Exclaim Marketing, LLC v. DIRECTV, LLC

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2339
EXCLAIM MARKETING, LLC,
Plaintiff - Appellant,
v.
DIRECTV, LLC,
Defendant – Appellee,
and
DIRECTV OPERATIONS, LLC; DIRECTV, INCORPORATED,
Defendants.
No. 15-2399
EXCLAIM MARKETING, LLC,
Plaintiff – Appellee,
v.
DIRECTV, LLC,
Defendant – Appellant,
and
DIRECTV, INCORPORATED; DIRECTV OPERATIONS, LLC,
Defendants.
Appeal from the United States District Court for the Eastern
District of North Carolina, at Raleigh. Louise W. Flanagan,
District Judge. (5:11-cv-00684-FL)
Argued: October 28, 2016 Decided: December 29, 2016
Before SHEDD, AGEE, and WYNN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Joseph H. Nanney, Jr., MEYNARDIE & NANNEY, PLLC,
Raleigh, North Carolina, for Appellant/Cross-Appellee. Michael
Ernest Williams, QUINN EMANUEL URQUHART & SULLIVAN, LLP, Los
Angeles, California, for Appellee/Cross-Appellant. ON BRIEF:
Robert C. Van Arnam, WILLIAMS MULLEN, Raleigh, North Carolina,
for Appellee/Cross-Appellant.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
A jury awarded $760,000.00 to Exclaim Marketing, LLC,
(“Exclaim”) on its North Carolina Unfair and Deceptive Trade
Practices Act (“UDTPA”) claim against DirecTV, LLC, (“DirecTV”)
and $25,000.00 to DirecTV on its counterclaim for trademark
infringement. Thereafter, the district court granted DirecTV’s
motions for judgment as a matter of law on the UDTPA claim and
for an increased award of profits under the counterclaim.
Exclaim appeals both of these judgments. In addition, DirecTV
has filed a cross-appeal challenging the district court’s denial
of its motion for attorney’s fees. For the reasons that follow,
we affirm the judgments of the district court in their entirety.
I.
Exclaim is a nationwide marketing company that, in relevant
part, acts as a liaison between potential satellite television
consumers and satellite television retailers. It purchases
thousands of telephone numbers that are then included in
telephone directories under various listings. Often, a single
Exclaim telephone number will be used in multiple listings in
multiple directories. When a consumer calls the number, a
telemarketer at a call center asks some screening questions and
then forwards the call to one of its clients, a retailer of
satellite television. These retailer-clients pay Exclaim for
3
each forwarded call, regardless of whether the consumer
eventually purchases satellite television.
The retailers in turn have contracted with one or more
providers of satellite television to “market, advertise, and
promote” their services. Exclaim Mktg., LLC v. DirecTV, LLC
(Exclaim I), 134 F. Supp. 3d 1011, 1016 (E.D.N.C. 2015).
DirecTV and Dish Network are the leading satellite television
providers in the United States. DirecTV’s retailer contracts
regulate how its retailers operate and include a restriction
that DirecTV retailers can only contract with a third party –-
such as Exclaim –- with DirecTV’s written consent. DirecTV did
not provide written authorization for its retailers to contract
with Exclaim.
Although most of Exclaim’s telephone directory listings are
identified in generic terms such as “satellite television,” some
of its listings used the name “DirecTV” or a close variant such
as “Direct TV” or “DIRECTTV.” When DirecTV discovered the
unauthorized use of its name, the company concluded that was a
violation of its trademark. Accordingly, DirecTV hired an
outside company to investigate who owned the listings by calling
the numbers associated with them. In addition, one of DirecTV’s
employees also called some of the listings. At times, the
callers would give the intermediary telemarketer a false name as
part of their conversation. Once DirecTV identified Exclaim as
4
the owner of numbers tied to these allegedly infringing
listings, DirecTV contacted Exclaim and asked that Exclaim
coordinate to have the listings removed or renamed. Exclaim
took steps to remove some of the listings, but over the course
of several years DirecTV continued to identify unauthorized
listings owned by Exclaim using DirecTV’s name and its variants.
In 2011, Exclaim filed a lawsuit in North Carolina state
court against DirecTV alleging that it had violated the UDTPA,
N.C. Gen. Stat. § 75-1.1 et seq. On the basis of diversity
jurisdiction, DirecTV removed the case to the U.S. District
Court for the Eastern District of North Carolina and filed a
counterclaim against Exclaim alleging trademark infringement, in
violation of the Lanham Act, 15 U.S.C. § 1114. 1
At trial, Exclaim alleged UDTPA violations arising from
multiple practices, but the jury found that DirecTV only engaged
in one of them. Specifically, the jury found that DirecTV
“telephoned Exclaim Marketing, LLC’s call center over 175 times
over a six year period, at times using false names.” J.A. 1743.
It further found that this conduct proximately caused injury to
Exclaim and that Exclaim was entitled to damages in the amount
of $760,000.00.
1
Other claims and counterclaims made in the course of the
litigation were dismissed or otherwise resolved and are not at
issue in this appeal.
5
On DirecTV’s counterclaim, the jury found that Exclaim used
DirecTV’s “trademark or a misspelling of the trademark in
connection with the sale, offering for sale, distribution or
advertising of products or services,” and that it did so “in a
manner likely to cause confusion, mistake, or deception as to
the source, origin, affiliation, approval, or sponsorship” of
Exclaim’s goods or services. J.A. 1744. The jury specifically
found that Exclaim’s conduct was “undertaken with the intent to
confuse or deceive” and awarded DirecTV $25,000.00 for trademark
infringement. J.A. 1746.
The issues on appeal arise from the district court’s
rulings on three post-trial motions filed by DirecTV. First,
DirecTV renewed its motion for judgment as a matter of law on
Exclaim’s UDTPA claim, contending that its conduct did not
support a UDTPA claim as a matter of law. The district court
granted DirecTV’s motion, concluding that the phone calls to
Exclaim were not “in or affecting commerce,” nor did they
constitute an “unfair or deceptive” practice, both of which were
required to state a UDTPA claim. Exclaim I, 134 F. Supp. 3d at
1020-25. Second, DirecTV moved for an increased profits award
on its successful trademark infringement claim, contending that
$25,000.00 was inadequate to account for Exclaim’s wrongdoing.
The district court granted that motion as well, though it
awarded less than the amount DirecTV sought. The district court
6
awarded DirecTV $610,560.00 based on a calculation of the profit
Exclaim derived from each infringing number over the course of
Exclaim’s infringement. Exclaim Mktg., LLC v. DirecTV, LLC
(Exclaim II), No. 5:11-CV-684-FL, 2015 WL 5725692 (E.D.N.C.
Sept. 30, 2015). Third, DirecTV moved for statutory attorney’s
fees in light of its successful trademark infringement verdict.
The district court denied that motion, concluding no award of
attorney’s fees was warranted because this case did not meet the
statutory requirement of being “exceptional.” Exclaim Mktg.,
LLC v. DirecTV, LLC (Exclaim III), No. 5:11-CV-684-FL, 2015 WL
5725703 (E.D.N.C. Sept. 30, 2015).
Exclaim noted a timely appeal, as did DirecTV. We have
jurisdiction under 28 U.S.C. § 1291.
II.
This case presents three issues: (1) whether the district
court erred in granting DirecTV’s motion for judgment as a
matter of law on Exclaim’s UDTPA claim; (2) whether the district
court abused its discretion in increasing the jury’s award of
damages from $25,000.00 to $610,560.00 in profits arising from
DirecTV’s trademark infringement claim; and (3) whether the
district court abused its discretion in denying DirecTV’s motion
for statutory attorney’s fees as the prevailing party in the
trademark infringement claim. We address each issue in turn.
7
A. UDTPA Claim
In order to establish a claim under the UDTPA, Exclaim had
to demonstrate the following elements: “(1) that [DirecTV]
engaged in conduct that was in or affecting commerce, (2) that
the conduct was unfair or [deceptive], and (3) that [Exclaim]
suffered actual injury as a proximate result of [DirecTV’s]
deceptive statement or misrepresentation.” See ABT Bldg. Prods.
Corp. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 472 F.3d 99,
122 (4th Cir. 2006). 2 The “occurrence of the alleged conduct,
damages, and proximate cause are fact questions for the jury,”
but “whether [such] conduct was unfair or deceptive is a legal
issue for the court,” as is whether the conduct was “in or
affecting commerce.” Id. at 123; see also S. Atl. Ltd. P’ship
of Tenn., LP v. Riese, 284 F.3d 518, 534 (4th Cir. 2002); Sara
Lee Corp. v. Carter, 519 S.E.2d 308, 311 (N.C. 1999).
Consistent with these standards, the only issues the district
court submitted to the jury on the UDTPA claim were the
occurrence of the individual acts, proximate cause, and
injury/damages. Each of the jury’s findings was left intact by
the district court when it considered the purely legal issues on
2We have omitted internal quotation marks, alterations, and
citations here and throughout this opinion, unless otherwise
noted.
8
liability raised in DirecTV’s renewed motion for judgment as a
matter of law.
Consequently, we review the district court’s decision to
grant the motion for judgment as a matter of law de novo. Belk,
Inc. v. Meyer Corp., 679 F.3d 146, 164 (4th Cir. 2012) (stating
that questions of law surrounding a motion for judgment as a
matter of law following a jury trial are reviewed de novo while
the jury’s factual findings are reviewed under a more
deferential standard). Similarly, we apply the same de novo
standard in reviewing the district court’s interpretation of the
UDTPA. Id.
The unfair or deceptive conduct element of a UDTPA claim is
set out in the alternative, meaning that an act can be either
unfair or deceptive to satisfy this requirement. A practice is
“unfair” when “a court of equity would consider [it to be]
unfair,” S. Atl. Ltd. P’ship of Tenn., 284 F.3d at 535, i.e.,
“when it offends established public policy as well as when the
practice is immoral, unethical, oppressive, unscrupulous, or
substantially injurious to consumers,” id. at 536. A practice
is “deceptive” if it “has the capacity or tendency to deceive.”
Id. Under either category, “only practices that involve some
type of egregious or aggravating circumstances are sufficient to
violate the U[D]TPA.” Id. at 535.
9
Exclaim contends that DirecTV’s practice was unfair because
placing more than 175 calls to Exclaim was “unethical,
oppressive, and unscrupulous.” Opening Br. 17. Exclaim posits
that DirecTV did not adequately communicate with it to remedy
the problematic listings and questions why some of the calls
received were tied to generic listings if the sole purpose of
DirecTV’s calls was to investigate potential infringement.
Exclaim further contends that North Carolina recognizes that an
inequitable assertion of power can constitute an unfair
practice, and it asserts that is what occurred here given that
DirecTV’s size and resources dwarf Exclaim’s. We disagree.
The district court correctly held that the evidence does
not demonstrate that DirecTV’s conduct was egregiously or
aggravatingly unfair. As a reminder, the “practice” at issue is
DirecTV’s placing more than 175 phone calls over a six-year
period. Although the calls to Exclaim’s call centers were not
spread out evenly, that frequency represents roughly 2-3 calls
to Exclaim’s call center each month for six years. Put another
way, it equals roughly 0.002958% of Exclaim’s total volume of
calls. Exclaim I, 134 F. Supp. 3d at 1023.
It is questionable whether such a “practice” could ever be
considered “unfair” on its own. Cf. id. (“Without more factual
specificity in the jury’s verdict, it is impossible to glean any
unfairness from the simple fact of the telephone calls.”). But
10
the record eliminates any doubt. It is not unfair to Exclaim
that Exclaim’s own publicly available telephone listings led
DirecTV to call Exclaim’s call centers. This is especially true
given that DirecTV had a legitimate business purpose for placing
those calls due to its investigating who owned the phone numbers
associated with listings it reasonably believed infringed on its
trademark. Indeed, the reasonableness of its investigatory
method was admitted by Exclaim’s co-owner, who testified that if
he did not recognize a listing identified as “Exclaim,” he, too,
would call the number to determine who was associated with it.
As the district court noted, “The numbers were public[]ly
available and could have been called by anyone.” Id.
Exclaim emphasizes, as it did at trial, that some
unspecified number of calls DirecTV placed to its call center
were associated with generic listings. Even assuming that to be
the case, it does not render DirecTV’s conduct an “unfair
practice.” The record demonstrates that some numbers were
associated with both generic and infringing listings. Moreover,
at the time DirecTV called a listing, it had no way of knowing
that Exclaim owned the associated phone number, so there is no
evidence that DirecTV was targeting Exclaim by calling any
particular listing, whether it was generic or not. Lastly,
DirecTV’s employee testified that she would occasionally call
generic listings for business reasons unrelated to the
11
investigation, such as to identify a retailer’s ad that she did
not recognize in order to determine whether the retailer was in
compliance with the retailer’s contract. On this record, that
some unspecified number of phone calls may have been placed to
numbers linked solely to generic listings does not undermine the
conclusion that DirecTV’s investigative effort of placing more
than 175 calls to Exclaim’s call center over a six-year period
was not an unfair practice, let alone an egregious or
aggravating one.
Exclaim’s argument about DirecTV’s allegedly inadequate
communication to resolve the infringing listings misdirects
attention from the salient inquiry -- whether placing the phone
calls was an unfair practice. Again, until DirecTV placed the
phone calls, it could not tie Exclaim to any specific infringing
number because Exclaim was not identified on the listing. The
parties’ communications after a specific number had been tied to
Exclaim are immaterial to whether the practice of placing calls
in the first instance was unfair. More problematic for Exclaim,
however, is that for years and even after republication of
certain directories, DirecTV continued to find infringing
listings tied to Exclaim. And so long as the problem remained,
DirecTV acted fairly in calling those numbers to determine who
owned them.
12
While an inequitable assertion of power may be part of the
unfair-practice analysis in some cases, it is not at issue here.
The fact of a size disparity between companies, without more, is
not sufficient to demonstrate an unfair practice; rather, courts
examine what the actor did in combination with that size
disparity to conclude that the exertion of an inequitable
assertion of power was unfair. See, e.g., S. Atl. Ltd. P’ship
of Tenn., 284 F.3d at 540 (observing that “manipulations and
assertions of controlling influence” such as exploiting
contractual rights without providing compensation is “precisely
the kind of ‘inequitable assertion[]’ of power” that is an
unfair trade practice under the UDTPA). DirecTV may be a larger
business than Exclaim, but nothing in the record indicates that
this disparity enabled or contributed to the acts Exclaim
complains were unfair. As the district court concluded, “[n]o
superior degree of power or advantageous market position was
leveraged” when DirecTV called publicly available phone numbers
to determine who owned them. Exclaim I, 134 F. Supp. 3d at
1023.
The telephone calls also were not a “deceptive practice”
for UDTPA purposes. Yet again, there is nothing inherently
deceptive about the jury’s factual finding that DirecTV placed
the calls. Cf. id. at 1024 (“[T]he fact of the calls involve[d]
no deception.”). But even accepting that the premise of being a
13
potential consumer or the use of a false name was “deceptive,”
the record demonstrates that it was not egregiously or
aggravatingly deceptive. The DirecTV employee at issue
testified based on her past personal experience that she was
often stonewalled in her efforts to identify the owner of the
phone numbers she called. In particular, when she used her real
name to place calls, telemarketers would be uncooperative or
would be instructed to hang up when recognizing her name from
past calls. DirecTV’s use of the false name was thus
intrinsically linked to -- and an effective means of --
investigating the source of infringing listings. As such, it
did not constitute an egregiously or aggravatingly deceptive
practice.
For these reasons, the district court did not err in
concluding that DirecTV’s placing more than 175 calls over a
six-year period could not, as a matter of law, constitute an
unfair or deceptive trade practice under the UDTPA. As such,
DirecTV was entitled to judgment as a matter of law regardless
of the jury’s findings with respect to other elements of
Exclaim’s claim. 3
3
In light of this holding, we need not address the parties’
arguments concerning the district court’s additional grounds for
granting DirecTV’s motion, that the phone calls were not “in or
affecting commerce.”
14
B. Trademark Infringement Counterclaim
Exclaim separately contends the district court erred in
granting DirecTV’s post-judgment motion for increased profits on
its trademark infringement claim. To establish such a claim,
the Lanham Act provides that a plaintiff –- such as DirecTV –-
who establishes a violation of § 1114(1)(a) is entitled “to
recover (1) defendant’s profits, (2) any damages sustained by
the plaintiff, and (3) the costs of the action.” 15 U.S.C. §
1117(a) (emphasis added). The pertinent statute further
provides:
In assessing profits the plaintiff shall be required
to prove defendant’s sales only; defendant must prove
all elements of cost or deduction claimed. . . . If
the court shall find that the amount of the recovery
based on profits is either inadequate or excessive the
court may in its discretion enter judgment for such
sum as the court shall find to be just, according to
the circumstances of the case. Such sum . . . shall
constitute compensation and not a penalty.
Id.
This Court has previously recognized that the statute
“gives little guidance on the equitable principles to be applied
by a court in making an award,” and has “identified six factors
to guide the process” of “weigh[ing] the equities of the dispute
and exercis[ing] its discretion on whether an award is
appropriate and, if so, the amount thereof.” Synergistic Int’l,
LLC v. Korman, 470 F.3d 162, 174-76 (4th Cir. 2006). Those
factors are: “(1) whether the defendant had the intent to
15
confuse or deceive, (2) whether sales have been diverted, (3)
the adequacy of other remedies, (4) any unreasonable delay by
the plaintiff in asserting his rights, (5) the public interest
in making the misconduct unprofitable, and (6) whether it is a
case of palming off.” Id. at 175.
The district court granted DirecTV’s motion based on its
conclusion that the jury’s award of $25,000.00 was insufficient
in light of the infringement at issue. Under the statutory
burden-shifting analysis, the district court observed that
DirecTV satisfied its burden of proving Exclaim’s total profits,
thereby shifting to Exclaim the burden of parsing out its
profits that were unrelated to the infringement. Based on the
quite limited evidence put forward by Exclaim on that point, the
district court concluded it had failed to meet its burden to
distinguish between profits attributable to infringement and any
others. 4 Nonetheless, the court concluded that “[i]t would be
inequitable to award DirecTV the entirety of Exclaim’s profits
over the relevant period” because while Exclaim owned 6,000
4
In its reply brief, Exclaim argues DirecTV did not satisfy
this burden because it demonstrated total profits, while the
statute should be interpreted to require a plaintiff to show
profits relating to the infringing activity. Because that
argument is raised for the first time in the reply brief, we do
not consider it. See Cavallo v. Star Enter., 100 F.3d 1150,
1152 n.2 (4th Cir. 1996) (holding that "an issue first argued in
a reply brief is not properly before a court of appeals").
16
telephone numbers, only 159 were associated with an infringing
listing. Exclaim II, 2015 WL 5725692, at *4. Instead, the
court multiplied the 159 listings by the record evidence as to
the “average profit per month per phone number” (between $75.00
and $80.00 per telephone number) over the entire period during
which Exclaim was infringing DirecTV’s trademark. Id. Under
that calculation method, the district court awarded DirecTV
$610,560.00.
The district court also noted that such an increased
profits award was appropriate in light of the relevant
Synergistic factors. In particular, it found that Exclaim’s
conduct was willful, that injunctive relief did “not remedy
Exclaim’s usurpation of the good will associated with DirecTV’s
mark for the period at issue,” that DirecTV’s delay was
reasonable considering the period of investigation and
reconciliation, and that the jury’s award had not been adequate
to make future infringement unprofitable. Id.
The Court reviews the district court’s decision to increase
an award of profits for an abuse of discretion. Pac. Ins. Co.
v. Am. Nat’l Fire Ins. Co., 148 F.3d 396, 402 (4th Cir. 1998)
(citing Fed. R. Civ. P. 59(e)).
Exclaim contends the district court abused its discretion
because the record shows DirecTV suffered no harm from Exclaim’s
conduct and, in fact, profited because many of Exclaim’s
17
referrals to retailers resulted in new DirecTV customers.
Exclaim asserts that the Synergistic factors do not support the
increased award of profits because Exclaim did not act in bad
faith, it did not divert sales, an injunction against using
DirecTV’s mark adequately protects DirecTV’s interests, and
there is no evidence of palming off. In addition, Exclaim
points to DirecTV’s delay in filing suit, a period of
approximately four years from when it first learned of
infringing listings. Lastly, Exclaim argues that anything more
than the jury’s nominal damages award constitutes a windfall and
unlawfully punishes Exclaim rather than compensates DirecTV.
We conclude the district court did not abuse its discretion
in granting DirecTV’s motion for increased profits. Many of
Exclaim’s arguments ignore the purpose of prohibiting trademark
infringement and the Lanham Act’s plain language, which allows
prevailing plaintiffs to recover not just an amount they
suffered in actual damages, but also a share of the defendants’
profits from the infringement. Cf. 15 U.S.C. § 1117(a). The
district court has broad discretion to award such relief in
order to achieve an equitable result. E.g., Burndy Corp. v.
Teledyne Indus., 748 F.2d 767, 772 (2d Cir. 1984).
Here, the district court did not abuse its discretion in
concluding that the Synergistic factors favored an increased
profits award. For example, the jury specifically found that
18
Exclaim intended to confuse or deceive consumers by using
DirecTV’s trademark. See Synergistic, 470 F.3d at 175 (stating
a defendant’s “intent to confuse or deceive” can support a
profits award). In addition, an injunction did not provide any
relief for Exclaim’s past wrongdoing and would also be unlikely
to adequately deter future misconduct given the scope of
Exclaim’s past misconduct and its proven profitability for
Exclaim. Cf. id. at 176. The district court also reasonably
rejected Exclaim’s argument that DirecTV unreasonably delayed
filing suit and thus should not be entitled to increased
profits. In so doing, the court observed that DirecTV undertook
an extensive investigation, attempted to resolve the matter
without litigation, and had to wait for new telephone
directories to be released in order to determine whether
infringement continued. Cf. id. The district court thus not
only relied on the proper analysis for determining whether to
award increased profits, but also did not abuse its discretion
in weighing the relevant circumstances and concluding that
increased profits were appropriate. Cf. id.
In addition to challenging any increase from the jury’s
award for Exclaim’s infringement, Exclaim also argues that the
record does not support the district court’s decision to award
profits in the amount of $610,560.00. It contends the evidence
presented at trial did not show that Exclaim owned 159
19
infringing phone numbers, but only nine numbers, and that the
district court relied on evidence that was not in the record to
reach the higher number. In addition, Exclaim contends the
record does not show that it owned all of those numbers for the
entire period of time used to calculate the profits award. As
such, Exclaim maintains that any increased profits award should
be substantially reduced.
We have reviewed the record and conclude that no reversible
error occurred. Three exhibits that were admitted at trial
support the district court’s attribution of 159 infringing
numbers to Exclaim: an email in which Exclaim admitted to owning
twenty-nine unique infringing numbers and two spreadsheets
DirecTV’s agent prepared compiling the results of its
investigation, in which an additional 130 unique numbers were
linked to Exclaim. It does appear that not all of these
telephone numbers were traced to infringing listings for the
entire period for which the district court awarded profits.
Nonetheless, we conclude that the district court did not err in
arriving at its final profits award.
As already noted, the statute authorizes the district court
to exercise broad equitable discretion in arriving at an
appropriate award. Coupled with this discretion is the fact
that Exclaim bore the burden of showing why certain of its
profits should be excluded from an award, yet it failed to
20
present relevant evidence for the district court to use in
considering an appropriate profits award. Once DirecTV
satisfied its statutory burden of demonstrating Exclaim’s
profits for the relevant period of time, the burden shifted to
Exclaim to show what amount of profits were not related to its
infringement. See 15 U.S.C. § 1117(a). Here, Exclaim made no
attempt to meet that burden. Despite Exclaim’s failure on this
point, the district court went out of its way to fashion a more
equitable result for both parties based on Exclaim’s average
profit per month per phone number. Its calculation was a
reasonable estimation of the profits Exclaim unjustly received,
and any minor variation in the precise number of lines per month
does not make the district court’s award an abuse of discretion.
Indeed, the district court indicated that Exclaim’s profits
relating to the infringing lines might have been even higher.
Exclaim II, 2015 WL 5725692, at *4 (“[DirecTV] is entitled to
Exclaim’s profits at least in the amount of $610,560.00.”
(emphasis added)). Given these circumstances, greater precision
in arriving at the exact award amount was not required. See,
e.g., Banjo Buddies, Inc. v. Renosky, 399 F.3d 168, 177-78 (3d
Cir. 2005) (approving the district court’s attempt to estimate
profits where it was not clear what share came from the wrongful
conduct versus other legitimate business conduct because the
calculation arrived at an appropriate ballpark figure).
21
C. Attorney’s Fees Cross-Appeal
We next turn to DirecTV’s cross-appeal, in which it argues
the district court erred in denying its motion for attorney’s
fees. The Lanham Act authorizes a district court to award
“reasonable attorney fees to the prevailing party” in
“exceptional cases.” 15 U.S.C. § 1117(a). In sum, DirecTV
contends that this case meets that “exceptional” standard
because the jury specifically found that Exclaim “acted with
‘the intent to confuse or deceive.’” Response/Opening Br. 60.
We review the district court’s decision on the award of
Lanham Act attorney’s fees for an abuse of discretion. Newport
News Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d 423,
441 (4th Cir. 2011). That review leads us to conclude the
district court properly applied the exceptional case analysis
set out in Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
134 S. Ct. 1749 (2014), and expounded upon by this Court in
Georgia-Pacific Consumer Prods. LP v. von Drehle Corp., 781 F.3d
710 (4th Cir. 2015).
In Octane Fitness, the Supreme Court analyzed the same fee
award standard applicable here albeit under the Patent Act. 134
S. Ct. at 1752. The Supreme Court held that the ordinary
meaning of “exceptional” indicated that fees should only be
awarded in a case “that stands out from others with respect to
the substantive strength of a party’s litigating position
22
(considering both the governing law and the facts of the case)
or the unreasonable manner in which the case was litigate.”
Factors to be considered include “frivolousness, motivation,
objective unreasonableness (both in the factual and legal
components of the case) and the need in particular circumstances
to advance considerations of compensation and deterrence.” Id.
at 1756 & n.6. Furthermore, the Supreme Court indicated that
district courts should “determine whether a case is
‘exceptional’ in the case-by-case exercise of their discretion,
considering the totality of the circumstances.” Id. at 1756.
This Court applied the Octane Fitness principles to a fee
award under § 1117(a) of the Lanham Act in Georgia-Pacific.
There, the Court took care to distinguish that the “exceptional”
case required more than just volitional conduct, else “every
Lanham Act case would qualify as ‘exceptional’ unless the
defendant could show that it unintentionally or mistakenly
performed the actions later found to be a violation of the Act.”
781 F.3d at 720. Instead, following Octane Fitness, the Court
set out three circumstances when, “in light of the totality of
the circumstances,” a case may be deemed “exceptional” such that
an award of fees is appropriate. Those circumstances are:
(1) there is an unusual discrepancy in the merits of
the positions taken by the parties, based on the non-
prevailing party’s position as either frivolous or
objectively unreasonable; (2) the non-prevailing party
has litigated the case in an unreasonable manner; or
23
(3) there is otherwise the need in particular
circumstances to advance considerations of
compensation and deterrence.
Id. at 721.
Relying on Octane Fitness and Georgia-Pacific, the district
court concluded this case was not “exceptional.” Exclaim III,
2015 WL 5725703, at *6-*8. First, it found that Exclaim’s
position was neither frivolous nor objectively unreasonable,
particularly in light of the competing legal arguments and facts
presented at trial. Second, it found Exclaim did not
unreasonably litigate the case, pointing out as an example that
Exclaim did not re-litigate issues previously decided. Lastly,
the court found that the increased profits award had adequately
compensated DirecTV and that a fee award was not needed for
deterrence.
The district court did not abuse its discretion in so
holding. Indeed, DirecTV does not take issue with any of the
district court’s findings, nor does it otherwise engage with the
analysis set out in Octane Fitness and Georgia-Pacific.
Instead, it argues that the district court should not have used
that analysis and should have relied on pre-Octane Fitness
Fourth Circuit case law stating that fees may be awarded where a
defendant willfully infringes a plaintiff’s trademark. See
Georgia-Pacific, 781 F.3d at 719-20. But in Georgia-Pacific, we
recognized that Octane Fitness modified our prior analysis and
24
“appl[ied] the Octane Fitness standard when considering the
award of attorneys fees under § 1117(a).” Id. at 721. In doing
so, we set out the three-part test the district court used in
deciding whether to award fees in this case. Id. at 719-21.
Contrary to DirecTV’s contention, nothing in either of
those cases suggests that the Octane Fitness analysis should not
also apply when a plaintiff successfully prosecutes an
infringement claim. While the factual background for Octane
Fitness may have been a prevailing defendant, nothing limits the
overarching objectives identified by the Supreme Court to that
context. Common sense confirms that both parties are equally
capable of taking unreasonable positions or litigation
strategies, just as the particular facts of a case decided in
either party’s favor may warrant compensation or deterrence.
While willfulness remains part of the totality of the
circumstances informing the analysis, after Octane Fitness and
Georgia-Pacific, it does not end there as DirecTV would have us
hold. In short, even assuming Exclaim’s infringement was
willful, that is no longer sufficient to show that a case is
“exceptional.”
The district court understood and applied the proper test
in determining that this case does not satisfy the applicable
standard. Inasmuch as DirecTV does not otherwise challenge the
basis for the district court’s denial of its motion, the
25
district court did not abuse its discretion in denying DirecTV’s
motion for attorney’s fees.
III.
For the aforementioned reasons, the judgments of the
district court are
AFFIRMED.
26