Letter from AmeriKat: Urban Outfitters v BCBG - An 'exceptional case'

Last Monday the AmeriKat attended the London Citizens' Greener Planet Action Team and Oragnico's free screening of the Oscar-nominated documentary, Food Inc., as part of their initial launch of their noble new program on food waste, Plan Zheroes (Note: there is a logo competition for anyone interested!). The initiative is to provide and increase access to food that would otherwise be thrown away to the thousands of Londoners (some of whom may even may be your next door neighbors) suffering from food poverty - an initiative she urges many to get involved in. The AmeriKat suggests that if you have not seen Food, Inc., you must. Although intellectual property and media lawyers come off the worse for wear (i.e., Monsanto's patent wars and food libel laws), it is an eye-opening film that Patrick Holden (director of the Soil Association), told the audience he had seen 7 times. The AmeriKat, although not a general fan of chickens when alive given her Kat tendencies, is now after watching the film taking an extra 30 minutes in Waitrose determining where the chickens came from before they ended up in her food bowl. (picture, top left - the closest the AmeriKat will ever be to being chicken)

"Do you have no sense of decency, sir?" - BCBG attorneys ask on award of costs

Someone who was also determining where something came from, this time in the field of costs, was Judge Michael Baylson of the US District Court of Pennsylvania who two weeks ago awarded the youthful lifestyle store, Urban Outfitters, $5,000 in sanctions in addition to $1.34 million in lawyers' fees in the company's trade mark suit against BCBG Max Azria. In making the award, the Judge held that BCBG's conduct during trial dragged the litigation out for far too long. In 2006, Urban Outfitters alleged that BCBG had infringed its mark "FREE PEOPLE" by their use of "TRUE PEOPLE". The FREE PEOPLE mark had been used by Urban Outfitters since 1970. In 2007, the district court granted Urban Outfitters a permanent injunction against BCBG. A district appeals court then upheld the lower court's finding last year and dismissed BCBG's attempt to cancel Outfitter's mark.

The case was remanded back to the lower court for the judge to determine whether this was an 'exceptional case' where attorney's fees should be awarded. Readers may know, that in the US the general principle is that each party bears its own costs. However, section 1117(a)(3) of the Lanham Act provides an exception that states that the "court in exceptional cases may award reasonable attorney fees to the prevailing party." 'Exceptional cases' is not defined in the statute but the various US Circuits have developed tests of when a case is exceptional, usually with benchmarks such as the defendant's wilful infringement coupled with pre-trial or trial bad faith conduct, blatant wilful trade mark infringement or fraudulent litigation conduct.

With the defendant's liability already decided and the case remanded back, the case turned to one only of costs, with Urban Outfitters requesting sanctions following their attorneys Drinker Biddle alleging that BCBG's key witnesses made misrepresentations to the court, referring to "BCBG's chicanery", and alleging general "litigation misconduct" by the other side. Judge Baylson attempted to find a half-way approach by finding one BCBG executive witness was not credible, but that this was not the fault of BCBG's lawyers. Because of this limited finding of misconduct, he therefore awarded Urban Outfitters half of its fees and costs in the substantive litigation but did not award any costs for the appeal. The judge wrote:

"The advocacy of counsel in this case on both sides was at a high level, both in terms of legal work and vocal exuberance. The record will disclose numerous verbal attacks by the lawyers on each other as well as on their parties' positions....It may be fairly said that some of the conduct described above constitutes 'litigation misconduct,' [but] the court does not find that any of defendants' trial counsel acted improperly or unethically."

But BCBG lawyers protested some more arguing that Drinker Biddle's fees should be disallowed due to their own misconduct. Drinker then asked Judge Baylson to sanction BCBG for making this protest in bad faith with an award of its fees for the post-remand stage of the litigation. If you are like the AmeriKat and are a fan of amusing legal filings, then she suggests you read this 15-page gem from BCBG's attorneys, Pepper Hamilton. Not only does it start from the famous quote from Joseph Welch to Senator McCarthy it then starts to list the various Amendments that Dinker Biddle are alleged to be disregarding in their applications for costs - 5th, 14th and wait for it, the 1st! An entertaining read although it may be, the Judge was not amused and criticized the response for it not actually responding to Drinker's fee request.

Surely having enough of the dramatic antics of counsel, over a week ago Judge Baylson ordered that that Drinker's full attorney fee request be awarded plus the additional $5,000 for the most recent costs round. He stated:

"The court finds that the non-responsive and previously rejected arguments made again by defendants [have] extended this litigation unduly, caused the court to spend time on irrelevant matters, and warrant an additional sanction against defendants."

But it may not be over. According to Forbes, M. Kelly Tillery of Pepper Hamilton, BCBG's law firm stated:

“With respect, the judge just got it wrong. It happens. That's why there is a court of appeals.”

This case is a good lesson that in a trade mark battle the fun does not always stop at the determination of the substantive legal merits. With the somewhat increasing trend of courts awarding the other side's costs in 'exceptional cases' (both trade mark and patent alike), litigation misconduct and defendant's applications made in bad faith are to be avoided at all costs. That, and try not to annoy the judge too much with litigation antics otherwise you may find yourself in BCBG's position and see your bill for the other side's costs double.

Other news update: For weekly readers, the AmeriKat wrote about the biggest US news of the week on Thursday in the Viacom and Premier League v Google/Youtube litigation here, which saw Judge Stanton award summary judgment in favor of Google. The AmeriKat is also expecting Bilski tomorrow (but don't hold your breath).