Specht et al v. Google Inc et al

Filing 362

MEMORANDUM Opinion and Order Signed by the Honorable Harry D. Leinenweber on 7/27/2011:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

ERICH SPECHT, et al.,
Plaintiffs,

Case No. 09 C 2572

v.
Hon. Harry D. Leinenweber
GOOGLE, INC.,
Defendant.

MEMORANDUM OPINION AND ORDER
Before the Court is (1) the Motion for Attorneys’ Fees and
Sanctions from Defendant Google Inc. (hereinafter, “Google”), (2)
a Motion to Strike Google’s Sanctions Motion from Plaintiffs Erich
Specht, Android Data Corporation, and The Android’s Dungeon, Inc.
(hereinafter, the “Plaintiffs”), and (3) Plaintiffs’ and attorney
Martin Murphy’s Motion to Strike Google’s Sanctions Motion.

For

the reasons stated herein, all three Motions are denied.
I.

INTRODUCTION

The Court previously detailed the facts of this case in its
Summary Judgment Memorandum Opinion and Order, so these need not be
repeated here. In short, this case involved Plaintiffs’ claim that
Google’s unregistered ANDROID mark infringed its registered ANDROID
DATA mark.

On December 17, 2010, the Court ruled that Plaintiffs

had abandoned their ANDROID DATA mark, and granted summary judgment
in favor of Google on all counts of Plaintiffs’ Second Amended

Complaint, and Counts I and III of Google’s Counterclaim.

After

the Court denied Plaintiffs’ Motion for Reconsideration, Google
dismissed

without

Counterclaim.

prejudice

the

remaining

counts

of

its

The Court filed judgment on February 24, 2011, but

entered judgment more than two weeks later on March 11, 2011.
On March 22, Google filed its attorneys’ fees and sanctions
motion.

Google moves for attorneys’ fees pursuant to 15 U.S.C.

§ 1117(a), which allows the prevailing party in an “exceptional”
trademark case to receive these fees.
§

1927

sanctions

against

It also moves for 28 U.S.C.

Plaintiffs’

attorneys

(“Murphy”) and P. Andrew Fleming (“Fleming”).

Martin

Murphy

Plaintiffs first

filed two motions to strike Google’s motion — one addressing the
Lanham Act claim, and the other, which is joined by Murphy,
addressing the § 1927 claim. Plaintiffs and Murphy have also filed
substantive responses to Google’s motion.

Fleming and his law

firm, Novack and Macey, have also responded to the § 1927 segment
of Google’s motion.
II.
A.

ANALYSIS

Plaintiffs’ and Martin Murphy’s Motions to Strike
1.

15 U.S.C. § 1117(a) Attorneys’ Fees

Plaintiffs filed two motions to strike on the same day.

One

motion addresses the Lanham Act attorneys’ fees set forth in
§ 1117(a) that Google seeks.

Here, Plaintiffs first argue that

Federal Rule of Civil Procedure 59(e), not Rule 54(d)(2), governs
- 2 -

§ 1117(a). According to Plaintiffs’ rationale, Google’s motion for
fees is actually a motion to amend or alter this Court’s judgment,
and as such Google must “demonstrate a manifest error of law or
present newly discovered evidence” for the court to amend its
judgment.

Heyde v. Pittenger, 633 F.3d 512, 521 (7th Cir. 2011).

Plaintiffs base this argument on the Seventh Circuit’s decision in
Hairline Creations, Inc. v. Kefalas, 664 F.2d 652 (7th Cir. 1981),
which held that the Lanham Act’s attorneys’ fees provision is tied
to the judgment, and therefore governed by Rule 59(e). Id. at 660.
After Hairline Creations, however, the Supreme Court decided White
v. New Hampshire Department of Employment Security, 455 U.S. 445
(1982).

In addressing a post judgment attorneys’ fees request

under the Civil Rights Attorney’s Fees Awards Act of 1976, 42
U.S.C. § 1988, the Court held that “federal courts generally have
invoked Rule 59(e) only to support reconsideration of matters
properly encompassed in a decision on the merits.” Id. at 451
(internal citation omitted).

The Court found that a § 1988

attorneys’ fees request presented “legal issues collateral to the
main cause of action.” Id.
Since White, the Seventh Circuit has walked a tightrope when
confronted with the viability of Hairline Creations.

Its analysis

in Bittner v. Sadoff & Rudoy Industries, 728 F.2d 820, 827–28 (7th
Cir. 1984), illustrates this feat of finding narrow grounds to

- 3 -

differentiate Lanham Act attorneys’ fees with other statutory
attorneys’ fees provisions:
Hairline Creations is an outlier. Most cases,
under most attorney-fee statutes, follow the
Rule 54(d) route. . . . There is a practical
reason for this: Especially in substantial
litigation, where large fees may reasonably be
requested, it is unrealistic to expect the
prevailing party’s lawyer to be able to get a
carefully formulated fee request in within the
Rule 59(e) deadline of ten days — a deadline
that cannot be extended. The Rule 59(e) route
would trap the unwary in some cases and in
others cause half-baked fee requests to be
submitted that would have to be amended later.
If Hairline Creations . . . is still good law
(a question we need not decide here), it is so
only because to allow attorney’s fees to be
awarded in “exceptional” cases may be thought
to imply that such fees are a sanction in the
nature of punitive damages; and of course a
plaintiff disappointed with a judgment that
did not include an award of punitive damages
would have to get the judgment amended if he
wanted them added. The analogy is imperfect,
because 15 U.S.C. § 1117 allows a prevailing
defendant as well as a prevailing plaintiff to
obtain an award of attorney’s fees “in
exceptional cases” and a defendant could never
get an award of punitive damages.
Id. at 827–28; see also Exch. Nat. Bank of Chicago v. Daniels, 763
F.2d 286, 294 (7th Cir. 1985)(“It is enough to say that Hairline
states a peculiarity of patent and trademark litigation. We may
reexamine Hairline if the occasion arises.”).
Hairline Creations has not been reexamined since 1985, so
Plaintiffs
expressly

are

correct

overruled

its

in

that

the

holding

that

Seventh
Rule

Circuit
59(e)

has

applies

not
to

§ 1117(a). Rather, the court has disregarded this issue since 1985
- 4 -

when addressing Lanham Act attorneys’ fees.

The fees motions in

many of these cases have emerged through procedures that comply
with Rule 54(d)(2), not Rule 59(e).

By not barring these motions

on procedural grounds, the Seventh Circuit, by implication, no
longer appears to consider Hairline Creations good law.
For

example,

the

Seventh

Circuit

affirmed

the

award

of

§ 1117(a) attorneys’ fees in S Industries, Inc. v. Centra 2000,
Inc., 249 F.3d 625, 629 (7th Cir. 2001).

In this case, Judge

George W. Lindberg entered judgment on March 31, 1998, after
granting summary judgment in favor of the defendant.
N.D. Ill. No. 96-C-3524, ECF No. 44.

S Indus.,

The defendant filed its

motion for attorneys’ fees on April 13, 1998, which was after the
10 days allowed at the time by Rule 59(e) to file such a motion.
Id. at

ECF

No.

46.

The defendant

had

filed

the

motion

in

compliance with Rule 54(d)(2). Nevertheless, despite the existence
of Hairline Creations, the district court ruled on the motion, and
the

Seventh

Circuit

affirmed

the

decision

without

addressing

whether Rule 59(e) or Rule 54(d)(2) applied.
A similar procedure was followed in Door Systems Inc. v. ProLine Door Systems, Inc., 126 F.3d 1028 (7th Cir. 1997), when the
Seventh Circuit reversed Magistrate Judge Arlander Keys’ decision
not to award the prevailing plaintiff § 1117(a) attorneys’ fees.
Judge Keys had entered judgment on October 30, 1995.

Door Sys.,

Inc. v. Overhead Door Sys., et al., N.D. Ill. No. 91-C-8050,
- 5 -

ECF No. 101.

The defendant filed its petition for attorneys’ fees

and costs on November 17, which, again, was after the 10-day period
that existed in 1995 to file a Rule 59(e) motion.

The Seventh

Circuit allowed the petition to proceed, presumably finding that it
complied with Rule 54(d)(2).
Finally, the Seventh Circuit in Nightingale Home Healthcare,
Inc. v. Anodyne Therapy, LLC, 626 F.3d 958 (7th Cir. 2010),
affirmed the Southern District of Indiana court’s award of Lanham
Act attorneys’ fees.

District Court Judge Sarah Evans Barker

entered judgment in favor of the defendant on May 15, 2009.
Nightingale Home Healthcare, S.D. Ind. No. 06-CV-1435, ECF No. 138.
The defendant’s fees motion did not seek to amend the judgment
pursuant to Rule 59(e), id. at ECF No. 140, which did not make the
Seventh Circuit pause in affirming the fees award.
While Hairline Creations may technically still be viable, it
appears relegated to the back corner of a locked closet, with the
Seventh Circuit disregarding it.

Accordingly, this Court finds

that Rule 54(d)(2), not Rule 59(e), applies to a motion for
attorneys’ fees under § 1117(a).
Plaintiffs next argue that even under Rule 54(d)(2), Google’s
motion was not timely.

They are wrong.

Plaintiffs for some reason

insist that judgment was entered in this case on December 17, 2010
— the date when the Court filed its summary judgment ruling.

They

do so even after being presented with case law clearly holding that

- 6 -

the date of judgment is the date on the docket on which judgment
was entered. See Ogborn v. United Food & Commercial Workers Union,
Local No. 881, 305 F.3d 763, 769–70 (7th Cir. 2002).

In this case,

the Court filed its judgment on February 24, 2011, but entered
judgment

on

March

11,

2011.

The

March

11

date

controls.

Plaintiffs do not — and cannot — cite any authority holding that
the date on which the Court granted summary judgment controls the
filing of a Rule 54(d)(2) motion. Google filed its motion on March
22, 2011 — well within the allowable time frame.

Therefore, the

Court denies Plaintiffs’ Motion to Strike Google’s motion for
Lanham Act attorneys’ fees.
2.

28 U.S.C. § 1927 Attorneys’ Fees

Plaintiffs’ second Motion to Strike, which Murphy joined,
addresses Google’s motion for 28 U.S.C. § 1927 attorneys’ fees.
Murphy sets forth a number of baseless reasons why the Court should
strike Google’s motion.

First, Murphy argues that, pursuant to

Nightingale, § 1927 attorneys’ fees are improper in Lanham Act
cases because § 1117(a) is the exclusive mechanism for such fees.
This is an incorrect reading of this case.
Google’s motion.

Murphy also misreads

Google moves for § 1927 sanctions from counsel,

not from Plaintiffs.

Murphy still needlessly argues that Google

moves for these sanctions against Plaintiffs. In addition, Murphy
argues that the motion should be stricken because it does not
specify the amounts Google seeks under § 1927.

- 7 -

He does not cite

any authority that Google is required to do so because, at this
point,

Google

need

not

provide

the

Court

or

Murphy

with

an

accounting of the fees it seeks. Finally, Murphy argues the merits
of Google’s motion and claims that Google has filed it for improper
purposes.

Not one of these arguments provides grounds to strike

the § 1927 motion. Accordingly, the second motion to strike is also
denied.
B.

Google’s Motion for Lanham Act Attorneys’ Fees

Moving to the merits of Google’s motion, the Lanham Act
provides that the court has discretion in an “exceptional case” to
award the prevailing party reasonable attorneys’ fees.
§ 1117(a).

The key issue in this analysis is what constitutes an

“exceptional case.”
question,

15 U.S.C.

and

held

The Seventh Circuit recently addressed this
that

“a

case

under

the

Lanham

Act

is

‘exceptional’ . . . if the losing party was the plaintiff and was
guilty of abuse of process in suing.” Nightingale Home Healthcare,
626 F.3d at 963–64.

The court addressed the fact that abuse of

process is a tort, and a motion for attorneys’ fees is not a
separate suit.

To minimize the proceedings in a § 1117(a) motion

so that the tail does not wag the dog, the court wrote:
[A]n elaborate inquiry into the state of mind
of the party from whom reimbursement of
attorneys’ fees is sought should be avoided.
It should be enough to justify the award if
the party seeking it can show that his
opponent’s claim or defense was objectively
unreasonable — was a claim or defense that a
rational litigant would pursue only because it
- 8 -

would impose disproportionate costs on his
opponent — in other words only because it was
extortionate in character if not necessarily
in provable intention.
Id. at 965.
In focusing on the claims that Plaintiffs made against Google
in determining if this is an exceptional case, the Court finds
that, overall, this is not an exceptional case.

When they filed

their Complaint, Plaintiffs had an active and valid registration to
the ANDROID DATA mark.

They learned that the United States Patent

and Trademark Office (the “USPTO”) had denied Google’s registration
of the ANDROID mark on likelihood of confusion grounds.

They

possessed reasonable grounds to file a likelihood-of-confusion suit
against Google.
Further, whether Plaintiffs had abandoned the ANDROID DATA
mark was not a cut-and-dry issue.

In ruling on summary judgment,

the Court had before it evidence that Plaintiffs had used the
ANDROID DATA mark in some manner from its inception through April
2005,

as

well

as

resumed

using

the

mark

in

late

2007.

A

dispositive issue that emerged was whether Plaintiffs’ use of the
ANDROID DATA mark on what was essentially a “ghost” web site for
their

dormant

business

15 U.S.C. § 1127.

was

a

use

in

commerce

as

defined

in

The Court ruled that it was not, and granted

summary judgment in favor of Google on the abandonment issue.

The

Court would not expect Plaintiffs to refrain from pursuing their

- 9 -

trademark infringement claims against Google on the basis of this
narrow use-in-commerce issue.
Google also alleges that Plaintiffs resurrected their use of
the ANDROID DATA mark simply for purposes of this lawsuit, and
engaged in fraud before the USPTO in renewing their mark.

The

Court, however, is not in a position to rule on these issues, and
will not engage in what would be essentially separate cases on to
themselves to determine if these provide grounds to sanction
Plaintiffs.
Google has identified three primary litigation tactics by
Plaintiffs — in addition to various other smaller issues — that it
claims invoke § 1117(a):

(1) moving for a temporary restraining

order and preliminary injunction to enjoin Google from using the
ANDROID mark; (2) naming 48 defendants in their Complaint and First
Amended Complaint; and (3) inserting allegations of counterfeiting
in their Complaint and First Amended Complaint.
The Court agrees that an objectively reasonable attorney who
conducted the proper due diligence into the law and facts of this
case would not have pursued these tactics. Further, the Court does
not accept Plaintiffs’ explanation that their attorney Murphy is
not a specialist in the area of trademark litigation, and therefore
the counterfeit claim emerged from a “literal reading” of the
USPTO’s ruling to deny registration of Google’s ANDROID mark.

A

counterfeit mark is defined in the Lanham Act as “a counterfeit of

- 10 -

a mark that is registered on the principal register in the United
States Patent and Trademark Office for such goods or services sold,
offered for sale, or distributed and that is in use, whether or not
the person against whom relief is sought knew such mark was so
registered.” 15 U.S.C. § 1116(d)(1)(B)(I). Absolutely no evidence
exists that Google was using a counterfeit of the ANDROID DATA mark
in connection with the sale or distribution of its Android mobile
device

operating

system.

Plaintiffs

may

have

included

this

allegation in their pleadings because they were enticed by the
treble and statutory damages associated with it.

See id. at

§ 1117(b)–(c).
Understanding the elements of a trademark counterfeit cause of
action does not require being a specialist in trademark law.
requires only a reasonable statutory reading.

It

Plaintiffs did not

do this, and in their response to Google’s motion, seem to admit
that Murphy violated Rule 11(b) with this counterfeit charge. Pls.’
Resp. to Google’s Mot. for Attorneys’ Fees at 8–9, May 19, 2011
(“Specht’s attorney is, in the words of Judge Easterbrook, a
generalist
litigation.

and

not

a

specialist

in

the

area

of

trademark

Plaintiffs applied the PTO’s finding, i.e., that the

marks are ‘identical,’ literally to the counterfeiting statute and
reasoned that the contemporaneous use of an ‘identical’ mark
belonging to someone else is a counterfeit.”).

Perhaps Murphy

should take heed of his own admission that he is not well-versed in

- 11 -

trademark law and make the appropriate decisions in the future when
presented with the opportunity to represent a client in a trademark
case.
However,

while

there

were

significant

deficiencies

in

Plaintiffs’ pleadings and in their effort to enjoin Google’s use of
its ANDROID mark, these do not move a case which at its core had a
colorable claim of trademark infringement into an exceptional case
that warrants § 1117(a) attorneys’ fees. Google’s allegations also
appear to

seek

Rule

11

sanctions. Google, however,

does not

expressly seek Rule 11 sanctions, nor has it complied with the
procedures required for these. The Court has the inherent power to
invoke sanctions. See Corley v. Rosewood Care Ctr., Inc., 142 F.3d
1041, 1058–59 (7th Cir. 1998). Such sanctions, however, “must be
invoked with the utmost caution.” Id. at 1059.

Here, the Court

will not invoke either § 1117(a) or Rule 11 sanctions against
Plaintiffs.
C.

Google’s Motion for 28 U.S.C. § 1927 Sanctions

Google also seeks sanctions against Plaintiffs’ attorneys
Murphy and Fleming pursuant to 28 U.S.C. § 1927.
attorney

“who

so

multiplies

the

Under § 1927, an

proceedings

in

any

case

unreasonably and vexatiously may be required by the court to
satisfy personally the excess costs, expenses, and attorneys’ fees
reasonably incurred because of such conduct.”

The Seventh Circuit

has established standards to impose such sanctions:

- 12 -

[A] court has discretion to impose § 1927
sanctions when an attorney has acted in an
objectively unreasonable manner by engaging in
serious and studied disregard for the orderly
process of justice; pursued a claim that is
without plausible legal or factual basis and
lacking in justification; or pursue[d] a path
that a reasonably careful attorney would have
known, after appropriate inquiry, to be
unsound.
Jolly Grp., Ltd. v. Medline Indus., Inc., 435 F.3d 717, 720 (7th
Cir. 2006)(quotations and internal citations omitted).

Counsel

must act unreasonably and vexatiously to warrant sanctions.

See

Kotsilieris v. Chalmers, 966 F.2d 1181, 1184 (7th Cir. 1992).
Vexatious conduct requires either subjective or objective bad
faith. See id.
“only

if

the

The moving party must show subjective bad faith
conduct

colorable basis.”

under

consideration

had

an

objectively

Dal Pozzo v. Basic Mach. Co., Inc., 463 F.3d

609, 614 (7th Cir. 2006).

Objective bad faith requires only

reckless indifference to the law, not malice or ill will. See id.
The

Court

first

addresses

Google’s

allegations

against

Fleming, which contend that he was responsible for sanctionable
conduct in signing on to the case and then proceeding to prosecute
it during discovery and through summary judgment.
matter,

Fleming

is

not

subject

to

sanctions

As an initial

for

filing

his

appearance, as Plaintiffs’ claims of trademark infringement had
some merit.

Plus, simply filing an appearance does not multiply

the proceedings.
contentious.

With Fleming on board, this case became more

For

example,

Fleming
- 13 -

should

have

been

more

forthcoming in responding to Google’s interrogatories and document
requests.

The fact that Google had to file three motions to compel

to receive the discovery it rightfully sought shows the extent of
the gamesmanship that transpired during discovery. However, rather
than illustrating sanctionable conduct, Fleming’s responses to
Google’s discovery requests — as well as the other allegations of
sanctionable

conduct

that

Google

alleges

against

Fleming

—

illustrate aggressive litigation behavior that was unreasonable but
not vexatious.

Discovery in this case was fraught with pitfalls.

The case, however, did not take a slow boat to summary judgment.
Rather, it progressed at a reasonably stable pace, coming to a
resolution in about 22 months.

Accordingly, Fleming is not liable

for § 1927 sanctions.
On the other hand, Murphy’s conduct during the course of this
litigation comes closer to warranting sanctions.

The Court,

however, exercises its discretion and does not sanction Murphy
under § 1927. The counterfeiting claim discussed above is just one
example of Murphy’s unreasonable conduct.

Google, however, does

not show that this baseless maneuver, or Murphy adding the multiple
defendants from the Open Handset Alliance (the “OHA”) and seeking
a

temporary

multiplied

restraining

the

proceedings

order

and

preliminary

significantly.

injunction,

Despite

Murphy’s

tactics, Google still had to defend itself against the underlying
infringement charge.

For example, Google represented all 48

- 14 -

defendants when it moved to dismiss the First Amended Complaint.
ECF No. 73, June 22, 2009.

It did not file a separate motion that

addressed the improperly joined OHA defendants.

While Google’s

briefing increased by addressing the OHA defendants, its work was
not multiplied excessively. The Court dismissed the claims against
all defendants except Google, which alleviated the need for Google
to

further

defend

the

claims

ECF No. 112, Aug. 3, 2009.

against

the

OHA

defendants.

Likewise, Murphy’s inclusion of a

counterfeiting charge was so absurd and frivolous that it warranted
little work by Google, and was also easily dismissed. See id.
Murphy’s motion seeking injunctive relief presents a different
scenario, as Google had to expend resources at the onset of this
case to fend off this motion.

Murphy’s motion was not a model in

artful pleading, as, for example, it failed to set forth clearly
the

irreparable

harm

injunctive relief.

that

Plaintiffs

would

suffer

without

Such a motion, however, is not subject to

heightened Rule 9(b) pleading standards. See United States ex rel.
Walner

v.

899 (N.D.

NorthShore
Ill.

2009).

Univ.

Healthsystem,

660

F.Supp.2d

While Murphy eventually

withdrew

891,
the

overbroad motion for injunctive relief, he had at least some basis
for filing the motion — he claims that he merely sought the relief
provided for in § 1116 of the Lanham Act once he learned of
Google’s use of the ANDROID mark in commerce.
standard in trademark infringement cases.

- 15 -

Such relief is

See J. Thomas McCarthy,

McCarthy on Trademarks and Unfair Competition § 30:1 (4th ed.
2011).

This motion, just like the other actions that Google

alleges subject Murphy to § 1927 sanctions, was unreasonable but
not vexatious. Therefore, Murphy is not subject to such sanctions.
III.

CONCLUSION

For the reasons stated herein, Plaintiffs’ Motions to Strike
are denied.

Google’s Motion for Attorneys’ Fees and Sanctions is

denied.
IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
DATE: 7/27/2011

- 16 -