Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-01005/USCOURTS-caed-2_04-cv-01005-10/pdf.json

Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 15:1125 Trademark Infringement (Lanham Act)

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

CONCRETE WASHOUT SYSTEMS INC.,

a California corporation,

NO. CIV. S-04-1005 WBS DAD

Plaintiff,

v. MEMORANDUM AND ORDER RE:

MOTION FOR ATTORNEYS’ FEES

MINEGAR ENVIRONMENTAL SYSTEMS

INC., a California

corporation, PETER J. MINEGAR,

and DOES 1-10,

Defendants.

----oo0oo----

Defendants Minegar Environmental Systems Inc. and Peter

J. Minegar move for an award of attorneys’ fees against plaintiff

Concrete Washout Systems Inc. pursuant to section 35 of the

Lanham Act, 15 U.S.C. § 1117.

I. Factual and Procedural Background

Plaintiff sued defendants under the Declaratory

Judgment Act, 28 U.S.C. § 2201, the Lanham Act, 15 U.S.C. §

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1 Claims included declaratory relief under state law, trade

name infringement under California Business and Professions Code

§ 14415, misappropriation of trade secrets under California Civil

Code § 3426.1(d), common law misappropriation, fraud,

constructive fraud, breach of confidence, unjust enrichment,

unfair competition under California Business and Professions Code

§ 17200, and false advertising under California Business and

Professions Code § 17500. 

2 For a more detailed description of the product at issue

and Lanham Act violations claimed in this case, see the court’s

order of July 12, 2005.

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1125(a), and California law1 alleging that defendants, after

approaching plaintiff as interested business partners,

misappropriated confidential product information and used this

information to develop their own concrete washout disposal bin.2

Plaintiff sought monetary, declarative, and injunctive relief

against defendants. (Pl.’s First Am. Compl. ¶ 73). Because the

Patent and Trademark Office was still in the process of reviewing

plaintiff’s patent application for the device, the court declined

to exercise its discretionary review of plaintiff’s claims under

the Declaratory Judgment Act and granted the defendants’ motion

for summary judgment on those counts. (July 12, 2005 Order at 1-

2). 

Additionally, the court granted summary judgment in

favor of the defendants on the Lanham Act claims because the

evidence submitted failed to demonstrate that the disputed term

“concrete washout” constituted a trademark or trade name, rather

than a generic term. (Id. at 12). Having disposed of

plaintiff’s federal claims, the court declined to exercise

supplemental jurisdiction over the remaining state law claims

pursuant to 28 U.S.C. § 1367(c)(3). (Id. at 15-16). 

Defendants now request attorneys’ fees totaling

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$80,000, which defendants allege represents the portion of fees

incurred specifically in defense of the Lanham Act claim. 

(Defs.’ Mot. for Attorneys’ Fees at 5).

II. Discussion

A. Applicable Standard

Although an award of attorneys’ fees under the Lanham

Act is within the district court’s discretion, section 35(a)

limits this power to “exceptional cases.” 15 U.S.C. § 1117(a)

(“The court in exceptional cases may award reasonable attorney

fees to the prevailing party” (emphasis added)). The act itself

fails to define “exceptional cases.” However, the Ninth Circuit

has interpreted the statute to “include cases that are ‘either

groundless, unreasonable, vexatious, or pursued in bad faith.’” 

Horphag Research Ltd. v. Pellegrini, 337 F.3d 1036, 1040 (9th

Cir. 2003). “The terms ‘groundless’ and ‘unreasonable’ suggest

that it is not enough that the plaintiff [simply] does not

prevail[,]” while “vexatious” and “bad faith” suggest that

plaintiffs’ motives for suit are relevant. Nat’l Ass’n of Prof’l

Baseball Leagues, Inc. v. Very Minor Leagues, Inc., 223 F.3d

1143, 1147 (10th Cir. 2000). “The prevailing party has the

burden to demonstrate the exceptional nature of a case by clear

and convincing evidence.” Seven-Up Co. v. Coca-Cola Co., 86 F.3d

1379, 1390 (5th Cir. 1996); see also Affymetrix, Inc. v.

Multilyte Ltd., No. C 03-03779, 2005 WL 1869405, at *2 (N.D. Cal.

Aug. 5, 2005) (evaluating the identical “exceptional cases”

requirement for attorneys’ fees in a patent infringement case and

requiring that “[t]he party seeking the award of fees . . .

establish that the case is exceptional by clear and convincing

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evidence”).

B. Groundless or Unreasonable

Defendants make the bald assertion that “[t]rademark

claims are not usually amenable to summary judgment” and argue

that their successful defense of plaintiff’s Lanham Act claim

makes this an exceptional case. However, this argument is flawed

in two ways. First, as previously noted, the statute does not

award fees to all parties who merely prevail. The individual

case must be exceptional. By imposing this restriction, rather

than simply awarding attorneys’ fees to the prevailing party,

Congress sought to prevent “unfounded suits brought by trademark

owners for harassment and the like” and at the same time not

discourage potential litigants. S. Rep. No. 93-1400 (1974),

reprinted in 1974 U.S.C.C.A.N. 7132, 7135. Creating an entire

category of exceptional cases (those won on summary judgment)

would seem to contradict the intention of the legislature. 

Second, despite defendants’ assertion that success on a

summary judgment motion in a Lanham Act case is a rare event, the

handful of cases cited in support of their motion for attorneys’

fees includes reference to Stephen W. Boney, Inc. v. Boney

Services, Inc., 127 F.3d 821, 828 (9th Cir. 1997), where the

defendants likewise succeeded on a summary judgment motion in a

case alleging trade name infringement. Despite the defendants’

victory in Boney, the court noted that they “[n]evertheless . . .

failed to demonstrate that [the] case [was] exceptional in any

respect . . . .” Id. at 827. Similarly, this court does not

recognize success on a summary judgment motion in this trade name

case as an exceptional event.

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Defendants also argue that plaintiff’s reliance on its

own employee’s assessment of consumer perception to establish the

term “concrete washout” as a distinctive mark belonging to the

plaintiff provides further evidence that the claim was

groundless. (Defs.’ Mot. for Attorneys’ Fees at 4). As

defendants point out, such testimony has “‘little probative

value’ because ‘trademark law is skeptical of the ability of an

associate of a trademark holder to transcend personal biases to

give an impartial account of the value of the holder's mark.’”

(Id. (quoting Filipino Yellow Pages, Inc. v. Asian Journal

Publ’ns, Inc., 198 F.3d 1143, 1152 (9th Cir. 1999)). Defendants

complain that “[p]laintiff offered no consumer surveys, no

evidence of its marketing efforts related to the term, . . . or

any other evidence traditionally used to show distinctiveness or

infringement.” (Id.). 

However, plaintiff’s failure to offer more probative or

convincing evidence in the form of surveys does not prove that

the case was unreasonable. In awarding summary judgment, the

court only noted that the “evidence submitted” failed to

establish grounds for going forward with the case. The fact that

plaintiff produced insufficient evidence of consumer perception

is inconclusive. Cf. Goodell v. Ralphs Grocery Co., 207 F. Supp.

2d 1124, 1125-26 (E.D. Cal. 2002) (reasoning that a plaintiff's

action is not necessarily “frivolous, unreasonable, or without

foundation” when the court has “no way . . . to know whether no

such evidence existed or whether plaintiff's attorneys simply

neglected to gather such evidence”). The court recognizes that

plaintiff may have conducted a half-hearted investigation into

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its Lanham Act claim, (see Defs.’ Reply Mem. in Supp. Of Defs.’

Mot. for Attorneys’ Fees at 6 (identifying the “handful” of

questions plaintiff asked “only one deponent” regarding the

Lanham Act claim as evidence that plaintiff never took this claim

seriously)). But plaintiff’s failure to gather convincing

evidence of confusion does not disprove the allegations of

plaintiff’s employee Kevin Mickelson–-that “a lot of people . . .

are shortening [plaintiff’s trade name] up and referring to

[plaintiff] as Concrete Washout.” (Decl. of Erick C. Howard in

Supp. of Defs.’ Mot. for Summ. J., Ex. B (excerpts from the

deposition transcript of Kevin Mickelson)). While unsuccessful,

plaintiff’s Lanham Act Claim was not unreasonable. 

C. Vexatious/In Bad Faith

Defendants also argue that plaintiff’s case was brought

in bad faith, but they point to nothing in the record, other than

the lack of sufficient evidence, to support this assertion. To

demonstrate that a case was vexatious or brought in bad faith,

defendants cannot simply rely on plaintiff’s failure to produce

evidence capable of defeating a motion for summary judgment. 

Defendants do not offer proof that plaintiff brought suit for the

sole purpose of, for example, harassing defendants or gaining a

competitive advantage in the concrete washout business. See Tire

Kingdom, Inc. v. Morgan Tire & Auto, Inc., 253 F.3d 1332, 1336

(11th Cir. 2001) (“Plaintiff's failure to present sufficient

evidence . . . coupled with evidence of bad faith and improper

motive, support the district court's conclusion that this case

was an exceptional case . . . .” (emphasis added); see also

Boney, 127 F.3d at 827 (holding that a failed trade name

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infringement claim is not necessarily illegitimate). 

In Tire Kingdom, the plaintiff withheld survey

information that tended to disprove its Lanham Act claims and

furthermore admitted to a scheme to use the lawsuit to raise

prices. 253 F.3d at 1336. Here, plaintiff may have advanced a

losing argument, but no evidence suggests that its motives were

unrelated to a desire to protect its trade name. See Gracie v.

Gracie, 217 F.3d 1060, 1071 (9th Cir. 2000) (“[C]onclusory

statements regarding [the losing party’s] supposed bad faith are

insufficient . . . to call into question [the losing party’s]

motives in filing . . . .”). While defendants hypothesize that

plaintiff submitted its Lanham Act claim for the purpose of

securing a more convenient forum, (see Defs.’ Reply Mem. in Supp.

of Defs.’ Mot. for Attorneys’ Fees at 7), these arguments are

largely speculative and at best founded on inferences drawn from

how plaintiff has gone about developing its case. Defendants

have not provided clear and convincing evidence of plaintiff’s

allegedly improper motives. See Affymetrix, 2005 WL 1869405 at

*3-4 (refusing to find that plaintiff brought suit in bad faith

despite court’s questions regarding the merits of plaintiff’s

“flimsy” positions).

III. Conclusion

Defendants have not demonstrated that plaintiff’s

conduct was sufficiently egregious to make this an exceptional

case. Plaintiff’s evidence may have failed to withstand a

summary judgment motion, but that alone cannot justify an award

of attorneys’ fees under the Lanham Act’s “exceptional case”

requirement. Defendants do not offer “clear and convincing”

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evidence of improper motive on the part of plaintiff. 

Consequently, they have failed to meet their evidentiary burden.

IT IS THEREFORE ORDERED that defendant's motion for

attorneys’ fees be, and the same hereby is, DENIED.

DATED: September 21, 2005

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