PET GIFTS USA, LLC v. IMAGINE THIS COMPANY, LLC et al
Filing
152
MEMORANDUM AND ORDER denying Defendant's 145 Motion for Attorney Fees. Signed by Judge Peter G. Sheridan on 7/15/2019. (jem)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
PET GIFTS USA, LLC,
Civil No. 14-cv-3884 (PGS)(DEA)
Plaintiff,
V.
MEMORANDUM AND ORDER
1MAG1NE THIS COMPANY, LLC, et al.,
Defendant.
SHERIDAN, U.S.D.J.
The matter comes before the Court on Defendants Imagine This Company, LLC, Twelve
Inc., Beverly Moss and Michael Moss (collectively referred to as “Imagine”) motion for attorney’s
fees, ECF No. 145. As the Court previously found, this case involves “allegations by two
competing printing companies involved in the business of creating novelty car magnets (such as
dog bones), that each had copied the other’s purported design.” (ECF No. 122). By way of
background, Plaintiff and Defendant entered into a contract in which Imagine agreed to print dog
bone magnets for Pet Gifts. After completion of the contract, Pet Gifts alleges that Imagine
commenced using its design and trade dress for marketing dog bone magnets. Although the facts
proved otherwise, it was reasonable under the circumstances for Pet Gifts to deduce same.
Imagine argues that an award of attorney’s fees is appropriate on three grounds: first,
Section 35 of the Lanham Act permits recovery of reasonable attorney’s fees in exceptional cases;
second, an award of attorney’s fees is appropriate as Ru’e 11 sanction; and lastly, the attorney’s
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fees are proper here because Pet Gifts’ counsel, Rutgers Law Associates, unconstitutionally
subsidized Pet Gifts with taxpayer funds, in violation of the New Jersey State Constitution.
In response, Pet Gifts argues that it did not act in bad faith, and that all three of Imagine’s
arguments are meritless, premature, and brought in bad faith.
I
Section 35 of the Lanham Act permits the recovery of reasonable attorney’s fees only “in
exceptional cases.” 15 U.S.C. § 1117(a). “[A] district court may find a case ‘exceptional’ when
(a) there is an unusual discrepancy in the merits of the positions taken by the parties or (b) the
losing party has litigated the case in an ‘unreasonable manner.” Fair Wind Sailing, Inc. v.
Dernpster, 764 F.3d 303, 315 (3d Cir. 2014) (quoting Octane Fitness, LLC v. ICON Health &
Fitness, Inc., 134 S. Ct. 1749, 1756 (2014)). Whether an “exceptional case” exists rests within the
district court’s discretion, after considering the totality of the circumstances. Id. Courts may
consider the following factors in determining whether a fee award is appropriate, including:
“frivolousness, motivation, objective unreasonableness (both in the factual and legal components
of the case) and the need in particular circumstances to advance considerations of compensation
and deterrence.” Octane Fitness, LLC, 572 U.S. at 554 n.6. “Courts.
.
.
have awarded fees where
the losing party has either pursued baseless claims or engaged in inequitable conduct.” Renna v.
Cnty. of Union, No. 11-3328, 2015 U.S. Dist. LEXIS 1370, at *18 (D.N.J. Jan. 6,2015).
Additionally, Federal Rule of Civil Procedure 11(b) allows a court to impose sanctions,
including attorney’s fees, but only in exceptional circumstances where a claim or motion is patently
unmeritorious or frivolous. Doering v Union Cty. Bd. of Chosen Freeholders, 857 F.2d 191, 194
(3d Cir. 1998). Rule 11 provides:
By presenting to the court
whether by signing, filing, submitting, or later
advocating
a pleading, written motion, or other paper, an attorney or
unrepresented party is certifying that to the best of the person’s knowledge,
—
—
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information, and belief,
circumstances:
formed
after an inquiry reasonable
under the
(1) it is not being presented for any improper purpose, such as to harass, cause
unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law
or by a nonfrivolous argument for extending, modifying, or reversing existing
law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically, so identified,
will likely have evidentiary support after a reasonable opportunity for further
investigation or discovery; and
(4) the denials of factual contentions are warranted on the evidence or, if
specifically, so identified, are reasonably based on belief or a lack of
information.
Fed. R. Civ. P. 11(b). The rule provides that if the court determines that Rule 11(b) has been
violated, the court may impose an appropriate sanction on any attorney, law firm, or party that
violated the rule or is responsible for the violation.” Fed. R. Civ. P. 11(c). However, “even where
such exceptional circumstances exist, the court is merely authorized, not required, to impose
sanctions.’ Gonzalez v. Busy Place Early Learning Ctr., No. 14-6379, 2015 U.S. Dist. LEXIS
129032, at *14 (D.N.J. Sep. 25, 2015) (citing Bensalern Twp.
‘.
int’l Surplus Lines Ins. Co., 38
F.3d 1303, 1314 (3d Cir. 1994)).
“The Rule imposes an affirmative duty on the parties to conduct a reasonable inquiry into
the applicable law and facts prior to filing.” Bensalem Twp., 38 F.3d at 1314 (citing Business
Guides, Inc. v. Chromatic Communications Enters., inc., 498 U.S. 533, 551 (1991)). “An inquiry
is considered reasonable under the circumstances if it provides the party with ‘an objective
knowledge or belief at the time of the filing of a challenged paper that the claim was well-grounded
in law and fact.” Id. (quoting Ford Motor Co. v. Suinmit Motor Prods., Inc., 930 F.2d 277, 289
(3d Cir. 1991), cert. denied, 112 S. Ct. 373 (1991) (internal quotation omitted)).
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In determining whether a fee award is appropriate, the Court declines to find that this case
was exceptional. It appears that Imagine did not disclose at the time of the contract that Imagine
was Pet Gifts’ competitor, and by undertaking the work, it was inviting Pet Gifts to conclude that
Imagine “stole” their idea. As such, no fee is warranted. Courts do not penalize plaintiffs for ‘being
on the losing side of a dispute.” Gaiardo v. Ethyl Corp., 835 F.2d 479, 482 (3d Cir. 1987).
Finally, the argument that Pet Gifts retained Rutgers Law Associates constitutes some type
of action that violates the New Jersey Constitution is not cogently presented. Imagine argues that
Rutgers subsidized Pet Gifts with taxpayer funds, in violation of the Constitution of the State of
New Jersey, which provides: “No donation of land or appropriation of money shall be made by the
state or any county or municipal corporation to or for the use of any society, association or
corporation whatever.” N.J. Const. Art. VIII, § III, para. III. Imagine contend that Rutgers’ Law
Associates is an organization funded by the taxpayers, and provides legal services at a below
market rate, therefore, the State of New Jersey has “effectively appropriated money to a private
entity, Pet Gifts, by enabling such a steep discount.” Imagine has not cited to any case law that
support’s the imposition of attorney’s fee’s against Pet Gifts because of Rutgers involvement. This
is an unusual far-fetched issue, and without presenting supporting case law, lacks merit.
In conclusion, after reviewing the record, the Court sees nothing so unreasonable that
would warrant the imposition of attorney’s fees. Pet Gift’s did not act in bad faith in advancing this
litigation; nor did it pursue baseless claims or engage in any inequitable conduct. Accordingly,
Imagine’s motion for Attorney’s fees (ECF No. 145) is denied.
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ORDER
This matter having come before the Court on Defendant’s motion for Attorney’s Fees (ECF
No. 145), and the Court having carefully reviewed and taken into consideration the submissions
of the parties, as well as the arguments and exhibits therein presented, and for good cause shown,
and for all of the foregoing reasons,
ITlSonthis /
)
dayof-J
,2019;
ORDERED that Defendant’s Motion for Attorney’s Fees (ECF No. 145) is DENTED.
PETER G. SHERIDAN, U.S.D.J.
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