The battle for attorneys’ fees after an intense trademark dispute often leaves many prevailing parties empty handed. This is because the Lanham Act only provides for attorneys’ fees in “exceptional cases.” Congress’s (and courts’) reluctance to award attorneys’ fees stems from the “American Rule,” which provides that each party to a lawsuit is responsible for paying its own fees–unless a statute provides otherwise. But the Lanham Act erects a high bar to obtaining fees by requiring that the case be “exceptional.”

On the one hand, trademark owners should not have to fully shoulder the burden of what often turns into expensive litigation just to enforce their rights. Indeed, the estimated cost of protecting one’s rights can dramatically affect the calculus of whether to sue for infringement in the first place. But on the other hand, trademark violations are sometimes debatable and unclear. In such circumstances, the American Rule provides some protection to litigants who would otherwise be discouraged from seeking redress due to the risk that they might have to pay the defendant’s fees in the end if they lose. Thus, the Lanham Act strikes a balance, providing for reimbursement in cases of brazen and clear infringement–or brazen and clear abuse of the litigation process–while retaining the benefits the American Rule otherwise provides.

The Lanham Act’s fee provision has come up recently in two high-profile trademark cases: one involving Comic Con (reported on previously here and here), the other meme-famous Grumpy Cat (also reported on previously here). But the result was legally different in both cases, with Comic-con obtaining millions in fees under the Lanham Act, while Grumpy Cat obtained nothing under the Act, but recovered nevertheless pursuant to a contract between her and the infringer. What explains the different results?

Comic-con: The Comic Con (short for “comic book convention”) dispute began when the San Diego Comic Con sued the Salt Lake Comic Con for infringing on San Diego’s “Comic-Con” trademarks. The San Diego convention was one of the first comics-fan conventions.  And it is the largest convention of its kind, drawing more than 130,000 attendees each year. Salt Lake’s convention began in 2013, but it has quickly grown to over 120,000 attendees. Thus, it is probably no surprise that San Diego took exception to Salt Lake’s competing event and use of the same “Comic Con” name–though, as my colleague Jessica Alm pointed out, there are many other conventions across the United States using the same name.

San Diego Comic Con sued Salt Lake Comic Con for infringement. But despite the seemingly-debatable nature of the dispute (because the name could be generic, and it would be difficult to prove consume confusion), less than a year ago a jury determined that Salt Lake was liable for infringement in the amount of $20,000. Thereafter, San Diego moved for fees in the amount of $5 million–a little disproportionate, one would think (but perhaps not in view of San Diego’s requested $12 million in damages).

The district court judge granted $3.9 million. The reasons? Salt Lake repeatedly disregarded court rules, violated confidentiality rules, squandered judicial resources by relitigating issues, based arguments on irrelevant law, and attempted to bias the jury during the trial. The judge felt that the case stood out from others due to the “unreasonable manner it was litigated.” Expect an appeal on the $20,000:$3.9 million ratio.

Grumpy Cat: The Grumpy Cat dispute began when Grenade Beverage LLC, which had licensed Grumpy Cat’s trademarks (names and likenesses) to be used in trade dress and advertising for a new line of iced coffee products called “Grumppuccinos,” also used the marks in connection with a new coffee bean product without Grumpy Cat’s permission. Like the Comic Con litigation, the parties also litigated this case for three years. In addition, a jury awarded Grumpy Cat over $700,000–much more than San Diego Comic Con. But only $1 of that was for breach of the licensing agreement.

But unlike the Comic Con litigation, a federal judge recently denied Grumpy Cat’s request for approximately $320,000 in fees under the Lanham and Copyright Acts. The judge did, however, granted Grumpy Cat fees under the licensing agreement with Grenade Beverage–though, the judge said that there needs to be additional briefing on how much in fees can be awarded under the contract. Central to the judge’s decision on the Lanham Act fees issue was the fact that Grenade Beverage had not acted frivolously or in bad faith when they adopted an interpretation of the licensing agreement that entitled them to use Grumpy Cat’s marks in a line of Grumpy-Cat- branded “coffee products,” rather than just iced coffee. This reasonable difference of opinion–and, presumably, reasonable litigation behavior throughout the case–did not make out “exceptional” circumstances justifying fees under the Lanham Act.

In general, the Comic Con and Grumpy Cat cases provide two high-level teachings when it comes to fees. First, it is important to choose professional counsel, make reasonable litigation decisions, and take good faith positions throughout the course of a case. Otherwise, that conduct in and of itself may make the case “exceptional,” putting you on the hook. Second, attorneys’ fees provisions in a licensing agreement can serve as a helpful back-up if the Lanham Act fees request fails. But in providing for such fees, one should consider whether it is truly advantageous in the circumstances to remove the American Rule’s protections. That requires some thought…I need a Grumppuccino.

P.S. In April, I wrote about the USPTO’s attempt to obtain attorneys’ fees when it prevails in district court patent litigation. The Federal Circuit rejected this attempt, stating “the American Rule prohibits courts from shifting attorneys’ fees from one party to another absent a ‘specific and explicit’ directive from Congress. The phrase ‘[a]ll the expenses of the proceedings’ [in 35 U.S.C. § 145] falls short of this stringent standard.”

Recently, we have been covering updates from a trademark infringement, dilution, and unfair competition action between Buc-ee’s and Choke Canyon, two rival Texas convenience stores with endless rows of gas pumps and checkout lanes (everything’s bigger in Texas, you know; even gas stations). About a month ago, a Texas jury found that the Choke Canyon alligator logo infringes on Buc-ee’s beaver logo:

But as I pointed out when covering the jury’s verdict, it wasn’t clear exactly why these two logos are confusingly similar and to what extent. Could it be the fact that both of the logos contain cartoon animals, who wear hats, who face right, who are smiling, who have red tongues, against a yellow-ish background? Some combination of these features? Additional features? The jury’s verdict doesn’t say; the jury only decided that the Choke Canyon logo infringed, but they weren’t asked to explain why.

However, the jury did send one note to the judge while deliberating, giving some clue as to infringement. In that note, the jury asked, “Does the logo to be considered by the jury in rendering an infringement judgment include a version without words?” To which the Judge responded, “Yes.” Not much insight, but at least we know the jury did not focus on Choke Canyon’s circular ribbon.

The reasons for the finding of infringement often have considerable implications. After such a finding, typically the prevailing trademark owner desires injunctive relief (in addition to damages) against the infringer–in the form of a court order prohibiting the infringer from using the too-similar mark. That form of equitable relief cannot be determined by a jury and has to come from the judge. Still, it seems like it might be useful for the judge, in crafting the injunction, to know why the jury felt the marks were so similar as to create customer confusion. This intuition has recently come to bear as the litigation between Buc-ee’s and Choke Canyon has progressed past trial.

Earlier this week, Buc-ee’s moved for a permanent injunction against Choke Canyon (you can read the motion here). Buc-ee’s seeks a permanent injunction barring Choke Canyon’s use of a whole host of similar logos, which were part of a package of example uses submitted to the jury and sampled below:

Buc-ee’s says that Choke Canyon’s proposed injunction is not expansive enough because it does not include or cover any of the black and white logos, only the colorful ones. Buc-ee’s says it “fought tooth and nail”–great imagery, given that it is represented by a beaver mascot–to obtain the finding of infringement of all marks, regardless of whether they include color. But the color similarities (the red tongues and yellow backgrounds) seem pretty important in the context of an infringement battle that otherwise comes down to smiling beaver versus a thumbs-up alligator.

Even though the jury may have technically considered all of the examples provided by Buc-ee’s, an injunction is an equitable remedy, and the Lanham Act (15 U.S.C. §1116) provides that courts shall issue injunctions “according to the principles of equity and upon such terms as the court may deem reasonable.” As part of this inquiry, courts consider (1) whether the trademark owner has suffered irreparable injury, (2) whether damages are adequate to compensate for the injury, (3) whether, considering the balance of hardships between the trademark owner and infringer, the requested relief is warranted, and (4) whether the public interest would be disserved by a permanent injunction. Courts frequently grant only limited or qualified injunctions and tailor them to the facts of the case, sometimes by restricting certain formats and locations and requiring disclaimers or corrective advertising.

This is all to say that the scope of an injunction in this case and others depends on the circumstances and the court’s view of what is equitable and reasonable–a flexible standard. In trademark, courts focus on what relief is necessary to remedy and prevent consumer confusion, as well as the potential effects an injunction would have on lawful competition–an important factor that should not be overlooked in this case (perhaps not only as to the parties, but also as to the precedent the court might set generally). What do you think that might be? Leave a thought in the comments below.

About a week ago, we reported on an interesting case out of the Southern District of Texas involving two competing convenience stores with cartoon animal mascots: Buc-ee’s (a beaver) and Choke Canyon (an alligator).

As someone who has personally visited Buc-ee’s stores, I can tell you that they are quite the destination. Buc-ee’s tend to be absolutely massive, with checkout lanes (everything’s bigger in Texas). People even buy T-shirts with Buc-ee’s logos on the front, with various Texan sayings on the back. I personally own three of them. So it’s kind of an understatement to call Buc-ee’s a “convenience store,” by Minnesota standards. And one can hardly complete a description of Buc-ee’s without noting that it is considered to have the “best bathrooms in Texas.”

Credit: Houston Chronicle

Choke Canyon? Yeah, its locations are pretty big too, but the mascot is far less cuddly. Though, it has a nice saying above the exit that probably wouldn’t work at Buc-ee’s: “See ya later, alligator.”

Credit: Yelp

Buc-ee’s sued Choke Canyon for a variety of claims, including: trademark infringement, dilution, unfair competition, and unjust enrichment. We cover these topics frequently on DuetsBlog (check out the topics column).

I must admit that when I first read about the suit, I could hardly believe it. I agree with my colleague that “the best I see from this case is that Choke Canyon may make consumers think of Buc-ee’s stores and beaver, but consumers don’t seem likely to assume that that there is a connection between the two.” And I also think that ” if it weren’t May, I’d assume this was an April Fools Day joke.”

But it’s no joke, and after a four-day jury trial and six hours of deliberation, Buc-ee’s won on all fronts. Specifically, the jury answered six questions (downloadable here):

  1. On Buc-ee’s claims for trademark infringement of its Buc-ee’s Logo, do you find for Buc-ee’s or Choke Canyon?
    • Jury answer: Buc-ee’s
    • Interestingly, the jury sent one note to the District Judge during deliberations, asking “Does the logo to be considered by the jury in rendering an infringement judgment include a version without words?” To which the Judge responded, “Yes.”
  2. Do you find that Buc-ee’s Logo was famous throughout Texas before Choke Canyon’s use of the Choke Canyon Logo?
    • Jury answer: Yes
  3. Because the jury answered “yes” to question 2, they skipped question 3 (which pertained to specific geographic areas in Texas).
  4. On Buc-ee’s claim for dilution by blurring of its Buc-ee’s Logo, do you find for Buc-ee’s or Choke Canyon?
    • Jury answer: Buc-ee’s
  5. On Buc-ee’s claim for unfair competition, do you find for Buc-ee’s or Choke Canyon?
    • Jury answer: Buc-ee’s
  6. On Buc-ee’s claim for unjust enrichment, do you find for Buc-ee’s or Choke Canyon?
    • Jury Answer: Buc-ee’s

I am surprised by the generality of the questions presented to the jury, and it’s interesting that the jury was not asked about damages–perhaps the issue was bifurcated and will be tried to a different jury.

Question 1, and the jury note, suggests to me that the jury was allowed to focus purely on the similarities between the cartoon animals in the above logos, disregarding Choke Canyon logo’s ribbon stating “Choke Canyon Travel Centers.” But even then, the only obvious similarities are the orientation of the mascots, the yellow background, the wearing of a hat, and their smiles and red tongues. It is hard to believe those basic, nominal characteristics are enough to show consumer confusion and infringement. Maybe Choke Canyon has a good chance on appeal or at judgment notwithstanding the verdict.

And I cannot help but wonder, in view of Question 2, whether the fact that Buc-ee’s mark was famous throughout Texas prior to Choke Canyon’s use of its alligator mark played the most important role in the jury’s verdict. Perhaps the jury felt that Choke Canyon intended to ride on Buc-ee’s mark. Indeed, at closing argument, Buc-ee’s counsel reminded the jurors that a survey showed more than 80% of Texans recognize the Buc-ee’s logo. But I tend to agree with Choke Canyon’s closing argument that the lawsuit seems directed at stifling competition, rather than truly protecting consumers–pointing to Buc-ee’s own prior statement that it only noticed the potential for consumer confusion when Choke Canyon began buying property in towns where Buc-ee’s operates. I find it hard to believe that a reasonable consumer would seriously confuse the two mascots and think they were associated. But apparently two actual-consumer witnesses testified in Buc-ee’s favor on this point. Texas sure is a strange place sometimes.