Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_08-cv-05016/USCOURTS-cand-4_08-cv-05016-11/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

For the Northern District of California

UNITED STATES DISTRICT COURT

Northern District of California

SAND HILL ADVISORS, LLC, a Delaware

limited liability company,

Plaintiff,

v.

SAND HILL ADVISORS LLC, a California

limited liability company,

Defendant.

_____________________________________/

No. C 08-5016 SBA (MEJ

REPORT AND RECOMMENDATION

RE: DEFENDANT’S MOTION FOR

ATTORNEY’S FEES (DKT. #61)

I. INTRODUCTION

Before the Court is Defendant Sand Hill Advisors, LLC’s (“Defendant”) Motion for

Attorney’s Fees, filed on February 9, 2010. (Dkt. #61.) On April 21, 2010, the undersigned found

the matter suitable for disposition without a hearing pursuant to Civil Local Rule 7-1(b). (Dkt. #83.) 

After consideration of the parties’ papers, relevant legal authority, and good cause appearing, the

undersigned RECOMMENDS as follows. 

II. BACKGROUND 

Plaintiff Sand Hill Advisors, LLC (“Plaintiff”), a “wealth management” firm located in

Menlo Park, California, adopted the name Sand Hill Advisors in 1999, when it was located at 3000

Sand Hill Road in Menlo Park. (Order Granting Defendant’s Motion for Summary Judgment

(“Order”) 1:24-25, 2:13-17, Dkt. #57.) Plaintiff provides financial and advisory services to “high

net-worth” clients, such as investment planning, retirement, and estate planning. Id. at 1:28-2:3. 

Plaintiff’s founders selected the name “Sand Hill Advisors” not only because of the firm’s location,

but to capitalize on the association with the Silicon Valley area. Id. at 2:20-22. In 2000, Plaintiff

changed its state of incorporation from California to Delaware in relation to an acquisition it made. 

Id. at 3:1-3. In November 2007, Plaintiff converted from a Delaware corporation to a limited

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liability company, and sought to change its name from Sand Hill Advisors, Inc. to Sand Hill

Advisors, LLC. Id. at 3:3-8. Plaintiff was unable to register the new name with California’s

Secretary of State because Defendant had previously registered the name with the Secretary of State

in 1999. Id. at 3:8-10. 

Defendant is in the business of purchasing and selling commercial real estate and is located

in Los Altos, California. Id. at 3:12-24. Defendant selected its business name by combining the last

names of its founders, Sandell and Hill. Id. Defendant does not provide any public services and has

never provided any financial or investment advice. Id. at 3:25-26. 

Following its inability to register the name “Sand Hill Advisors LLC” with the California

Secretary of State, and after attempting to informally resolve the situation, Plaintiff sued Defendant

for service mark infringement under the Lanham Act, 15 U.S.C. §§ 1051 et seq., in this district. (Id.

at 4:5-7; Pl.’s Opp’n 1:17-19, Dkt. #72.) On January 26, 2010, the Honorable Saundra B.

Armstrong, the presiding judge in the matter, granted summary judgment in favor of Defendant,

finding that Plaintiff was unable to prove that it had a protectable service mark or that Defendant’s

use of the identical mark was likely to cause consumer confusion. (Order 14:12-15, 20:4-10, Dkt.

#57.) 

On February 9, 2010, Defendant filed the instant motion seeking $378,779.00 in attorney’s

fees. (Dkt. #61.) On March 18, 2010, Plaintiff Sand Hill Advisors LLC (“Plaintiff”) filed an

opposition (Dkt. #72), and Defendant filed a reply on March 25, 2010 (Dkt. #77). 

 III. DISCUSSION

In its Motion, Defendant argues that Plaintiff’s lawsuit for willful infringement merits an

award of reasonable attorney’s fees because Plaintiff pursued its claim in bad faith and for an

improper purpose, and because Plaintiff knew prior to filing suit that its claim was groundless and

unreasonable. (Def.’s Mot. 6:3-7, Dkt. #61.) Specifically, Defendant contends that Plaintiff filed

this case to force Defendant to surrender its business registration with the Secretary of State so that

Plaintiff could register its name. Id. at 6:21-24. Defendant argues that its victory on summary

judgment proves that Plaintiff produced no evidence to support its claim, and that this entitles it to

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an award of fees. Id. at 17:4-6.

In response, Plaintiff asserts that it filed suit based upon a genuine belief that it had superior

rights to the service mark and that Defendant’s use of the mark could be enjoined. (Pl.’s Opp’n

10:8-10, Dkt. #72.) Plaintiff states that its desire to register in its home state under a mark it had

used continuously for fourteen years and had spent a great deal of time and resources developing is

not evidence of an improper motive. Id. at 10:10-14. Plaintiff argues that summary judgment

against it does not change this fact. Id.

A. Legal Standard

The Lanham Act provides that “exceptional cases” may merit an award of reasonable

attorney’s fees. 15 U.S.C. § 1117(a). The statute provides that a court may award fees; it does not

require them. Gracie v. Gracie, 217 F.3d 1060, 1071 (9th Cir. 2000). “When a plaintiff's case is

groundless, unreasonable, vexatious, or pursued in bad faith, it is exceptional, and the district court

may award attorney's fees to the defendant.” Boney, Inc. v. Boney Services, Inc., 127 F.3d 821, 827

(9th Cir. 1997). However, the exceptional case requirement must be construed narrowly. Classic

Media, Inc. v. Mewborn, 532 F.3d 978, 990 (9th Cir. 2008) (citing Gracie, 217 F.3d at 1071). 

Thus, where the plaintiff’s claims of infringement raise debatable issues of law and fact, it is not an

exceptional case for purposes of attorney’s fees. Boney, Inc., 127 F.3d at 827.

 An infringement case under the Lanham Act is brought in bad faith where it is “initiated for

reasons other than a sincere belief in the merits of the underlying claims.” Universal City Studios,

Inc. v. Nintendo Co., 615 F. Supp. 838, 864 (S.D.N.Y 1985) (aff’d, 797 F.2d 70 (2nd Cir. 1986)); see

also K-Jack Engineering Co. v. Pete's Newsrack, Inc., 1980 U.S. Dist. LEXIS 16677, at *4 (C.D.

Cal. 1980) (finding an exceptional case where the plaintiff’s infringement action lacked “any basis

of admissible evidence for a good faith belief that such infringement was occurring[.]”).

A suit is groundless and unreasonable where it has no legal basis. Cairns v. Franklin Mint

Co., 292 F.3d 1139, 1156 (9th Cir. 2002) (district court did not err in finding plaintiff’s dilution of

trademark claim to be groundless and unreasonable because it had no legal basis and was based on

the “absurd and just short of frivolous contention that the mark ‘Diana, Princess of Wales’” had

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Defendant argues that Judge Armstrong expressly found as such when she wrote: “[a]s a

result of Plaintiff’s inability to register the name “Sand Hill Advisors LLC” with the California

Secretary of State, Plaintiff filed suit against Defendant in this Court. . . .” (Order 4:4-6, Dkt. #57.) 

The undersigned does not agree with Defendant’s reading of that section of Judge Armstrong’s

procedural history, and declines to find that the sentence translates to a finding that Plaintiff filed for

an improper purpose. 

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In response, Plaintiff contends that the parties did not discuss the merits of the service mark

claim, and Mr. McCaffrey “believes it is very unlikely he would have said something to Mr. Hill

that he did not believe.” (Pl.’s Opp’n 12:3-5, Dkt. #72.) 

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secondary meaning because the public now identified the mark with "charitable and humanitarian

services rather than Princess Diana the individual.”); compare Applied Information Sciences Corp. v.

eBAY, Inc., 511 F.3d 966, 973 (9th Cir. 2007) (finding no abuse of discretion where district court

denied the defendant’s motion for attorney’s on a finding that the plaintiff did not pursue litigation

for purposes of harassment and that the case raised debatable issues.) 

B. Application to the Case at Bar

In its Motion, Defendant argues that this case is exceptional because Plaintiff sued it solely

to force Defendant to surrender its business registration with the Secretary of State so that Plaintiff

could register its name.1

 (Def.’s Mot. 6:21-24, Dkt. #61.) Defendant asserts that Plaintiff tried to

conceal this purpose by claiming that its use of “Sand Hill Advisors LLC” was likely to cause

customer confusion, but argues that this claim failed by Plaintiff’s own admission. Id. at 7:3-5. 

Specifically, Defendant claims that when one of its founders, Albert Hill, spoke in person with

James McCaffrey, former president and COO of Plaintiff, Mr. McCaffrey admitted that he did not

think the Defendant’s use of the name in dispute was likely to cause consumer confusion.2

 (Hill

Decl. ¶ 11, Dkt. #38.) Additionally, Defendant claims that Plaintiff sued knowing “that it had no

reasonable or evidentiary basis for claiming that ‘Sand Hill Advisors’ was a protectable mark.” 

(Def.’s Mot. 10:23-25, Dkt. #61.) 

Further, Defendant points out that both the United States Patent and Trademark Office and

Judge Armstrong found that Plaintiff did not have a protectable service mark. (Order 4:8-13, 14:12-

15, Dkt. #57.) Defendant argues that the Court’s grant of summary judgment was a “sweeping

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defeat” which “underscores that [Plaintiff] did not and never could provide a shred of evidence to

support its claim.” (Def.’s Mot. 17:4-6, Dkt. #61.) 

In response, Plaintiff asserts that Defendant has failed to meet its burden of proving that the

action was groundless, unreasonable, vexatious, or pursued in bad faith, and thus its fee motion must

be denied. (Pl.’s Opp’n 1:7-9, Dkt. #72.) Plaintiff contends that it filed suit based upon a genuine

belief that it had superior rights to the service mark and that Defendant’s use of the mark could be

enjoined. Id. at 10:8-10. Plaintiff argues that, as the senior user of a mark identical to Defendant’s

which both used in the same geographic region, it was entirely reasonable for it to seek legal redress

rather than risk forfeiting its rights to the mark. Id. at 2:2-4. Plaintiff further argues that, although it

lost on summary judgment, its claim was not groundless, as it believed that Defendant’s use of an

identical service mark when both parties offer real estate-related services created a likelihood of

confusion. Id. at 2:10-15. Plaintiff claims that it was concerned and continues to be concerned that

a current or potential customer seeing Defendant’s name attached to an offer of real estate for lease

could become confused that Plaintiff was offering the space for lease. Id. at 7:8-21. 

Plaintiff further argues that its evidence, including that the parties used identical marks and

provided related services in the same geographic area, raised debatable issues as to whether there

was a likelihood of consumer confusion. Id. at 22:8-11. Plaintiff maintains that there have been

instances of actual confusion, including its receipt of faxes and emails meant for Defendant. Id. at n.

18. Finally, Plaintiff states that its continued concern prompted it to change its name to “Sand Hill

Global Advisors, LLC” following receipt of Judge Armstrong’s summary judgment Order. Id. at

7:21-22. 

Upon review of the parties’ arguments, the undersigned finds that this case is not an

exceptional one and that Defendant is not entitled to an award of fees. Plaintiff’s case raised

debatable issues of law and fact, as evidenced by the fact that Judge Armstrong spent nearly twenty

pages analyzing the parties’ arguments before finding that Defendant was entitled to summary

judgment in its favor. (Dkt. #57.) Thus, Plaintiff’s case was neither groundless nor unreasonable,

and, as detailed below, the undersigned finds that it was not pursued in bad faith. The undersigned

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shall consider each of the parties’ arguments in turn. 

1. Whether Plaintiff’s Lawsuit was Filed in Bad Faith

Defendant argues that Plaintiff’s improper motive in bringing this case was to register the

name “Sand Hill Advisors LLC” with the Secretary of State, which it could not do because

Defendant had already registered under that name. (Def.’s Mot. 1:8-10, Dkt. #61.) In support of

this argument, Defendant argues that Plaintiff knew, prior to filing suit, that it did not have a

protectable service mark. Id. at 2:4-6. Defendant focuses on certain deposition testimony given by

current and former executives of Plaintiff to support its arguments that Plaintiff’s purpose for filing

suit was not a proper one under the Lanham Act, and that Plaintiff knew in 1995 that its mark was

not protectable. 

a. Whether Plaintiff Had an Improper Motive

Defendant cites from the testimony of James McCaffrey to support its argument that Plaintiff

had an improper motive: 

Q: Wasn’t it true, though, you filed this lawsuit because you want the Sand Hill

Advisors, LLC, business name? A: Yes. Q: That is the reason why you filed this

suit; isn’t it? A: We believe there is enough there for us to get the name because we

believe in that. Q: Why do you think you are entitled to the business name? A: We

believe we have had senior use of it since 1995. Q: Why do you think that entitles

you to the business name? A: Because we have put tremendous resources and effort

into building up the goodwill and cache and we are entitled to that business name and

have been using it since 1995. 

(Davidson Decl. ¶ 18, Ex. E, RT 212:7-213:24, Dkt. #62-5.) 

However, the undersigned finds that while the driving force behind Plaintiff’s filing of the

lawsuit may very well have been the desire to register to do business under the Sand Hill Advisors

mark, it does not make the filing of the case unreasonable or in bad faith. In fact, Mr. McCaffrey

testified in addition to the testimony above that Plaintiff did not consider registering with the

Secretary of State under a different name because Plaintiff “built a lot of goodwill under that name.” 

(Davidson Decl., Ex. E, RT 128:13-129:5, Dkt. #62-5.)

Additionally, another co-founder and the current CEO of Plaintiff, Jane Williams, submitted

a declaration stating that she believed that Plaintiff’s marketing and promotional efforts had caused

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Plaintiff and the mark “Sand Hill Advisors” to gain tremendous respect in the community, that

Defendant’s use of the identical mark could cause confusion and damage to Plaintiff, and that she

did not believe there was anything improper about suing for service mark infringement in attempts

to prevent Defendant from using an identical mark. (Williams Decl. ¶¶ 1, 4, 5, Dkt. #74.) Ms.

Williams states that, based on this concern regarding confusion, Plaintiff changed its name to “Sand

Hill Global Advisors LLC.” Id. at ¶ 6. Thus, the undersigned finds that Plaintiff’s genuine and

continued concern regarding confusion, especially as evidenced by its willingness to change its

name after failing to prevail on its service mark infringement claim, establishes a good faith belief in

its claim. Further, in her order, Judge Armstrong gave no indication that the claim was baseless or

frivolous. Accordingly, the undersigned finds that Plaintiff’s motive in bringing suit was not

improper. 

b. Whether Plaintiff Had Knowledge that its Mark was not Protectable

Defendant next cites to the deposition of Gary Conway to support its argument that Plaintiff

knew prior to filing suit that “Sand Hill Advisors” was not a protectable mark. Mr. Conway, one of

Plaintiff’s founders, testified that he likely solicited a trademark for the name Sand Hill Advisors in

1995 and definitely discussed trademarking with counsel. (Davidson Decl., Ex. C, RT 84:6-85:10,

Dkt. #62-5.) However, Mr. Conway did not state the result of that solicitation, but testified that

whatever did happen was the result of him accepting the advice of his counsel. Id. Defendant

contends that this testimony shows that Mr. Conway and Plaintiff knew in 1995 that the name Sand

Hill Advisors was not a protectable mark. (Def.’s Mot. 11:4-5, Dkt. #61.)

In response, Plaintiff contends that Defendant misconstrues Mr. Conway’s testimony. (Pl.’s

Opp’n 13:10-12, Dkt. #72.) Plaintiff argues that Defendant is seeking to draw an adverse inference

from Mr. Conway’s invocation of the attorney-client privilege. Id. Plaintiff bases this on testimony

earlier in the deposition:

Q: When Sand Hill Advisors, Inc. in 1999 adopted the name Sand Hill Advisors, was

there ever any thought about trademarking or service marking the name Sand Hill

Advisors? A: I honestly can’t remember what we discussed at the time, but we

discussed what was necessary and acted upon the advice of counsel. . . . Q: Did you

personally ever think that trademarking or service marking the name Sand Hill

Advisors was something important to do? A: I’m fairly certain that I went to our

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attorney at the time and asked what was necessary. Ms. Miller: Wait. Objection. 

Okay. I need to object to the extent that you’re going to talk about any

communications you had with any attorney at any time. 

(Davidson Decl., Ex. C, RT 80:1-23, Dkt. #62-5.) Following several additional objections, the

testimony cited by Defendant above took place. Plaintiff contends that a fair reading of Mr.

Conway’s testimony in its entirety shows that he could not remember whether he had spoken to

attorneys about registering the mark in question, but assumed that he had, and the fact that Plaintiff

did not apply for a service mark must have been on the advice of counsel. (Pl.’s Opp’n 13:12-16,

Dkt. #72. Plaintiff argues that there is no evidence that it believed it did not own a protectable mark,

and the fact that it did not apply for service mark registration in 1995 does not evidence that it knew

the mark was not protectable. Id. at 13:1-3, 13:16-18. 

The undersigned agrees with Plaintiff’s reading of Mr. Conway’s deposition. Mr. Conway’s

testimony indicates that he does not recall specifically the events and conversations of fifteen years

ago regarding Plaintiff’s motivation for not applying for a service mark. Even had he remembered

the advice of counsel specifically, Mr. Conway was instructed by his counsel not to discuss

communications he had with counsel. Thus, the undersigned finds that this is not evidence that

Plaintiff knew it did not have a protectable service mark. And, as discussed above, Ms. Williams

believed that Plaintiff’s marketing and promotional efforts had caused Plaintiff and the mark “Sand

Hill Advisors” to gain tremendous respect in the community, (Williams Decl. ¶¶ 1, 4, 5, Dkt. #74),

and Mr. McCaffrey testified that he believed that Plaintiff had built a lot of goodwill under the Sand

Hill Advisors name (Davidson Decl., Ex. E, RT 128:13-129:5, Dkt. #62-5.) 

Based on this analysis, the Court finds that Plaintiff did not have an improper motive in filing

suit; rather, it sought to protect a service mark it believed to be protectable. Accordingly, the

undersigned finds that Plaintiff did not file suit in bad faith. 

2. Whether Plaintiff Raised Debatable Issues Regarding the Mark’s

Descriptiveness

Defendant next argues that Plaintiff had “no reasonable or evidentiary basis to disclaim the

geographical significance” of the Sand Hill Advisors mark. (Def.’s Mot. 11:22-23, Dkt. #61.) 

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Plaintiff, in response, argues that its infringement suit raised debatable issues as to whether the

service mark was suggestive rather than primarily descriptive. (Pl.’s Opp’n 17:13-20, Dkt. #72.) 

Plaintiff argues here, as it did in its summary judgment opposition, that it reasonably believed that

the trier of fact could conclude that “Sand Hill” evoked qualitites associated with Silicon Valley, in

the same way that “Broadway” and “Rodeo” evoke thoughts of certain places. Id. at 18:20-23. 

Plaintiff argues that the inclusion of a geographic term, such as the road on which the firm is

located, does not necessarily render the mark descriptive. Id. at 18:4-5. Plaintiff notes that it offered

evidence at the summary judgment phase that other service marks beginning with “Sand Hill” were

registered without proof of secondary meaning, indicating that they were not merely descriptive,

arguing that this created a debatable issue as to whether secondary meaning had been achieved. Id.

at 18:6-9, 20:6-7. Plaintiff also notes that although Judge Armstrong ultimately found that “Sand

Hill Advisors” was primarily geographically descriptive rather than suggestive, she did not find

Plaintiff’s argument to the contrary to be frivolous. Id. at 17:13-15. 

The amount of protection accorded to a mark is a function of the distinctiveness of that mark. 

(Order 6:2-3, Dkt. #57.) “Marks are often classified in categories of generally increasing

distinctiveness; . . . they may be (1) generic; (2) descriptive; (3) suggestive; (4) arbitrary; or (5)

fanciful.” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). The latter three

categories are considered inherently distinctive and entitled to protection, while those marks

considered “descriptive” may only acquire distinctiveness through the mark’s use in commerce. Id.

at 768-69. In her Order, Judge Armstrong noted that Plaintiff’s evidence showed that it had selected

the name “Sand Hill” due to its geographical significance, but also entertained Plaintiff’s arguments

that “Sand Hill Advisors” was a suggestive mark. (Order 7:15-10:20, Dkt. #57.) While Judge

Armstrong concluded that the mark was primarily geographically descriptive, the undersigned notes

that she spent nearly four pages weighing the parties’ arguments on the issue. Id. Nowhere within

those pages did Judge Armstrong find Plaintiff’s argument on this issue frivolous or vexatious, or

refer to it as unreasonable. In fact, Judge Armstrong agreed with Plaintiff in part, noting that “[t]he

mere fact that a mark references a geographic location does not ipso facto lead to the conclusion that

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15 U.S.C. § 1052(f) provides that a plaintiff who has exclusively and continuously used a

mark in commerce for five years prior to the date that the claim of distinctiveness is made has made

a prima facie case that the mark is distinctive. 

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the mark is descriptive.” (Order 7:15-16, Dkt. #57 (citing Japan Telecom, Inc., 287 F.3d at 871.)) 

Thus, the undersigned finds that Plaintiff raised debatable issues as to whether the mark was

primarily geographically descriptive.

3. Whether Plaintiff’s Argument that the Mark Acquired Secondary Meaning Was

Unreasonable 

Defendant next argues that Plaintiff’s claim that the mark was protectable based on acquired

secondary meaning was groundless and unreasonable. (Def.’s Mot. 12:15-18, Dkt. #61.) Defendant

contends that Plaintiff’s only attempt to establish secondary meaning was its “factually barren”

claim that it had engaged in advertising and promotion efforts in the wealth management industry

over a period of time. Id. at 13:18-20. In response, Plaintiff argues its evidence of use and

advertising of the mark over a substantial period of time created a debatable issue as to whether the

“Sand Hill Advisors” mark had acquired secondary meaning. (Pl.’s Opp’n 20:6-12, Dkt. #72.) 

The more distinctive a mark, the more protection it is afforded. Two Pesos, Inc, 505 U.S. at

768. A mark that is primarily geographically descriptive may only acquire distinctiveness through

the mark’s use in commerce. Id. at 768-69. The acquired distinctiveness is termed “secondary

meaning.” Id. at 769 (internal quotations omitted). “Secondary meaning can be established in many

ways, including (but not limited to) direct consumer testimony; survey evidence; exclusivity,

manner, and length of use of a mark; amount and manner of advertising; amount of sales and

number of customers; established place in the market; and proof of intentional copying by the

defendant.” Filipino Yellow Pages, Inc. v. Asian Journal Publications, Inc., 198 F.3d 1143, 1151

(9th Cir. 1999). “Evidence of use and advertising over a substantial period of time is enough to

establish secondary meaning.” Clamp Manufacturing Co., Inc. v. Enco Manufacturing Co., Inc.,

870 F.2d 512, 517 (9th Cir. 1989). 

At the summary judgment phase, Plaintiff first relied on 15 U.S.C. § 1052(f)3

 to establish

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secondary meaningowever, Judge Armstrong found that Plaintiff could not seek shelter using that

section’s presumption because it requires that the mark be registered. (Order 12:6-9, Dkt. #57.) 

Once again, rather than stopping at that conclusion, Judge Armstrong continued in her analysis for a

full page to determine whether Plaintiff could have sought protection under § 1052(f), had it

registered the mark. Although the Court found that “Plaintiff cannot demonstrate the requisite five

years of substantially exclusive and continuous use” required to raise a presumption of secondary

meaning, nowhere did Judge Armstrong refer to the arguments raised by Plaintiff as unreasonable or

groundless. Id. at 13:3-6. 

In response to Plaintiff’s evidence regarding Plaintiff’s advertising and promotion efforts,

Judge Armstrong noted that the Court could only consider evidence of the mark in advertising prior

to Defendant’s use of the mark to determine whether the mark had acquired secondary meaning. Id.

at 13:22-28; Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1358 (9th Cir. 1985). If the

advertising is so effective as to create an association with the advertiser, then the plaintiff has

established secondary meaning. Art Attacks Ink, LLC v. MGA Entertainment Inc., 581 F.3d 1138,

1146 (9th Cir. 2009) (internal citations omitted). 

In her Declaration, Jane Williams attempted to illustrate how Plaintiff’s advertising and

promotion efforts have caused the “Sand Hill Advisors” mark to acquire secondary meaning. Ms.

Williams stated that Plaintiff sponsors lecture series and events where Plaintiff’s members speak

about its role in the community. (Williams Decl. in Support of Pl.’s Opp’n to Def.’s Mot. for

Summary Judgment ¶ 16, Dkt. #44.) Williams states that Plaintiff has a role as a school and

educational sponsor, that Plaintiff’s members have given seminars and speeches in the community

where the firm is highlighted, that Plaintiff’s founders have appeared on radio shows to provide

commentary on market-related topics, that Plaintiff’s members have contributed to local

newspapers, and that members of Plaintiff have garnered various other media exposure. Id. at 16-

20; Williams Decl. in Support of Pl.’s Opp’n to Def.’s Mot. for Summary Judgment, Exs. J-T, Dkt.

#44. Judge Armstrong considered Plaintiff’s marketing and promotion efforts, but found that

Plaintiff adduced no evidence to show that its advertising and marketing efforts were effective. 

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(Order 14:11-12, Dkt. #57.) Based on this, the Court found that Plaintiff failed to show secondary

meaning, an essential element of its service mark infringement claim. Id. at 14:12-14. 

Although Judge Armstrong ruled against Plaintiff, the undersigned finds that Plaintiff did

present evidence in an attempt to prove that the mark had acquired secondary meaning, and that this

evidence helps establish that Plaintiff’s claims were not groundless and unreasonable. Although

Judge Armstrong found no evidence that Plaintiff’s advertising and promotion efforts were effective,

she discussed the possibility that the efforts may have caused the mark to acquire secondary

meaning and analyzed Plaintiff’s evidence in support of its arguments. Thus, the undersigned finds

that Plaintiff’s secondary meaning argument was neither groundless nor unreasonable.

4. Whether Plaintiff’s Raised Debatable Issues as to the Likelihood of Confusion

Finally, Defendant argues that Plaintiff “made no sincere attempt to establish any of the

essential elements” required to prove that Defendant’s use of the identical mark caused a likelihood

of confusion amongst consumers. (Def.’s Mot. 16:14, Dkt. #61.) In response, Plaintiff argues that it

presented evidence that the parties provide related services in the same geographic area, to the same

customers, through the same marketing channels, and that there were some incidents of confusion. 

(Pl.’s Opp’n 22:8-11, Dkt. #72.) Plaintiff contends that this evidence raised debatable issues as to

whether there was a likelihood of confusion. Id. at 22:7-8.

In AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), the Ninth Circuit first

laid out its eight-factor test to be used in determining whether there is a likelihood of confusion. 

Those are: (1) the similarity of the marks; (2) the relatedness of the two companies' services; (3) the

marketing channel used; (4) the strength of the plaintiff’s mark; (5) the defendant’s intent in

selecting its mark; (6) evidence of actual confusion; (7) the likelihood of expansion into other

markets; and (8) the degree of care likely to be exercised by purchasers. GoTo.com, Inc. v. Walt

Disney Co., 202 F.3d 1199, 1205 (9th Cir. 2000). “Some factors are much more helpful than others,

and the relative importance of each individual factor will be case specific. It is often possible to

reach a conclusion with respect to a likelihood of confusion after considering only a subset of the

factors.” Thane Intern., Inc. v. Trek Bicycle Corp., 305 F.3d 894, 901 (9th Cir. 2002) (internal

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citations and quotations omitted). Defendant contends that Plaintiff was unable to show that a single

Sleekcraft factor weighed in its favor and thus that Plaintiff’s claims were groundless. (Def.’s Mot.

16:15, Dkt. #61.) In her order, Judge Armstrong analyzed each of the eight factors, finding that all

but one favored Defendant. (Order 19:25, Dkt. #57.) Judge Armstrong thus found that no

reasonable jury could find that there was a likelihood of confusion. Id. at 20:4-6. 

However, this does not mean that Plaintiff’s claims were groundless or unreasonable. In

Applied Information Sciences Corp., 511 F.3d 966, the plaintiff, a vendor of specialized software,

alleged that the defendant, eBay, Inc., used one of its trademarks without its consent. Id. at 968-69.

The district court granted the defendant’s motion for summary judgment on the ground that the

plaintiff did not have a valid protectable interest in the mark. Id. at 969. The defendant

subsequently moved for attorney’s fees under 15 U.S.C. § 1117(a), but the district court denied its

motion, finding no compelling proof that the plaintiff acted capriciously or pursued litigation to

harass the defendant, or that the plaintiff intended to bring a meritless or unreasonable case against

the defendant. Id. at 972. The defendant appealed to the Ninth Circuit Court of Appeals where,

despite finding that the plaintiff failed to produce any admissible evidence tending to show a

likelihood of confusion, or address any of the Sleekcraft factors required for a likelihood of

confusion analysis, the Ninth Circuit affirmed the district court’s decision. Id. 

Here, unlike the plaintiff in Applied Information, Plaintiff produced evidence in support of

its likelihood of confusion claim. Regarding the relatedness of services factor, Plaintiff argued that

its provision of real estate investment advice overlapped with Defendant’s business in that they both

provided real estate-related services. (Order 16:19-26, Dkt. #57.) Plaintiff also presented evidence

that the parties used identical service marks. Id. at 17:8-9. As to the marketing channels used,

Plaintiff’s evidence showed that the parties both used banners and brochures as a form of advertising

and both operated websites. Id. at 17:20-23. Regarding actual confusion, Plaintiff presented

evidence that over the last decade, Defendant has received five or six phone calls and one package

intended for Plaintiff. Id. at 18:25-26. While Judge Armstrong commented on the “paucity of

evidence of actual confusion,” Id. at 20:2, this lack of evidentiary support does not merit an award of

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fees in light of Applied Information, where the plaintiff produced no evidence at all in support of its

likelihood of confusion argument and the court found that attorney’s fees were still not warranted. 

Further, although Judge Armstrong ultimately ruled against Plaintiff, she considered all the evidence

it presented and never found that Plaintiff acted in bad faith or unreasonably in pursuing its claims. 

Thus, the undersigned finds that the present case is not exceptional and attorney’s fees are not

appropriate. 

IV. CONCLUSION

Based on the foregoing, the undersigned finds that Plaintiff’s lawsuit was not filed in bad

faith and its claims were not groundless. As such, this is not an exceptional case, and the

undersigned RECOMMENDS that the Court DENY Defendant’s Motion for Attorney’s Fees. 

Pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b)(2), a party may serve

and file objections to this Report and Recommendation within 14 days of being served.

IT IS SO RECOMMENDED.

Dated: June 1, 2010 _______________________________

Maria-Elena James 

Chief United States Magistrate Judge 

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