuit precedent, see Jarrow, 304 F.3d at 838 (holding that

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the court must assess the length of delay from the time plaintiff

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"knew or should have known about its potential cause of action"),

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Fitbug is correct that it was entitled to wait until it "had a

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provable infringement claim against [Fitbit]."

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Country Smoker, Inc. v. Tillamook Cnty. Creamery Ass'n, 465 F.3d

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1102, 1108 (9th Cir. 2006).

Although Fitbug was unreasonable in relying on a case

See Tillamook

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A provable infringement claim requires a showing of likelihood

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of confusion, which is assessed through the factors laid out in AMF

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Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979).

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In

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granting summary judgment, the Court found that Fitbug had a

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provable infringement claim in September 2008 despite the absence

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of evidence on two factors -- the "proximity of the goods" and

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"evidence of actual confusion" -- before Fitbit shipped its

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allegedly infringing devices in September 2009.

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Despite that finding, the lack of evidence on those factors

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certainly supports Fitbug's view it did not have a provable

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infringement claim until September 2009.

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at 1108.

Id. at 348.

See Tillamook, 465 F.3d

Coupling this with the assumption that the most analogous

United States District Court

For the Northern District of California

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state law cause of action under California law has a four-year

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statute of limitations, Fitbug's decision to bring suit in March of

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2013 was not legally or factually unreasonable, frivolous, or

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otherwise "exceptional."

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Fitness, 134 S. Ct at 1756 & n.6.

See 15 U.S.C. § 1117(a); see also Octane

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B.

Damages Theories

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Second, Fitbit contends that Fitbug's damages theories were

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legally baseless.

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demand for disgorgement of Fitbit's profits and its efforts to

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obtain "lost royalties."

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Fitbug eventually dropped these contentions, Fitbug did so just

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twenty days before trial, after Fitbit allegedly incurred

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significant expense defending against them.

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Specifically, Fitbit takes issue with Fitbug's

Mot. at 9.

While Fitbit points out

Fitbug's Disgorgement Theory

Fitbug sought disgorgement of Fitbit's profits as damages.

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An alleged infringer's profits are recoverable in trademark cases

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on a disgorgement/unjust enrichment theory or as proxy for actual

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damages under 15 U.S.C. Section 1117(a)(2).

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Inc. v. Bic Pen Corp., 982 F.2d 1400, 1405-09 (9th Cir. 1993); Spin

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See Lindy Pen Co.,

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Master, Ltd. v. Zobmondo Entm't, 944 F. Supp. 2d 830, 839-49 (C.D.

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Cal. 2012).

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willfulness may not be required to recover an alleged infringer's

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profits as a proxy for actual damages, a disgorgement theory

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clearly requires willfulness.

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F.3d 984, 988 (9th Cir. 1995). Moreover, a showing of intent to

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"'exploit the advantage of an established mark'" and "'gain the

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value of an established name of another'" is similarly necessary

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for disgorgement of profits.

United States District Court

For the Northern District of California

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While Fitbug points to cases suggesting that

See Adray v. Adry-Mart, Inc., 76

Id. at 849 (quoting Lindy Pen, 982

F.2d at 1405-06).
As the Court found in granting summary judgment, "Fitbit has

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offered no evidence demonstrating that Fitbit employed the

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allegedly infringing mark with the wrongful intent of capitalizing

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on its goodwill."

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omitted) (quoting RSI Corp. v. IBM Corp., No. 5:08-CV-3414-RMW,

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2012 WL 3277136, at *20 (N.D. Cal. Aug. 9, 2012)).

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of evidence of trading off Fitbug's goodwill, disgorgement would

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"amount to a penalty to [Fitbit] and a windfall to [Fitbug], who

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has only a 'relatively obscure name' to appropriate, even if

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[Fitbit's] infringement was otherwise intentional."

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Master, 944 F. Supp. 2d at 848-49.

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SJ Order at 27 (internal quotation marks

In the absence

See Spin

If Fitbug had asserted this theory from the start (and thus

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without the benefit of discovery), the Court might be reticent to

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conclude the assertion of this theory was unreasonable.

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particularly true given that Fitbug dropped this theory prior to

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trial, likely in recognition of the absence of evidence of any

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willfulness or intent to trade on Fitbug's name.

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did not identify this theory until it supplemented its initial

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This is

However, Fitbug

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disclosures in August 2014 -- just before the close of fact

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discovery and after the action was pending for well over a year.

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ECF No. 111-1 ("Wakefield Decl.") at Ex. 2.

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finds Fitbug's decision to seek disgorgement of Fitbit's profits

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lacked an objectively reasonable factual or legal basis.1

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Octane Fitness, 134 S. Ct. at 1756 & n.6 (citing Fogerty v.

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Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994)).
2.

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United States District Court

For the Northern District of California

See

Lost Royalties

Second, Fitbit argues that Fitbug's claim for lost royalty

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As a result, the Court

damages was unreasonable.
Lost royalties are a permissible form of damages for trademark

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infringement akin to lost profits, and must be proven with

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reasonable certainty.

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No. SA 12-cv-0451(RNBx), 2013 WL 1953719, at *4 (C.D. Cal. May 9,

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2013).

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reasonable royalties are most often granted in a trademark context

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where the parties had a prior licensing arrangement, or where the

See QS Wholesale, Inc. v. World Mktg., Inc.,

"Because of the 'reasonable certainty' requirement,

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Fitbit also points to Fitbug's "forward confusion" theory and
arguments about the famousness of its mark as further supporting
its belief that the claims for Fitbit's profits were unsupported
and unreasonable. While the Court agrees that the forward
confusion theory was unlikely to succeed on the merits, Fitbug's
argument had factual and legal support. See Tools USA & Equip. Co.
v. Champ Frame Straightening Equip., Inc., 87 F.3d 654, 660-61 (4th
Cir. 1996) (noting that evidence of actual consumer confusion is
the best evidence of likelihood of confusion); ECF No. 49
("Rosenberg Decl.) Ex. 8 (summarizing customer queries to Fitbit
regarding Fitbug devices); but see Reply at 11 (pointing out the
factual evidence of actual confusion, summaries of communications
between Fitbit and its customers, were potentially inadmissible)
(citing Fed. R. Evid. 602, 802). Setting aside this evidentiary
dispute, which the Court need not resolve, even if Fitbug's forward
confusion theory was weak, the Court finds that in light of the
factual and legal support for the theory, asserting a forward
confusion theory was neither frivolous nor objectively
unreasonable. See Octane Fitness, 134 S. Ct. at 1756 n.6.

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plaintiff previously had engaged in the practice of licensing the

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mark to a third party . . . ."

Id. (internal citations omitted).

Here, as Fitbit notes, the parties did not have an existing or

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prior licensing arrangement and Fitbug does not have a history of

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licensing its mark.

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allowing a reasonable royalty theory to proceed despite the absence

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of a prior licensing history between the parties or between the

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plaintiff and a third party.

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F. Supp. 2d 1309, 1330 (N.D. Ga. 2013).

However, Fitbug points to at least one case

See ITT Corp. v. Xylem Grp., LLC, 963
As a result, even if this

United States District Court

For the Northern District of California

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theory of damages was unlikely to succeed, the Court finds it was

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not "groundless, unreasonable, vexatious, . . . pursued in bad

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faith," or otherwise objectively unreasonable.

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134 S. Ct. at 1756, n.6; Secalt, 668 F.3d at 687 (internal

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quotation marks omitted).

See Octane Fitness,

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V.

CONCLUSION

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Awarding attorneys' fees under 15 U.S.C. Section 1117(a) is

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discretionary.

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F.3d 704, 711 (9th Cir. 1999).

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the Court finds that while Fitbit's laches defense was relatively

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strong and Fitbug's claims for Fitbit's profits were legally and

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factually unreasonable, considering "the totality of the

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circumstances," this case neither "stands out from others with

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respect to the substantive strength of a party's litigating

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position . . . or the unreasonable manner in which the case was

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litigated," Octane Fitness, 134 S. Ct. at 1756, nor was it

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"groundless, unreasonable, vexatious, or pursued in bad faith."

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See Secalt, 668 F.3d at 687 (internal quotation marks omitted).

See Rolex Watch, U.S.A., Inc. v. Michel Co., 179
In the exercise of that discretion,

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Accordingly, Fitbit's motion for attorneys' fees is DENIED.

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Dated: June 5, 2015

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UNITED STATES DISTRICT JUDGE

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United States District Court

For the Northern District of California

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