Teal Bay Alliances, LLC v. Southbound One Inc.
MEMORANDUM AND ORDER re: Cost/Fees. Signed by Judge Marvin J. Garbis on 1/26/2015. (bas, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
TEAL BAY ALLIANCES, LLC
CIVIL ACTION NO. MJG-13-2180
SOUTHBOUND ONE, INC.
MEMORANDUM AND ORDER RE: COSTS/FEES
The Court has, as set forth in the Bench Trial Decision
issued herewith, decided that Plaintiff Teal Bay Alliances, LLC
(“Teal Bay”) has failed to prove any of the claims it asserts
against Defendant Southbound One, Inc. (“Southbound”).
Southbound seeks to have “[t]he Court find this to be an
exceptional case pursuant to 15 U.S.C. § 1117(a), and award
Defendant its reasonable attorneys’ fees pursuant to 15 U.S.C. §
1117(a).” Answer 7, Prayer for Relief ¶ 4, ECF No. 23.
Title 15 U.S.C. § 1117 provides for recovery for violations
of any right of the registrant of a mark registered in the
Patent and Trademark Office. Section 1117(a) states, in
The court in exceptional cases may award
reasonable attorney fees to the prevailing
The United States Court of Appeals for the Fourth Circuit
has held that a prevailing alleged infringer may be awarded
attorney’s fees under this provision in exceptional cases. See,
e.g., Retail Servs., Inc. v. Freebies Publ’g, 364 F.3d 535, 550
(4th Cir. 2004).
The term “exceptional” is not defined in the statute.
THE STANDARD FOR AN EXCEPTIONAL CASE
The Octane Fitness (Patent Case) Decision
In Octane Fitness, LLC v. Icon Health & Fitness, Inc., –––
U.S. ––––, 134 S. Ct. 1749 (2014), a patent infringement action,
the Supreme Court defined the term “exceptional” as used in the
Patent Act, 35 U.S.C. § 285, which states – in
identical to that used in 15 U.S.C. § 1117(a):
The court in exceptional cases may award
reasonable attorney fees to the prevailing
The Supreme Court rejected the Federal Circuit’s prior
standard requiring culpable conduct and held that “an
‘exceptional’ case is simply one that stands out from others
with respect to the substantive strength of a party’s litigating
position (considering both the governing law and the facts of
the case) or the unreasonable manner in which the case was
litigated.” Octane Fitness, 134 S. Ct. at 1756.
stated that “[d]istrict courts may determine whether a case is
‘exceptional’ in the case-by-case exercise of their discretion,
considering the totality of the circumstances.”
The Court further rejected the Federal Circuit’s
requirement that a party establish exceptionality by clear and
convincing evidence and required proof by a preponderance of the
evidence. Id. at 1758.
Applicability to Trademark Cases
The Fourth Circuit has not yet addressed the question of
whether the Supreme Court’s Octane Fitness definition of an
exceptional case is applicable to trademark cases.1
As of this writing, only one circuit court has decided the
The Third Circuit, in Fair Wind Sailing, Inc. v.
Dempster, 764 F.3d 303 (3d Cir. 2014) stated:
We believe that the Court [in Octane
Fitness] was sending a clear message that it
was defining ‘exceptional’ not just for the
In the past, the Fourth Circuit has applied the trademark
fee-shifting statute in a party-sensitive manner, i.e., the
burden of proof for prevailing defendants has been lower than
for prevailing plaintiffs. When a defendant prevails, the
Fourth Circuit courts have considered “the closeness of the
case, tactics of counsel, the conduct of the parties, and any
other factors that may contribute to a fairer allocation of the
burdens of litigation between the winner and loser.” Radiance
Found., Inc. v. Nat’l Ass’n for the Advancement of Colored
People, No. 2:13CV53, 2014 WL 2601747, at *27-28 (E.D. Va. June
10, 2014)(quoting McAirlaids, Inc. v. Kimberly–Clark Corp.,
7:12CV578, 2014 WL 495748, *2 (W.D. Va. Feb. 6, 2014)).
fee provision in the Patent Act, but for the
fee provision in the Lanham Act as well.
We therefore import Octane Fitness’s
definition of ‘exceptionality’ into our
interpretation of § 35(a) of the Lanham Act
[15 U.S.C. § 1117(a)].
764 F.3d at 315.
There have, to date, been few district court decisions
addressing the matter. Compare Romag Fasteners, Inc. v. Fossil,
Inc., No. 3:10CV1827 JBA, 2014 WL 4073204, at *5 (D. Conn. Aug.
14, 2014) (“[T]he Supreme Court was interpreting only the Patent
Act and not the Lanham Act in Octane Fitness”), with BMW of N.
Am., LLC v. Cuhadar, No. 6:14-CV-40-ORL-37DAB, 2014 WL 5420133,
at *2 (M.D. Fla. July 10, 2014)(“Although the instant case
arises under the Lanham Act and Octane is a patent case . . .
the Court finds the Octane analysis to be applicable in
interpreting the identical provision at issue here.”).
This Court finds persuasive the rationale of the Third
Circuit as expressed in Fair Wind Sailing and predicts that the
United States Court of Appeals for the Fourth Circuit will
Accordingly, the Court shall decide the instant matter
utilizing the Octane Fitness definition of an exceptional case.2
The Court notes that because this is a case with a
prevailing defendant, the differences in interpretation of
The Instant Case is “Exceptional”
Pursuant to Octane Fitness, a case is exceptional if it
stands out from others 1) with respect to the substantive
strength of a party’s litigating position (considering both the
governing law and the facts of the case) or 2) the unreasonable
manner in which the case was litigated.
As set forth in the Bench Decision issued herewith, Teal
Bay brought the instant case in federal court relying upon a
trademark registration obtained, by means of a material false
representation, to the United States Patent and Trademark
Moreover, Teal Bay did not use its purported mark in
commerce as a trademark prior to Southbound’s first use in
commerce of the name “Shorebilly Brewing Company.”
even if Teal Bay had obtained any trademark rights in the name
“Shorebilly” as identifying a t-shirt supplier, it did not
establish that Southbound would have infringed its rights by
utilizing the name “Shorebilly Brewing Company” to identify its
food and beverage business on promotional t-shirts using that
name and a logo having no similarity to Teal Bay’s claimed
“exceptional” are not as great as they would have been if we
were dealing with a prevailing plaintiff.
Furthermore, even after Southbound – to avoid the expense
and delay inherent in this litigation – voluntarily changed its
name so as no longer use the word “shorebilly,” Teal Bay
Accordingly, the Court hereby exercises its discretion and
determines, considering the totality of the circumstances, that
the instant case is “exceptional” as that term is used in 15
U.S.C. § 1117(a).
Moreover the Court exercises its discretion
to issue to Southbound, an award of costs, including legal fees.
THE AMOUNT TO AWARD
District courts have wide discretion to determine the
amount of legal fees upon a determination that a case is
See, e.g., Mercer v. Duke Univ., 401 F.3d 199, 211
(4th Cir. 2005) (“We have made it clear that the determination
of a reasonable attorney’s fee award is a decision for the
district court to make, and the district court has broad
discretion in that regard . . . .”); Carroll v. Wolpoff &
Abramson, 53 F.3d 626, 628 (4th Cir. 1995) (“It is for the
district court in the first instance to calculate an appropriate
award of attorney’s fees.”).
In the instant case, the Court finds that certain of the
actions of Southbound in defending the case imposed unnecessary
burdens on Teal Bay and on the Court.
persisted with the case, asserting damage claims that can, at
best, be described as implausible.
For example, Southbound required briefing and a decision on
the baseless contention that “shorebilly” could not be a
trademark because the word was generic.
neglected to note that generic words can be trademarks for
products or services other than those identified by the word
itself. For example, the word “apple” may be used as a trademark
for computers but not for fruit.
More significantly, Southbound engaged in what can best be
described as the “Shore Billy Biker Club” fiasco.
Southbound purportedly found that an Ocean City marina had,
prior to Teal Bay’s use of the name “shorebilly,” been offering
t-shirts bearing the name “Shore Billy Biker Club.”
Nov. 5, 2013 [Document 26]. Southbound obtained a purported
license from the marina and sought to use this as a defense. Id.
Following discovery regarding this matter, however, Southbound
completely abandoned the contention.
See Ltr., Jan. 6, 2014
In view of Southbound’s actions, significantly increasing
the cost of litigation of the instant suit, the Court shall not
award Southbound its full legal fees or even a substantial
Rather, the Court shall award the amount that
it finds sufficient to recognize that Teal Bay should not have
brought and pursued the case but also to recognize that
Southbound should not have asserted meritless defense
contentions that needlessly increased the cost of litigation.
Under the circumstances, the Court shall award legal fees
to Southbound on the basis of a deliberate underestimate of the
minimal amount of legal fees incurred in regard to the trial of
the instant case.
That is, the award amount will be determined
based upon the Court’s records of the time recorded as in
session time for the four days on which the case was heard4 [18
hours, 42 minutes], assuming that only Mr. Astrachan and Mr.
Lyon can bill for their professional time, and on the
unrealistic assumption that for an hour of in-court time, each
of these lawyers devoted only one hour of out-of-court
Hence, the award shall be based upon charges
by Mr. Astrachan and Mr. Lyon for a total of 37 hours, 24
minutes (37.4 hours).
The Court shall utilize the maximum
hourly rate5 in the Rules and Guidelines for Determining
Attorneys’ Fees contained in Appendix B to the U.S. District
Court of Maryland Local Rules.
Accordingly, the amount of fees awarded shall be $30,855
per the following calculation:
July 21 – 5:42 hours, July 22 – 5:l0 hours, July 23 – 3:05
hours, July 31 – 4:45 hours.
In recognition that the subject matter was more complex
than the usual discovery dispute.
For the foregoing reasons:
The Court hereby awards Defendant Southbound,
Inc. legal fees, pursuant to 15 U.S.C. § 1117(a)
in the total amount of $30,855.
The Court further awards Defendant Southbound,
Inc. assessable costs pursuant to U.S. District
Court of Maryland Local Rule 109.1 in an amount
to be determined upon the submission to the Clerk
of a Bill of Costs.
The awards set forth herein shall be included in
the Judgment to be issued by separate Order.
SO ORDERED, on Monday, January 26, 2015.
Marvin J. Garbis
United States District Judge
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