Articles Posted in Attorney’s Fees

Indianapolis, Indiana – Judge Richard L. Young of the Southern District of Indiana issued a decision on cross-motions for attorneys’ fees and costs in the case of Richard N. Bell (“Bell”) versus Michael Maloney (“Maloney”). The Court first entered judgment in favor of Bell on June 11, 2019 granting him $200 in statutory damages, and costs. Bell sought $33,536,25 in attorney’s fees and $4,719.80 in costs. Maloney made a cross-motion “for leave to file a Bill of Costs totaling $2,183.77 and to enforce the Rule 68 offer. The Court found that the Rule 68 offer should be enforced and Maloney is entitled to the costs he incurred after the offer was rejected.

Bell sent a demand letter to Maloney for $5,000.00 prior to filing this suit. After Bell filed suit, Maloney filed his Answer and then sent Bell an Offer of Judgment pursuant to FRCP 68. This offer was for $2,500.00 for Bell to take judgment against Maloney and would include all attorney’s fees and costs. Bell denied the Rule 68 offer and after the denial of cross-motions for summary judgment, the case went to a bench trial. After the one-day bench trial, the Court found Bell was the prevailing party and was entitled to $200 in statutory damages. Bell filed his motion for fees and costs eleven months after the bench trial occurred.

FRCP 68 provides in part, “[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” The court in Payne v. Milwaukee Cty., 288 F.3d 1021, 1024 (7th Cir. 2002), found that “Rule 68 is designed to provide a disincentive for plaintiffs from continuing to litigate a case after being presented with a reasonable offer.” In determining if a final judgment obtained is less favorable than a Rule 68 offer, “the attorney’s fees and costs that accrued before the offer must be added to the judgment.” Lawrence v. City of Philadelphia, 700 F.Supp. 832, 836 (E.D. PA. 1988).

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FBlogPhoto-300x199ort Wayne, Indiana – Attorneys for Plaintiff, Design Basics, LLC and W.L. Martin Home Designs, LLC, filed suit in the Northern District of Indiana alleging that Defendants, Heller & Sons, Inc. d/b/a Heller Homes and Heller Development Corporation, infringed numerous copyright registrations. The Court granted the Defendants’ Motion for Summary Judgment on June 24, 2019. Design Basics filed its Notice of Appeal on July 19, 2019. Although Design Basics had filed its Notice of Appeal, Defendants submitted their Petition for Attorney Fees and Costs and were awarded $310,759.34.

According to the Opinion and Order dated September 3, 2019, the “Court invited Defendants to file a request for attorneys’ fees pursuant to 17 U.S.C. § 505, and further invited Design Basics to file a response in opposition.” The Court cites an exception from general rules of jurisdiction following a filing of a notice of appeal from Terket v. Lund, 623 F.2d 29, 33-34, in which a district court may enter an award for attorneys’ fees while the merits of the case are on appeal. In this case, Defendants submitted their Petition for Attorney Fees and Costs and Design Basics submitted its response in opposition.

District courts consider at least four different factors listed in Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n. 19 (1994) when determining whether to award attorneys’ fees, including: “(1) frivolity of the claim; (2) motivation in filing the claim; (3) objective reasonableness of the claim; and (4) considerations of compensation and deterrence.” Here, the Court found that while the Defendants argued the Seventh Circuit’s decision in Design Basics, LLC v. Lexington Homes, Inc., 858 F.3d 1093 (7th Cir. 2017) rendered all copyright cases filed by Design Basics frivolous, Design Basics may still recover on copyright infringement claims although it may be difficult. When analyzing Design Basics’ motivation for filing its infringement claims, the Court noted that Design Basics “realized approximately $5 million in net litigation profits in 2016 and 2017 alone, while the gross revenues for Design Basics during the same period of time were approximately $2.5 million.” Based off this finding, among others, the Court believes that this case, and most infringement cases filed by Design Basics, are filed due to a financial motive.

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Indianapolis, Indiana – Judge Richard L. Young in the Southern District of Indiana granted default judgment in favor of Engineered by Schildmeier, LLC (“Engineered”) and against WUHU Xuelang Auto Parts Co., LTD and Amazing Parts Warehouse (collectively the “Defendants”). Engineered filed suit seeking a declaratory judgment of both patent and trade dress infringement in late 2018. The patentEngineered-BlogPhoto-300x254 allegedly infringed in the complaint is United States Patent No. D 816,584 (the “‘584 Patent”) for a “Pair of Bed Rail Stake Pocket Covers”.

When a defendant fails to plead or defend a case against them within the allotted time frame, they are in default. A plaintiff may motion the court for a default judgment, which is a binding judgment of the court for failure of the defendant to answer the allegations. The court can then grant a default judgment. If a proof of damages hearing is necessary, the judge can order such a hearing, but the defendant may not appear at that point to defend the amount of damages asserted by the plaintiff. A default judgment may be set aside upon request of the defendant, but they must show a good defense and legitimate excuse as to why they were in default to the court.

In this case, neither of the Defendants plead or otherwise defended themselves against the allegations set forth in Engineered’s complaint. As such, the court granted Engineered’s motion for default judgment and awarded damages accordingly. First, the Court found that the Defendants infringed the ‘584 Patent. Second, the Court found the Defendants violated Section 43(a) of the Lanham Act by infringing Engineered’s trade dress. Third, the Defendants were enjoined from importing, selling, or offering for sale any imitations of the ‘584 Patent. Finally, Engineered was awarded a total of $1,424,070.00. The damages award was calculated by adding $470,020.00 in lost profits; $940,040.00 in treble damages for willful infringement; $13,610.00 in attorneys’ fees; and $400.00 in court costs. By failing to appear and defend themselves, not only will defendants have default judgments granted against them, but as shown in this case, extremely large damages may also be imposed.

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Indianapolis, Indiana –Plaintiff and Attorney Richard N. Bell of McCordsville, Indiana filed suit in theBell-v-Powell-BlogPhoto-300x63 Southern District of Indiana alleging that Defendants, David N. Powell and Midwest Regional Network for Intervention with Sex Offenders (“MRNISO”), infringed his rights in his copywritten photograph. In this case, the Court was faced with cross-motions for summary judgment, which it ruled in favor of the Defendants. After being granted summary judgment, the Defendants filed their separate Motions for Attorney Fees and Bill of Costs. While Powell’s motion was denied as moot, MRNISO’s motion was granted.

Bell, in his motion for summary judgment asserted that he was owed for damages caused by the Defendants for their unauthorized use of his photograph. However, Powell asserted Eleventh Amendment immunity against Bell’s claims and MRNISO claimed it was protected by the fair use doctrine. The Court agreed with both Powell and MRNISO and granted them summary judgment.

Following the final entry of judgment against Bell, Powell and MRNISO each filed a separate motion for attorney fees. According to the Court, Bell filed a “Report of Settlement Between Powell and Bell” and requested all deadlines for Powell’s motion be stayed. Powell did not file a response to the Report of Settlement and thus the dates were vacated by the Court. Powell’s motion was denied by the Court without prejudice leaving Powell the opportunity to refile his motion if the settlement was not able to be finalized.

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Indianapolis, Indiana – Attorneys for Plaintiff, Dexas International, Ltd. of Coppell, Texas filed suit in the Southern District of Indiana alleging that Defendant, Menard, Inc. of Eau Claire, Wisconsin infringed its rights in United States Copyright Registration No. VA 2-118-094 (“Dexas Cutting Board Photo”). Plaintiff is seeking costs, reasonable attorneys’ fees, injunctive relief, and post judgment interest.

A Dexas employee created an original art piece entitled “Dexas Cutting Board Photo” within the scope of hisDexas-v-Menard-BlogPhoto-300x113 employment in 2013 (the “Dexas Photo”). This art piece was for use in the product insert label for the Dexas cutting board. On April 4, 2018, Dexas applied for copyright registration for the Dexas Photo.

Dexas alleges that at least as of 2017, if not earlier, Menard began selling a “Collapsible Colander Cutting Board Set” with a label insert that includes the unauthorized copy of or derivative work based on the Dexas Photo. Further, Dexas believes Menard has manufactured, imported, published, sold, and/or distributed unauthorized copies of, or derivative works based upon the Dexas Photo and those were sold to consumers.

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Indianapolis, Indiana  – Stone Basket Innovations, LLC of Austin, Texas, filed a patent infringement lawsuit in the Eastern District of Texas which was transferred to the Southern District of Indiana alleging that Cook Medical, LLC of Bloomington, Indiana, infringed Patent No. 6,551,327 (“‘327 Patent”), Endoscopic Stone Extraction Device with Improved Basket, issued by the US Patent Office.Stonebasket-BlogPhoto-300x204

The initial Complaint for this case was filed on April 8, 2015. Defendant served their invalidity contentions in October 2015 and deposed the ‘327 patent’s inventor in January of 2016. During the deposition, the inventor stated in regards to an addition to overcome an examiner’s rejection, “I realize there is nothing novel about it.” Defendant then petitioned the U.S. Patent and Trademark Office for inter partes review (IPR) of all the claims. The District Court case was stayed pending the outcome of the petition for an IPR based off a joint motion.

After the IPR was instituted in September 2016, Plaintiff offered to license the ‘327 patent to Defendant for $150,000.00. Negotiations fell through and the settlement did not occur. Plaintiff then filed a motion requesting an adverse judgment in the IPR proceeding in December 2016 and moved to dismiss the District Court case with prejudice, both of which were granted.

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BlogPhoto-6Indianapolis, IN – The National Collegiate Athletic Association had filed a Trademark infringement lawsuit in the Southern District of Indiana alleging that Kizzang LLC, infringed trademarks registered by the NCAA.

A recent Order signed by Judge Jane Magnus-Stinson grants the National Collegiate Athletic Association’s Motion for Default Judgment and Motion for Permanent Injunction against Defendant, Kizzang LLC.

The NCAA sued over Defendant’s use of the terms “Final 3” and “April Madness,” which Plaintiff alleges infringe on the trademarked phrases “Final Four” and “March Madness,” which are commonly used to refer to the annual men’s college basketball championship tournament.

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Washington, D.C. – In the matter of Kirtsaeng v. John Wiley & Sons, Inc., the U.S. Supreme Court unanimously held that, among the factors considered in awarding attorneys’ fees under the Copyright Act, courts must give substantial weight to the objective reasonableness of the losing party’s position.

The Court was not persuaded that special consideration should be given to whether the lawsuit resolved important and close legal issues, expressing doubt that fee shifting will encourage parties to litigate such issues. While the Second Circuit test is close to what the Supreme Court prescribes, Justice Kagan wrote, in the Second Circuit, “substantial weight” has become “dispositive weight.” However, the Court also stressed that all circumstances of the case must be considered in light of the goals of the Copyright Act, acknowledging that fees may be warranted despite the objective reasonableness of the losing party’s position.

The decision is consistent with the position advocated in an AIPLA amicus brief filed in this case.

Background

Supap Kirtsaeng, born in Thailand, attended college in the United States. While he was studying in the United States, Kirtsaeng asked his friends and family in Thailand to buy and mail to him copies of foreign edition English language textbooks at Thai book shops, where they are sold at low prices. When publisher John Wiley & Sons (“Wiley”) learned about Kirtsaeng’s sales in the United States at low prices, it sued Kirtsaeng for copyright infringement.

In 2013, the Supreme Court ruled in favor of Kirtsaeng, concluding that Wiley’s sales of the books in Thailand exhausted its copyright interest in the U.S. sales under the first sale doctrine. On remand, Kirtsaeng’s motion for attorneys’ fees was denied. In affirming the decision, the Second Circuit relied on the objective reasonableness of Wiley’s position that the first sale doctrine did not apply to extra-territorial transactions.

Kirtsaeng asked the Supreme Court to review the attorney fee decision.

Competing Factors

Justice Kagan noted that Section 505 of the Copyright Act states that district courts “may” award attorneys’ fees to the prevailing party in copyright litigation, but said that the statute provides no standards for deciding when such awards are appropriate. Guidance for fee awards can be found in the Court’s decision in Fogerty v. Fantasy, Inc, she added, which includes a non-exclusive list of factors that further the goals of the Copyright Act.

In this litigation, each party asserted a factor believed to merit substantial weight: for Kirtsaeng, it is whether the lawsuit resolved an important and close legal issue; for Wiley, it is whether the position unsuccessfully argued by the losing party was objectively reasonable.

The Court concluded that the objective reasonableness of the losing party’s position is more important than the lawsuit’s role in settling a significant and uncertain legal issue. According to Justice Kagan, Wiley’s proposal “both encourages parties with strong legal positions to stand on their rights and deters those with weak ones from proceeding with litigation.” The copyright holder with no reasonable infringement claim has good reason not to sue in the first instance, she explained, and the infringer with no reasonable defense has every reason to give in quickly, before each side’s litigation costs mount.

By contrast, the Court continued, Kirtsaeng’s proposal would not produce any sure benefits. While litigation of close cases can advance the public interest by helping to clearly demarcate the boundaries of copyright law, it is not clear that fee shifting will necessarily, or even usually, encourage parties to litigate those cases to judgment, according to the Court. Justice Kagan explained as follows:

Fee awards are a double-edged sword: They increase the reward for a victory–but also enhance the penalty for a defeat. And the hallmark of hard cases is that no party can be confident if he will win or lose. That means Kirtsaeng’s approach could just as easily discourage as encourage parties to pursue the kinds of suits that “meaningfully clarif[y]” copyright law. … It would (by definition) raise the stakes of such suits; but whether those higher stakes would provide an incentive–or instead a disincentive–to litigate hinges on a party’s attitude toward risk. Is the person risk-preferring or risk-averse–a high-roller or a penny-ante type? Only the former would litigate more in Kirtsaeng’s world. … And Kirtsaeng offers no reason to think that serious gamblers predominate. … So the value of his standard, unlike Wiley’s, is entirely speculative.

What is more, Wiley’s approach is more administrable than Kirtsaeng’s. A district court that has ruled on the merits of a copyright case can easily assess whether the losing party advanced an unreasonable claim or defense. That is closely related to what the court has already done: In deciding any case, a judge cannot help but consider the strength and weakness of each side’s arguments. By contrast, a judge may not know at the conclusion of a suit whether a newly decided issue will have, as Kirtsaeng thinks critical, broad legal significance. The precedent-setting, law-clarifying value of a decision may become apparent only in retrospect–sometimes, not until many years later. And so too a decision’s practical impact (to the extent Kirtsaeng would have courts separately consider that factor). District courts are not accustomed to evaluating in real time either the jurisprudential or the on-the-ground import of their rulings. Exactly how they would do so is uncertain (Kirtsaeng points to no other context in which courts undertake such an analysis), but we fear that the inquiry would implicate our oft-stated concern that an application for attorney’s fees “should not result in a second major litigation.”

Substantial, But Not Dispositive, Factor

All of that said, objective reasonableness can be only an important factor in assessing fee applications–not the controlling one, Justice Kagan cautioned. “Although objective reasonableness carries significant weight, courts must view all the circumstances of a case on their own terms, in light of the Copyright Act’s essential goals,” she wrote.

The Court particularly acknowledged the serious concerns raised over the Second Circuit approach. While it frames the inquiry in a similar way, the Second Circuit language at times suggests that a presumption against a fee award arises from a finding of reasonableness. That perspective goes too far in limiting the district court’s analysis, according to the Court, observing that district courts in the Second Circuit appear to have turned “substantial” weight into something closer to “dispositive” weight. In particular, the Court acknowledged that hardly any of those decisions have granted fees when the losing party raised a reasonable argument (and none have denied fees when the losing party failed to do so).

Without suggesting that a different conclusion be reached, the Court vacated and remanded the case for further consideration in line with this analysis.

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Indianapolis, Indiana – In the trademark lawsuit between of Plaintiff Wine & Canvas Development, LLC (“WNC”) and Defendants Christopher Muylle, Theodore Weisser, YN Canvas CA, LLC and Weisser Management Group, LLC, the Southern District of Indiana found that Plaintiffs had engaged in abuse of process and awarded an additional $175,882.68 in attorneys’ fees and costs to Defendant Muylle.

Plaintiff WNC sued Defendants in 2011 on allegations of trademark infringement and false designation of origin after disputes arose regarding the parties’ franchising agreement. Defendants counterclaimed for abuse of process against WNC and its principals Anthony Scott (“Scott”), Tamara McCracken Scott (“Ms. McCracken”), and Donald McCracken (“Mr. McCracken”).

Following a November 2014 trial, the jury found in favor of Defendant Muylle, returning a verdict that there had been no trademark infringement or false designation of origin by Muylle. The jury also found for Muylle on his claim of abuse of process. It awarded him $81,000 from WNC, $81,000 from Scott, $81,000 from Ms. McCracken, and $27,000 from Mr. McCracken.

In this order, the court ruled on Muylle’s most recent petition for attorneys’ fees. These fees had been incurred after September 30, 2014 and consisted of attorneys’ fees that had been neither requested from the jury nor already paid as part of any of three prior payments of Muylle’s attorneys’ fees that had earlier been awarded by the court as sanctions against Plaintiff for failing to follow discovery or court rules.

The court evaluated both whether the fees should be awarded and, if so, whether the amount requested, $175,882.68, was reasonable. Under Seventh Circuit jurisprudence, attorneys’ fees are available when a trademark infringement lawsuit is deemed to be “exceptional.” An example of such an exceptional circumstance under the Lanham Act would be if the plaintiff lost and was also guilty of abuse of process.

The Plaintiff in this litigation lost. At trial, Muylle contended that the trademark infringement lawsuit had been brought for the purpose of causing him to incur considerable litigation costs to put on a defense and, thus, force the closing of the business. Muylle claimed that Scott had told him during a telephone conversation that Scott expected to lose the lawsuit against Muylle but that winning was not the goal of the litigation. Instead his goal was to put Defendants out of business. The jury found that Plaintiff had engaged in abuse of process.

The court also considered whether the amount of the fees was unreasonable. Judge Walton Pratt admitted that, at first blush, the fees did seem questionable for two months of legal services. Upon reviewing the detailed time records, however, the court found that neither the amount of time nor the rates charged per hour were unreasonable. The full amount of attorneys’ fees was awarded to Defendant.

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Hammond, Indiana – In the matter of Biomet, Inc. v. Bonutti Skeletal Innovations, LLC, the Northern District of Indiana, Hammond Division granted Defendant Bonutti’s motion to dismiss with prejudice its counterclaim. Bonutti’s counterclaim alleged that Biomet had infringed U.S. Patent No. 7,806,897 (the “‘897 patent”). Patent attorneys for Biomet Inc. asked the court to impose attorneys’ fees as a condition of the dismissal but this motion was denied.

On March 8, 2013, patent lawyers for Plaintiff Biomet filed an action for declaratory judgment against Bonutti Skeletal Innovations LLC. At issue were contentions of patent infringement of fifteen patents. Bonutti counterclaimed against Biomet and several other counterclaim Defendants. This multi-faceted dispute had been resolved with respect to some of the patents prior to this order. Other allegations of patent infringement remained.

Among the assertions by Bonutti that had remained was a counterclaim that Biomet had infringed the ‘897 patent. In this order, the court granted Bonutti’s request under Rule 41(a)(2) to dismiss this counterclaim with prejudice. The court also addressed Biomet’s contention that it should be awarded attorneys’ fees as a “prevailing party” in this portion of the patent litigation.

The court denied attorneys’ fees to Biomet on several grounds. First, it noted that, while attorney’s fees are available as part of a Rule 41(a)(2) dismissal without prejudice, this is justified as compensation for requiring a defendant to incur unnecessary litigation expenses. That same rationale does not apply where, as in this case, the dismissal is with prejudice.

Additionally, the court noted that any request for attorneys’ fees was premature. Such fees are only available to the “prevailing party” and Biomet had not established itself as such a prevailing party. Biomet may yet be able to recover attorneys’ fees if, at the conclusion of the patent lawsuit, Biomet is held to be the prevailing party.

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