Scurmont LLC v. Firehouse Restaurant Group Inc

Filing 241

ORDER denying 226 Motion for Judgment as a Matter of Law; granting 227 Motion for Attorney Fees. Signed by Honorable R Bryan Harwell on 10/17/2011. (hcic)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
FLORENCE DIVISION

Firehouse Restaurant Group, Inc., a Florida
corporation, Three Alarm Subs, Inc., a
South Carolina corporation, and Fireside
Restaurant Company, Inc., a South Carolina
corporation,

)
)
)
)
)
)
Plaintiffs,
)
)
v.
)
)
Scurmont LLC, d/b/a Calli Baker’s
)
Firehouse Bar & Grill, and Heath
)
Scurfield, an individual,
)
)
Defendants.
)
____________________________________)

C/A No. 4:09-cv-00618-RBH

ORDER

This is a trademark dispute between competing restaurants. Firehouse Restaurant Group, Inc.
(“FRG”) is the franchiser of the FIREHOUSE SUBS® restaurant franchise (hereinafter “FRG
Restaurants”) that operates more than 350 locations throughout various parts of the United States,
including Myrtle Beach, South Carolina. The core menu item offered by FRG Restaurants is submarinestyle sandwiches. Three Alarm Subs, Inc. (“Three Alarm”) and Fireside Restaurant Company, Inc.
(“Fireside”) are franchisees who own and operate FRG Restaurants in the Myrtle Beach area.1 Scurmont,
LLC (“Scurmont”) also operates a restaurant in Myrtle Beach, South Carolina under the name CALLI
BAKER’S FIREHOUSE BAR & GRILL (“CALLI BAKER’S”). CALLI BAKER’S is a full-service
restaurant that offers a variety of menu items and incorporates a firehouse theme in its décor and menu.

1

FRG, Three Alarm, and Fireside, collectively, will hereinafter be referred to as the
“Firehouse Plaintiffs” for the purposes of this Order.
1

Heath Scurfield (“Scurfield”) is the sole member of Scurmont and is an active-duty firefighter with Horry
County Fire Rescue.2
Factual Background and Procedural History
FRG filed for and obtained more than 60 federal trademark and service mark registrations for its
marks from the United States Patent and Trademark Office (“USPTO”). Of the 60 or more registered
marks obtained by FRG, one mark is the term “FIREHOUSE” for use in restaurant services: Registration
Number 3,173,030 (“FIREHOUSE word mark”). This mark was the subject matter of the Calli Baker’s
Defendants’ claims, specifically their Third Cause of Action for Trademark Cancellation due to Fraud.
In their claims, the Firehouse Plaintiffs asserted against the Calli Baker’s Defendants, 34 of FRG’s United
States federal registrations (the “Registrations”), which include various forms of FIREHOUSE® and
FIREHOUSE SUBS® marks used in connection with their business. The Registrations cover use of
FRG’s marks in connection with a broad scope of goods and services that include restaurant services, food
products, sandwich platters, sandwiches, drinks, soups, salads, cookies, brownies, catering services, and
restaurant franchising.
In June 2008, counsel for FRG issued a cease and desist letter to Scurfield stating that CALLI
BAKER’S use of the word “Firehouse” was infringing on FRG’s trademarks. In March 2009, the Calli
Baker’s Defendants filed an action for declaratory judgment of non-infringement and also asserted various
other claims. The Firehouse Plaintiffs filed a separate lawsuit alleging trademark infringement under the
Lanham Act and common law. The cases were consolidated in January 2010. On June 2, 2010, the Calli
Baker’s Defendants filed their [46] Second Amended Complaint. The Second Amended Complaint
asserted three causes of action against the Firehouse Plaintiffs: (1) Declaratory Judgment for Non-

2

Scurmont and Scurfield, collectively, will hereinafter be referred to as the “Calli Baker’s
Defendants” for the purposes of this Order.
2

Infringement of Trademarks, (2) South Carolina Unfair Trade Practices Act, and (3) Trademark
Cancellation Due to Fraud. On July 6, 2010, the Firehouse Plaintiffs filed their [49] Answer and
Affirmative and Additional Defenses to Plaintiffs’ Second Amended Complaint, Counterclaim, and
Demand for Attorneys’ Fees and Jury Trial. Accordingly, the Firehouse Plaintiffs alleged the following
claims against the Calli Baker’s Defendants: (1) Federal Trademark Infringement (15 U.S.C. § 1114), (2)
False Designation of Origin (15 U.S.C. § 1125(a)), (3) Common Law Trademark Infringement and Unfair
Competition, and (4) Unjust Enrichment.3
In December 2010, among other motions, the Calli Baker’s Defendants filed a [81] Motion for
Partial Summary Judgment. In February 2011, the Firehouse Plaintiffs filed a [135] Motion for Summary
Judgment or, in the alternative, Partial Summary Judgment on all counts asserted in the Second Amended
Complaint and all remaining counterclaims. On June 30, 2011, the Court held a hearing on these motions.
By Order dated July 8, 2011, the Court denied the Calli Baker’s Defendants’ [81] Motion for Partial
Summary Judgment, and granted in part, denied in part, the Firehouse Plaintiffs’ [135] Motion for
Summary Judgment or, in the alternate, Partial Summary Judgment. Specifically, the Court granted
summary judgment in favor of the Firehouse Plaintiffs on the Calli Baker’s Defendants’ Second Cause
of Action for violation of the South Carolina Unfair Trade Practices Act. Additionally, the Firehouse
Plaintiffs’ claim for Unjust Enrichment was deemed withdrawn and therefore moot. Moreover, based on
the nature and the remaining claims and for an orderly disposition of the case, the parties were realigned
as reflected in the current caption of the case without objection.

3

The Firehouse Plaintiffs also alleged the Calli Baker’s Defendants violated South
Carolina’s Unfair Trade Practices Act. However, this counterclaim was withdrawn with
the Calli Baker’s Defendants’ consent. See Text Order, Doc. #64 (denying as moot the
Motion to Strike Counterclaim).
3

A jury trial of this case began on August 15, 2011. After a five day trial, the jury unanimously
found that the Calli Baker’s Defendants had not infringed any of the 34 registered trademarks asserted
by FRG. Further, the jury unanimously found that “the [Calli Baker’s] Defendants have proved by clear
and convincing evidence that Plaintiff [FRG] obtained the registration for the trademark FIREHOUSE,
Registration Number 3,173,030, through fraud on the U.S. Patent & Trademark Office.” Verdict Form,
Doc. #218. On August 22, 2011, Judgment was entered in favor of the Calli Baker’s Defendants; the
Court ordered the cancellation of the FIREHOUSE word mark based on the jury’s finding that FRG
committed fraud on the USPTO and ordered that the Calli Baker’s Defendants shall recover costs from
the Firehouse Plaintiffs.
On August 29, 2011, the Firehouse Plaintiffs filed the instant [226] Motion for Judgment as a
Matter of Law as to Defendants’ Claim of Fraud . . . or in the Alternative a New Trial as to All Issues,
to which the Calli Baker’s Defendants have filed a response in opposition; the Firehouse Plaintiffs have
also filed a reply. The Calli Baker’s Defendants have filed the instant [227] Motion for Attorneys’ Fees
and [228] Bill of Costs,4 to which the Firehouse Plaintiffs have filed a response in opposition and
objections, respectively. The Court will now address each of these issues in turn.5
Discussion
I:

Firehouse Plaintiffs’ Motion for Judgment as a Matter of Law or Alternatively a New Trial
In their Motion for Judgment as a Matter of Law, the Firehouse Plaintiffs move the Court for an

Order entering judgment as a matter of law on the Calli Baker’s Defendants’ claim for cancellation due

4

On September 26, 2011, the Calli Baker’s Defendants filed an Amended Bill of Costs to
correct what appeared to be a scrivener’s error. See Doc. #239.
5

Under Local Rule 7.08, “hearings on motions may be ordered by the Court in its
discretion. Unless so ordered, motions may be determined without a hearing.” The issues
have been briefed by the parties, and the Court believes a hearing is not necessary.
4

to fraud on the USPTO as to registration of the FIREHOUSE word mark, Registration No. 3,173,030, or,
in the alternative, a new trial on all claims, pursuant to Fed. R. Civ. P. 50(a) and 59. “A district judge
may overturn a jury verdict on a motion [pursuant to Fed. R. Civ. P. 50] only if ‘there is no legally
sufficient evidentiary basis for a reasonable jury to have found for [the prevailing] party.’” AnheuserBusch, Inc. v. L. & L. Wings, Inc., 962 F.2d 316, 318 (4th Cir. 1992) (citing Fed. R. Civ. P. 50(a)(1)). “In
making this determination, the judge is not to weigh the evidence or appraise the credibility of witnesses,
but must view the evidence in the light most favorable to the non-moving party and draw legitimate
inferences in its favor.” Id. (citation omitted). A party may join a motion for a new trial with a motion
for judgment after trial, or request a new trial in the alternative.
A. Claim of Insufficient Evidence to Support Jury Verdict as to Fraud
First, the Firehouse Plaintiffs argue that the jury’s verdict that FRG committed fraud in obtaining
the registration of the FIREHOUSE word mark must be set aside as a matter of law because there was
insufficient evidence to support the jury’s verdict. “Fraud on the [USPTO] in connection with trademark
registration requires that the following elements be alleged and proven: (1) The challenged statement was
a false representation regarding a material fact[;] (2) The person making the representation knew that the
representation was false (‘scienter’)[;] (3) An intent to deceive the USPTO[;] (4) Reasonable reliance on
the misrepresentation[; and] (5) Damage proximately resulting from such reliance.” J. Thomas McCarthy,
McCarthy on Trademarks & Unfair Competition § 31:61 (West 2010). As such, a trademark is obtained
fraudulently only if the applicant or registrant “knowingly makes a false, material representation with the
intent to deceive the [USPTO]. In re Bose Corp., 580 F.3d 1240, 1245 (Fed. Cir. 2009); see Brittingham
v. Jenkins, 914 F.2d 447, 453-54 (4th Cir. 1990) (“A number of courts have held that procurement of a
trademark registration through the use of false or misleading statements does not constitute fraud within
the meaning of 15 U.S.C. § 1115(b)(1) unless the statements were both material to the decision to grant
5

the registration and made with a deliberate intent to defraud.”). Specifically, the Firehouse Plaintiffs
argue that there is no evidence in the record, let alone clear and convincing evidence, to support two
critical elements of the Calli Baker’s Defendant’s cancellation due to fraud claim: (1)intent to deceive and
(2) materiality of the misrepresentation.
1. Intent to Deceive
According to the Firehouse Plaintiffs, the Calli Baker’s Defendants “presented no evidence at trial
to establish, under any standard, that FRG knowingly withheld information from the USPTO with a
specific intent to deceive. [Thus,] Defendants, as a matter of law, could not and did not meet their
burden.” Doc. #226-1, p.6. However, the Calli Baker’s Defendants argue that there was sufficient
evidence in the record to support the conclusion that FRG intended to deceive the USPTO, and the Court
agrees with the Calli Baker’s Defendants.
In seeking cancellation of the FIREHOUSE word mark due to fraud on the USPTO, the Calli
Baker’s Defendants claimed that FRG
submitted its oath [to the USPTO], pursuant to 18 U.S.C. § 1001, that to
the best of its knowledge and belief no other person, firm, corporation or
association has the right to use the mark in commerce, either in the
identical form thereof or in such near resemblance thereto as to be likely,
when used on or in commerce with the goods/services of such other
person, to cause confusion, or to cause mistake, or to deceive . . . . [despite
the fact that] FRG knew that there were many other pre-existing food and
beverage businesses with the name FIREHOUSE or some substantially
similar variation thereof.
Second Amended Compl. ¶¶45 & 47, Doc. #46. Firehouse Grill & Pub, which has been registered and
doing business in Tampa, Florida, since October 4, 1990, was one of the alleged pre-existing businesses
using the FIREHOUSE word mark at issue in this case. Sorensen testified both in his deposition and
during trial that he first learned about Firehouse Grill & Pub in or around August 2002, which was
approximately six months prior to FRG’s filing its application for the FIREHOUSE word mark
6

registration. See Doc. #226-3, p.2; Doc. #226-4, pp.5-6. Additionally, Sorensen acknowledged that
Firehouse Grill & Pub “predated” FRG Restaurants and “may” have superior rights in their market area.
Id. Similarly, Dillip Kanji, the Tampa area franchisee for FRG Restaurants, stated in correspondence
around the same time that “[s]ince [Firehouse Grill & Pub has] been in operation longer than we have,
they have superior rights.” Doc. #236-4, p.2. While the Firehouse Plaintiffs claim that the Firehouse Grill
& Pub was a “pool hall” and, therefore, they did not believe that there was any likelihood of confusion
or conflict between it and FRG Restaurants, the evidence, viewed in the light most favorable to the Calli
Baker’s Defendants, suggests that the Firehouse Plaintiffs actually considered Firehouse Grill & Pub
something more than a “pool hall” and realized that there was a likelihood of confusion between the two
restaurants. See, e.g., Doc. #236-2, p.2 (letter from Sorensen to Kanji referring to Firehouse Grill & Pub
as “food and beverage establishment” and stating “nothing can be gained from their learning about us and
our registered mark. To the contrary, the longer we operate at the same time, particularly given our recent
press and notoriety in the restaurant industry, will only strengthen our rights vis a vis any rights they may
have.”); Doc. #226-6, p.2 (letter from Sorensen to Firehouse Grill & Pub owner Bryan Carroll referring
to the Firehouse Grill & Pub as a “restaurant”); Doc. #236-7, p.2 (email from Kanji to Sorensen stating
“the potential for customer confusion does exist” and “[i]n fact we have had a few people already who
have come in the New Tampa location and asked if we are connected to Firehouse Grill & Pub.”). In fact,
Kanji considered Firehouse Grill & Pub’s existence in the Tampa market “a serious matter” that “needs
to be addressed now not later.” Doc. #236-4, p.2.
On March 12, 2003, FRG filed its application for the FIREHOUSE word mark with the USPTO
at Sorensen’s direction. When FRG filed the FIREHOUSE word mark application, it declared that “no
other person, firm, corporation, or association has the right to use the mark in commerce” in a manner
likely to cause confusion, even though it was aware of the prior, senior use by Firehouse Grill & Pub. See
7

Doc. #226-11, p.70. As a defense to the cancellation due to fraud claim, Sorensen testified that, prior to
filing the FIREHOUSE word mark application, he reached a coexistence agreement with Bryan Carroll,
the owner of the Firehouse Grill & Pub. Specifically, Sorensen testified during direct examination that
he had a conversation with Carroll, and that Carroll indicated that he had no problem with FRG opening
up a number of restaurants in the Tampa area. Notably, however, there is no evidence in the record that
Sorensen ever told Carroll that he was going to apply for the exclusive right to use the word “Firehouse”
in connection with restaurant services. Moreover, there is evidence in the record from which a reasonable
jury could infer that no coexistence agreement actually existed between FRG and Firehouse Grill & Pub.
On cross-examination, counsel for the Calli Baker’s Defendants obtained admissions from Sorensen that
his conversation with Carroll had not been planned or arranged in advance; that Sorensen dropped by the
Firehouse Grill & Pub on a busy Saturday night unannounced; that Carroll was supervising a pool
tournament that night; that Sorensen waited at the bar at least an hour before he was able to speak with
Carroll; that his conversation with Carroll lasted less than ten minutes; and that Carroll told him “good
luck” and shook his hand. See Doc. #236-5, pp.8-9. Additionally, on April 2, 2003, over twenty days
after submitting the FIREHOUSE work mark application, Sorensen wrote a letter to Carroll, in which
it appears he proposed a coexistence agreement and enclosed a check for $5,000. See Doc. #226-6, p.2.
In the letter, Sorensen writes the following:
You may not remember me, but earlier this month while in Tampa, I
stopped by your restaurant. It was a pleasure meeting you and introducing
you to my business. . . .
As part of our Tampa plan, . . . we will be opening additional locations in
the Temple Terrace section of Tampa. We are considering locating a few
stores in your neighborhood. We do not expect these stores to interfere at
all with your business. Nevertheless, we would like to reach an
understanding with you that these few stores and your business will coexist in this overlapping area while maintaining a friendly relationship. As
a token of our goodwill, we would be willing to make a payment to you in
8

the amount of $5,000.00. . . . We will continue our growth elsewhere if you
are uncomfortable with this arrangement.
I have enclosed a check for $5,000.00 and an agreement confirming this
understanding. If you would like to accept this offer as stated in the
attached agreement, simply cash the enclosed check. Please also return a
signed copy of the agreement to me for my records.
Id. (emphasis added). At trial, Sorensen admitted that he did not mention anything about the payment
of $5,000 to Carroll during their conversation or anytime prior to mailing the April 2, 2003, letter and,
when Sorensen followed up with Carroll after sending the letter and proposed coexistence agreement,
Carroll stated that his wife was “going to talk to our attorney about it, and we’ll go from there.” Doc.
#226-3, pp.7-8, 10. Moreover, Sorensen testified that Carroll never cashed the check or signed the
proposed agreement. Id. at 11. A reasonable jury could find that Sorensen’s subsequent letter, proposed
coexistence agreement, and offer to pay $5,000 to Carroll constituted an implicit acknowledgment that
there was no clear agreement or understanding between Sorensen and Carroll prior to FRG’s filing its
application for the FIREHOUSE word mark.
Viewing the evidence in the light most favorable to the Calli Baker’s Defendants, the legitimate
inference to be drawn from this evidence is that there was, in fact, no consent agreement between the
parties prior to FRG’s filing the FIREHOUSE word mark application with the USPTO.6 Moreover, the
Court finds that there is legally sufficient evidence in the record upon which a reasonable jury could
conclude that Sorensen knew of Firehouse Grill & Pub’s senior use of the word “Firehouse” and believed
that there was a likelihood of confusion between FRG Restaurants and Firehouse Grill & Pub at the time

6

George M. Thomas, the Firehouse Plaintiffs’ own trademark expert, also testified that a
consent agreement may be filed with the USPTO, and that the USPTO “would evaluate
that . . . and make a decision as to whether or not to allow the application to be approved and
registration issued.” Doc. #236-1, p.6. The fact that there is no evidence that any such
agreement was ever filed with the USPTO further supports the inference that no coexistence
agreement existed between FRG and Firehouse Grill & Pub.
9

FRG submitted the FIREHOUSE word mark application at his direction. Based on the foregoing, a
reasonable jury could have found, by clear and convincing evidence, that FRG intended to deceive the
USPTO when it filed its application for the FIREHOUSE word mark, to which it knew it was not entitled,
and declared that “no other person, firm, corporation, or association has the right to use the mark in
commerce”7 in a manner likely to cause confusion.
2. Materiality of the Misrepresentation
The Firehouse Plaintiffs also argue that there is not legally sufficient evidence to support the jury’s
finding of fraud because there is no evidence that FRG made a “material” misrepresentation. Specifically,
the Firehouse Plaintiffs argue that “there is no evidence in the record to support a conclusion that the
examiner would not have issued or published the mark for opposition and issue[d] the certificate had it
known of the evidence submitted by Defendants in support of their claim.” Doc. #226, p.2. In the context
of fraud relating to a trademark application, a material misrepresentation to the USPTO exists where, “but
for the misrepresentation, the federal registration either would not or should not have issued.” See J.

7

The Firehouse Plaintiffs also argue that “Mr. Sorensen testified that he believed the
[Firehouse Grill & Pub] did not operate in interstate commerce, and Defendants presented
no evidence to the contrary. . . . The jury was incapable of making any assessment on the
interstate commerce issue because Defendants did not present any evidence or testimony
regarding whether the [Firehouse Grill & Pub] actually operated in interstate commerce.”
Doc. #226-1, p.12. However, the jury could have reasonably found Sorensen’s testimony not
credible on this issue. When Defense counsel asked Sorensen about interstate commerce, he
testified that he understood interstate commerce to mean that you do business across state
lines or you serve people that are from other states in your restaurant. Aside from the
inference that can be reasonably made that a restaurant in the State of Florida, which is
known for attracting vacationers, would serve customers from other states, Sorensen also
testified about a trademark application that he signed and submitted to the USPTO in 1995,
when there was only one FRG Restaurant in Florida. In that particular application, Sorensen
represented, under oath, that FRG was engaged in interstate commerce at that time. See Doc.
#236-12, p.2. Therefore, there is sufficient evidence in the record for the jury to conclude
that Sorensen believed that a single location restaurant in Florida, such as Firehouse Grill
& Pub, was doing business in interstate commerce.
10

Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 31:67 (West 2010); cf. United
States v. David, 83 F.3d 638, 640 n.2 (4th Cir. 1996) (stating that materiality has a specialized legal
meaning and defining materiality as having “a natural tendency to influence agency action or is capable
of influencing agency action.”).
The Firehouse Plaintiffs argue that the application file for the FIREHOUSE word mark contains
a letter dated July 7, 2005, which was submitted by a lawyer on behalf of its third party clients. The letter
is addressed to the FIREHOUSE word mark application examiner and notified her of 27 third party
restaurants using the word “Firehouse” in their names. “After receiving the letter and entering it into the
Application file, the USPTO allowed the Application and it matured into registration number 3,173,030,”
the FIREHOUSE word mark. Doc. #226-1, p. 15. Accordingly, the Firehouse Plaintiffs conclude that
“[t]he USPTO did not consider the Letter or its disclosures material to the Application.” Id. They assert
that the Firehouse Grill & Pub is similar to the 27 other restaurants that were included in the letter.
Specifically, they argue that the Calli Baker’s Defendants “offered no evidence, much less clear and
convincing evidence, that the examiner would not have allowed the Application to register had the
Firehouse Grill & Pub in Tampa, been added to the list of 27 other restaurants, bars and pool halls
disclosed in the Letter. . . . If the examiner did not consider restaurants and bars named ‘Firehouse’ and
‘Firehouse Pub’ to be material, then, the Tampa ‘Firehouse Grill & Pub’ would not have been material
either.” Id. at 18. In response, the Calli Baker’s Defendants contend
Plaintiffs’ argument regarding materiality overlooks the simple fact that
the [US]PTO will not issue a trademark registration unless the applicant
signs the declaration, which is assumed to be truthful. George Thomas’
testimony that the [US]PTO will not issue a trademark registration unless
the applicant submits a signed declaration demonstrates that the
misrepresentation, or omission, regarding the other senior users, was
material. Sorensen’s testimony regarding the seriousness of the matter,
combined with his attempt to enter into a co-existence agreement with
[Firehouse Grill & Pub], further demonstrates the materiality of the
11

information that was known to him. . . .
The document upon which Plaintiffs rely is a copy of a July 7, 2005 letter
from an attorney to the trademark examiner, advising her that there are
other “firehouse” restaurants around the country. The letter included a list
of 27 establishments, including the Johnson City Firehouse. The Tampa
[Firehouse Grill & Pub] was not included on the list. Plaintiffs make the
conclusory assumption that the [US]PTO “did not consider the Letter or
its disclosures material to the Application.” Notably, however, the letter
did not disclose the central, important fact that was known to FRG, i.e.,
whether any of those 27 establishments had prior or senior rights to use the
FIREHOUSE [word] mark. . . . There is no evidence that the trademark
examiner investigated further to determine whether, in fact, any of those
other restaurants had senior rights to use the mark. The fact that the letter
was sent to the [US]PTO does not cure the material misrepresentation in
FRG’s sworn application.
Doc. #236, pp.6 & 8 (internal citations omitted). In reply, the Firehouse Plaintiffs attack the Calli Baker’s
Defendants’ reasoning:
According to Defendants, because the USPTO will not allow an
application to register without a signed declaration, any registration
challenged for fraud automatically satisfies the materiality requirement
because the applicant signed the declaration. If the materiality prong of the
test for fraud can be satisfied simply by noting that no application will
mature into a registration without a signed declaration, then the materiality
prong is a nullity.
Doc. #238, p.10.
The Court finds unpersuasive the Firehouse Plaintiffs’ argument regarding whether there is legally
sufficient evidence to support the jury’s finding of fraud and, specifically, the finding that FRG made a
“material” misrepresentation to the USPTO. Moreover, the Court disagrees with the Firehouse Plaintiffs’
contention that the Calli Baker’s Defendants’ view of the signed declaration requirement effectively
“reads the materiality requirement out of the rule.” Id. The Firehouse Plaintiffs’ characterization of the
Calli Baker’s Defendants’ argument is oversimplified. If an applicant is prevented from signing the
declaration required to register a mark in good faith because it both knows of a senior user with superior

12

rights and believes there is likelihood of confusion, but it signs the declaration stating otherwise anyway
in order to get the registration, then it has made a “material” misrepresentation. In such a situation, but
for the misrepresentation (i.e., the applicant signing the declaration despite both knowing of a senior user
with superior rights and believing there exists a likelihood of confusion) in the applicant’s declaration,
the registration “would not or should not have issued.” That misrepresentation, therefore, is a “material”
misrepresentation by definition.
In the instant matter, the evidence of FRG’s own actions supports the jury’s finding of materiality.
The various correspondences between Sorensen and Kanji, as well as Sorensen’s efforts to get Carroll to
sign a coexistence agreement, constitute evidence that FRG was concerned about Firehouse Grill & Pub’s
superior rights and a likelihood of confusion.8 Further, with regard to the letter containing the 27 other
“Firehouse” establishments, there is no information regarding whether those establishments had senior
rights to the FIREHOUSE word mark over FRG Restaurants like the Firehouse Grill & Pub. Viewing
the evidence in the light most favorable to the Calli Baker’s Defendants, the Court finds that there is
legally sufficient evidence in the record upon which a reasonable jury could conclude that “the federal
registration either would not or should not have issued” absent FRG’s misrepresentation that “no other
person, firm, corporation, or association has the right to use the mark in commerce” in a manner likely

8

Under the proposed coexistence agreement, the Firehouse Grill & Pub would be required
to “consent[]” to FRG’s use of its trademarks, including “FIREHOUSE” and “FIREHOUSE
SUBS,” and “all other words, logos, names, slogans, trademarks, service marks and trade
names used now or in the future . . . even if such uses or activities may cause confusion,
dilution or otherwise conflict with Grill & Pub’s use of the business name ‘The Firehouse
Grill & Pub’ or any of Grill & Pub’s trademarks or service marks.” Doc. #226-6, p.3.
Notably, the language of the proposed agreement and Sorensen’s offer in the accompanying
letter that “We will continue our growth elsewhere if you are uncomfortable with this
arrangement” appear to represent an implicit acknowledgment that Firehouse Grill & Pub’s
superior rights would influence any decision by the USPTO regarding whether or not to
issue FRG a registration containing the word “Firehouse.” See id. at pp.2-3.
13

to cause confusion. As stated above, there is legally sufficient evidence in the record upon which a
reasonable jury could conclude that Sorensen knew of Firehouse Grill & Pub’s senior use of the word
“Firehouse” and believed that there was a likelihood of confusion between FRG Restaurants and
Firehouse Grill & Pub at the time FRG submitted the FIREHOUSE word mark application at his
direction. Further, a reasonable jury could conclude that by directing its representative to sign the
declaration, which states otherwise and without which a registration will not be issued, FRG made a
material misrepresentation to the USPTO. Based on the foregoing, a reasonable jury could have found,
by clear and convincing evidence, that FRG made a material misrepresentation and obtained the
FIREHOUSE word mark through fraud on the USPTO.
B. Request for New Trial as to all Issues based on Alleged Inconsistent Verdict
Alternatively, the Firehouse Plaintiffs argue that the jury verdict should be set aside and a new trial
granted as to all issues because it is inconsistent based on the evidence. A new trial is warranted if (1)
the verdict is against the weight of the evidence; (2) the verdict is based upon evidence which is false; or
(3) the verdict will result in a miscarriage of justice. Atlas Food Sys. & Servs., Inc. v. Crane Nat’l
Vendors, Inc., 99 F.3d 587, 594 (4th Cir. 1996). Moreover, “[t]he proper remedy for an inconsistent
verdict [is] a new trial.” Id. at 598. “In considering a new trial motion, the district court may weigh the
evidence and consider the credibility of the witnesses.” Conner v. Schrader-Bridgeport Int’l, Inc., 227
F.3d 179, 200 (4th Cir. 2000). The court’s ruling is a matter resting within the sound discretion of the
district court and is not reviewable upon appeal except in the most exceptional circumstances. Lindner
v. Durham Hosiery Mills, Inc., 761 F.2d 162, 168 (4th Cir. 1985) (citations omitted). The Firehouse
Plaintiffs argue that the verdict in the instant matter is inconsistent because, in order to find for the Calli
Baker’s Defendants on their cancellation due to fraud claim, “the jury must have determined that the mark
Firehouse Grill & Pub [was] likely to cause confusion with FRG’s FIREHOUSE [word] mark.” Doc.
14

#226-1, p.21. They argue that this is inconsistent with the jury’s finding of no likelihood of confusion
between CALLI BAKER’S and FRG’s 34 registered marks and that the verdict “defies logic and common
sense” because likelihood of confusion “is the essential element of both claims.” Id. at 22. In response,
the Calli Baker’s Defendants argue that the jury verdict is not inconsistent because “the test for the fraud
claim hinges not upon a fact finding of whether there was a likelihood of confusion between [FRG’s
FIREHOUSE word mark] and [Firehouse Grill & Pub], but rather, what Robin Sorensen knew and
subjectively believed, in March 2003 . . .” Doc. #236, p.13. As explained below, the Court agrees with
the Calli Baker’s Defendants, and the Firehouse Plaintiffs’ motion for a new trial is denied.
Essentially, the Firehouse Plaintiffs argue that the only way the jury could find that FRG’s
nondisclosure of the Firehouse Grill & Pub was a “material” misrepresentation for purposes of the
cancellation due to fraud claim was if they also determined that “the use of [the word] FIREHOUSE by
the [Firehouse Grill & Pub] would be confusingly similar to the operations of FRG’s restaurants. . .” Doc.
#226-1, p.22. The fallacy in the Firehouse Plaintiffs’ argument, however, is their mistaken belief that
“[l]ikelihood of confusion is the essential element of both claims.” Id. In order to prevail on their claims
for Trademark Infringement under the Lanham Act, False Designation of Origin, and common law
trademark infringement and common law unfair competition, the Firehouse Plaintiffs had to prove that
FRG (1) has a valid, protectable trademark and (2) that CALLI BAKER’S use of a reproduction or
colorable imitation of the trademark is likely to cause confusion among consumers. See, e.g., George &
Co., LLC, v. Imagination Entm’t Ltd., 575 F.3d 383, 393 (4th Cir. 2009) (citing 15 U.S.C. § 1114(1)(a)).
In considering whether a likelihood of confusion exists between CALLI BAKER’s and FRG’s registered
marks, the jury was instructed to examine the following factors:
(1) the strength or distinctiveness of the plaintiff’s mark as actually used
in the marketplace; (2) the similarity of the two marks to consumers; (3)
the similarity of the goods or services that the marks identify; (4) the
15

similarity of the facilities used by the markholders; (5) the similarity of
advertising used by the markholders; (6) the defendant’s intent; and (7)
actual confusion.
George & Co., 575 F.3d at 393 (citing Pizzeria Uno Corp. v. Temple, 747 F.2d 1522, 1527 (4th Cir.
1984)). In contrast, “[t]he claim of Fraud on the [USPTO] in connection with [the FIREHOUSE word
mark] trademark registration requires that [the Calli Baker’s Defendants] prove by clear and convincing
evidence that [FRG] knowingly made a false, material representation of fact in connection with its
trademark application for [the FIREHOUSE word mark], with the intent to deceive the [USPTO]. Jury
Instructions, Doc. #220, pp.22-23. Fraud in the procurement of a trademark registration is also a defense
to a claim of trademark infringement. See, e.g., Lone Star Steakhouse & Saloon v. Alpha of Virginia, Inc.,
43 F.3d 922, 931 n.12 (4th Cir. 1995) (recognizing the defense and noting that trademarks procured by
fraud are unenforceable). To prevail on their claim of cancellation due to fraud, the Calli Baker’s
Defendants had the burden of proving fraud by clear and convincing evidence; notably absent from their
burden is a requirement to prove a likelihood of confusion or an underlying case of trademark
infringement. If the Court was to adopt the Firehouse Plaintiffs’ view of the law, in order to meet their
burden as to the cancellation due to fraud claim, the Calli Baker’s Defendants would have the additional
burden to prove that the Firehouse Grill & Pub in Tampa would have ultimately prevailed on a trademark
infringement claim against FRG Restaurants. The Court has found no law supporting this proposition.
Additionally, the Firehouse Plaintiffs have cited no case in support of their motion for a new trial in which
the party asserting fraud had to also prove an underlying case of trademark infringement to prevail on the
fraud claim.
The Firehouse Plaintiffs also appear to overlook the fact that the issue of likelihood of confusion
is an “inherently factual” determination. Anheuser-Busch, Inc. v. L. & L. Wings, Inc., 962 F.2d 316, 318
(4th Cir. 1992). As such, the jury’s determination as to whether a likelihood of confusion exists between
16

CALLI BAKER’s and FRG Restaurants does not indicate one way or another as to whether there exist
a likelihood of confusion between FRG Restaurants and some other entity. Whether, in fact, trademark
infringement could have been proven if there was a lawsuit between FRG Restaurants and the Firehouse
Grill & Pub is irrelevant to the fraud analysis in this particular case. Here, the jury found that FRG
obtained the registration for the FIREHOUSE word mark through fraud on the USPTO. There is legally
sufficient evidence in the record upon which a reasonable jury could conclude that Robin Sorensen knew
of Firehouse Grill & Pub’s senior use of the word “Firehouse” and believed that there was a likelihood
of confusion between FRG Restaurants and Firehouse Grill & Pub at the time FRG submitted the
FIREHOUSE word mark application, in which it declared that “no other person, firm, corporation, or
association has the right to use the mark in commerce.” The jury also found that CALLI BAKER’S did
not infringe upon any of FRG’s 34 registered marks. The jury’s verdict on these claims is neither “against
the weight of the evidence” nor inconsistent.9
Even assuming, arguendo, that the jury’s verdict is inconsistent, it appears that the Firehouse
Plaintiffs’ objection to the alleged inconsistent verdict and motion for new trial has been waived. The
verdict form that was presented to the jury was a general verdict form with written questions pursuant to

9

It appears that the only potential for an inconsistent verdict in this case would have been
if the jury found for the Calli Baker’s Defendants on their claim of cancellation due to fraud,
but found for the Firehouse Plaintiffs on their claim that CALLI BAKER’S infringed on the
FIREHOUSE word mark. The verdict form was specifically designed to avoid any such
inconsistency because it specifically instructed the jury that, if it found for the Calli Baker’s
Defendants on the fraud claim, then it must also find for the Calli Baker’s Defendants on the
question of trademark infringement with respect to the FIREHOUSE word mark. Stated
differently, the jury’s finding that FRG obtained the registration for the FIREHOUSE word
mark through fraud on the USPTO effectively resulted in a jury finding that the
FIREHOUSE word mark was not a valid, protectible and enforceable mark. Because having
a valid and protectible mark is an essential element of proving trademark infringement, the
jury’s verdict as to the cancellation due to fraud of the FIREHOUSE word mark effectively
precluded the jury from simultaneously finding that the Calli Baker’s Defendants infringed
upon the FIREHOUSE word mark.
17

Rule 49(b) of the Federal Rules of Civil Procedure, not a special verdict form pursuant to Rule 49(a) as
argued by the Firehouse Plaintiffs.10 The verdict form was prepared by the Court and approved by
counsel for all parties prior to submission of the case to the jury. After the verdict was published, the
Court, at the request of counsel for Firehouse Plaintiffs, polled the individual jury members to confirm
the unanimous verdict. The Firehouse Plaintiffs did not assert any objection to the verdict, or request that
the jury be ordered to continue their deliberations, based upon any alleged inconsistent verdict. With no
objections by counsel, the Court discharged the jury. In White v. Celotex Corp., the Fourth Circuit held
that the failure to object to an alleged inconsistent verdict pursuant to Rule 49(b) prior to the discharge
of the jury waives a party’s right to seek a new trial. 878 F.2d 144, 146 (4th Cir.1989); see Essex v. Prince
George’s County Md., 17 F. App’x 107, 118 n.4 (4th Cir. 2001) (“[I]f trial counsel fails to object to any
asserted inconsistencies and does not move for resubmission of the inconsistent verdict before the jury
is discharged, the party's right to seek a new trial is waived.” (quoting Brode v. Cohn, 966 F.2d 1237,
1239 (8th Cir.1992))). Specifically, the court stated in White that “[p]roper respect for [Rule 49(b)]
mandates that failure to bring any purported inconsistencies in the jury’s verdict to the attention of the
court prior to the release of the jury will constitute a waiver of a party’s right to seek a new trial.” White,
878 F.2d at 146. “The purpose of such a Rule is plain, to promote the efficiency of trials by allowing the
original deliberating body to reconcile inconsistencies without the need for another presentation of the
evidence to a new body.” Id. All parties in this case, including the Firehouse Plaintiffs, acknowledge that
“Rule 49(b) requires a pre-discharge objection to an inconsistent verdict form to preserve error.” Doc.

10

A “general verdict” is a verdict “by which the jury finds in favor of one party or the
other, as opposed to resolving specific fact questions.” Black's Law Dictionary, 1592 (8th
ed.2004). A “special verdict,” by contrast, is a verdict “that gives a written finding for each
issue, leaving the application of the law to the judge.” Id. at 1593. The verdict at issue in this
case is a general verdict.
18

#238, p.13. Thus, the Firehouse Plaintiffs’ motion for a new trial is also denied on the alternative ground
that they failed to object to any alleged inconsistent verdict prior to the Court’s discharging the jury.
II:

Calli Baker’s Defendants’ Motion for Attorneys’ Fees & Bill of Costs
The Calli Baker’s Defendants have moved for an award of attorneys’ fees pursuant to § 35(a) of

the Lanham Act, which authorizes a court “in exceptional cases [to] award reasonable attorney fees to the
prevailing party.” 15 U.S.C. § 1117(a). It is undisputed that the Calli Baker’s Defendants were the
prevailing party in this matter. An examination of the legislative history of 15 U.S.C. § 1117 clearly
indicates that Section 35 was intended to deter both willful infringement by a defendant and abusive
litigation brought by an oppressive plaintiff, as evidenced by the following:
Effective enforcement of trademark rights is left to the trademark owners
and they should, in the interest of preventing purchaser confusion, be
encouraged to enforce trademark rights. It would be unconscionable not
to provide a complete remedy including attorney fees for acts which courts
have characterized as malicious, fraudulent, deliberate and willful . . .
The bill would also permit prevailing defendants to recover attorney fees
in exceptional cases. This would provide protection against unfounded
suits brought by trademark owners for harassment and the like.
See Scotch Whisky Ass’n v. Majestic Distilling Co., Inc., 958 F.2d 594, 600 (4th Cir. 1992) (quoting S.
Rep. No. 1400, 93rd Cong., 2d Sess., reprinted in 1974 U.S.C.C.A.N 7132, 7136-7137). The Fourth
Circuit has recognized two separate standards to prove an “exceptional” case depending on whether the
prevailing party is the plaintiff or defendant. See id. at 599-600. In doing so, the court has specifically
pointed out that “[a] prevailing defendant who has been wrongfully charged of falsely designating origin
has only one source of restitution, recovery of attorney fees.” Id. (“[W]e believe that a finding of bad faith
on the part of a plaintiff is not necessary for a prevailing defendant to prove an ‘exceptional’ case under
section 35(a) of the Lanham Act. . . . This is consistent, we think, with the report’s discussion of attorney
fees to a plaintiff as completing his remedy whereas the discussion of fees for a winning defendant is
19

couched in terms of providing the only remedy.”). As such, the Fourth Circuit has held that, while a
prevailing plaintiff must show that “the defendant’s conduct was malicious, fraudulent, willful or
deliberate in nature,”11 a prevailing defendant needs to show “[s]omething less than bad faith” to prove
an exceptional case under the Lanham Act for attorneys’ fees to be awarded. Id. at 599 (quoting Noxell
Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 771 F.2d 521 (D.C. Cir. 1985)).
However, in Retail Services, Inc. v. Freebies Publishing, the Fourth Circuit noted that the different
standards of proving an exceptional case for the award of attorneys’ fees may not have survived the
Supreme Court’s decision in Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994), in which the Court rejected
a standard that differentiated between prevailing plaintiffs and defendants for the recovery of attorneys’
fees in the copyright context. Retail Servs., 364 F.3d at 550 n.7. In light of the footnote in Retail Services
and the Supreme Court’s decision in Fogerty, a recent district court decision from the Eastern District of
North Carolina applied the higher bad faith standard to a prevailing defendant’s request for attorneys’ fees
in a trademark infringement case and denied the request for attorneys’ fees. See Ray Commc’ns, Inc. v.
Clear Channel Commc’ns, No. 2:08-cv-24-BO, 2011 WL 3207805 (E.D.N.C. July 26, 2011). Similarly,
this Court will apply the higher bad faith standard, but finds that it makes little difference because the
Calli Baker’s Defendants have not only made the “[s]omething less than bad faith” showing to prove that

11

Retail Servs. Inc. v. Freebies Publ’g, 364 F.3d 535, 550 (4th Cir. 2004) (citation
omitted).
20

this is an exceptional case,12 but also have shown that FRG’s conduct was “malicious, fraudulent, willful
or deliberate in nature.” Retail Servs., 364 F.3d at 550. In fact, the jury’s verdict, finding that FRG
committed fraud on the USPTO, renders this case “exceptional.” As stated by the United States Senate,
“It would be unconscionable not to provide a complete remedy including attorney’s fees for acts which
the courts have characterized as . . . fraudulent.” S. Rep. No. 1400, 93rd Cong., 2d Sess., reprinted in 1974
U.S.C.C.A.N. 7132, 7136.
Having determined that this is an “exceptional” case, the Court must now turn to the
“reasonableness” of the Calli Baker’s Defendants’ request for attorneys’ fees. The reasonableness of
attorneys’ fees is determined by use of what is known as the “lodestar” method, pursuant to which the
Court first determines a reasonable number of hours for the work expended and multiplies those hours
by a reasonable hourly rate. Hensley v. Eckerhart, 461 U.S. 424, 433-34 (1983), abrogated in part on
other grounds, Gisbrecht v. Barnhart, 535 U.S. 789 (2002). The Court can then increase or decrease the
award based on certain factors, such as “the results obtained.” Id. at 434. To determine the reasonable
number of hours and the reasonable rate to use in calculating the lodestar, the Court is guided by twelve

12

The Court finds that there is ample support in the record that the Firehouse Plaintiffs’
actions make this an “exceptional” case that warrants an award of attorneys’ fees to the Calli
Baker’s Defendants. The supporting reasons are enumerated in detail in the Calli Baker’s
Defendants’ Memorandum in Support of Defendants’ Motion for Attorneys’ Fees [Doc.
#227-1] and their subsequent reply memorandum [Doc. #240], which are both hereby
adopted by the Court. For example, it is clear from the record and the jury’s verdict that: (1)
FRG’s factual certification to the USPTO was not only erroneous but fraudulent; (2) FRG
has over asserted its trademark rights; (3) counsel for Firehouse Plaintiffs inappropriately
asked Mr. Scurfield a question regarding prior settlement negotiations during trial; (4) FRG
caused potentially prejudicial publicity, on the eve of trial, in connection with a donation that
had been made nearly four months earlier; this resulted in a last-minute motion hearing by
the Court; and (5) Firehouse Plaintiffs’ asserted a South Carolina Unfair Trade Practices Act
claim only to later withdraw the claim when threatened with a motion to strike.
21

non-exclusive factors. These factors, which have been approved by the Supreme Court and embraced by
the Fourth Circuit are:
(1) the time and labor required; (2) the novelty and difficulty of the
questions; (3) the level of skill required to perform the legal service
properly; (4) the preclusion of employment by the attorney due to
acceptance of the case; (5) the customary fee; (6) whether the fee is fixed
or contingent; (7) the time limitations imposed by the client or the
circumstances; (8) the amount involved and the results obtained; (9) the
experience, reputation, and ability of the attorneys; (10) the
“undesirability” of the case; (11) the nature and length of the professional
relationship with the client; and (12) awards in similar cases.
Rum Creek Coal Sales, Inc. v. Caperton, 31 F.3d 169, 175 (4th Cir. 1994) (citing Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974)); see Blanchard v. Bergeron, 489 U.S. 87, 91 n.5
(1989). These factors were first adopted by the Fourth Circuit in Barber v. Kimbrell’s, Inc., 577 F.2d 216,
226 (4th Cir. 1978).13 In more recent cases, some courts restate the sixth factor as relating to counsel’s
expectations at the outset of the litigation. See Brodziak v. Runyon, 145 F.3d 194, 196 (4th Cir. 1998)
(quoting EEOC v. Service News, Co., 898 F.2d 958, 965 (4th Cir. 1990)). Although the Court considers
all of the factors, they need not be strictly applied in every case inasmuch as all of the factors are not
always applicable. Service News, 898 F.2d at 965.
A. Reasonable Number of Hours
To establish the number of hours reasonably expended, the attorney “should submit evidence
supporting the hours worked . . .” Hensley, 461 U.S. at 433. The number of hours should be reduced to
exclude “hours that are excessive, redundant, or otherwise unnecessary” in order to reflect the number
of hours that would properly be billed to the client. Id. at 434. “Where the [movant] has failed to prevail

13

The local rules in this District require that “[a]ny petition for attorney’s fees . . . comply
with the requirements set forth in Barber v. Kimbrell’s, Inc. . . .” Local Rule 54.02
(D.S.C.).
22

on a claim that is distinct in all respects from his successful claims, the hours spent on the unsuccessful
claim should be excluded in considering the amount of a reasonable fee.” Id. at 440. “[T]he district court
may simply reduce the award to account for the limited success.” Signature Flight Support Corp. v.
Landow Aviation L.P., 730 F. Supp. 2d 513, 528 (E.D. Va. 2010) (quoting Hensley, 461 U.S. at 436-37).
In this case, counsel for the Calli Baker’s Defendants, Ms. Sarah Day Hurley, has presented billing
records showing that her firm, Turner Padget, spent 2163.7 hours working on this case. In evaluating
whether these hours were reasonably expended, the Court addresses the relevant factors below.
1. Time and Labor Required
This case started more than three years ago when counsel for FRG sent a cease and desist letter
to Scurfield, the owner of CALLI BAKER’S. The time and labor required to litigate this action have been
substantial due to the nature of this litigation. Further, this has been a long, complex case. The record
contains over two dozen motions, pretrial and post trial, each of which has been fully briefed. Many of
these submissions, coupled with exhibits, are hundreds of pages long. The trial of the case took five days.
In response to the Calli Baker’s Defendants’ Motion for Attorneys’ Fees, the Firehouse Plaintiffs
argue that fees unrelated to the Calli Baker’s Defendants’ prevailing claims are not recoverable.
Specifically, they argue that
Despite not prevailing on four of their six claims and on eleven of their
twelve affirmative defenses, Defendants seek attorneys’ fees for all work
performed by their counsel on this case, as well as for work unrelated to
the litigation. For example, Defendants seek an award of fees for services
performed six months prior to the filing of this lawsuit, for unsuccessfully
opposing Firehouse’s motions to dismiss, for unsuccessfully opposing
Firehouse’s summary judgment motion on Defendants’ SCUTPA claim,
for researching whether they could transform this two-restaurant dispute
into a class action and then trolling for prospective class-action members,
for researching whether they could register their own trademark, and for
analyzing their prospective advertising campaigns. . . . Defendants . . .
make no effort to distinguish their fees between arguably permissible and

23

clearly impermissible time entries. Defendants’ blanket request must be
denied.
Doc. #234, p.18. Ms. Hurley has submitted a declaration that the request for attorneys’ fees does not
include amounts that were “courtesy write-offs to the client” and was tailored specifically to “remove any
entries that reflect time dedicated primarily to claims or affirmative defenses that were dismissed by the
Court. As a result, 85.6 hours have been removed from the time entries previously billed to the client.”
Doc. #227-2, p.5.14 The Court has carefully reviewed the Firehouse Plaintiffs’ specific arguments
concerning “Defendants’ four unsuccessful claims,” “Defendants’ fees for pre-suit activities,”
“Defendants’ fees for work unrelated to this lawsuit,” “Defendants’ fees for their affirmative defenses,”
and “Defendants’ fees for the unsuccessful portion of their cancellation claims.” The Court has also
reviewed the Calli Baker’s Defendants’ reply to these arguments. As a result, the Court finds that the
hours claimed and fees sought by the Calli Baker’s Defendants must be significantly reduced.
When a movant has pursued both successful and unsuccessful claims, “the most critical
factor . . . is the degree of success obtained.” because when a movant has achieved only partial or limited
success, the product of hours reasonably expended on the litigation as a whole may be an excessive
amount.” Brodziak, 145 F.3d at 196-97 (quoting Hensley, 461 U.S. at 436). In determining whether to
reduce the compensable hours, the Court must first identify the relationship between the successful and
unsuccessful claims. If the claims are based on different facts and legal theories, the movant should not
be compensated for time spent pursuing the unsuccessful claims because that effort was not “expended

14

In the Calli Baker’s Defendants’ reply, counsel states: “Defense counsel has again
reviewed the time entries submitted and identified three entries that it consents to
withdraw–from 2/27/2009 (3.2 hours), 3/31/2009 (0.4 hours), and 4/8/2009 (0.6 hours).
While counsel feels the inclusion of these entries was justified because of commingling of
analysis and tasks, this withdrawal is consistent with the previous removal of other entries
that included ‘class action.’” Doc. #240, p.11 n.13.
24

in pursuit of the ultimate result achieved.” Hensley, 461 U.S. at 435. However, “[i]n [some] cases, the
[movant’s] claims for relief will involve a common core of facts or will be based on related legal theories.
Much of counsel’s time will be devoted generally to the litigation as a whole, making it difficult to divide
the hours expended on a claim-by-claim basis.” Id. In such a case, “the district court should focus on the
significance of the overall relief obtained by the [movant] in relation to the hours reasonably expended
on the litigation.” Id.
As an initial matter, it must be noted that although the Calli Baker’s Defendants indicate that they
eliminated entries for unsuccessful claims, they still seek fees for work dedicated to the litigation as a
whole because the work related to “the same core set of facts.” Doc. #240, p.9. As argued by the Calli
Baker’s Defendants in their reply, the Court finds that the cancellation due to fraud claim/defense and the
various Lanham Act claims at issue in this case were based upon the same core set of facts and
interrelated legal theories. However, a significant reduction is appropriate because many of the claims
for which the Calli Baker’s Defendants are not entitled to fees- whether because the claims were
unsuccessful or because the claims are not the proper basis for a fee award- involve legal research and
legal theories different from the research and theories for which fees are appropriate. Specifically, upon
the Firehouse Plaintiffs’ Motion to Dismiss, the Court dismissed the Calli Baker’s Defendants’ claims
of antitrust, unfair competition, and third-party use; dismissed FRG’s founders from the lawsuit; and
struck two of the Calli Baker’s Defendants’ affirmative defenses. The Court also ordered the Calli
Baker’s Defendants to more definitely plead their fraud claim and later granted summary judgment
against them on their South Carolina Unfair Trade Practices Act claim because the Calli Baker’s
Defendants failed to present any evidence of damages. Further, the Calli Baker’s Defendants seek
reimbursement of fees for pre-suit activities and work unrelated to this lawsuit. Since the Calli Baker’s

25

Defendants’ own reduction of their fee submission does not sufficiently address these issues, a more
significant reduction is appropriate.
2. Novelty and Difficulty of the Questions Presented by the Lawsuit
This case involved claims of trademark infringement and unfair competition, which are generally
recognized as complex areas of the law. The procedural posture added to the difficulty of this case. For
example, both parties filed Complaints, involving a common set of facts and involving common issues
of law, against each other in this District within a span of approximately five days; however, counsel for
the Firehouse Plaintiffs opposed consolidation of the two lawsuits. This resulted in the subsequent filing
of three separate motions to dismiss relating to the two separate lawsuits. Similarly, the total number of
motions filed in this case, which is more than two dozen, gives some hint as to the difficulty of the matter.
The case was also complex and difficult due to the nature of the cancellation due to fraud claim,
and the need for extensive discovery concerning USPTO records and third party usage of the
FIREHOUSE word mark. In addition, the Firehouse Plaintiffs produced more than 7,000 pages of
documents, including complex legal documents such as franchise agreements and extensive marketing
studies, which they ultimately relied on at trial.
3. Level of Skill Required to Perform the Legal Service Properly
This case required great skill in both trademark enforcement/defense and business litigation. Given
the complexity of this case, only the most experienced and most competent counsel would be able to
handle it. Based on the results obtained, it is apparent that counsel for the Calli Baker’s Defendants were
competent in this area of representation.
4. Preclusion of Other Employment
Obviously, a significant amount of time was required from the lawyers assigned to the case. Time
spent on this case meant less time for development of other clients’ cases.
26

5. The Customary Fee
The Calli Baker’s Defendants do not address this factor in their memorandum or reply, but Ms.
Hurley does state in her petition in support of attorneys’ fees that her rate in this case was $250/hour and
she also submitted the declaration accompanying the request for attorneys’ fees in Super Duper, Inc. v.
Mattel, Inc., 382 F. App’x 308 (4th Cir. 2010) as specific evidence of the prevailing market rate in this
type of case.
6. Whether the Fee is Fixed or Contingent
This case is not contingency based.
7. The Time Limitations Imposed by the Client or Circumstances
Like many cases, this case involved thousands of pages of documentation and countless exhibits.
There is no doubt that such voluminous documentation required many hours of review to understand and
fully comprehend the nature and impact, if any, of such evidence. Given the sheer volume of documents
at issue, it was reasonable for Ms. Hurley to solicit the assistance of other attorneys and paralegals at
Turner Padget in order to get the work done.
8. The Amount Involved and the Results Obtained
Initially, as demonstrated by the pleadings, the Firehouse Plaintiffs were seeking both injunctive
relief and monetary damages. The Firehouse Plaintiffs ultimately dropped their claim for monetary
damages, and their claim for unjust enrichment was eventually dismissed. Upon the Firehouse Plaintiffs’
Motion to Dismiss, the Court dismissed the Calli Baker’s Defendants’ claims of antitrust, unfair
competition, and third-party use; dismissed FRG’s founders from the lawsuit; and struck two of the Calli
Baker’s Defendants’ affirmative defenses. The Court also ordered the Calli Baker’s Defendants to more
definitely plead their fraud claim and later granted summary judgment against them on their South
Carolina Unfair Trade Practices Act claim because the Calli Baker’s Defendants failed to present any
27

evidence of damages.

At trial, the Calli Baker’s Defendants prevailed on all claims alleged by the

Firehouse Plaintiffs for Trademark Infringement under the Lanham Act, False Designation of Origin, and
common law trademark infringement and common law unfair competition on each of the 34 trademarks
asserted by the Firehouse Plaintiffs. Had the jury found that the Calli Baker’s Defendants infringed on
just one of FRG’s Registrations, then CALLI BAKER’S would have been required to change the name
of its business. Additionally, the Calli Baker’s Defendants prevailed on their claim of cancellation of the
FIREHOUSE word mark due to fraud on the USPTO. Despite prevailing on all claims at trial, the Court
finds that a reduced fee is appropriate given that the Calli Baker’s Defendants did not prevail on four of
their six original claims, including any claims for which they would have been awarded damages.
9. Experience, Reputation, and Ability of the Attorneys
Counsel for the Calli Baker’s Defendants, Ms. Hurley, has many years of experience as a business
litigator, has handled previous trademark infringement claims, and has tried several business disputes to
verdict. Despite the fact that she has not been admitted to practice before the USPTO, Ms. Hurley’s
litigation experience was evident throughout this case. Additionally, her experience and reputation and
that of the different attorneys at her firm, Turner Padget, who worked on the file and as set forth in her
declaration is exceptional. As shown by the Declaration of Ms. Hurley, Turner Padget has been
recognized as a leading litigation firm in South Carolina and the Southeast. Doc. #227-2, ¶¶2-4. In
addition, the law firm of Turner Padget handled this case is a very efficient manner. Specifically, the
Calli Baker’s Defendants were represented by only one lawyer and one paralegal at trial, while the
Firehouse Plaintiffs were represented by three lawyers and one paralegal. Regarding their abilities, the
Court has, among other things, reviewed the many filings that Ms. Hurley submitted to the Court, heard
the arguments she made, and observed her conduct at trial. The Court finds that these factors weigh in
favor of approval of a reasonable amount of attorneys’ fees in this action.
28

10. Undesirability of the Case
This factor appears to have no bearing on the reasonableness of the fees in this case.
11. Nature and Length of the Attorney’s Professional Relationship with the Client
Ms. Hurley has not previously represented the Calli Baker’s Defendants.
12. Fee Awards in Similar Cases
The amount of fees requested by counsel for the Calli Baker’s Defendants is less than 20% of the
fees awarded in the most recent trademark infringement case to be tried to a jury in South Carolina. See
Super Duper, Inc. v. Mattel, Inc., 382 F. App’x 308 (4th Cir. 2010) (affirming award of $2,643,844.15
in attorneys’ fees after a seven-day trial). However, unlike the Super Duper case, counsel for the Calli
Baker’s Defendants only sought cancellation at trial and did not have to prove damages.
Taking all of these factors into account, including the reductions already made by the Calli
Baker’s Defendants themselves, the Court finds that it is appropriate to reduce the overall number of
hours performed by counsel for the Calli Baker’s Defendants by an additional 50%. See In re Outsidewall
Tire Litig., 748 F. Supp. 2d 557, 565 n.25 (E.D. Va. 2010) (collecting cases applying percentage-based
fee reductions). The total number of hours for which counsel for the Calli Baker’s Defendants are entitled
to attorneys’ fees, therefore, is 1079.75.15
B. Reasonable Hourly Rate
The hourly rates included in a request for attorneys’ fees must also be reasonable. Hensley, 461
U.S. at 433. A reasonable hourly rate is defined as “the ‘prevailing market rate[] in the relevant
community.’” Rum Creek Coal Sales, 31 F.3d at 175. The relevant community for determining the
prevailing market rate is generally the community in which the court where the action is prosecuted sits.

15

See supra note 14.
29

Id. This determination is fact intensive and the Court may look to what attorneys earn from paying clients
for similar services in similar circumstances. See Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984). “While
evidence of fees paid to attorneys of comparable skill in similar circumstances is relevant, so too is the
rate actually charged by the petitioning attorneys when it is shown that they have collected those rates in
the past from the client.” Rum Creek Coal Sales, 31 F.3d at 175 (citing Gusman v. Unisys Corp., 986 F.2d
1146 (7th Cir. 1993)).
According to Ms. Hurley’s declaration, her “hourly rate in this case is $250.00 per hour.” Doc.
#227-2, ¶6. Additionally, she states that “[t]he hourly rates charged by Turner Padget’s lawyers are
reasonable and comparable to, if not less than, rates charged by attorneys at other firms in South Carolina
for comparable work.” Id. ¶16. Ms. Hurley also submitted the declaration accompanying the request for
attorneys’ fees in the Super Duper case as specific evidence of the prevailing market rates in this
community.16 The Firehouse Plaintiffs do not appear to object to the reasonableness of the hourly rates
charged by Ms. Hurley and the other members of Turner Padget who worked on this case. Based on (1)
the Court’s own knowledge of hourly rates in this District; (2) the evidence submitted by Ms. Hurley; (3)
the attorneys’ customary fees; (4) the attorneys’ experience, reputation, and ability; and (5) awards in
similar cases, the Court finds that the hourly rates documented by Ms. Hurley and reflected in the billing
records are the prevailing market rates for this type of case in the District of South Carolina. In
conclusion, therefore, the Court finds that a reasonable number of hours is 1079.75 and, when multiplied
by the prevailing market rates, the Court calculates the lodestar amount to be $241,888.00. This amount

16

In Super Duper, the primary attorney’s hourly rate was from $335 to $370 and the
declaration in that case also set forth hourly rates for others involved in that litigation. Here,
while Ms. Hurley was the primary attorney who worked the majority of the hours claimed,
the billing records submitted show occasional work by others at Turner Padget, such as
Bernard Klosowski, whose hourly rate was from $300 to $320.
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is a reasonable amount of attorneys’ fees in this case.17 The Court notes that this is one-half of the amount
sought.
C. Bill of Costs
The Calli Baker’s Defendants, as documented in their Amended Bill of Costs [Doc. #239], seek
$18,410.14 in addition to the requested attorneys’ fees. Specifically, they seek the following costs: (1)
$3,769.09 for Westlaw “Research”; (2) $350.00 for “Fees of the Clerk”; (3) $4,117.86 for “Printing
Costs”; (4) $8,710.38 for “Transcript Costs”; and (5) $1,462.81 for “Mediation Costs.” Doc. #239-1. In
response, the Firehouse Plaintiffs argue that, while the Lanham Act allows for awards of costs to
prevailing plaintiffs, § 1117(a) does not allow for awards of costs to prevailing defendants. The Firehouse
Plaintiffs also object to several specific costs that the Calli Baker’s Defendants seek to recoup.
The Fourth Circuit has held that Rule 54(d)(1) creates a presumption that the prevailing party will
be awarded costs. Cherry v. Champion Int’l Corp., 186 F.3d 442, 446 (4th Cir. 1999) (citing Delta Air
Lines, Inc. v. August, 450 U.S. 346 (1981)). The Court has “considerable discretion” in deciding whether
and to what extent to tax costs. See Constantino v. American S/T Achilles, 580 F.2d 121, 123 (4th Cir.
1978). However, the Court’s discretion to tax costs is limited to those specifically enumerated in 28
U.S.C. § 1920. See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441 (1987); see also Fells
v. Virginia Dep’t Of Transp., 605 F. Supp. 2d 740, 742 (E.D. Va. 2009). Inasmuch as the Court has found
that the Calli Baker’s Defendants are the only prevailing party in this case, then costs, if any, can be
granted as to them. Contrary to the Firehouse Plaintiffs’ assertion, there is no controlling rule in this

17

In earlier filings with the Court, counsel for the Calli Baker’s Defendants stated that
“the median cost of litigating a trademark infringement case involving less than $1 million
is approximately $300,000.” Doc. #147, p.4 n.2. Additionally, in a sworn affidavit, Scurfield
declared that, through November 2010, he had borrowed $200,000 from a line of credit to
pay attorneys’ fees and other costs associated with this litigation. Doc. #147-3, pp.2-3.
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Circuit that prohibits a prevailing defendant from receiving costs under the Lanham Act. See Super
Duper, Inc. v. Mattel, Inc., 382 F. App’x 308 (4th Cir. 2010); see also Ray Commc’ns, Inc. v. Clear
Channel Commc’ns, No. 2:08-cv-24-BO, 2011 WL 3207805 (E.D.N.C. July 26, 2011); cf. PETA v.
Doughney, 263 F.3d 359, 371 (4th Cir. 2001) (stating the “award of monetary damages, attorney fees and
costs under the Lanham Act is committed to the sound discretion of the Court, based on the equities of
each particular case”) (citation omitted).
1. Mediation Costs
First, the Firehouse Plaintiffs object to the inclusion of mediation costs. The Calli Baker’s
Defendants do not appear to contest that these costs are not recoverable costs enumerated in 28
U.S.C. § 1920. Therefore, because the Calli Baker’s Defendants have failed to make the requisite initial
showing that these costs fall within an allowable category of taxable costs,18 they will not be awarded.
See Brisco-Wade v. Carnahan, 297 F.3d 781, 782 (8th Cir. 2002) (stating “section 1920 does not list
mediation fees as taxable costs); see also AM Props. v. Town of Chapel Hill, 202 F. Supp. 2d 451, 456
(M.D.N.C. 2002) (rejecting taxation of mediator fees); Zeuner v. Rare Hospitality Int’l, Inc., 386 F. Supp.
2d 635, 640 (M.D.N.C. 2005) (concluding that mediation expenses are not taxable as costs under 28
U.S.C. § 1920).
2. Computerized Research
Next, the Firehouse Plaintiffs object to the inclusion of costs for computerized legal research.
According to the Firehouse Plaintiffs, “because computerized legal research is not one of the enumerated
costs recoverable under 28 U.S.C. § 1920, the amount of $3,769.00 sought by Defendants here should be

18

“The prevailing party bears the burden of showing that the requested costs are allowed
by § 1920. . . . Once the prevailing party makes this showing, the burden shifts to the losing
party to show the impropriety of taxing these costs.” Fells, 605 F. Supp. 2d at 742.
32

disallowed.” Doc. #235, p.4. In response, the Calli Baker’s Defendants argue that “[s]uch computerized
research was reasonable (less than $4,000 over the life of the case) and necessary in order to defend the
many claims asserted by Plaintiffs.” Doc. #240, p.14. Because these costs are not an allowable category
of taxable costs pursuant to § 1920, they will not be awarded.19 See Am. Props., 202 F. Supp. 2d at 456
(collecting circuit court cases holding that computerized legal research costs are not taxable under §
1920); see also Dick’s Sporting Goods, Inc. v. Dick’s Clothing & Sporting Goods, Inc., 12 F. Supp. 2d
499, 501 (D. Md. 1998) (limiting taxable costs to those specifically enumerated in § 1920 and disallowing
costs for “Lexis/Westlaw” use); O’Bryhim v. Reliance Standard Life Ins. Co., 997 F. Supp. 728, 737 (E.D.
Va. 1998) (awarding the “costs usually allowed under 28 U.S.C. § 1920" and disallowing costs for
Westlaw use).
3. Printing Costs
The Firehouse Plaintiffs also object to the inclusion of $4,117.86 in costs for “[f]ees and
disbursements for printing.” The Calli Baker’s Defendants claim that
printing and copying charges are also recoverable, as necessary documents
for use in the case, pursuant to 28 U.S.C. § 1920(4). As shown by Exhibit
A to Defendants’ Bill of Costs, such charges included the costs of
obtaining copies of Plaintiffs’ records during discovery. . . . It was
necessary for Calli Baker’s counsel to obtain those documents in order to
defend the case.
Doc. #240, p.14. Section 1920(4) provides that “[f]ees for exemplification and the costs of making copies
of any materials where the copies are necessarily obtained for use in the case” are taxable costs. 28 U.S.C.
§ 1920(4); see Simmons v. O’Malley, 235 F. Supp. 2d 442, 444 (D. Md. 2002) (A showing that the papers

19

The Court notes that the costs of computerized legal research are properly reflected as
part of the reasonable attorneys’ fees awarded to the Calli Bakers’ Defendants. See
O’Bryhim, 997 F. Supp. at 737; see also Am. Props., 202 F. Supp. 2d at 455 (concluding that
the cost of Westlaw legal research “is more properly characterized as a component of
attorneys’ fees, not as a taxable cost of litigation”).
33

were “necessarily obtained for use in the case” includes, “at a minimum, documents used at trial and
copies furnished to the court and opposing counsel.”). Local Rule 54.03(F)(1) enumerates the five types
of taxable costs permitted under this Section, the most relevant being “[c]osts of one copy of a
document . . . introduced into evidence in lieu of original.” Local Rule 54.03(F)(1)(a) (D.S.C.). However,
“[c]opies of exhibits obtained for counsel’s own use” are not taxable. Local Rule 54.03(F)(2)(d); see
Simmons, 235 F. Supp. 2d. at 444. As the burden is on the party seeking recovery of photocopying costs
to demonstrate the reasons for each copying charge,20 and since the Calli Baker’s Defendants have not
identified the number of copies; the charges for making those copies; or the purposes or uses of those
copies, “there does not appear to be a sufficient showing for the [C]ourt to exercise its discretion to
determine that these costs are properly reimbursable rather than incurred simply as a ‘convenience’ to
counsel.” Simmons, 235 F. Supp. 2d at 444; Mann v. Heckler & Koch Def., Inc., 2011 WL 1599580, at
*7 (E.D. Va. 2011).
4. Transcript Costs and Fees of the Clerk
Finally, the Calli Baker’s Defendants seek $8,710.38 in “Transcript Costs” and $350.00 in “Fees
of the Clerk.” The Firehouse Plaintiffs do not appear to make specific objections to these costs, and the
Court finds that these costs are taxable costs and, thus, shall be awarded. See 28 U.S.C. § 1920(1) & (2);
Local Rule 54.03(A) & (H); see also LaVay Corp. v. Dominion Fed. Sav. & Loan Ass’n, 830 F.2d 522,
528 (4th Cir. 1987); O’Bryhim, 997 F. Supp. at 737-38.
For the reasons stated above, the Court grants, as modified, the Calli Baker’s Defendants’
Amended Bill of Costs. Specifically, the Calli Baker’s Defendants shall recoup $350.00 for “Fees of the
Clerk” and $8,710.38 for “Transcript Costs” as taxable costs.

20

Ford v. Zalco Realty, Inc., 708 F. Supp. 2d 558, 563 (E.D. Va. 2010).
34

Conclusion
Based on the foregoing, it is ORDERED that:
(1) Firehouse Plaintiffs’ [226] Motion for Judgment as a Matter of Law as to Defendants’ Claim of Fraud
. . . or in the Alternative a New Trial as to All Issues is DENIED;
(2) Calli Baker’s Defendants’ [227] Motion for Attorneys’ Fees is GRANTED, as modified, and the
Firehouse Plaintiffs shall pay the Calli Baker’s Defendants attorneys’ fees in the sum of $241,888.00;
(3) Calli Baker’s Defendants’ [239] Amended Bill of Costs is GRANTED, as modified, and the Firehouse
Plaintiffs shall pay the Calli Baker’s Defendants $350.00 for “Fees of the Clerk” and $8,710.38 for
“Transcript Costs”; and
(4) the Clerk of Court is hereby DIRECTED to enter judgment for the Calli Baker’s Defendants in the
following amounts: Calli Baker’s Defendants, as the prevailing party, are entitled to an award of costs in
the total amount of $9,060.38 and is entitled to an award of attorneys’ fees in the amount of $241,888.00.
IT IS SO ORDERED.
s/ R. Bryan Harwell
R. Bryan Harwell
United States District Judge
October 17, 2011
Florence, South Carolina

35