United States District Court, E.D. Virginia, Alexandria Division
M. HILTON UNITED STATES DISTRICT JUDGE.
MATTER comes before the Court on Defendants' Motion for
Inc. ("Plaintiff") is a global business that
provides internet domain names and internet security.
XYZ.com, LLC and CEO Daniel Negari ("Defendants")
also operate in the domain name industry. In December 2014,
Plaintiff filed a federal lawsuit against Defendants,
alleging a violation of the Lanham Act for false advertising.
On November 20, 2015, this Court granted summary judgment to
Defendants. Defendants then filed a motion for attorney fees,
and Plaintiff appealed this Court's decision on summary
judgment. This Court stayed these motions while the appeal
was pending at the U.S. Court of Appeals for the Fourth
Circuit. The Fourth Circuit affirmed the decision granting
summary judgment to Defendants.
Court then took up the Defendants' motion for attorney
fees and bill of costs, denying an award of fees but granting
costs. The Defendants appealed the denial of attorney fees to
the Fourth Circuit. The Fourth Circuit remanded the decision
in order to allow this Court to apply the appropriate burden
Court now returns to the motion for attorney fees. Under the
Lanham Act, an award of reasonable attorney fees is available
to the prevailing party only in "exceptional
cases." 15 U.S.C. § 1117(a). A case is
"exceptional" if it simply "stands out from
the others." Octane Fitness, LLC v. ICON Health
& Fitness, Inc., 572 U.S. 545, 554 (2014). Cases
determined to be "exceptional" are "uncommon,
rare, or not ordinary." Id. at 553 (internal
quotations omitted). The prevailing party has the burden to
prove by a preponderance of the evidence that: (1) there is
an unusual discrepancy in the merits of the positions taken
by the parties because the non-prevailing party's
position is frivolous or objectively unreasonable; (2) the
non-prevailing party litigated the case in an unreasonable
manner; or (3) there is a need to advance considerations of
compensation and deterrence. Verisign, Inc. v.
XYZ.COM LLC, 891 F.3d 481, 485-86 (4th Cir.
2018); Georgia-Pacific Consumer Prods. LP v. von Drehle
Corp., 781 F.3d 710, 721 (4th Cir. 2015). The movant
will be successful if it can demonstrate one of the three
exceptionalities in the totality of the circumstances.
Georgia-Pacific, 781 F.3ci at 721. There is no need
to show the non-prevailing party acted in bad faith, only the
unreasonableness of the non-prevailing party's conduct.
Verisign, Inc., 891 F.3d at 487-88. In this case,
Defendants did not bear their burden in showing this case to
Plaintiffs case was not objectively unreasonable or
frivolous. In deciding the first Georgia-Pacific
factor, courts should make an objective assessment of the
merits of the claims and defenses. 781 F.3d at 721. Unless a
claim or defense is so unreasonable that no reasonable
litigant would make it, an award of attorney fees is not
warranted under the first factor. Verisign, 891 F.3d
at 488 n. 4. However, the movant need not show the claims
were entirely baseless in order to prevail. Id. at
487. A claim that merely proves unsuccessful is not a basis
for awarding attorney fees. See, e.g.,
Farberware Licensing Co., LLC v. Meyer Mktg. Co.,
Ltd., 428 Fed.Appx. 97, 99 (2d Cir. 2011). Here,
Defendants contend that Plaintiff's claims were
unreasonable from the outset. However, this ignores the fact
that Plaintiff was successful in preventing a judgment on the
pleadings, thus demonstrating at least a modicum of
reasonableness at the beginning of the case. Defendant also
ignores that Plaintiff was able to bring forth some evidence
at the summary judgment stage to support its claims. The fact
that the evidence was not enough to carry the day is not
evidence that Plaintiff's claims became unreasonable,
only that they were not successful.
the cases cited by Defendants are not binding and inapposite
to the case at bar. The claims in those cases were supported
by manufactured evidence or entirely unsupported. See,
e.g., Sazerac Company, Inc. v. Fetzer Vineyards,
Inc., 3:15-cv-4618, 2017 WL 6059271, at *6 (N.D. Cal.
Dec. 7, 2017) (stating that the non-prevailing party provided
"zero" evidence for one of the elements at trial);
Valador, Inc. v. HTC Corp., 1:16-cv-1162, Proposed
Findings of Fact and Recommendations 7-9, FCF No. 319, (E.D.
Va. May 30, 2018) (finding that the non-prevailing party
attempted to create new infringing acts by the defendant when
it realized it could not win with the available evidence).
That was simply not what occurred in this case. As noted
above, Plaintiff had some evidence to support its claims,
even though it ultimately failed to prove its claims.
Defendants failed to show that it is more likely than not
that the Plaintiff s case was objectively unreasonable or
Plaintiff s conduct during litigation was not unreasonable
under the totality of the circumstances. On this factor, the
prevailing party must show egregious conduct.
Georgia-Pacific, 781 F.3d at 721. Questionable
discovery tactics are not enough. Even still, Defendants
attempt to hang their hat for this issue on discovery
were numerous actions by Plaintiff that showed its litigation
conduct was not unreasonable. First, Plaintiff attempted to
resolve the dispute with a demand letter before filing the
case; Defendants never responded. Next, when Plaintiff filed
its trial exhibit list with content that Defendants
considered confidential, Plaintiff agreed that same day to
redactions to be provided by Defendants. Defendants then took
five days to provide Plaintiff with the redactions it sought,
choosing at that point to demand the list be fully sealed.
Defendants make the contention that their conduct should not
be considered because the issue is whether "the
non-prevailing party litigated the case in an unreasonable
manner." Georgia-Pacific, 781 F.3d at 721.
However, Defendants ignore that these considerations must be
made under the totality of the circumstances. Octane
Fitness, 572 U.S. at 554; Georgia-Pacific, 781
F.3d at 721. Thus, if Plaintiff's actions were responsive
to the Defendants, then the Defendants' actions must be
considered for purposes of determining Plaintiff's
reasonableness. Here, any delay in sealing the exhibit list
was due to Defendants' sluggishness in providing the
redactions sought and cannot be said to be unreasonable
action by Plaintiff. Finally, the majority of Plaintiff's
discovery motions, including those for third-party discovery,
were granted either in whole or in part, again showing some
degree of reasonableness. Ultimately, Defendants have not
shown by a preponderance of the evidence that Plaintiff
litigated this case in an unreasonable manner.
the Court does not find deterrence or compensation to be
necessary in this case. Defendants offer speculation as to
Plaintiff's motive in filing this case and urge the Court
to find that Plaintiff merely brought this suit in order to
bury a competitor in legal fees. Defendants base this
speculation on the facts that Plaintiff is a larger and more
established company than Defendants and Plaintiff expressed
concern about new competition in the domain name industry.
Plaintiff has responded offering other evidence and
alternative interpretations. Primarily, Plaintiff notes that
it has not sued any of the other newly formed competitors,
only Defendants. Plaintiff states that it was concerned with
new competitors as a threat to its business, but ultimately
its decision to proceed against Defendants was due to its
belief that Defendants had engaged in false advertising.
While Plaintiff may not have been successful in this case,
that lack of success should not be used to infer that it
acted wrongfully. Because there is countervailing evidence
and sensible alternative interpretations for Plaintiff's
decision to bring this suit, Defendants have not carried
their burden of demonstrating by a preponderance of the
evidence that Plaintiff must be deterred from this sort of
action in the future.
reasons stated, the Court concludes that this is not an
"exceptional case" under 15 U.S.C. § 1117(a)
and an award of attorney fees is unavailable. Accordingly,
Defendants' Motion for Attorney ...