IP Law Daily, TRADEMARK—M.D. Fla.: Lanham Act attorney fees of more than $1.6M reasonable for hours expended on intertwined IP claims, (Jun 24, 2022)

By Patricia K. Ruiz, J.D.

The magistrate judge properly found that hours spent defending the action cannot be feasibly allocated to a particular claim.

In a design patent infringement, copyright infringement, and trade dress infringement suit, brought by Lanard Toys Limited—the creator of a chalk holder toy designed to look like a no. 2 pencil—against Toys “R” Us-Delaware, Inc., and other defendants, the federal district court in Jacksonville has found that a magistrate judge’s recommended award of attorney fees and costs of over $1.6 million under the Lanham Act and the Florida Deceptive and Unfair Trade Practices Act was proper and should be adopted. The court held that the magistrate judge properly found that the claims were intertwined and shared a common core of facts and related legal theories, making the fee reasonable for all hours expended on the Lanham Act claims (Lanard Toys Limited v. Toys ''R'' US-Delaware, Inc., June 22, 2022, Howard, M.).

Background. Lanard Toys Limited—the creator of a chalk holder toy designed to look like a no. 2 pencil—filed suit against Toys “R” Us-Delaware, Inc., and other defendant companies alleging copyright infringement, design patent infringement, trade dress infringement under the Lanham Act, and unfair competition under the Lanham Act, the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), and Florida common law. In March 2019, the court granted summary judgment to the defendants on all of Lanard’s claims. The court found that Lanard’s design patent was invalid because it claimed functional elements and Lanard’s copyright was similarly invalid because covered utilitarian features. Lanard’s claim of common law trade dress protection for its chalk holder was dismissed because Lanard failed to show either that the trade dress was nonfunctional or that it had acquired secondary meaning.

After prevailing, the defendants moved for attorney fees under the Copyright Act, the Patent Act, the Lanham Act, and the FDUPTA. A magistrate judge recommended that the court enter an order determining that the defendant companies were entitled to an award of fees under the Lanham Act and FDUTPA, but not under the Copyright Act or Patent Act. In her reports, the magistrate judge recommended fees of $1,630,203.54 and addressed the allocation of time between the claims for which the defendant companies were entitled to fees and those for which she believed they were not.

De novo review. The Federal Rules of Civil Procedure allow a court to accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge, determining de novo any part of the disposition that has been properly objected to. The court considered whether the award of joint fees was appropriate under the Lanham Act.

Lanard argued that the judge failed to apply the correct standard, but the court found this contention to be without merit. The Eleventh Circuit previously explained that if compensable and non-compensable claims are intertwined and share a common core of facts or a related legal theory, then a reasonable fee is allowed as to all hours expended on both sets of claims. In the instant case, the magistrate judge reviewed the applicable legal authority and determined that the claims were intertwined and shared a common core of facts and related legal theories.

The court held that Lanard’s suggestion that a further finding was required was without merit. Given the common facts and legal theories underlying all four claims, some—but not all—of the time spent defending the action cannot be feasibly allocated to any particular claim. Upon independent review, the magistrate judge found that three percent of the unallocated joint fees were more properly attributable to the copyright or patent claims alone. However, rather than exclude entries on a line-by-line basis, the magistrate judge opted to account for the allocation issues in her selection of a 30 percent reduction across the board. The court rejected other proposed methodologies for determining the proper allocation of fees.

The court also held that a significant fee is warranted and finding an award of $1,630,203.54 was a reasonable attorney fee award for the Lanham Act claims in this case.

The case is No. 3:15-cv-00849-MMH-PDB.

Attorneys: Eric R. Thompson (Gordon Rees Scully Mansukhani LLP) for Lanard Toys Ltd. Frederick Dyer Page (Holland & Knight, LLP) and Lewis Anten (Lewis Anten, PC) for Dolgencorp, LLC, Toys "R" Us-Delaware, Inc. and JA-RU, Inc. John R. Catizone (Litchfield Cavo, LLP) and Richard H. Nicolaides, Jr. (Nicolaides Fink Thorpe Michaelides Sullivan, LLP) for First Mercury Insurance Co.

Companies: Lanard Toys Ltd.; Dolgencorp, LLC; Toys "R" Us-Delaware, Inc.; JA-RU, Inc.; First Mercury Insurance Co.

Cases: Copyright Patent Trademark FloridaNews GCNNews