United States Court of Appeals
For the First Circuit
Nos. 01-1382, 01-2273
TAMKO ROOFING PRODUCTS, INC.,
Plaintiff, Appellee,
v.
IDEAL ROOFING COMPANY, LTD.,
Defendant, Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph A. DiClerico, Jr., U.S. District Judge]
Before
Selya, Circuit Judge,
Campbell, Senior Circuit Judge,
and Lynch, Circuit Judge.
H. Joseph Hameline, Rosemary M. Allen, Geri L. Haight, Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C., and Michael B. Clapp
on brief for appellant.
Christopher R. Benson, Marcy Hogan Greer, Susan J. Hightower,
and Fulbright & Jaworski L.L.P. on brief for appellee.
June 28, 2002
LYNCH, Circuit Judge. Tamko Roofing Products, after
winning its trademark infringement action at trial, and prevailing
on a subsequent appeal by the infringer Ideal Roofing Company,
brings this application for an award of reasonable attorneys' fees
and expenses in connection with the appeal. We articulate the
standards to be used in the analysis and deny Tamko's application
because we find that Ideal's appeal did not constitute an
exceptional case within the meaning of 15 U.S.C. § 1117(a) (2000).
I.
The six-day trial in this trademark infringement case
concerned Ideal's use of Tamko's Heritage trademark in connection
with roofing products. The district court ruled that Tamko's
Heritage trademarks were valid, and the jury found: (i) "by a
preponderance of the evidence that Ideal infringed Tamko's
trademarks"; (ii) "by clear and convincing evidence that Ideal
acted willfully in infringing Tamko's trademarks"; and (iii) "by a
preponderance of the evidence that the roofing product[s] of Ideal
and Tamko directly competed with each other." Tamko Roofing
Products, Inc. v. Ideal Roofing Co., 282 F.3d 23, 29 (1st Cir.
2002) (internal quotation marks omitted).
In August 2000, the district court issued orders that
Tamko was entitled to: (1) an accounting of Ideal's profits; (2)
attorneys' fees; and (3) an injunction permanently enjoining Ideal
from "using the term Heritage, Heritage Series, H Series, or any
name or mark confusingly similar to Heritage." Id. (internal
quotation marks omitted).
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On appeal, Ideal challenged all three of the district
court's rulings, but not the jury's finding of willful
infringement. We affirmed all of the appealed district court's
rulings in Tamko Roofing Products, Inc. v. Ideal Roofing Co., 282
F.3d 23 (1st Cir. 2002).
On April 22, 2002, Tamko filed an application for an
award of attorneys' fees and expenses in connection with its
defense of the appeal that Ideal brought. Ideal filed an objection
to Tamko's application on May 20, 2002.
II.
The Lanham Act's attorneys' fees provision, section 35,
reads: "The court in exceptional cases may award reasonable
attorney fees to the prevailing party." 15 U.S.C. § 1117(a)
(2000). In "exceptional cases," a prevailing party can obtain
attorneys' fees for a trial and on an appeal.1 See 5 J.T.
McCarthy, McCarthy on Trademarks and Unfair Competition § 30:99, at
30-184 (4th ed. 2002). As we noted in Tamko Roofing Products, we
"turn[] to the legislative history for a working definition" of
exceptional cases: "In exceptional cases, attorneys' fees may be
appropriate in circumstances where the acts of infringement were
'"malicious," "fraudulent," "deliberate," or "willful."'" 282 F.3d
at 31 (quoting S. Rep. 93-1400, at 5 (1974), reprinted in 1974
1
This case does not present the occasion to delineate the
boundaries between an award of just damages and costs under Fed. R.
App. P. 38, Maher v. Hyde, 272 F.3d 83, 87 (1st Cir. 2001)
(discussing Rule 38's "frivolous appeal" standard), and an award of
appellate attorneys' fees for "exceptional cases" under 15 U.S.C.
§ 1117(a), except to say that the two standards do not appear to be
the same.
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U.S.C.C.A.N. 7132, 7133). The district court awarded attorneys'
fees to Tamko for the defense of its trademark at the trial level.
In affirming the attorneys' fees award for the trial in
this case, we rejected the argument "that bad faith or fraud is a
necessary condition to an award of attorneys' fees under section 35
of the Lanham Act," and held that "willful conduct may be
sufficient when the trial court takes into account all the facts
and equities of the case." Id. at 27. The facts and equities
surrounding Ideal's willful infringement of Tamko's mark justified
the trial court's award of fees.
Here, Tamko argues that because this was an exceptional
case and attorneys' fees were awarded at the trial level,
attorneys' fees should also be awarded for the appeal. Tamko cites
to Committee for Idaho's High Desert, Inc. v. Yost, 92 F.3d 814
(9th Cir. 1996), in which the Ninth Circuit granted the prevailing
plaintiff attorneys' fees on appeal because "the district court
found that appellants 'knowingly, intentionally and deliberately
adopted and used'" the plaintiff's name, and the case was therefore
exceptional. Id. at 825.
In response, Ideal argues that in order to obtain an
award of attorneys' fees for an appeal, the appeal itself must be
exceptional, which it equates with frivolous. Ideal, in turn,
relies on another Ninth Circuit case, U-Haul International, Inc. v.
Jartran, Inc., 793 F.2d 1034 (9th Cir. 1986), which denied an award
of attorneys' fees against a defendant who, like Ideal, lost both
at trial and on appeal. The Ninth Circuit reasoned that attorneys'
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fees were not warranted because "[t]here [was] nothing
'exceptional' about [the defendant] appealing this $40 million
judgment. . . . [D]ifficult issues were raised . . . [and] [i]t was
entirely reasonable for [the defendant] to challenge the district
court's decision." Id. at 1044.
The case law in this area is very sparse, perhaps because
most applications for attorneys' fees for an appeal are handled in
summary court orders. Articulation of the standards by which we
will evaluate whether appeals are within the "exceptional case"
requirement may be helpful. We reject Ideal's view that the appeal
must be frivolous in order to justify an award of appellate
attorneys' fees; rather, the statutory standard is whether the
case, as it appears on appeal, is "exceptional." We also reject
Tamko's argument that whenever a case is deemed exceptional at the
trial court level, attorneys' fees should automatically be awarded
for the appeal. Instead, we strike a middle ground. In each case
this court will assess and weigh several factors: (1) whether the
appeal was on issues different from those that caused the trial
court to find an "exceptional case"; (2) the relative strengths or
weaknesses of the appellate issues; and (3) the extent to which the
appeal can be said to have prolonged, without adequate
justification, a particularly bad "exceptional case." The weight
to be given to each of these three factors may vary from case to
case. In addition, this court will look to whether the losing
party's position on appeal appears to be of a whole with the
earlier "malicious, fraudulent, deliberate, or willful" acts of
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infringement or is otherwise inequitable. Cf. Securacomm
Consulting, Inc. v. Securacom Inc., 224 F.3d 273, 280-83 (3d Cir.
2000) (fees justified where litigation itself is oppressive and
meant to delay).
This approach makes sure that the prevailing party in a
trademark infringement case does not have to keep expending its
resources defending the merits of a case characterized by
exceptional willful infringement, but also ensures that the losing
party is not unfairly thwarted in its attempts to make relevant and
reasonable arguments about potential procedural errors or about the
type and amount of remedies. In addition, this approach lends a
degree of flexibility because a portion of the total amount of
appellate attorneys' fees may be awarded when the appeal in part
attempts to rehash the merits of an already exceptional case, and
in part makes relevant and reasonable arguments about procedural or
remedial issues.
We apply our standards to this case. Here, we understand
the district court's award of fees to have been based on Ideal's
willful acts of infringement and not on Ideal's position as to
appropriate remedy. Ideal did not appeal from the infringement
finding against it. Its appeal was, by contrast, primarily
concerned with the appropriateness of the remedies ordered and with
the award of attorneys' fees. Thus, its appeal was on issues
different from those that caused the trial court to find that this
was an exceptional case.
As to the relative strengths and weaknesses, Ideal's
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arguments, while not strong, were respectable; were made in areas
where the law of this circuit was unclear; and had some reason to
them. This appeal cannot be said to have prolonged, without
adequate justification, a case that the district court found to be
exceptional. We therefore deny Tamko's application for the award
of attorneys' fees in connection with the appeal.
So ordered.
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