Motel 6 Operating LP v. HI Hotel Group LLC ( 2016 )

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 16-1989
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MOTEL 6 OPERATING LP;
G6 HOSPITALITY IP LLC;
G6 HOSPITALITY FRANCHISING LLC;
G6 HOSPITALITY LLC,
Appellants
v.
HI HOTEL GROUP LLC; NAVNITLAL B. ZAVER;
SHAILESH PATEL; 1450 HOSPITALITY PA LLC;
PRIYESH K. SHAH; INDRAJIT PATEL
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On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. No. 1-11-cv-02176)
District Judge: Honorable Yvette Kane
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Argued November 3, 2016
Before: CHAGARES, HARDIMAN, and SCIRICA, Circuit Judges
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ORDER
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Following a generally favorable result in the District Court, Plaintiffs Motel 6
Operating LP, G6 Hospitality IP LLC, G6 Hospitality Franchising LLC, and G6
Hospitality LLC (collectively, “Motel 6”) filed this appeal. Motel 6 claims: (1) the
District Court committed legal error when it interpreted the Lanham Act’s anti-
counterfeiting penalties not to reach the use of the Motel 6 mark without permission; and
(2) the District Court abused its discretion when it failed to award prejudgment interest to
Motel 6.
Appellees HI Hotel Group LLC, Navnitlal B. Zaver, Shailesh Patel, 1450
Hospitality PA LLC, Priyesh K. Shah, and Indrajit Patel neither filed a responsive brief
nor participated in oral argument. Accordingly, the Court’s review and deliberation of the
issues presented has been hindered by the absence of an adversarial presentation.
Having reviewed the record below and the brief filed on appeal, along with the
relevant statutory and decisional law, the Court agrees that the District Court interpreted
the Lanham Act too narrowly and contrary to the weight of persuasive authority. See, e.g.,
State of Idaho Potato Comm’n v. G & T Terminal Packaging, Inc., 425 F.3d 708 (9th Cir.
2005); Rolex Watch USA, Inc. v. Meece, 158 F.3d 816 (5th Cir. 1998); Gen. Elec. Co. v.
Speicher, 877 F.2d 531 (7th Cir. 1989); Century 21 Real Estate LLC v. Bercosa Corp.,
666 F. Supp. 2d 274 (E.D.N.Y. 2009); but see U.S. Structures, Inc. v. J.P. Structures,
Inc., 130 F.3d 1185 (6th Cir. 1997). Accordingly, we will vacate the District Court’s
order to the extent it holds that Motel 6 may not recover treble damages under 15 U.S.C.
§ 1117(b), and remand the matter for the District Court to determine, with respect to each
individual Defendant/Appellee, whether “extenuating circumstances” exist under Section
1117(b) such that treble damages would not be appropriate as to that particular party.
As for Motel 6’s second issue, the District Court held that Plaintiffs were not
entitled to prejudgment interest because the case did not involve counterfeiting under the
Lanham Act. In light of our decision to vacate the District Court’s order with respect to
counterfeiting, it follows that we must vacate the order as to prejudgment interest as well.
We disagree with Motel 6 that the District Court was required to award prejudgment
interest once it found the case exceptional for purposes of attorney’s fees and costs under
Section 1117(a). Accordingly, we leave the decision whether to award prejudgment
interest to the sound discretion of the District Court after it considers anew the
counterfeiting issue.
Accordingly, it is hereby ORDERED and ADJUDGED by the Court that the
judgment of the United States District Court for the Middle District of Pennsylvania
entered March 22, 2016, be and the same is hereby VACATED as to the above two issues
alone, and the case is REMANDED to the United States District Court for the Middle
District of Pennsylvania. No costs shall be taxed.
BY THE COURT:
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s/ Thomas M. Hardiman
Circuit Judge
ATTEST:
s/ Marcia M. Waldron
Clerk
Dated: November 23, 2016
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