# United Stat es Court of Appeals For the First C ircuit

Nos. 01-1382, 01-2273 TAMKO ROOFING PRODUCTS, INC., Plaintiff, Appellee,

v. IDEAL ROOFING COMPANY, LTD., Defendant, Appellant.

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE [Hon. Joseph A. DiClerico, Jr., U.S. District Judge ]

Before Selya, Circuit Judge , Campbell, Senior Circuit Judge , and Lynch, Circuit Judge .

H. Joseph Hameline , Rosemary M. Allen , Geri L. Haight , Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. , and Michael B. Clapp on brief for appellant. Christopher R. Benson , Marcy Hogan Greer , Susan J. Hightower , and Fulbright & Jaworski L.L.P. on brief for appellee.

June 28, 2002-2- LYNCH, Circuit Judge . Tamko Roofing Products, after winning its trademark infringement action at trial, and prevailing

on a subsequent appeal by the infringer Ideal Roofing Company, brings this application for an award of reasonable attorneys' fees andexpenses in connection with the appeal. We articulate the standards to be used in the analysis and deny Tamko's application becaus e w e find that Ideal's appeal did not constitute an exceptional case within the meaning of 15 U.S.C. § 1117(a) (2000). I. The six-day trial in this trademark infr i ngement case concerned Ideal's use of Tamko's Heritage trademark in connection with roofing products. The district court ruled that Tamko's Heritage trademarks were valid, and the jury found: (i) "by a preponderance of the evidence that Ideal infringed Tamko's trademarks"; (ii) "by clea r and convincing evidence that Ideal actedwillfully in infringing Tamko's trademarks"; and (iii) "by a preponderance of the evidence that the roofing product[s] of Ideal andTamko directly competed with each other." Tamko Roofing Products, Inc. v . Id eal Roofing Co. , 282 F.3d 23, 29 (1st Cir. 2002) (internal quotation marks omitted).

In August 2000, the district court issued orders that Tamko was entitled to: (1) an accounting of Ideal's profits; (2) attorneys' fees; and(3) an injunction permanentlyenjoining Ideal from"using the term Heritage, Heritage Series, H Series, or any

name or mark c onfusi ngly similar to Heritage." Id. (internal quotation marks omitted).1 This case does not present the occasion to delineate the

boundaries between an award of just damages and costs under Fed. R. App. P. 38, Maher v. Hyde , 272 F.3d 83, 87 (1st Cir. 2001) (discussing Rule 38's "frivolous appeal" standard), and an awardof appellate attorneys' fees for "exceptional cases" under 15 U.S.C. § 1117(a), except to say that the two standards do not appear to be the same. -3-

On appeal, Ideal challenged all three of the district court's rulings, but not the jury's finding of willful infringement. We affirmed all of th e a ppealed district court's rulings in Tamko Roofing Products, Inc. v. Ideal Roofing Co. , 282 F.3d 23 (1st Cir. 2002).

On April 22, 2002, Tamko filed an application for an awardof attor ney s' fees and expenses in connection with its defense of the appeal that Ideal brought. Ideal filed an objection to Tamko's application on May 20, 2002. II. The Lanham Act's attorneys' fees provision, section 35, reads: "The court in exceptional cases may award reasonable attorneyfees to the prevailing party." 15 U.S.C. § 1117(a) (2000). In "exceptional cases," a prevailing party can obtain attorneys' fees for a trial and on an appeal. 1 See 5 J.T. McCarthy, McCarthy on Trademarks and Unfair Competition § 30:99, at 30-184 (4th ed. 2002). As we noted in Tamko Roofing Products , we "turn[] to t he legislative history for a working definition" of exceptiona l ca ses: "In exceptional cases, attorneys' fees may be appropriate in cir cums tances where the acts of infringement were '"malicious," "fraudulent," "deliberate," or "willful."'" 282 F.3d at 31 (quoting S. Rep. 93-1400, at 5 (1974), reprinted in 1974-4-

U.S.C.C.A.N. 7132, 7133). The district court awarded atto rney s' fees to Tamko for the defense of its trademark at the trial level.

In affirming the attorneys' fees award for the trial in this case, we rejected the argument "that bad faith or fraud is a necessarycondition to an award of attorneys' fees under section 35 of the Lanham Act," and held that "willful conduct may be sufficient when the trial court takes into account all the facts andequi ties of the case." Id. at 27. The facts and equities surrounding Ideal's willful infringement of Tamko's mark justified the trial court's award of fees.

Here, Tamko argues that because this was an exceptional

c ase and attorneys' fees were awarded at the trial lev el , attorneys' fees should also be awarded for the appeal. Tamko cites to Committee for Idaho's High D esert, Inc . v. Yost , 92 F.3d 814 (9th Cir. 1996), in which the Ninth Circuit granted the prevailing plaintiff attorneys' fees on appeal because "the district court foundthat appellants 'knowingly, intentionally and deliberately adoptedand used'" the plaintiff's name, and the case was therefore exceptional. Id. at 825.

In response, Ideal argues that in order to obtain an award of attorneys' fees for an appeal, the appeal itself must be exceptional, which it equates with frivolous. Ideal, in turn, relies on another Ninth Circuit case, U-Haul International, Inc. v. Jartran, Inc. , 793 F.2d 1034 (9th Cir. 1986), which denied an award of attorneys' fees against a defendant who, like Ideal, lost both at trial and on appeal. The Ninth Circuit reasoned that attorneys'-5-

fees were not warranted because "[ t]here [was] nothing 'exceptional' about [the defendant] appealing th is $4 0 million judgment. . . . [D]ifficult issues were raised . . . [and] [i]t was entirely reasonable for [the defendant] to challenge the district court's decision." Id. at 1044.

The case law in this area is very sparse, perhaps because most applications for attorneys' fees for an appeal are handled in summarycourt orders. Articulation of the standards by which we will evaluate whether appeals are within the "exceptional case" requirement may be helpful. We reject Ideal's view that the appeal must be frivolous in order to justify an award of appellate at torn eys' fees; rather, the statutory standard is whether the case, as it appears on app eal, is "exceptional." We also reject Tamko's argument that whenever a case is deemed exceptional at the trial court level, attorneys' fees should automatically be awarded for the appeal. Instead, we strike a middle ground. In each case this court will assess and weigh several factors: (1) whether the appeal was on issues different from those that caused the trial court to find an "exceptional case"; (2) the relative strengths or weaknesses of the appellate issues; and (3) the extent to which the appeal can be said to have prolonged , wi thout adequate justification, a particularly bad "exceptional case." The weight to be given to each of these three factors may var y from case to

case. In addition, this court will look to wh ethe r the losing party's positi on on appeal appears to be of a whole with the earlier "malicious, fraudulent, delib e rate, or willful" acts of-6-

infringement or is o ther wise inequitable. Cf. Securacomm Consulting, Inc. v. Securacom Inc. , 224 F.3d 273, 280-83 (3d Cir. 2000) (fees justified where litigation itself is oppressive and meant to delay).

This approach makes sure that the prevailing party in a tradem ark infringement case does not have to keep expending its

resources defending the merits of a case characterized by exceptional willful infringement, but also ensures that the losing partyis not unfairlythwarted in its attempts to make relevant and reasonable arguments about potential procedural errors or about the type and a mount of remedies. In addition, this approach lends a degree of flexibility because a portion of the total amount of appellate attorneys' fees may be awarded when the appeal in part attempts to rehash the merits of an already exceptional case, and in part makes relevant and reasonable arguments about procedural or remedial issues.

We apply our standards to this case. Here, we understand th e dis trict court's award of fees to have been based on Ideal's willful acts of infringement and not on Ideal's position as to appropriate remedy. Ideal did not ap peal from the infringement finding against it. Its appeal was, by contrast, primarily concernedwith the appropriateness of the remedies ordered and with t he award of attorneys' fees. Thus, its appeal was on issues different from those that caused the trial court to find that this was an exceptional case. As to the relative strengths and w eakn esses, Ideal's-7-

arguments, while not strong, were respectable; were made in areas where the law of this circuit was unclear; and had some reason to them. This appeal cannot be said to have prolonged, without adequate justification, a case that the district court found to be exceptional. We therefore deny Tamko's application for the award of attorneys' fees in connection with the appeal.

So ordered .