Amarte USA Holdings, Inc. v. Kendo Holdings Inc.

District Court, N.D. California·Decided December 5, 2024·No. 3:22-cv-08958·Unknown

Opinion

1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 AMARTE USA HOLDINGS, INC., Case No. 22-cv-08958-CRB

9 Plaintiff,

ORDER GRANTING DEFENDANTS’ 10 v. MOTION FOR FEES

11 KENDO HOLDINGS INC., et al., 12 Defendants.

13 Plaintiff Amarte USA sued Defendants Kendo, Marc Jacobs International, Sephora 14 USA, and the Neiman Marcus Group for trademark infringement. See Compl. (dkt. 1). 15 The Court granted Defendants’ motion for summary judgment. See MSJ Order (dkt. 173). 16 Defendants now move for attorney fees. See Mot. (dkt. 190). The Court finds the matter 17 suitable for resolution without a hearing pursuant to Local Civil Rule 7-1(b) and GRANTS 18 Defendants’ fees motion based on Amarte’s unreasonable conduct in this litigation. 19 I. BACKGROUND 20 The Court’s prior order, available at 2024 WL 4093910, describes the facts of this 21 case in detail. The following high-level overview provides only the context necessary to 22 address this fees motion. 23 Plaintiff Amarte sells high-quality skincare products, including its trademarked 24 EYECONIC eye cream. MSJ Order at 1–3. Defendants sell beauty products, including 25 Kendo and Marc Jacobs’ MJB EYE-CONIC eye shadow. Id. at 3. In 2021 Amarte sent a 26 cease-and-desist letter to Marc Jacobs. Id. at 2. Kendo’s general counsel responded and 27 explained to Amarte that MJB EYE-CONIC had been discontinued. Id. at 2–3. Sephora 1 In December 2022 Amarte sued Defendants for federal trademark infringement and 2 several related counts. The Court ultimately granted summary judgment for Defendants. 3 In doing so, the Court found that there was no likelihood of confusion between Plaintiff’s 4 EYECONIC eye cream and Defendants’ MJB EYE-CONIC eye shadow. Id. at 9–21.1 5 Defendants now move for attorney fees, arguing both that Amarte engaged in 6 unreasonable litigation conduct and that its case was substantively weak. As evidence of 7 Amarte’s unreasonable conduct, Defendants point to Amarte’s repeated attempts to expand 8 the scope of the case to ancillary parties (such as parent companies and retailers), 9 Amarte’s factual misstatements at various stages of litigation, and Amarte’s uncooperative 10 behavior during discovery. Mot. at 9–16. They further state that Amarte was improperly 11 motivated by an interest in extracting a settlement from Defendants. Id. at 16–17. As 12 evidence of Amarte’s allegedly weak case, Defendants point to the lack of any direct 13 evidence of consumer confusion between the EYECONIC and MJB EYE-CONIC 14 products, as well as clear dissimilarities between the products’ packaging. Id. at 17–19. 15 Defendants assert that their timekeepers billed over 2,300 hours and incurred over 16 $2 million in legal fees, of which they seek to recover approximately $1.3 million (plus 17 fees associated with this motion, which would be calculated later). Id. at 8–9. 18 II. DISCUSSION 19 The Lanham Act provides that “[t]he court in exceptional cases may award 20 reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117(a). “[A]n 21 ‘exceptional’ case is simply one that stands out from others with respect to the substantive 22 strength of a party’s litigating position (considering both the governing law and the facts of 23 the case) or the unreasonable manner in which the case was litigated.” SunEarth, Inc. v. 24 Sun Earth Solar Power Co., 839 F.3d 1179, 1180 (9th Cir. 2016) (quoting Octane Fitness, 25 LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 554 (2014)). There is no “precise rule 26 or formula for making these determinations,” but “district courts analyzing a request for 27 1 fees under the Lanham Act should examine the ‘totality of the circumstances’ to determine 2 if the case was exceptional.” Id. at 1181 (quoting Octane Fitness, 572 U.S. at 554). The 3 Supreme Court has identified several factors for courts to weigh, including “frivolousness, 4 motivation, objective unreasonableness (both in the factual and legal components of the 5 case) and the need in particular circumstances to advance considerations of compensation 6 and deterrence.” Id. (quoting Octane Fitness, 572 U.S. at 554 n.6). Amarte challenges the 7 appropriateness of attorney fees at all, as well as the reasonableness of the fees that 8 Defendants request. See Opp. (dkt. 197). 9 A. Whether to Award Attorney Fees 10 At the outset, the parties dispute whether a motion for fees can be granted based 11 solely on a party’s unreasonable litigation conduct or whether the party’s litigation position 12 must also have been substantively weak. Both purport to rely on Octane Fitness. Compare 13 Opp. at 2 (“Defendants cite no authority that a court can ignore the merits of a claim in 14 order to award fees under Octane Fitness.”), with Reply (dkt. 211) at 5 (“[T]he Supreme 15 Court itself said that a case can be exceptional on the basis of litigation conduct alone.”). 16 Defendants have the better interpretation of Octane Fitness, which states that “an 17 ‘exceptional’ case is simply one that stands out from others with respect to the substantive 18 strength of a party’s litigating position … or the unreasonable manner in which the case 19 was litigated.” 572 U.S. at 554 (emphasis in original). “Or” means “or,” and Amarte 20 points to no language in Octane Fitness that would suggest a contrary interpretation. 21 Accordingly, the Court can, and does, grant Defendants’ motion on the basis of 22 Amarte’s conduct alone. Some of the analysis bleeds into the merits of Amarte’s case, but 23 the merits are not so obviously weak to warrant attorney fees on their own.2 Amarte’s 24 conduct, however, crosses the line from acceptable to unreasonable. Specifically, Amarte 25 (1) filed multiple meritless, dilatory motions; (2) repeatedly misrepresented material facts; 26 2 To be sure, the facts that (1) Amarte never had any evidence that any consumer was ever 27 confused between the marks and (2) the products’ packaging looked nothing alike made 1 and (3) was uncooperative to the point of stonewalling in discovery. Moreover, this 2 conduct, taken as a whole, strongly suggests that Amarte was improperly motivated by an 3 effort to extract settlement money rather than good-faith trademark enforcement. This 4 case is therefore “exceptional” under the Lanham Act, and attorney fees are proper.3 5 1. Repeated meritless motions to add defendants 6 Amarte sought leave to amend its complaint three times—once to add seven of 7 Defendants’ parent companies and twice to add nearly a dozen retailers. The Court denied 8 all of these attempts. Indeed, Amarte’s repeated attempts to expand the scope of this 9 litigation were not only without merit; they needlessly prolonged litigation and 10 demonstrated Amarte’s defiance of adverse rulings. 11 In Amarte’s first effort to amend its complaint, it sought to add parent companies as 12 defendants based solely on the fact that the parents were listed on Defendants’ Rule 7.1 13 disclosures. First Mot. to Amend (dkt. 52) at 6–7. But Amarte’s allegations as to the 14 parents’ alleged misconduct were “sparse,” limited to allegations that the parents “direct, 15 own, and control” the existing Defendants. Order Denying First & Second Mots. to 16 Amend (dkt. 72) at 3 (quoting Proposed Second Am. Compl. (dkt. 66-1) ¶¶ 42, 44, 46, 49). 17 Amarte’s allegations as to personal jurisdiction were similarly so “bare” as to be “plainly 18 insufficient.” Id. at 4–5. Amarte did not go into any greater depth as to its theory of 19 liability for Defendants’ parents in its motion to amend. Instead, it recited the boilerplate 20 legal standard for evaluating proposed amendments and then asserted, without any 21 explanation, that its proposed amendment would not be futile. First Mot.

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Amarte USA Holdings, Inc. v. Kendo Holdings Inc., (N.D. Cal. 2024).

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