IP Law Daily, TRADEMARK—D.S.C.: Dispute between Monster Daddy and Monster Cable was not exceptional case, (Jun 23, 2014)

By Peter Reap, J.D., LL.M.

Trademark and breach of contract litigation between Monster Daddy and Monster Cable Products, Inc., was not “exceptional” for purposes of Sec. 35(a) of the Lanham Act, the federal district court in Greenville, South Carolina, has decided (Monster Daddy v. Monster Cable Products, Inc., June 19, 2014, Lewis, M.). Therefore, Monster Cable was not entitled to an award of attorney fees and costs in litigating the trademark issues in the dispute. However, as the prevailing party on the contract claims at issue, Monster Cable was entitled to fees and costs incurred in connection with those claims.

To aid the court in determining the appropriate award of fees to which Monster Cable was entitled as the prevailing party on its breach of contract claims, Monster Cable was directed to re-calculate and re-submit its summary charts outlining the fees and costs with litigating the breach of contract claims but reflecting the hourly rates of $330 for attorneys and $150 for paralegals that the court deemed appropriate.

Background. Monster Daddy is the owner of the MONSTER and MONSTER ENGINEERING trademarks associated with various industrial, commercial, and household cleaners, waxes, and adhesives. Around 2000, Monster Cable began producing MONSTER SCREENCLEAN, an electronics screen cleaning product.

In 2007, the parties resolved a previous action, Monster Daddy LLC v. Monster Cable Products, Inc., CA No. 6:06-293-HMH, by entering into a Settlement Agreement. In that Settlement Agreement, Monster Cable agreed to recognize Monster Daddy’s rights to the MONSTER trademark in connection with various types of products, including waxes and cleaners, along with other goods. Also granted to Monster Daddy was the right to extend its trademark into the natural zone of expansion for its various goods and services. In return, Monster Daddy expressly relinquished any claim it had to the MONSTER mark in connection with cleaners for consumer electronics and electronic accessories.

In this case, Monster Daddy, a manufacturer and seller of industrial, commercial, and household cleaning products under the mark MONSTER, alleged that Monster Cable’s use of the trademarks MONSTER and MONSTER ENGINEERED AND MADE IN THE USA in connection with Monster Cable’s WEST COAST CUSTOMS BY MONSTER car care products were likely to cause consumer confusion Monster Cable moved for summary judgment in this matter on June 11, 2012. On July 2, 2013, this Court issued an opinion and order granting, upon reconsideration, summary judgment in favor of Monster Cable on Monster Daddy’s breach of contract claims as well as Lanham Act and related claims concerning Monster Cable’s Screen Clean products. On September 30, 2013, a court order resolved the parties’ remaining claims on the merits in favor of Monster Cable.

Breach of contract claims. The Settlement Agreement provides for the recovery of reasonable attorney fees and costs by the prevailing party “in the event of any breach of [the] Agreement.” Monster Daddy did not specifically dispute Monster Cable’s entitlement to attorney fees pursuant to the Settlement Agreement, and instead focused its arguments on whether this case is exceptional under the Lanham Act and the overall reasonableness of the fee request.

Here, the court agreed that Monster Cable was the prevailing party on the breach of contract claims. The court ultimately granted Monster Cable summary judgment on Monster Daddy’s breach of contract claims based on a lack of evidentiary proof as to damages attributable to any alleged breach of the Settlement Agreement. Monster Cable also prevailed at trial on its breach of contract counterclaim. Thus, Monster Cable was entitled to fees and costs for the breach of contract claims, the court held.

Lanham Act claims. Monster Cable argued that this was an “exceptional case” as contemplated by the statute, maintains that it has “proven that Monster Daddy’s conduct, as a whole, was highly prejudicial and done in bad faith,” and as evidence pointed to Monster Daddy’s litigation tactics, purported meritless claims, failure to comply with the terms of the Settlement Agreement, and willful and deliberate conduct in bad faith. Monster Daddy argued that this case was not exceptional under the Lanham Act and characterized the action as a simple and non-malicious disagreement over the interpretation of a settlement contract.

Monster Cable alerted this Court to a recent and relevant Supreme Court case which states that the determination of whether a case is “exceptional” in these instances is a case-by-case exercise of the district court’s discretion in consideration of the totality of the circumstances, and subject to a preponderance of the evidence standard. Octane Fitness, LLC v. Icon Health & Fitness, Inc., (Apr. 29, 2014).

Even applying the flexible standard set forth in Octane Fitness, the case at bar was not an exceptional case warranting the imposition of attorney’s fees and costs, the court ruled. This case was not a “standout” from others with respect to the substantive strength (or lack thereof) of Monster Daddy’s litigating position after considering both the governing law and facts of the case; or with respect to the unreasonableness of the manner in which this case was litigated.

Although the court had made a finding as to the bad faith nature of Monster Daddy’s conduct relative to discovery, the court declined to use that order and those proceedings as further proof of any bad faith or unreasonable conduct on the part of Monster Daddy as to the case in its entirety and for the purpose of awarding fees under the Lanham Act. To the extent Monster Cable contended that an award of attorney’s fees under the Lanham Act was appropriate based on the discovery-related conduct of Monster Daddy during the course of this litigation, the court had already addressed the behavior and made an award.

Amount of the award. Monster Cable sought its reasonable attorney’s fees and costs in the amount of $2,323,259 for its success. To determine whether the requested amount was reasonable, the court applied the “lodestar” formula and should multiply the number of hours reasonably expended by counsel by a reasonable hourly rate. In determining reasonableness, the court analyzed the twelve factors set forth in Barber v. Kimbrell’s, Inc., 577 F.2d 216 (4th Cir. 1978).

The balance of the relevant Barber factors weighed in favor of reducing the requested hourly rates to $330 for attorneys and $150 for paralegals, the court held. The court previously addressed attorney’s fees in this matter in conjunction with a discovery sanction and found the appropriate hourly rate for the attorneys in this case to be $330 per hour. Having considered the arguments of the parties and the record, the court applied the same hourly rate to the instant petition. This is the hourly rate of the special counsel who did significant work on the case and it was consistent with the court’s knowledge of hourly rates for other high level attorneys in the community. This rate also took into account counsel’s expertise and experience in the field of intellectual property and litigation.

It was appropriate to cut the requested paralegal rate from $190 to $150. A paralegal rate of $150 was recently approved in another case in this district and this rate was more in line with the going rates for work done by paralegals in this district.

Monster Cable sought $2,323,259 in attorney fees and costs. Of this total, Monster Cable contended that $435,959 in attorney fees and costs were expended on defending against Monster Daddy’s breach of contract claims. The court received in-camera, unredacted copies of invoices and summary charts reflecting Monster Cable’s fees and expenses to aid the court in making a further assessment of the appropriateness of the time billed in this matter. This breakdown of attorney time among the various claims and defenses helped the court to better adjudicate the fee petition to award attorney’s fees and costs on the breach of contract claims only.

Nevertheless, to further aid the court in finalizing its ruling, Monster Cable’s counsel was asked to re-calculate and re-submit summary charts outlining the fees and costs associated with litigating the breach of contract claims but should calculate the hours expended based on the rates of $330 and $150 and should also specify the number of attorney and paralegal hours for which it seeks fees. Upon receipt and review of the revised fee statement, this Court would briefly address the need for any further deductions, if any are warranted, and would enter a final order on the motion. In addition, because Monster Cable submitted a bill of costs, Monster Daddy would have 14 days from the date of this Order to respond. The court would then make a ruling or request further evidence or briefing if it was warranted.

The case is No. 6:10-1170-MGL.

Attorneys: Alexander S. Kornfeld (Alex Kornfeld Attorney at Law LLC), and William SF Freeman (William SF Freeman Law Firm) for Monster Daddy LLC. Sara Centioni Kanos (Nexsen Pruet) for Monster Cable Products Inc., Monster LLC, and West Coast Customs Inc.

Companies: Monster Daddy LLC; Monster Cable Products Inc.; Monster LLC; West Coast Customs Inc.

Cases: Trademark SouthCarolinaNews