Appellate Case: 22-4020 Document: 010110959318 Date Filed: 11/28/2023 Page: 1 FILED United States Court of Appeals UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT November 28, 2023 _________________________________ Christopher M. Wolpert Clerk of Court ALFWEAR, INC.,
Plaintiff - Appellee,
v. No. 22-4020 (D.C. No. 2:17-CV-00936-TC) MAST-JAEGERMEISTER US, INC., (D. Utah)
Defendant - Appellant. _________________________________
ORDER AND JUDGMENT* _________________________________
Before HOLMES, Chief Judge, HARTZ, and MORITZ, Circuit Judges. _________________________________
After the district court granted summary judgment for Mast-Jaegermeister US,
Inc. (MJUS) on Alfwear Inc.’s trademark infringement and unfair competition
claims, MJUS moved for an award of prevailing-party attorney’s fees and costs under
the Lanham Act, 15 U.S.C. § 1117(a), and Rule 54(d) of the Federal Rules of Civil
Procedure. The district court denied the motion, concluding the case was not
* After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. It may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1. Appellate Case: 22-4020 Document: 010110959318 Date Filed: 11/28/2023 Page: 2
sufficiently exceptional to warrant an award under § 1117(a). MJUS appeals and,
exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
I. Background
The factual and procedural background of the case is described in detail in
our decision affirming the grant of summary judgment. See Alfwear, Inc. v.
Mast-Jaegermeister US, Inc., No. 21-4029, 2023 WL 5765891, at *1-3 (10th Cir.
Sept. 7, 2023) (Alfwear I). We do not repeat that information here, but provide the
following additional background information regarding the motion for fees and costs.
Following entry of judgment, MJUS filed its motion along with a bill of costs.
The district court clerk entered an order for taxable costs, and the motion for
attorney’s fees and nontaxable costs proceeded to briefing. After a magistrate judge
entered an order purporting to deny the motion, MJUS filed objections to the order
and a notice of appeal to this court. We abated the appeal pending the district court’s
decision on the objections. The district court treated the magistrate judge’s order as a
report and recommendation and made a de novo determination of the portions of the
order to which MJUS objected. See 28 U.S.C. § 636(b)(3); Fed. R. Civ. P. 72(b)(3);
cf. Colo. Bldg. & Constr. Trades Council v. B.B. Andersen Constr. Co., 879 F.2d
809, 811 (10th Cir. 1989) (recognizing that dispositive post-judgment matters may be
assigned to magistrate judges under § 636(b)(3), subject to de novo review). The
district court adopted the magistrate judge’s recommendation and denied the motion.
We lifted the abatement and dismissed the appeal of the magistrate judge’s order for
lack of jurisdiction because the order was not a final order by the district court and
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was not directly appealable. See Alfwear, Inc. v. Mast-Jaegermeister US, Inc.,
No. 21-4123, 2022 WL 1164853, at *1 (10th Cir. Mar. 24, 2022).
MJUS then filed this appeal from the district court’s order. It challenges the
order on two grounds. First, it argues that the court abused its discretion by denying
prevailing-party attorney’s fees under the Lanham Act. Second, it argues that the
court erred by refusing to award additional costs under Rule 54.
II. Denial of Attorney’s Fees
A. Standard of Review
“We review orders granting or denying attorney’s fees under the Lanham Act
for abuse of discretion.” Derma Pen, LLC v. 4EverYoung Ltd., 999 F.3d 1240, 1244
(10th Cir. 2021). “An abuse of discretion has been characterized as an arbitrary,
capricious, whimsical, or manifestly unreasonable judgment.” Xlear, Inc. v. Focus
Nutrition, LLC, 893 F.3d 1227, 1233 (10th Cir. 2018) (internal quotation marks
omitted). A court abuses its discretion when it “commits legal error, relies on clearly
erroneous factual findings, or issues a ruling without any rational evidentiary basis.”
Id. Under the abuse-of-discretion standard, we will reverse only if we have
“a definite and firm conviction that the [district] court made a clear error of judgment
or exceeded the bounds of permissible choice in the circumstances.” Lorillard
Tobacco Co. v. Engida, 611 F.3d 1209, 1213 (10th Cir. 2010) (internal quotation
marks omitted).
To facilitate meaningful appellate review, a district court must “provide a
concise but clear explanation of its reasons for” its ruling on a motion for attorney’s
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fees. Xlear, 893 F.3d at 1233 (internal quotation marks omitted). The district court’s
explanation must “provide enough analysis to satisfy us that its decision was not
arbitrary.” Derma Pen, 999 F.3d at 1245 n.2 (emphasis and internal quotation marks
omitted).
Although we review the district court’s ruling for abuse of discretion, we
review its underlying factual findings for clear error. See Lorillard Tobacco,
611 F.3d at 1213. Under that standard, “[w]e . . . must uphold any district court
finding that is permissible in light of the evidence.” Manning v. United States,
146 F.3d 808, 813 (10th Cir. 1998) (internal quotation marks omitted). Thus, if the
record supports “two permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous.” Id. (internal quotation marks omitted).
B. Legal Standards
The Lanham Act allows a district court to award attorneys’ fees to a prevailing
party only in “exceptional cases.” 15 U.S.C. § 1117(a). An exceptional case is one
“that stands out from others with respect to the substantive strength of a party’s
litigating position (considering both the governing law and the facts of the case) or
the unreasonable manner in which the case was litigated.” Derma Pen, 999 F.3d
at 1245 (internal quotation marks omitted). The prevailing party has the burden of
demonstrating exceptionality by a preponderance of the evidence. Octane Fitness,
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LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 557 (2014) (interpreting identical
exceptional-case attorney fee provision in the Patent Act).1
There is no “precise rule or formula for making” exceptional-case
determinations. Id. at 554. A “case presenting either subjective bad faith or
exceptionally meritless claims may sufficiently set itself apart from mine-run cases to
warrant a fee award,” but it is “the rare case” in which a party’s non-sanctionable
litigation conduct, even if unreasonable, is “so ‘exceptional’ as to justify an award of
fees.” Id. Thus, aggressive litigation tactics and overreach do not necessarily
transform an ordinary case into an exceptional one for which fee-shifting is
warranted. Other non-exclusive factors that may support a finding of exceptionality
include frivolousness, motivation, objective unreasonableness of the facts or legal
theories, and the need to compensate the prevailing party or deter the losing party.
Id. at 554 n.6; see also Derma Pen, 999 F.3d at 1246 (applying Octane Fitness test in
Lanham Act case). “In more general terms, [courts] look to both the objective
strength of a plaintiff[’]s Lanham Act claim and the plaintiff’s subjective
motivations.” King v. PA Consulting Grp., Inc., 485 F.3d 577, 592 (10th Cir. 2007).
District courts have broad discretion to decide whether a case is exceptional
under the totality of the circumstances. See Derma Pen, 999 F.3d at 1246. Even
1 In Octane Fitness, the Supreme Court established the standards applicable under the exceptional-case attorney fees provision in the Patent Act, 35 U.S.C. § 285, which is identical to the one in the Lanham Act. Compare 15 U.S.C. § 1117(a) with 35 U.S.C. § 285. In Derma Pen, we held that the Octane Fitness standard applies to fee awards for exceptional cases under the Lanham Act. Derma Pen, 999 F.3d at 1245. 5 Appellate Case: 22-4020 Document: 010110959318 Date Filed: 11/28/2023 Page: 6
when a court deems a case exceptional, it has discretion to decide whether the case is
sufficiently exceptional to warrant a fee award. Nat’l Ass’n of Pro. Baseball
Leagues, Inc. v. Very Minor Leagues, Inc., 223 F.3d 1143, 1146 (10th Cir. 2000). On
review, we are mindful that district courts are “particularly well-equipped” to decide
whether a case is exceptional because they “live[] with the case over a prolonged
period of time.” Derma Pen, 999 F.3d at 1244 (internal quotation marks omitted).
C. Analysis
Applying the Octane Fitness/Derma Pen test here, the district court concluded
that the case was not exceptional because it did not stand out either based on the
strength of Alfwear’s claims or its litigation conduct. MJUS insists it is entitled to an
award of fees based on the “weakness of Alfwear’s claims from the case’s inception
to summary judgment,” and its “serial vexatious” litigation tactics, Aplt. Opening Br.
at 25-26, but we find no abuse of discretion in the district court’s ruling.
MJUS maintains that the same evidence that led the district court to dismiss
Alfwear’s case on summary judgment required a finding of exceptionality for
purposes of an attorney’s fees award. But under the exceptionality requirement, fee
awards are not used as a penalty for losing. See Nat’l Ass’n of Pro. Baseball
Leagues, 223 F.3d at 1147 (“[I]t is not enough that the plaintiff does not prevail.
Rather, to be an ‘exceptional’ case within the meaning of the statute, the plaintiff’s
suit must lack any reasonable foundation.”). Thus, not every case dismissed on
summary judgment can be considered exceptional. See Octane Fitness, 572 U.S.
at 558 (remanding for exceptionality determination under the correct standard instead
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of concluding that party awarded summary judgment was entitled to attorney’s fees).
Indeed, if a district court awarded attorney’s fees every time it entered summary
judgment, fee awards would be commonplace, not exceptional.
Here, the district court explained that “if the case had been truly meritless
from the outset, the court would have had no qualms about dismissing the case,” but
Alfwear’s claims were “sufficiently meritorious” to survive MJUS’s motion to
dismiss. Aplt. App., vol. XIX at 213 (internal quotation marks omitted). The court
acknowledged that MJUS ultimately prevailed at summary judgment, but it correctly
observed that “losing is not the benchmark for awarding attorneys’ fees.” Id. at 214.
And despite MJUS’s argument that Alfwear “should [not] have filed suit in the first
place,” the court found no “improper motive, objective unreasonableness, or bad
faith” in Alfwear’s decision to do so. Id. In particular, the court found that
Alfwear’s belief that there was a likelihood of confusion between the parties’
trademarks was “objectively reasonable,” and that “[t]his was not a frivolous case.”
Id. MJUS’s disagreement with these findings does not establish that they are clearly
erroneous, and the district court did not abuse its discretion in concluding that
Alfwear’s case was not so meritless that it rose to the level of exceptional.
MJUS also takes issue with the district court’s conclusion that Alfwear’s
litigation conduct did not justify a fees award. The court described the case as
“contentious,” id. at 213, and found that “[b]oth parties engaged in hard-fought
tactics,” id. at 212 (internal quotation marks omitted). It acknowledged MJUS’s
argument that Alfwear engaged in abusive litigation conduct by, among other things,
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filing proceedings before the Trademark Trial and Appeal Board (TTAB) and in
another federal district court while this case was pending. But the court noted that
MJUS was the first to seek relief outside this lawsuit by filing four TTAB
proceedings and a declaratory judgment action in the other district court. Id. The
court also noted that it had not “single[d] out either side’s behavior as crossing the
line” but that it had “chided [MJUS] for forum shopping and for lodging accusations
at Alfwear based on insinuation.” Id. at 213 (internal quotation marks omitted).
Based on these findings and its consideration of “the totality of the circumstances,”
the court concluded that “Alfwear’s litigation tactics are not enough to label this case
exceptional.” Id. (internal quotation marks omitted).
MJUS claims the record does not support the district court’s findings. It
reiterates the same factual narrative and arguments it presented in its district court
filings, and it maintains that the court failed to “analyz[e] the full procedural
history,” Aplt. Opening Br. at 26, and “to properly weigh” the evidence, id. at 14. It
characterizes its out-of-district litigation as a legitimate effort to protect its rights,
and describes Alfwear’s as an improper attempt to shore up its claims in this case and
to harass MJUS. Based on this narrative, MJUS says the district court “minimize[ed]
the abusive manner in which Alfwear prosecuted this case,” and it takes issue with
the court’s finding of “equivalence in the parties’ actions.” Id. at 26.
It was within the court’s discretion to weigh the evidence regarding the
parties’ litigation conduct in making its exceptionality determination, and because its
“equivalence” finding is a permissible view of the evidence, we will not disturb it
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even if, under MJUS’s narrative, the evidence also would have supported a different
conclusion. See Manning, 146 F.3d at 813. MJUS’s attacks on the adequacy of the
district court’s findings and analysis do not undermine its ruling. The court’s failure
to mention each instance of alleged litigation abuse and to address every aspect of
MJUS’s argument does not mean the court failed to consider the full story. Its
explanation is sufficient to satisfy us that its decision was not arbitrary. See Derma
Pen, 999 F.3d at 1245 n.2.
MJUS’s arguments boil down to a disagreement with the outcome of the
district court’s weighing of the evidence and its discretionary determination based on
the totality of the circumstances that this case was not exceptional. We will not
reweigh the evidence, however, and see no basis for setting aside the district court’s
ruling. By the time the court decided the motion for fees, it had presided over this
case for about five years. It was thus “singularly familiar” with the case and the
parties, and it was in the best position to decide whether this is an “exceptional” or
“routine” case, Derma Pen, 999 F.3d at 1245. The court applied the correct legal
standard, its factual findings are not clearly erroneous, and its ruling has a rational
evidentiary basis. Accordingly, we find no abuse of discretion in its exceptionality
determination. See Xlear, 893 F.3d at 1233.2
2 Having concluded that the district court did not abuse its discretion in denying the motion for fees, we need not address MJUS’s arguments about the reasonableness of its attorney’s fees.
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III. Denial of Costs
MJUS also argues that the district court erred by denying its motion for
nontaxable costs pursuant to Rule 54(d). Specifically, MJUS insists it is entitled to
recover its expert witness fees, third-party vendor fees, and TTAB filing fees
incurred in defending against Alfwear’s claims. Again, we disagree.
A. Legal Framework
We review the district court’s ruling on a motion for costs under Rule 54(d)
for abuse of discretion. See Rodriguez v. Whiting Farms, Inc., 360 F.3d 1180, 1190
(10th Cir. 2004).
As pertinent here, Rule 54(d) provides that “[u]nless a federal statute . . .
provides otherwise, costs—other than attorney’s fees—should be allowed to the
prevailing party.” Fed. R. Civ. P. 54(d)(1). “[T]he Supreme Court has placed strict
limits on what can be awarded” under Rule 54(d)(1). Stender v. Archstone-Smith
Operating Tr., 958 F.3d 938, 941 (10th Cir. 2020). The costs allowable under this
rule are limited to the six categories of taxable “costs” Congress identified in the
general costs statutes, 28 U.S.C. §§ 1821, 1920, which “define the full extent of a
federal court’s power to shift litigation costs absent express statutory authority to go
further.” Rimini St., Inc. v. Oracle USA, Inc., 139 S. Ct. 873, 877-78 (2019) (internal
quotation marks omitted).
A prevailing party may seek an award of nontaxable costs pursuant to a statute
that provides for such an award. See Fed. R. Civ. P. 54(d)(2)(A), (B)(ii). But any
statute allowing a costs award “will not be construed as authorizing an award of
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litigation expenses beyond the six categories listed in §§ 1821 and 1920, absent an
explicit statutory instruction to that effect.” Rimini St., 139 S. Ct. at 878.
B. Analysis
The district court correctly concluded that none of the nontaxable costs MJUS
sought were recoverable under Rule 54(d)(1) because they are not listed in the
general costs statute, 28 U.S.C. §§ 1821, 1920. See Stender, 958 F.3d at 941-42; see
also Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 439 (1987) (holding
that expert witness fees are not available under Federal Rule of Civil Procedure 54(d)
because “when a prevailing party seeks reimbursement for fees paid to its own expert
witnesses, a federal court is bound by the limit of [the general costs statute], absent
contract or explicit statutory authority to the contrary”).
We are not persuaded otherwise by MJUS’s insistence that “relevant case law”
permits an award of its litigation costs under Rule 54(d)(1). Aplt. Opening Br.
at 50-51 (capitalization omitted). The cases MJUS relies on hold that a court
may award nontaxable costs as part of a prevailing-party attorney’s fees award or
pursuant to the court’s inherent authority to impose sanctions in cases where the
non-prevailing party acted fraudulently or in bad faith. They do not hold that a court
may award nontaxable costs such as non-court appointed expert witness fees under
Rule 54(d)(1), and both we and the Supreme Court have expressly held otherwise.
See Stender, 958 F.3d at 941-42.
Nor were MJUS’s nontaxable costs recoverable under Rule 54(d)(2) and the
Lanham Act. For starters, the Lanham Act provides that successful plaintiffs are
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entitled to “the costs of the action,” and does not specifically provide for an award of
costs to a successful defendant. See 15 U.S.C. § 1117(a). Moreover, even if a
successful defendant is entitled to an award of costs under § 1117(a), the allowable
costs would not include nontaxable litigation expenses because the statute does not
explicitly authorize the award of costs beyond those listed in the general costs statute.
See Rimini St., 139 S. Ct. at 877-78 (holding that the authorization in 42 U.S.C.
§ 1988 to award “full costs” does not provide the “explicit statutory authority”
required to award costs, including expert witness fees, beyond those provided by
§§ 1920 and 1821 (internal quotation marks omitted)); Reazin v. Blue Cross & Blue
Shield of Kan., Inc., 899 F.2d 951, 981-82 (10th Cir. 1990) (holding that expert
witness fees are not recoverable under the attorney’s fees provision in the Clayton
Act, which does not expressly allow costs and fees in excess of the general cost
statute). An award of nontaxable costs under § 1117(a)’s prevailing-party fee-
shifting provision was precluded by the district court’s determination, which we have
already upheld, that this case is not exceptional. See Mathis v. Spears, 857 F.2d 749,
759 (Fed. Cir. 1988) (recognizing that an award of reasonable expert witness fees is
permissible under the Patent Act’s exceptional-case fee-shifting provision “only upon
a finding of” exceptionality).
Finally, a district court has the inherent authority to award attorney’s fees and
related expenses as a sanction for the losing party’s bad faith, see Chambers v.
NASCO, Inc., 501 U.S. 32, 46 (1991), but such an award was foreclosed here by the
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district court’s finding that Alfwear did not act in bad faith, see Mountain W. Mines,
Inc. v. Cleveland-Cliffs Iron Co., 470 F.3d 947, 954 (10th Cir. 2006).
IV. Conclusion
We affirm the district court’s order denying MJUS’s motion for attorneys fees
and costs. We provisionally granted both parties’ motions to file their briefs and
portions of its appendix under seal, along with publicly-filed redacted versions of the
briefs and appendix, subject to a reconsideration by the merits panel. We now make
our provisional orders permanent.
Entered for the Court
Jerome A. Holmes Chief Judge