Court Opinion

ID: 67138
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:18:15+00
Date Added: 2024-06-11T09:39:17.234484
License: Public Domain

[DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS
                                                                FILED
                    FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                      ________________________ ELEVENTH CIRCUIT
                                                            DEC 2, 2008
                             No. 08-13287                 THOMAS K. KAHN
                         Non-Argument Calendar                CLERK
                       ________________________

                  D. C. Docket No. 05-00096-CV-WCO-2

WELDING SERVICES, INC.,

                                                           Plaintiff-Appellant,

                                  versus

TERRY FORMAN,
WELDING TECHNOLOGIES, INC.,
ROBERT HENSON,
CHARLES JONES,
ROD FORMAN,

                                                        Defendants-Appellees.

                       ________________________

                Appeal from the United States District Court
                   for the Northern District of Georgia
                     _________________________

                           (December 2, 2008)

Before TJOFLAT, CARNES, and KRAVITCH, Circuit Judges.
PER CURIAM:

      Welding Services, Inc. filed a 15 U.S.C. § 1125(a) trademark infringement

claim along with state law claims against Welding Technologies, Inc. The district

court granted summary judgment in favor of WTI on the Lanham Act claim and on

the related state law claims for unfair competition and deceptive trade practices. It

declined to exercise supplemental jurisdiction over the remaining state law claims

and dismissed them. We affirmed the district court’s judgment. Back in district

court, WTI renewed its motion for attorney’s fees as the prevailing party under 15

U.S.C. § 1117(a). The district court awarded fees and costs to WTI in the amount

of $104,463.71. WSI now appeals that judgment.

      In an exceptional trademark infringement case brought under 15 U.S.C. §

1125(a), a court may award reasonable attorney’s fees to the prevailing party. 15

U.S.C. § 1117(a). A “prevailing party” includes a prevailing defendant—WTI in

this case. Lipscher v. LRP Publ’ns, Inc., 266 F.3d 1305, 1319 n.10 (11th Cir.

2001) (“While an exceptional case [for a prevailing plaintiff] is characterized as

one in which the acts of infringement can be characterized as malicious, fraudulent,

deliberate, or willful, the legislative history to the Lanham Act makes it clear that

attorney’s fees are also available to prevailing defendants in exceptional

cases.”(quotation marks omitted)) (citing H.R. Rep. No. 93-524 (1974), reprinted

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in 1974 U.S.C.C.A.N. 7132, 7133).

      The conduct that the court must assess in order to determine whether a case

is exceptional depends on which party prevails. See Nat’l Ass’n of Prof’l Baseball

Leagues, Inc. v. Very Minor Leagues, Inc., 223 F.3d 1143, 1148 (10th Cir. 2000).

The Tenth Circuit has explained:

      When attorney fees are awarded against a defendant, the court looks
      to whether the defendant’s acts of infringement were pursued in bad
      faith. When attorney fees are awarded against a plaintiff, the court
      looks to the plaintiff’s conduct in bringing the lawsuit and the manner
      in which it is prosecuted.

Id.

      “[A]n exceptional case is one that can be characterized as malicious,

fraudulent, deliberate and willful, or one in which evidence of fraud or bad faith

exists.” Tire Kingdom, Inc. v. Morgan Tire & Auto, Inc., 253 F.3d 1332, 1335

(11th Cir. 2001) (citations and quotation marks omitted). Applying that standard,

we have held that an award of attorney’s fees to a prevailing defendant may be

justified when a plaintiff has brought an obviously weak Lanham Act claim and the

evidence shows that the plaintiff acted in bad faith and with an improper motive.

See id. at 1336 (“Plaintiff’s failure to present sufficient evidence on four of the five

Lanham Act elements, coupled with evidence of bad faith and improper motive,

support the district court’s conclusion that this case was an exceptional case

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justifying an award of attorney’s fees.”).

      We review a district court’s award of attorney’s fees only for abuse of

discretion. Id. at 1335. WSI contends that whether a case is “exceptional” under §

1117(a) is a question of law that we should review de novo. Here, however, the

district court applied the correct legal standard to determine whether the case was

exceptional, stating that attorney’s fees should be awarded only if there was

evidence of fraud or bad faith. Therefore, our review of its decision to award the

fees is limited to abuse of discretion. See Tire Kingdom, 253 F.3d at 1335; Dieter

v. B & H Indus. of Sw. Fla., Inc., 880 F.2d 322, 329 (11th Cir. 1989) (“Even if the

trial court finds that the circumstances of the case are, in fact, exceptional, the

decision whether to award attorney’s fees is still discretionary.”). We review only

for clear error the district court’s findings of facts underlying that decision. See

Goldsmith v. Bagby Elevator Co., 513 F.3d 1261, 1276 (11th Cir. 2008).

      The district court found in the present case that WSI had an improper motive

for bringing the infringement claim. The court considered the fact that WSI filed

its trademark infringement claim only after three former WSI employees acquired

WTI—despite the fact that WTI had been using the same mark for two years

before the lawsuit was filed. The court also found that WTI attempted to resolve

the infringement issue without litigation, responding to WSI’s cease and desist

                                             4
letter by “volunteering” to change the allegedly infringing mark. The district court

determined that WSI continued to resist settlement, refusing a pre-discovery offer

of judgment. Although the court recognized that the offer of judgment would have

required WSI to dismiss with prejudice certain state law claims along with the

trademark infringement claim, before awarding fees the court noted that WSI had

not refiled those other claims in state court. Finally, the court found that WSI’s

trademark infringement claims were weak and that WSI persisted with expensive,

time-consuming litigation in spite of that. Based on those findings, the court

awarded attorney’s fees to WTI.

      Our review of the appellate briefs and the record establishes that the district

did not abuse its discretion except that one of its findings is clearly erroneous. The

district court clearly erred in finding that WTI “volunteer[ed]” to stop using the

WTI mark. WSI wrote a cease and desist letter to WTI, and WTI’s counsel

responded on its behalf as follows: “My client values very much the principles of

communication and compromise, and appreciates sincere communications from its

clients, competitors and potential future competitor; for example, my client was

already previously considering changing its logo, which was created long before

[former WSI employee] Terry Forman was employed [at WTI]” (emphasis added).

      Contrary to WTI’s representation to the district court and the district court’s

                                           5
finding, in that letter WTI did not “volunteer[] to change” the mark. WTI’s letter

may, however, signal an openness to “communication and compromise” and a

willingness to consider changing the mark. Instead of exploring that course, WSI

filed a lawsuit. On remand the district court should consider again that

letter—which does not “volunteer[] to change” the WTI mark— and reassess its

conclusion to the extent necessary to correct any misapprehension the court had

about the content of the letter.

      In addition to that letter, the district court had before it the sworn declaration

of a former WSI employee stating that WSI’s chief executive officer told him that

he intended to “‘sue [WTI] out of business.’” WSI denied that statement in its

response to WTI’s renewed motion for attorney’s fees. In its order granting WTI’s

motion, the district court did not mention that statement, so we cannot tell if the

court disregarded it based on a credibility determination or simply overlooked it.

On remand, the district court should make a credibility determination regarding the

alleged statement and, if it finds that statement was made, should consider it in

deciding whether WSI litigated with an improper motive.

      On remand, in evaluating WTI’s response letter to WSI’s cease and desist

letter and WSI’s alleged statement about suing WTI out of business, the district

court should decide whether the weakness of WSI’s trademark infringement claim,

                                           6
see Welding Servs., Inc. v. Forman, 509 F.3d 1351, 1359–61 (11th Cir. 2007), was

“coupled with evidence of bad faith and improper motive” by WSI, making this an

exceptional case in which the prevailing defendant is entitled to attorney’s fees.

See Tire Kingdom, 253 F.3d at 1336.

      WSI also challenges the amount of attorney’s fees awarded by the district

court. WSI did not raise this argument in the district court; therefore, it has waived

the argument for purposes of this appeal. See, e.g., Technical Coating Applicators,

Inc. v. United States Fidelity and Guaranty Co., 157 F.3d 843, 846 (11th Cir.1998)

(declining to consider an argument on appeal because the district court did not

have an opportunity to address it). If the district court on remand awards WTI

attorney’s fees, it should hear and decide any issues about the amount of those fees

that WSI raises in a timely fashion.

      REVERSED IN PART; AFFIRMED IN PART; AND REMANDED.

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