19-76-cv Desly International Corporation v. Otkryt oe Aktsionernoe Obshchestvo “Spartak”

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32 .1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRON IC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

At a stated Term of the Unite d States Court of Appeals for th e Second Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
3 rd day of February, two thousand twenty.

Present: GUIDO CALABRESI, ROSEMARY S. POOLER, SUSAN L. CARNEY, Circuit Judges

.

_____________________________________________________

DESLY INTERNATIONAL CORPOR ATION, MARAT NOVIKOV, OLGA NOVIKOV, ANDR EY NOVIKOV,

Plaintiffs-Counter-Defendants-Appellees

,

v. 19-76-cv

OTKRYTOE AKTSIONERNOE OBSHCHESTVO “SPARTAK”, AKA SOVMESTNOE PREDPRIYATIE OTKRYTOE, AKA AKTSIONERNOE OBSHCHESTVO “SPARTAK”,

Defendant-Counter-Claimant-Appellant

. 1

_____________________________________________________
Appearing for Appellant: John F. Ward, Kelley Drye & Warren LLP (David G. Lindenbaum, on the brief ), New York, N.Y.

Appearing for Appellees: Anthony F. Lo Cicero, Amster, Rothst ein & Ebenstein LLP (Richard S. Mandaro, on the brief ), New York, N.Y.

1 The Clerk of the Court is directed to amend the caption as above.2 Appeal from the United States Di strict Court for the Eastern Di strict of New York (Vitaliano, J. ).

ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of said Dist rict Court be and it hereby is AFFIRMED

.

Otkrytoe Aktsionernoe Obshchestvo “Spa rtak” (“Spartak”) appeals from the December 7, 2018 opinion and order of the United States Dist rict Court for the East ern District of New York (Vitaliano, J. ) denying its motion for attorneys’ fees under the Lanham Act and pursuant to an agreement between the parties. We assume the parties’ fa miliarity with the underlying facts, procedural history, and specifi cation of issues for review.

An order denying attorneys’ fees is reviewed for abuse of discretion. CARCO Group, Inc. v. Maconachy , 718 F.3d 72, 79 (2d Cir. 2013). “An abuse of discretion occurs when (1) the
court’s decision rests on an error of law (such as application of the wrong legal principle) or clearly erroneous factual finding, or (2) its decision—though not necessarily the product of a legal error or a clearly errone ous factual finding—cannot be located within the range of permissible decisions.” Id . (internal quotation marks omitted). “The deference exercised in an abuse of discretion review takes on special sign ificance when reviewing fee decisions because the district court, which is inti mately familiar with the nuances of the case, is in a far better position to make such decisions than is an appell ate court, which must work from a cold record.”
Id. (internal quotation marks omitted).

Spartak first challenges the district court’s conclusion that this case is not “exceptional” within the meaning of Section 35 of the Lanham Ac t. Section 35(a) provid es that a court “may award reasonable attorney fees to the preva iling party” in “exceptional cases.” 15 U.S.C. § 1117(a). In Sleepy’s LLC v. Select Comfort Wholesale Corp ., 909 F.3d 519, 529-31 (2d Cir. 2018), this Circuit revised its approach to the definition of “exceptional, ” adopting the test set forth by the Supreme Court for “exceptional cases” under the attorneys’ fees provision of the
Patent Act. Octane Fitness, LLC v. Icon Health & Fitness, Inc ., 572 U.S. 545 (2014). Octane
Fitness provided that “an ‘exceptional’ case is si mply one that stands out from others with respect to the substantiv e strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasona ble manner in which the case was litigated.” Id. at 554. Courts are to “evaluate the to tality of the circumstances,” l ooking to “a wide variety of factors, including frivolousness, motivation, objective unr easonableness (both in the factual and legal components of the case) and the need in pa rticular circumstances to advance considerations of compensation and deterrence.” Sleepy’s LLC , 909 F.3d at 530 (internal quotation marks omitted).

The district court did not exceed the bounds of its discretion in declining to award attorneys’ fees. Spartak’s main argument is th at Desly International Corp. knew that it was contravening the agreement between the parties when it registered the Spartak mark and logo
without written authorization. But the district court found that “[a] panorama view of the entire litigation, particularly the testimony and documents adduced at trial,” de monstrated that in context, the action was not as egregious as it seems. Desly International Corporation v. Otkrytoe Aktsionernoe Obshchestvo “Spartak ,” 2018 WL 7054830, at *4 (E.D.N.Y. Dec. 7, 2018) (“ Desly
III ”). It noted that Novikov testifie d he received oral permission to register the marks, and that3 Spartak was well aware of Desly’ s distribution of products under the Spartak mark in the United
States. Id. at *2. These findings were well within th e range of acceptable decisions on which to base a determination as to whether excep tional circumstances have been shown.

Spartak also challenges the district court’s d ecision not to award Spar tak attorneys’ fees pursuant to an agreement between the parties. The magistrate j udge did not recommend such an award because “Spartak failed . . . to support its request that the Court enforce the attorneys’ fee provision of the Agreement . . . .” Desly International Corporation v. Spartak , 2018 WL 4522081, at *7, n.10 (E.D.N.Y. Aug. 1, 2018) (“ Desly II ”). The district cour t agreed, noting that “[o]bjections are not intended to gi ve litigants a ‘second bite at the apple’, or, more accurately in this case, a first bite after the fact,” and declin ed to consider the arguments made by Spartak in its objections to the report and recommendation. Desly III , 2018 WL 7054830, at *5.

Spartak argues that the district court erred in finding that it was not a prevailing party because it had not received monetary damages. Th at is not what the district court found. The
district court found that Spartak failed, in its motion before th e magistrate judge, to fully develop its argument that it was entitled to fees unde r the agreement betwee n the parties. Desly III , 2018 WL 7054830, at *5 (noting that “[i]n its motion pape rs, Spartak merely recited the text of the Agreement’s attorney’s fees provision and the Court’s finding that De sly’s false registration constituted a breach, without identif ying the applicable law or dem onstrating that the provision is enforceable thereunder.”). We agr ee that Spartak failed to adequately raise the issue before the magistrate judge. Under New York law, even if there is an agreement to shift fees, the party seeking fees must show that it is entitled to such fees. Hooper Assocs., Ltd. v. AGS Computers,
Inc. , 74 N.Y.2d 487, 492 (1989). “[T]he court should not infer a party’s inte ntion to waive the
benefit of the rule unless the intention to do so is unmistakably clear . . . .” Id. Given Spartak’s failure to make arguments, we cannot say that Sp artak has born “the heavy burden of persuading [the court] to depart from the American Rule.” U.S. Fidelity and Guar. Co. v. Braspetro Oil
Servs. Co ., 369 F.3d 34, 75 (2d Cir. 2004).

We have considered the remainder of Sparta k’s arguments and find them to be without merit. Accordingly, the order of the di strict court hereby is AFFIRMED.

FOR THE COURT: Catherine O’Hagan Wolfe, Clerk