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Express Homebuyers USA, LLC v. WBH Marketing, Inc.

United States District Court, E.D. Virginia, Alexandria Division

October 25, 2018

EXPRESS HOMEBUYERS USA, LLC, Plaintiff,
v.
WBH MARKETING, INC., Defendant.

          MEMORANDUM OPINION

          T. S. ELLIS, III UNITED STATES DISTRICT JUDGE

         Plaintiff, a Virginia company engaged in the homebuying business, prevailed in the underlying trademark action, and has now filed a motion seeking attorney's fees pursuant to 15 U.S.C. § 1117(a). At issue, post-summary judgment, is whether, as plaintiff contends, this case is an "exceptional case" and thus warrants the award of fees under § 1117(a) of the Lanham Act. For the reasons stated below, plaintiff has not shown that defendant's positions in this litigation were objectively unreasonable, nor that there is a need in this particular case to grant an award of fees in order to advance considerations of compensation and deterrence, nor that this case is otherwise "exceptional." Accordingly, plaintiffs motion must be denied.

         I.

         On June 28, 2017, plaintiff filed a complaint pursuant to 15 U.S.C. § 1064 seeking cancellation of defendant's two registered trademarks, "We Buy Houses" and "webuyhouses.com." As is typical in trademark cases, there was in this case a threshold motion to dismiss that was briefed, argued and resolved, followed by the filing of an answer that included, as is also not atypical in trademark cases, various counterclaims. The parties then engaged in discovery, in which various depositions were taken but neither party sought leave to take additional depositions beyond the number permitted by Rule 30, Fed. R. Civ. P., and Local Rule 30, Local Civ. R. Plaintiff also filed a Daubert motion raising issues concerning proposed expert testimony. In the end, it was not necessary to reach or decide these issues. After the close of discovery, the parties filed cross-motions for summary judgment with respect to plaintiffs § 1064 claims and with respect to defendant's nine counterclaims.

         Following oral argument, a Memorandum Opinion and Order dated August 14, 2018 issued, granting summary judgment in favor of plaintiff with respect to plaintiffs § 1064 claims on the ground that defendant's marks were generic phrases; the undisputed record evidence demonstrated the relevant consuming public, competitors, and the prior owners of the marks used and understood the phrase "we buy houses" to signify generically house-buying services and not the source of those services. Express Homebuyers USA, LLC v. WBH Mktg. Inc., ___ F.Supp.3d ___ (E.D. Va. 2018). Summary judgment was also granted in favor of plaintiff as to defendant's trademark infringement and false designation of origin counterclaims because those counterclaims were dependent on the validity of the marks. Id. And by Order dated August 29, 2018, summary judgment was granted in favor of plaintiff with respect to defendant's false advertising, defamation, and conspiracy counterclaims. Express Homebuyers USA, LLC v. WBH Mktg. Inc, No. 1:17-cv-00736-TSE-IDD, Order, ECF No. 128 (Aug. 29, 2018). Plaintiff has now filed a motion seeking attorney's fees under § 1117(a) of the Lanham Act.

         II.

         Section 1117(a) of the Lanham Act provides, in pertinent part, as follows: "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a) (emphasis added). Two important aspects of this congressional directive are pertinent here. First, § 1117(a) makes clear that fees are to be awarded only in "exceptional" cases. Second, the statute also clearly provides that the decision whether to award fees in an "exceptional" case is discretionary, not mandatory.

         Analysis properly begins with the meaning of the statutory phrase "exceptional cases." This phrase has a well understood meaning in common parlance; exceptional means rare, extraordinary, atypical or aberrant. Indeed, the Supreme Court in Octane Fitness, LLC v. ICON Health & Fitness, Inc. had occasion to construe the phrase "exceptional case" and referred to three dictionaries in defining the word "exceptional" as rare or extraordinary. 134 S.Ct. 1749, 1756 (2014) (citing Merriam-Webster's Collegiate Dictionary 435 (11th ed. 2008); Webster's New International Dictionary 889 (2d ed. 1934); 3 Oxford English Dictionary 374 (1933)). Thus, in drafting § 1117(a), Congress clearly intended to abrogate the American Rule[1] in a narrow range of cases and to grant district courts the discretion to award fees in rare, extraordinary cases when warranted. Otherwise, the American Rule prevails.

         A review of the record as a whole in this case makes clear that by no stretch of the imagination is this case "exceptional"; it is not a rare, extraordinary or otherwise unique trademark case. To the contrary, this case is a garden variety trademark case challenging two registered trademarks that use a phrase that is used in common parlance to signify a service.

         The Supreme Court's decision in Octane Fitness, construing the Patent Act's fee-shifting provision, which is identical to § 1117(a), is particularly instructive here. In Octane Fitness, the Supreme Court held that an exceptional case in the Patent Act context is one that "stands out from others with respect to the substantive strength of a party's litigating position... or the unreasonable manner in which the case was litigated." Octane Fitness, 134 S.Ct. at 1756. Under this standard, the instant case is not exceptional because although plaintiff prevailed and defendant lost, neither the substantive weakness of defendant's litigation position nor the manner in which defendant litigated this case "stands out" from the run-of-the-mill trademark case.

         Nor is there any reason to conclude that Octane Fitness has no application here because it occurred in the Patent Act context. Many circuits, including the Fourth Circuit, have applied the Octane Fitness standard in § 1117(a) cases, on the ground that § 1117(a) and its Patent Act analog are identical. See, e.g., Georgia-Pac. Consumer Prod. LP v. von Drehle Corp., 781 F.3d 710, 721 (4th Cir. 2015); SunEarth, Inc. v. Sun Earth Solar Power Co., 839 F.3d 1179, 1181 (9th Cir. 2016); Baker v. DeShong, 821 F.3d 620, 625 (5th Cir. 2016); Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 315 (3d Cir. 2014). In Georgia-Pacific, the Fourth Circuit vacated the district court's award of attorney's fees pursuant to § 1117(a) and remanded with the instruction to consider whether the case was "exceptional" in light of the Octane Fitness standard. Georgia-Pacific, 781 F.3d at 719-21. Specifically, the Fourth Circuit in Georgia-Pacific explained that a district court may find a case "exceptional" under § 1117(a) if, in light of the totality of the circumstances, the court finds one of the following grounds[2]:

(1) there is an unusual discrepancy in the merits of the positions taken by the parties, based on the non-prevailing party's position as either frivolous or objectively unreasonable; (2) the non-prevailing party has litigated the case in an unreasonable manner[3]; or (3) there is otherwise the need in particular circumstances to advance considerations of compensation and deterrence.

Id. at 721. Further, and importantly, the prevailing party must prove that a case is "exceptional" under one of the above categories by a preponderance of the evidence. Verisign, Inc. v. XYZ.COM LLC, 891 F.3d 481, 484 (4th Cir. 2018) ("Verisign II"). Ultimately, the decision whether or not to find a case "exceptional" on the basis of any of the above grounds is within the discretion of the district court. Id. at 484-85; see also Octane Fitness, 134 S.Ct. at 756 (holding in the context of the Patent Act's identical fee-shifting provision that "[t]here is no precise rule or formula for making these determinations, but instead equitable discretion should be exercised in light of the considerations we have identified.") (internal quotes omitted). The three Georgia-Pacific factors, applied here, make clear that this is not an exceptional case.

         To avoid this conclusion, plaintiff chiefly argues that this case is exceptional because defendant's position on summary judgment-that the Marks were not generic-was objectively unreasonable, thus satisfying the first Georgia-Pacific category. This argument fails because the fact that the PTO had registered the Marks gave defendant an objectively reasonable legal and ...


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