Court Opinion

ID: 998401
Source: CourtListenerOpinion
Date Created: 2013-07-04 17:10:22.376797+00
Date Added: 2024-06-11T11:24:42.838574
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BUBBA'S BAR-B-Q OVEN,
INCORPORATED,
Plaintiff-Appellant,

v.                                                                 No. 98-1029

THE HOLLAND COMPANY,
INCORPORATED,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of North Carolina, at Wilmington.
James C. Fox, District Judge.
(CA-96-153-F(3)-7)

Argued: January 27, 1999

Decided: April 5, 1999

Before ERVIN, LUTTIG, and KING, Circuit Judges.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: Clifford Ted Hunt, Charlotte, North Carolina, for Appel-
lant. John R. Long, NEWSOM, GRAHAM, HEDRICK & KENNON,
P.A., Durham, North Carolina, for Appellee. ON BRIEF: Thomas H.
Lee, Jr., NEWSOM, GRAHAM, HEDRICK & KENNON, P.A., Dur-
ham, North Carolina, for Appellee.

_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

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OPINION

PER CURIAM:

Bubba's Bar-B-Q Oven, Inc. ("Bubba"), sought a declaratory judg-
ment in the district court that its gas-fired barbecue grill (the "Bubba
Oven") did not infringe the trade dress1 of the gas-fired barbecue grill
(the "Holland Grill") manufactured by The Holland Company, Inc.
("Holland"). Holland counterclaimed, alleging trade dress infringement2
and unfair competition, in violation of Section 43(a) of the Lanham
Act, 15 U.S.C. § 1125(a), as well as violations of North Carolina stat-
utory and common law.

At trial before the court, Bubba conceded the lack of any factual
or legal basis for its declaratory judgment claim and stipulated that
the Bubba Oven infringed the trade dress of the Holland Grill. Hol-
land therefore prevailed at trial on both Bubba's declaratory judgment
claim and its own counterclaim. Among other forms of relief, the dis-
trict court awarded Holland its attorneys' fees. Bubba now appeals the
district court's award of attorneys' fees, arguing that the fee award is
not authorized by Section 35(a) of the Lanham Act. 3 Because we find
the award to be legally sound, and there being no abuse of discretion,
we affirm.
_________________________________________________________________
1 "`Trade dress' involves the total image of a product, and may include
features such as size, shape, color or color combinations, texture, graph-
ics, or even particular sales techniques." Two Pesos, Inc. v. Taco
Cabana, Inc., 505 U.S. 763, 764 n.1 (1992).
2 In order to succeed on a claim of trade dress infringement, a party
must prove three elements: (1) the trade dress is primarily non-
functional; (2) the trade dress is inherently distinctive or has acquired a
secondary meaning; and (3) the alleged infringement creates a likelihood
of confusion. Tools USA & Equip. Co. v. Champ Frame Straightening
Equip., Inc., 87 F.3d 654, 657 (4th Cir. 1996).
3 In "exceptional cases," the court may award reasonable attorney fees
to the prevailing party. 15 U.S.C. § 1117(a).

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I.

Since 1989, Holland has been producing a gas-fired barbecue grill
under the trademark THE HOLLAND GRILL. The Holland Grill pos-
sesses several distinctive physical characteristics that contribute to its
overall image and appearance. Holland has successfully marketed the
Holland Grill, expanding unit sales and profits dramatically from
1989 to 1996.

In the summer of 1996, Holland discovered that Bubba was mar-
keting a gas-fired barbecue grill that was essentially identical in
appearance to the Holland Grill. Upon its discovery of the identical
product, Holland contacted Bubba and demanded that Bubba cease its
marketing of the Bubba Oven. Bubba responded to Holland's demand
by filing a lawsuit in the Eastern District of North Carolina, from
which this appeal arises.

During discovery prior to the non-jury trial, Bubba repeatedly
refused to admit that its product caused a likelihood of confusion or
that the Holland Grill had acquired secondary meaning. See note 2,
supra. Bubba's consistent refusal to admit the existence of these ele-
ments forced Holland to engage in extensive pretrial preparation and
to develop evidence on these issues.

Despite its consistent denials in the pretrial proceedings, Bubba
altered its position at trial and stipulated that it possessed no evidence
regarding confusion or secondary meaning. Bubba further stipulated
that the Bubba Oven infringed the trade dress of the Holland Grill.
The district court found Bubba liable for trade dress infringement and
ordered Bubba to pay Holland $3,000 in compensatory damages.

After the entry of judgment in its favor, Holland moved for an
award of its attorneys' fees. The district court, finding that "Bubba
deliberately, intentionally, and willfully copied the Holland Grill and
its trade dress in designing and manufacturing the Bubba Oven," con-
cluded that Holland was entitled to recover the attorneys' fees
incurred in litigating the elements of secondary meaning and confu-
sion. Consequently, the district court awarded Holland $138,876.00,
an amount representing two-thirds of Holland's total fee request.

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II.

On appeal, Bubba argues that the trial court abused its discretion
in granting Holland a portion of its attorneys' fees. First, Bubba main-
tains that, because Holland was not a prevailing defendant in Bubba's
declaratory judgment action, the district court could not base its
award on the more lenient standard applicable to prevailing defen-
dants. Second, although Bubba concedes that Holland was the pre-
vailing plaintiff in its trade dress infringement countersuit, Bubba
asserts that the award of attorneys' fees was an abuse of the district
court's discretion because the court did not specifically find that
Bubba had acted in "bad faith."

We review the district court's decision regarding a Lanham Act
attorneys' fee application for abuse of discretion. Shell Oil Co. v.
Commercial Petroleum, Inc., 928 F.2d 104, 108 n.6 (4th Cir. 1991).
When a violation of Section 43(a) of the Lanham Act has been estab-
lished, the court may award the prevailing plaintiff damages and the
costs of the action. 15 U.S.C. § 1117(a). Where the court deems the
case to be "exceptional," it may also award the prevailing party rea-
sonable attorneys' fees. Id. In determining what constitutes an excep-
tional case--and who may be classified as a "prevailing party"--we
have differentiated between prevailing plaintiffs and prevailing defen-
dants. Scotch Whisky Ass'n v. Majestic Distilling Co., 958 F.2d 594,
599 (4th Cir. 1992). Where the plaintiff prevails, we require a demon-
stration of bad faith on the part of the defendant before allowing the
plaintiff to recover its attorneys' fees. Id. On the other hand, we have
allowed a prevailing defendant to recover reasonable attorneys' fees
upon a showing of "something less" than bad faith on the part of the
plaintiff. Id.4

While it may be unnecessary for a prevailing defendant to prove
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4 This "dual standard" may have been called into doubt by Fogerty v.
Fantasy, Inc., 510 U.S. 517, 523-26 (1994). An identical standard,
whether it be bad faith or something less, may be required for both pre-
vailing defendants and prevailing plaintiffs in Lanham Act cases.
Because the specific factual findings of the district court clearly rise to
the higher standard of bad faith, we need not address the potential impact
of Fogerty upon the dual standard enunciated in Scotch Whisky, Ass'n.

                    4
bad faith, the Act's legislative history makes it clear that for a prevail-
ing plaintiff to succeed in a request for attorneys' fees, the plaintiff
must show that the defendant acted in bad faith. Id.

          Effective enforcement of trademark rights is left to the
          trademark owners and they should, in the interest of pre-
          venting purchaser confusion, be encouraged to enforce
          trademark rights. It would be unconscionable not to provide
          a complete remedy including attorneys fees for acts which
          courts have characterized as malicious, fraudulent, deliber-
          ate and willful.

S. Rep. No. 93-1400 (1978), reprinted in 1978 U.S.C.C.A.N. 7132,
7136.

In the present case, the district court properly found that Holland
was both a prevailing defendant (on Bubba's declaratory judgment
claim) and a prevailing plaintiff (on its own infringement claim).
While the district court did not specify upon which standard--bad
faith or something less--it based its award of attorneys' fees, it did
make specific findings of fact, including: (1) Bubba was not engaged
in any aspect of marketing or selling barbecue grills before it intro-
duced the Bubba Oven; (2) Bubba was aware of the Holland Grill,
Holland's patent, and Holland's trademark before Bubba began man-
ufacturing the Bubba Oven; (3) The Bubba Oven is essentially identi-
cal in appearance to the Holland Grill and uses the trade dress of the
Holland Grill without authorization or acquiescence; and (4) Bubba
deliberately, intentionally, and willfully copied the Holland Grill and
its trade dress in designing and manufacturing the Bubba Oven.5

Although the district court did not use the specific terminology
"bad faith" in its opinion, it is clear beyond peradventure that the
court made such a finding. The district court's finding of bad faith is
amply supported by the record. Bubba's actions, as characterized by
_________________________________________________________________

5 Indeed, Bubba candidly admits that it purchased a model of the Hol-
land Grill and shipped it to the Czech Republic with instructions for the
Czech manufacturer to copy it.

                     5
the district court, are the type of malicious, fraudulent, deliberate, and
willful actions that Congress intended the Lanham Act to redress.6

Bubba admitted in pleadings filed with the district court, and again
before this Court, that it deliberately copied the design and salient fea-
tures of the Holland Grill, and that it did so because it knew the Hol-
land Grill was a commercial success. By closely copying the trade
dress of the Holland Grill, Bubba admittedly hoped to cash in on Hol-
land's success and "jump-start" its own sales. When Holland
demanded that Bubba cease its infringing conduct, Bubba responded
by hauling Holland into court. Throughout the course of pretrial dis-
covery, Bubba stated its intent to defend on all elements of Holland's
infringement countersuit. As a result, Holland was required to
develop evidence and prepare for trial on all elements of a trade dress
infringement suit, including likelihood of confusion and secondary
meaning. On the day of trial, however, Bubba unconditionally surren-
dered, stipulating both that it possessed no evidence to contest these
issues and that its product infringed the Holland Grill's trade dress.

III.

The district court was well within its discretion to find as it did, and
those findings reflect its considered conclusion that Bubba's conduct
rose to the level of bad faith, thereby qualifying this case as "excep-
tional" and warranting the award of attorneys' fees. Accordingly, the
district court's award of attorneys' fees to Holland and against Bubba
under Section 35(a) of the Lanham Act is affirmed.

AFFIRMED
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6 See Quality Inns Int'l, Inc. v. McDonald's Corp., 695 F. Supp. 198,
222 (D. Md. 1988), which recognized that, although some cases have
held Section 35(a) of the Lanham Act as requiring some form of fraudu-
lent conduct, while other cases have noted that the conduct need only be
deliberate and willful, the issue remains one of discretion based on all the
circumstances before the court. See also Brittingham v. Jenkins, Nos. 95-
1277, 95-1792, 1992 WL 172092 (4th Cir. July 23, 1992) (affirming an
award of attorneys' fees where the district court found a "deliberate and
willful pattern of conduct." Id. at *5).

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