Urban Outfitters, Inc. v. BCBG Max Azria Group, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 10-2922/10-3510
URBAN OUTFITTERS, INC.; URBAN OUTFITTERS
WHOLESALE, INC.; FREE PEOPLE LLC
v.
BCBG MAX AZRIA GROUP, INC.; STREET
BEAT SPORTSWEAR, INC.; MAX RAVE LLC,
Appellants.
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D. C. No. 06-cv-04003)
District Judge: Honorable Michael M. Baylson
Submitted under Third Circuit LAR 34.1(a)
on April 11, 2011
Before: RENDELL, WEIS and ROTH, Circuit Judges
(Opinion filed: June 1, 2011)
OPINION
ROTH, Circuit Judge:
This appeal requires us to consider the District Court‟s award of attorneys‟ fees
under the “exceptional case” provision of the Lanham Act. For the reasons expressed
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below, we affirm the judgment of the District Court and grant Urban Outfitters partial
attorneys‟ fees for its prior appeal in this case.
I. Background1
Urban Outfitters, Inc., Urban Outfitters Wholesale, Inc., and Free People LLC
(collectively, Urban Outfitters) filed an action against BCBG Max Azria Group, Inc.,
Max Rave, LLC, and Street Beat Sportswear, Inc. (collectively, BCBG) for trademark
infringement and related claims under sections 32 and 43(a) of the Lanham Act. See 15
U.S.C. §§ 1114, 1125(a). After granting preliminary injunctive relief, the District Court
eventually granted Urban Outfitters a permanent injunction that limited BCBG‟s use of
its TRUE PEOPLE mark to avoid confusion with Urban Outfitters‟ FREE PEOPLE
mark. The District Court also dismissed BCBG‟s counterclaim, which alleged that Urban
Outfitters had defrauded the Patent and Trademark Office, but denied Urban Outfitters‟
request for “exceptional case” attorneys‟ fees.
BCBG appealed the District Court‟s adverse rulings, and Urban Outfitters cross-
appealed the District Court‟s denial of “exceptional case” attorneys‟ fees. We affirmed
all of the District Court‟s actions except for one: We vacated the District Court‟s
“exceptional case” ruling and remanded with instructions to consider “exceptional case
fees” in light of certain, undiscussed instances of “BCBG‟s chicanery.” Urban Outfitters,
Inc. v. BCBG Max Azria Group, Inc., Nos. 07-3882, 08-1472, 08-1655, 2009 U.S. App.
LEXIS 6586 (3d Cir. Mar. 30, 2009).
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We assume familiarity with the facts, which we refer to only as necessary to
explain our decision.
2
On remand, based on record evidence of BCBG‟s intentional infringement and
litigation misconduct, the District Court found the case to be exceptional and required
BCBG to pay Urban Outfitters “50% of the total attorney fees and expenses” that Urban
Outfitters had “spent in the preparation and presentation of [its] case.”2 Now pending
before the Court are BCBG‟s appeal from the District Court‟s judgment, and Urban
Outfitters‟ petition for attorneys‟ fees related to its previous appeal.
II. Discussion 3
We generally review a district court‟s award of “exceptional case” attorneys‟ fees
for an abuse of discretion, but we review under a plenary standard a district court‟s
interpretation of “the scope and meaning of the term „exceptional‟” as used in section
35(a) of the Lanham Act. Securacomm Consulting, Inc. v. Securacom, Inc., 224 F.3d
273, 279 (3d Cir. 2000); see also Ferrero U.S.A., Inc. v. Ozak Trading, Inc., 952 F.2d 44,
48 (3d Cir. 1991).
A. Appeal of “Exceptional Case” Award of Attorneys’ Fees
We find that the District Court, in its well-reasoned opinion on remand, did not
abuse its discretion nor commit any error of law when it awarded Urban Outfitters
“exceptional case” attorneys‟ fees under section 35(a) of the Lanham Act, 15 U.S.C. §
2The District Court also sanctioned BCBG in the sum of $5,000 for asserting
“non-responsive and previously rejected arguments . . . [that] extended this litigation
unduly” in briefing on the amount of attorneys‟ fees Urban Outfitters incurred during the
litigation.
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The District Court had subject matter jurisdiction under 15 U.S.C. § 1121 and 28
U.S.C. §§ 1331, 1338(a), as Urban Outfitters claimed trademark infringement under 15
U.S.C. §§ 1114, 1125. Pursuant to 28 U.S.C. § 1291, this Court has jurisdiction to hear
this appeal.
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1117. Pursuant to section 35(a), a court may award attorneys‟ fees to the “prevailing
party” in “exceptional cases,” such as where the infringement was intentional, see
Ferrero, 952 F.2d at 48, or where the losing litigant has committed some other culpable
conduct, for instance, misconduct during the course of litigation, see SecuraComm, 224
F.3d at 282. See generally Green v. Fornario, 486 F.3d 100, 103-04 (3d Cir. 2007).
The record of BCBG‟s “chicanery” is well-established, as recognized by this
Court, Urban Outfitters, Inc. v. BCBG Max Azria Group, Inc., Nos. 07-3882, 08-1472,
08-1655, 2009 U.S. App. LEXIS 6586 (3d Cir. Mar. 30, 2009), and the District Court,
Urban Outfitters, Inc. v. BCBG Max Azria Group, Inc., No. CIV.A.06-4003, 2010 U.S.
Dist. LEXIS 19059, (E.D. Pa. Mar. 2, 2010); Urban Outfitters, Inc. v. BCBG Max Azria
Group, Inc., No. CIV.A.06-4003, 2008 U.S. Dist. LEXIS 7000 (E.D. Pa. Jan. 31, 2008).
The District Court‟s opinion – the subject of this appeal – carefully analyzed each
instance of litigation misconduct that this Court identified and also noted its previous
finding of BCBG‟s intentional infringement. We will affirm the District Court‟s findings
in all respects. Further, the District Court was well within its discretion in requiring
BCBG to pay 50% of Urban Outfitters‟ attorneys‟ fees under the “exceptional case”
provision of the Lanham Act and later in sanctioning BCBG for filing a non-responsive
brief that extended litigation unduly.
BCBG‟s arguments that the District Court misconstrued the limits of this Court‟s
remand and erred by failing to consider Urban Outfitters‟ alleged misconduct are
unavailing. We remanded this case for the District Court to address an award of
“exceptional case” attorneys‟ fees in light of misconduct that it had not explicitly
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addressed in ruling on that issue in the first instance. We explicitly left open whether an
examination of that misconduct would support an award of “exceptional case” attorneys‟
fees. Urban Outfitters, Inc., 2009 U.S. App. LEXIS 6586, at *4 n.3 (“In remanding for
further consideration of „exceptional case‟ fees, we do not suggest a particular outcome
must result.”). The District Court considered the specific instances this Court had noted,
and found in fact that such misconduct qualified for an award of attorneys‟ fees. The
District Court, therefore, properly interpreted the scope of remand. We also reject
BCBG‟s argument that the District Court was required to address whether instances of
Urban Outfitters‟ purported misconduct precluded an award of “exceptional case”
attorneys‟ fees to Urban Outfitters. BCBG‟s allegations of misconduct are not supported
by the record and, despite extensive litigation on the question of attorneys‟ fees, were not
presented in any detail to the District Court.
B. Petition for Attorneys’ Fees on Appeal
We will grant in part Urban Outfitters‟ petition for attorneys‟ fees from the first
appeal on the same basis given by the District Court in finding that BCBG‟s conduct was
“exceptional” for purposes of section 35(a) of the Lanham Act, 15 U.S.C. § 1117. See
Urban Outfitters, Inc., 2010 U.S. Dist. LEXIS 19059, *3-11. When it comes to awarding
attorneys‟ fees on appeal under 15 U.S.C. § 1117, we agree with the First Circuit that
“[t]he case law in this area is very sparse.” Tamko Roofing Prods., Inc. v. Ideal Roofing
Co., Ltd., 294 F.3d 227, 230 (1st Cir. 2002). In the dearth of precedent on this point, we
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also find instructive the several factors the First Circuit weighs in determining whether to
grant attorneys‟ fees in such a case:
(1) whether the appeal was on issues different from those that caused the
trial court to find an “exceptional case”; (2) the relative strengths or
weaknesses of the appellate issues; and (3) the extent to which the appeal
can be said to have prolonged, without adequate justification, a particularly
bad “exceptional case.”
Id. at 230.
Based on the totality of these factors and in light of the instances of intentional
infringement and litigation misconduct previously cited by this Court and the District
Court, we conclude that BCBG is to pay Urban Outfitters 50% of Urban Outfitters‟
attorneys‟ fees for its previous appeal. See JCW Invs., Inc. v. Novelty, Inc., 509 F.3d 339,
342 (7th Cir. 2007) (awarding “exceptional case” attorneys‟ fees on appeal for “flagrant”
copyright infringement and “willful” trademark infringement); Comm. for Idaho’s High
Desert v. Yost, 92 F.3d 814, 825 (9th Cir. 1996) (awarding “exceptional case” attorneys‟
fees on appeal for intentional infringement).
In responding to Urban Outfitters‟ petition for attorneys‟ fees, BCBG failed to
raise any substantive ground in opposition to the petition. Instead, BCBG relied solely on
procedural arguments that Urban Outfitters‟ petition was untimely. As we have already
granted Urban Outfitters‟ motion to file a petition for attorneys‟ fees out of time and the
parties have fully litigated the issue of “exceptional case” attorneys‟ fees both before this
Court and the District Court, we find that additional briefing on whether to grant
“exceptional case” attorneys‟ fees on appeal would only unnecessarily prolong this case.
See Urban Outfitters, Inc. v. BCBG Max Azria Group, Inc., Order, Nos. 07-3882, 08-
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1472, 08-1655, 10-2922 and 10-3510 (3d Cir. Dec. 21, 2010) (Rendell, Weiss and Roth)
(granting motion to file petition for attorneys‟ fees).
IV. Conclusion
For the foregoing reasons, we will affirm the District Court‟s award of
“exceptional case” attorneys‟ fees and its subsequent sanction of $5,000 against BCBG.
We further award Urban Outfitters 50% of the attorneys‟ fees resulting from its previous
appeal (Nos. 07-3882, 08-1472, 08-1655) in this case. To determine the amount of this
award, we direct the parties to follow the procedure set forth in the instant Judgment. See
Vasquez v. Fleming, 617 F.2d 334, 336 (3d Cir. 1980) (supporting this Court‟s authority
to determine the amount of attorneys‟ fees on appeal).
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