RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 Eagles, Ltd., et al. v. Am. No. 02-5560
ELECTRONIC CITATION: 2004 FED App. 0035P (6th Cir.) Eagle Foundation
File Name: 04a0035p.06
_________________
UNITED STATES COURT OF APPEALS COUNSEL
FOR THE SIXTH CIRCUIT ARGUED: James R. Hastings, COLLEN IP, Ossining, New
_________________ York, for Appellant. Carla J. Christofferson, O’MELVENY
& MYERS, Los Angeles, California, for Appellees.
EAGLES, LTD . and EAGLES X ON BRIEF: James R. Hastings, Jess M. Collen, COLLEN
RECORDING CO ., - IP, Ossining, New York, for Appellant. Carla J.
Plaintiffs-Appellees, - Christofferson, Daniel M. Petrocelli, O’MELVENY &
- No. 02-5560 MYERS, Los Angeles, California, Michael J. Avenatti,
- GREEN, BROILLET, PANISH & WHEELER, Santa
v. > Monica, California, for Appellees.
,
-
AMERICAN EAGLE _________________
-
FOUNDATION f/k/a NATIONAL - OPINION
FOUNDATION TO PROTECT - _________________
AMERICA ’S EAGLES, -
Defendant-Appellant. - AVERN COHN, District Judge. This is a trademark case.
- Defendant American Eagle Foundation (AEF) appeals from
N the district court’s denial of its motion for attorney’s fees and
Appeal from the United States District Court costs under 15 U.S.C. § 1117(a) and 28 U.S.C. § 1927 and the
for the Eastern District of Tennessee at Knoxville. district court’s denial of its motion to order the Patent and
No. 98-00090—R. Leon Jordan, District Judge. Trademark Office (PTO) to dismiss a trademark opposition
filed by plaintiffs based on the dismissal of the district court
Argued: December 10, 2003 action. AEF says that (1) the district court erred by failing to
articulate its reasons for denying attorney’s fees and costs;
Decided and Filed: January 29, 2004 (2) the district court improperly held it to a higher standard
for proving an “exceptional” case under 15 U.S.C. § 1117(a);
Before: ROGERS and COOK, Circuit Judges; COHN, and (3) the district court had jurisdiction and should have
District Judge.* ordered the PTO to dismiss the pending opposition. Plaintiffs
say that (1) the district court adequately stated the applicable
legal standards for an award of attorney’s fees as well as its
reasoning for the denial; (2) the district court did not abuse its
discretion in holding that the circumstances of the case were
* not “exceptional;” and (3) the district court correctly refused
The Honorab le Avern Cohn, United States District Judge for the
Eastern District of Michigan, sitting by designation.
1
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to dismiss the opposition because the issue of estoppel must for it to go to trial in a week with completely new counsel and
be raised before the PTO not the district court. We affirm. many of its witnesses unavailable to testify. The district court
dismissed EL’s case with prejudice and allowed AEF to move
I. BACKGROUND for attorney’s fees and costs. AEF also moved to include as
part of the Rule 41(a)(2) dismissal an order directing that the
Plaintiff Eagles, Ltd. (EL) is one of several companies suspended opposition in the PTO be dismissed with prejudice.
affiliated with the Eagles, a rock and roll band formed in The district court declined to dismiss the opposition and
1971. EL owns the registered trademark and service mark denied AEF’s motion for attorney’s fees and costs under
“Eagles.” AEF is a non-profit organization dedicated to 15 U.S.C. § 1117(a) and 28 U.S.C. § 1927.
protecting American bald eagles. It engages in education and
protection activities, as well as selling and promoting music- II. ANALYSIS
related products such as a song entitled “Save the Eagle.”
AEF uses the Internet domain name “eagles.org” and vanity A. District Court’s Statement of Reasons for Denying
telephone numbers such as (800) 2-EAGLES. Attorney’s Fees
AEF filed a trademark application for the “American The district court’s denial of attorney’s fees under
Eagles Records” mark in 1995. EL filed Opposition No. 15 U.S.C. § 1117(a) and 28 U.S.C. § 1927 is reviewed for
103,477 in response. Before the PTO ruled on AEF’s abuse of discretion. See Johnson v. Jones, 149 F.3d 494, 503
application, EL filed suit in the district court in 1998 against (6th Cir. 1998); Ridder v. City of Springfield, 109 F.3d 288,
AEF for trademark infringement, dilution, and other causes of 298 (6th Cir. 1997). “This court has defined an abuse of
action under the Lanham Act. The PTO then suspended its discretion as a ‘definite and firm conviction that the trial court
proceedings pending final disposition of the civil action. committed a clear error of judgment.’” Arban v. West Publ’g
Corp., 345 F.3d 390, 404 (6th Cir. 2003) (citation omitted).
The trial was originally scheduled to begin in April 2000
but was delayed and rescheduled for June 2001. The parties 15 U.S.C. § 1117(a) reads (emphasis added):
then submitted cross motions for summary judgment, which
were denied by the district court. On May 29, 2001, less than When a violation of any right of the registrant of a mark
two weeks before trial was set to begin, EL moved for registered in the Patent and Trademark Office, a violation
substitution of counsel and requested a continuance until fall under section 43(a) or (d), or a willful violation under
2001 because important witnesses, including members of the section 43(c), shall have been established in any civil
band, would be on tour in Europe during the summer and action arising under this Act, the plaintiff shall be
unavailable to testify. The district court granted the motion entitled, subject to the provisions of sections 29 and 32,
for substitution of counsel but denied EL’s motion for a and subject to the principles of equity, to recover
continuance. (1) defendant’s profits, (2) any damages sustained by the
plaintiff, and (3) the costs of the action. The court shall
EL then moved for voluntary dismissal of its action assess such profits and damages or cause the same to be
pursuant to Rule 41(a)(2) of the Federal Rules of Civil assessed under its direction. In assessing profits the
Procedure, arguing that it would be economically unfeasible plaintiff shall be required to prove defendant’s sales
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only; defendant must prove all elements of cost or entry that completely fails to set forth any reason for the
deduction claimed. In assessing damages the court may denial is an abuse of discretion because it is impossible to
enter judgment, according to the circumstances of the determine on appeal whether the district court was aware that
case, for any sum above the amount found as actual it had the discretion to award attorney’s fees.
damages, not exceeding three times such amount. If the
court shall find that the amount of the recovery based on Unlike the trial courts in Israel and Morscott, the district
profits is either inadequate or excessive the court may in court here gave more than a marginal denial without support.
its discretion enter judgment for such sum as the court The district court’s order was sufficient because it clearly
shall find to be just, according to the circumstances of the stated the applicable law and gave the reasons for the denial.
case. Such sum in either of the above circumstances Regarding 15 U.S.C. § 1117(a), the district court recognized
shall constitute compensation and not a penalty. The that it had discretion under the “exceptional” case standard
court in exceptional cases may award reasonable and cited cases from this Court applying the test. The district
attorney fees to the prevailing party. court then recited each side’s arguments and stated:
28 U.S.C. § 1927 reads (emphasis added): The court has considered the circumstances of this case
and the applicable legal standard and in its discretion
Any attorney or other person admitted to conduct cases concludes that this is not an exceptional case as called for
in any court of the United States or any Territory thereof under § 1117(a). Litigation requires strategic and often
who so multiplies the proceedings in any case difficult and costly decisions. However, in the context of
unreasonably and vexatiously may be required by the this case, such decisions do not qualify it as an
court to satisfy personally the excess costs, expenses, and “exceptional” case warranting an award of fees.
attorneys’ fees reasonably incurred because of such
conduct. Regarding 28 U.S.C. § 1927, the district court stated the
proper legal standard, recognized its discretion, and held:
AEF says that the district court in denying attorney’s fees
abused its discretion because it failed to adequately articulate Defendant contends that the conduct ascribed to the
its reasons. In Israel v. City of Barberton, 936 F.2d 573, No. plaintiffs satisfies the standard of section 1927. Plaintiffs
90-3268, 1991 U.S. App. LEXIS 32336, at *3 (6th Cir. do not specifically direct their response to this contention
Apr. 4, 1991) (unpublished), this Court held that “[i]n order but argue[] the case was not pursued in a vexatious,
to review a discretionary decision [to deny attorney’s fees], wanton, or oppressive manner. In any event, the court
some understanding of the trial court’s reasons is necessary. has again considered the circumstances of this case in
Absent a statement of reasons, no meaningful review can be light of the standard required by § 192[7], and in its
made.” The district court in Israel denied a motion for discretion finds that an award of fees under this provision
attorney’s fees “by a marginal denial” with no hearing or is not warranted. Accordingly, defendant’s motion for
statement of reasons and the case was remanded so that the costs and fees will be denied in its entirety.
district court could give its reasons for the denial. Id. at *2,
*4. In Morscott, Inc. v. City of Cleveland, 936 F.2d 271, 272 Having handled the case over the course of four years, the
(6th Cir. 1991), this Court held that a district court’s marginal district court was in the best position to determine whether the
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circumstances of the case and conduct of EL warranted an Inc., 208 F.3d 212, No. 98-1143, 2000 U.S. App. LEXIS
award of attorney’s fees. The district court addressed the 3290, at *2 (6th Cir. Feb. 25, 2000) (unpublished) (citing
parties’ arguments and applied the correct legal standard. Finance Inv. Co. v. Geberit AG, 165 F.3d 526, 533 (7th Cir.
Further, the record relied on by the district court is available 1998)). This Court has also held that “[w]here a plaintiff sues
for review on appeal. The adequacy of a district court’s under a colorable, yet ultimately losing, argument, an award
statement is determined by this Court’s ability to understand of attorney’s fees is inappropriate.” American Council of
its reasoning, not by the number of sentences it uses. The Certified Podiatric Physicians & Surgeons v. American Bd.
district court’s order was sufficient to allow meaningful of Podiatric Surgery, Inc., 185 F.3d 606, 625 (6th Cir. 1999).
review under the deferential abuse of discretion standard.
AEF says that these cases have created an artificial bias in
B. “Exceptional” Case Under 15 U.S.C. § 1117(a) favor of prevailing plaintiffs in Lanham Act cases, which
violates the party-neutral approach of Fogerty v. Fantasy,
The district court’s denial of attorney’s fees under Inc., 510 U.S. 517, 534-35 (1994) (“Prevailing plaintiffs and
15 U.S.C. § 1117(a) is reviewed for abuse of discretion, but prevailing defendants are to be treated alike, but attorney’s
the district court’s legal analysis and interpretation of the fees are to be awarded to prevailing parties only as a matter of
Lanham Act is reviewed de novo. See Stephen W. Boney, Inc. the court’s discretion.”). Fogerty, however, did not specify
v. Boney Servs., Inc., 127 F.3d 821, 825 (9th Cir. 1997). that the standard for prevailing plaintiffs and prevailing
defendants had to be identical. Rather, it stated that courts
Under 15 U.S.C. § 1117(a), a district court may award should generally award attorney’s fees in an even-handed
reasonable attorney fees to the prevailing party in manner. It is difficult to imagine how the standards for
“exceptional” cases. Here, the district court correctly 15 U.S.C. § 1117(a) could be the same given that prevailing
recognized that the term “exceptional” is not defined in the plaintiffs focus on the act of infringement while prevailing
statute, although a case is not exceptional unless “the defendants point to the act of litigation. See National Ass’n
infringement was malicious, fraudulent, willful, or of Prof’l Baseball Leagues, Inc. v. Very Minor Leagues, Inc.,
deliberate.” See Hindu Incense v. Meadows, 692 F.2d 1048, 223 F.3d 1143, 1148-49 (10th Cir. 2000).
1051 (6th Cir. 1982). Because it relates to the act of
infringement, the Hindu Incense standard clearly applies to While the circuits differ somewhat as to the test for
prevailing plaintiffs. Indeed, most of the cases involving 15 determining whether a case is “exceptional,” often replacing
U.S.C. § 1117(a) have applied the “exceptional” case analysis the term with other adjectives, see, e.g., Ale House
to prevailing plaintiffs. It is clear, however, that Congress Management, Inc. v. Raleigh Ale House, Inc., 205 F.3d 137,
intended to include prevailing defendants as well. See S. Rep. 144 (4th Cir. 2000) (“Relevant factors include ‘economic
No. 93-1400 (1974), reprinted in 1974 U.S.C.C.A.N. 7132, coercion,’ ‘groundless arguments,’ and failure to cite
7136. controlling law.”); Scott Fetzer Co. v. Williamson, 101 F.3d
549, 555 (8th Cir. 1996) (“When a plaintiff’s case is
In applying 15 U.S.C. § 1117(a) to a prevailing defendant, groundless, unreasonable, vexatious, or pursued in bad faith,
this Court has held that an “exceptional” case is one “where it is exceptional, and the district court may award attorney’s
a plaintiff brings a suit that could fairly be described as fees to the defendant.”), we believe that the “oppressive”
‘oppressive.’” Balance Dynamics Corp. v. Schmitt Indus., standard first followed in Balance Dynamics most closely
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follows the statute. Awarding attorney’s fees to a prevailing bringing the suit and not its later conduct during litigation.
defendant is meant to “provide protection against unfounded However, it is clear that the district court considered EL’s
suits brought by trademark owners for harassment and the alleged conduct during litigation, including “the use of certain
like.” S. Rep. No. 93-1400 (1974), reprinted in 1974 witnesses, the last-minute exhibit list, and [EL’s] apparent
U.S.C.C.A.N. 7132, 7136. The test requires an objective intention not to go to trial,” and recognized the difficulty
inquiry into whether the suit was unfounded when it was faced by EL that led to its voluntarily dismissing lengthy and
brought and a subjective inquiry into the plaintiff’s conduct expensive litigation.
during litigation. See S Indus. v. Centra 2000, Inc., 249 F.3d
625, 627 (7th Cir. 2001) (“A suit is oppressive if it lacked Finally, AEF argues that the district court applied the
merit, had elements of an abuse of process claim, and wrong standard because it based its denial on a finding that
plaintiff’s conduct unreasonably increased the cost of EL brought the action in good faith. AEF says that the
defending against the suit.”); National Ass’n of Prof’l district court implicitly required it to prove bad faith on the
Baseball Leagues, 223 F.3d at 1146-47 (“No one factor is part of EL to receive attorney’s fees, which it says is
determinative, and an infringement suit could be ‘exceptional’ incorrect. See Scotch Whisky Ass’n v. Majestic Distilling Co.,
for a prevailing defendant because of (1) its lack of any 958 F.2d 594, 599 (4th Cir. 1992) (requiring “‘something less
foundation, (2) the plaintiff’s bad faith in bringing the suit, than bad faith’” to award attorney’s fees to a prevailing
(3) the unusually vexatious and oppressive manner in which defendant). But see Conopco, Inc. v. Campbell Soup Co., 95
it is prosecuted, or (4) perhaps for other reasons as well.”). F.3d 187, 194-95 (2d Cir. 1996) (requiring the defendant to
show the plaintiff’s bad faith). Simply because the district
The “oppressive” test is similar to the standard applied to court referred to EL’s argument that its case was brought in
prevailing plaintiffs where an award is appropriate if the good faith and on the advice of counsel does not mean that it
infringement is “malicious, fraudulent, willful, or deliberate.” was looking for the opposite. There is no indication that the
See Hindu Incense, 692 F.2d at 1051. Both allow an award of district court required a showing of bad faith.
fees where the opposing party abused the protections afforded
by the Lanham Act. The standard of law applied by the EL had colorable legal arguments and legitimate reasons
district court, therefore, did not violate Fogerty’s party- for choosing to dismiss the lawsuit. The district court applied
neutral requirement. the correct legal standard and in its discretion found that the
case was not “exceptional” under 15 U.S.C. § 1117(a). The
Next, AEF argues that the district court incorrectly applied district court did not abuse its discretion in holding that AEF
a heightened “clear and convincing” burden of proof because was not entitled to attorney’s fees.
it cited Finance Investment, 165 F.3d at 533, which required
clear and convincing evidence of exceptional circumstances. C. Pending PTO Opposition
Although AEF is correct that a “clear and convincing”
requirement is not supported by the language of the statute, The district court’s decision regarding the Rule 41(a)(2)
there is no indication in the district court’s opinion that it motion is reviewed for abuse of discretion. United States v.
applied a “clear and convincing” burden of proof. Similarly, 266 Tonawanda Trail, 95 F.3d 422, 425 (6th Cir. 1996). The
AEF argues that the district court inappropriately relied on district court’s decision to include certain terms and
Finance Investment by only considering EL’s actions in conditions in a Rule 41(a)(2) voluntary dismissal is
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appealable only if unreasonable. See Duffy v. Ford Motor diluted EL’s “Eagles” mark; the case did not involve AEF’s
Co., 218 F.3d 623, 627 (6th Cir. 2000). rights in the “American Eagles Records” mark. While the
district court may have had general authority under 15 U.S.C.
EL’s opposition in the PTO to AEF’s application for the § 1119 to order the PTO to take action, it did not have the
“American Eagles Records” mark was suspended pending authority to decide issues regarding a mark that was not
resolution of this case. After the district court dismissed the properly before it. See Old Dutch Foods, Inc. v. Dan Dee
case with prejudice pursuant to Rule 41(a)(2), AEF moved to Pretzel & Potato Chip Co., 477 F.2d 150, 157 (6th Cir. 1973)
reconsider the dismissal arguing for the first time that the (directing the PTO to issue a concurrent registration to the
district court should order EL or the PTO to dismiss the defendant with limitations); Durox Co. v. Duron Paint Mfg.
opposition with prejudice as part of the Rule 41(a)(2) Co., 320 F.2d 882, 883, 885-86 (4th Cir. 1963) (directing the
dismissal’s terms and conditions. AEF argued that EL should PTO to issue a registration for the plaintiff’s mark after the
be “estopped” from pursuing the opposition because it told plaintiff properly raised the issue of validity in the
the PTO that this case would be dispositive of the opposition, complaint); Massa v. Jiffy Prods. Co., 240 F.2d 702, 704, 707
although EL’s statement is not in the record. The district (9th Cir. 1957) (directing the PTO to cancel the “Jiffy” mark
court denied EL’s request and held that “[t]he issue of for the plaintiff and award a registration for the same mark to
estoppel is before the Trademark tribunal not this court. If the defendant).
defendant believes that the plaintiffs should be prohibited
from pursuing the Opposition action in the Trademark Office Further, the prospect of dismissal of the PTO opposition
because of the result in this case, then defendant needs to was not properly before the district court because AEF raised
make that argument to the Trademark Office.” the issue for the first time in its motion for reconsideration.
AEF failed to raise the argument as a counterclaim to the
AEF says that district courts are given clear statutory infringement action. Hence, according to the procedural
authority over actions regarding the trademark registration posture of the case and by AEF’s own admissions, its
process under 15 U.S.C. § 1119, which states that “[i]n any argument for dismissal is not based on the merits but on an
action involving a registered mark the court may determine estoppel theory. As the district court correctly pointed out,
the right to registration, order the cancelation of registrations, estoppel issues are ordinarily enforced by awaiting a second
in whole or in part, restore canceled registrations, and action in which they are pleaded and proved by the party
otherwise rectify the register with respect to the registrations asserting estoppel. The PTO, not the district court, must
of any party to the action.” AEF cites Avon Shoe Co. v. determine the preclusive effect of EL’s statements.
David Crystal, Inc., 279 F.2d 607, 609 (2d Cir. 1960), which
involved a dispute over the plaintiff’s use of the “Haymakers” Even if the issue of estoppel was properly before the district
mark and the defendant’s use of the “Haymaker” mark. The court, however, in light of the PTO’s expertise and the district
Second Circuit affirmed the district court’s order directing the court’s failure to reach the merits of the underlying action in
PTO to dismiss the plaintiff’s opposition and grant the this case, the district court’s decision was reasonable and not
concurrent registration of defendant’s mark. Id. at 614-16. an abuse of discretion.
This case is factually distinguishable from Avon Shoe,
however, because the marks at issue are not the same. The
issue in this case was whether AEF’s activities infringed or
No. 02-5560 Eagles, Ltd., et al. v. Am. 13
Eagle Foundation
III. CONCLUSION
The district court adequately articulated its reasons for
denying attorney’s fees and costs, applied the correct legal
standard for “exceptional” cases under 15 U.S.C. § 1117(a),
and in its discretion denied AEF’s request for attorney’s fees.
The district court also did not abuse its discretion by refusing
to dismiss the pending trademark opposition.
Accordingly, the district court’s decision is AFFIRMED.