Express Homebuyers USA, LLC v. WBH Marketing, Inc.

• Court: Court of Appeals for the Fourth Circuit
• Decided: November 15, 2019
• Docket: 18-2353
• Status: Unpublished

Opinion

UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 18-2353

EXPRESS HOMEBUYERS USA, LLC,

Plaintiff - Appellant,

and

LAWRENCE BRADFORD CHANDLER, III,

Counter Defendant - Appellant,

v.

WBH MARKETING, INC.,

Defendant - Appellee,

JEREMY BRANDT,

Defendant.

Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. T.S. Ellis, III, Senior District Judge. (1:17-cv-00736-TSE-IDD)

Submitted: October 21, 2019 Decided: November 15, 2019

Before AGEE and QUATTLEBAUM, Circuit Judges, and TRAXLER, Senior Circuit Judge. Affirmed by unpublished per curiam opinion.

Ugo Colella, Washington, D.C., John J. Zefutie, Jr., CULHANE MEADOWS PLLC, Princeton, New Jersey, for Appellants. Damon W.D. Wright, Mitchell Y. Mirviss, VENABLE LLP, Washington, D.C., for Appellee.

Unpublished opinions are not binding precedent in this circuit.

2 PER CURIAM:

In this trademark case, Express Homebuyers USA, LLC (“Express”), appeals the

district court’s order denying its motion for costs and attorney’s fees under 15 U.S.C.

§ 1117(a) (2012). 1 Express, which commenced this action against WBH Marketing, Inc.

(“WBH”), prevailed at summary judgment, securing both a declaration that two of WBH’s

registered trademarks were subject to cancellation and a judgment denying relief on

WBH’s several counterclaims. Express then filed its § 1117(a) motion, arguing that

WBH’s defenses, counterclaims, and reconsideration motion were frivolous or objectively

unreasonable, and that considerations of compensation and deterrence supported an award

of legal fees. Marching through each of Express’ arguments, the court agreed that some of

WBH’s positions had been unreasonable, but ultimately concluded that the action as a

whole was not so exceptional that attorney’s fees were warranted. Finding no abuse of

discretion, we affirm the district court’s order.

The Lanham Act provides that, “in exceptional [trademark] cases,” the district court

“may award reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117(a). In this

context, “exceptional” means, among other things, that “there is an unusual discrepancy in

the merits of the positions taken by the parties, based on the non-prevailing party’s position

as either frivolous or objectively unreasonable,” or that “there is otherwise the need in

particular circumstances to advance considerations of compensation and deterrence.”

1 For ease of reference, we refer only to Express when discussing the § 1117(a) motion jointly filed by Express and its CEO, Lawrence Bradford Chandler, III.

3 Verisign, Inc. v. XYZ.COM LLC, 891 F.3d 481, 483-84 (4th Cir. 2018) (internal quotation

marks omitted). “[A] prevailing party need only prove that a case is exceptional under the

Lanham Act by a preponderance of the evidence.” Id. at 484. In deciding whether the

prevailing party has met its burden, the district court must consider “the totality of the

circumstances.” Id. at 483 (internal quotation marks omitted). On appeal, we review for

abuse of discretion a decision to deny a motion for attorney’s fees under the Lanham Act,

id. at 484, but only for clear error “the district court’s underlying finding as to whether the

case is exceptional,” Newport News Holdings Corp. v. Virtual City Vision, Inc., 650 F.3d

423, 441 (4th Cir. 2011) (internal quotation marks omitted).

At summary judgment, Express argued, and the district court agreed, that WBH’s

marks were generic and, thus, not entitled to trademark protection. Subsequently, in its

§ 1117(a) motion, Express claimed that WBH’s defense of its marks was frivolous or

objectively unreasonable, citing the dearth of evidence supporting WBH’s position that the

marks were not, in fact, generic. The court declined to accept this characterization of

WBH’s defense, reasoning that the United States Patent and Trademark Office’s decision

to issue trademark registrations to WBH weighed strongly against an exceptional case

finding. See Am. Online, Inc. v. AT&T Corp., 243 F.3d 812, 816 (4th Cir. 2001) (holding

that trademark “registrant obtains prima facie evidence that its mark is not generic in the

eyes of the relevant public, and that its mark is not merely descriptive, but at a minimum

is descriptive and has obtained secondary meaning” (citation, emphasis, and internal

quotation marks omitted)).

4 On appeal, Express contends that, contrary to the district court’s holding, a

trademark owner cannot evade an exceptional case finding solely by relying on its validly

registered trademark. However, based on our review of the court’s analysis, we conclude

that the court regarded the registrations as highly probative, but not dispositive. Thus, we

reject Express’ assertion that the district court created a per se rule that a party’s defense

of its registered trademark always is objectively reasonable, even if the mark later proves

to be generic.

Next, Express argues that four of WBH’s counterclaims were objectively

unreasonable, insisting that they were doomed to fail because WBH lacked evidence to

establish indispensable elements of each claim. As to two of these counterclaims—

concerning allegedly defamatory statements made by Express—the district court agreed

that the statements at issue were nonactionable bluster or opinion, yet the court indicated

that a reasonable litigant might nevertheless assert that the comments were factual in

nature. Contrary to Express’ argument, we discern no inconsistency in the court’s

conclusion that a litigant might reasonably press a claim that is subsequently found to lack

merit.

As to the other two counterclaims, the district court determined that, even if these

claims were objectively unreasonable because WBH could not prove damages, this

shortcoming did not render the entire case exceptional. Similarly, while the court

acknowledged that WBH advanced clearly meritless arguments regarding the burden of

proof for establishing genericness and the admissibility of certain evidence, it determined

that such isolated missteps did not transform this case from ordinary to exceptional. Given

5 the court’s charge to view the litigation in toto, we discern no impropriety in its conclusion

that a handful of unreasonable arguments failed to convert the entire case into an

unreasonable or exceptional one. 2

Finally, Express contests the district court’s determination that considerations of

deterrence and compensation did not support an exceptional case finding. In our view,

however, the court reasonably concluded that the general principle of promoting trademark

enforcement outweighed any benefits that might derive from penalizing WBH for its

unreasonable litigation positions. Ultimately, the court developed a “superior

understanding of the litigation” through its resolution of the parties’ claims, Hensley v.

Eckerhart, 461 U.S. 424, 437 (1983), and, based on our review of the record, we cannot

say that the court abused its discretion in denying Express’ motion for attorney’s fees.

Accordingly, we affirm the district court’s order. We dispense with oral argument

because the facts and legal contentions are adequately presented in the materials before this

court and argument would not aid the decisional process.

AFFIRMED

2 While Express complains that the district court considered “the action as a whole,” Retail Servs., Inc. v. Freebies Publ’g, 364 F.3d 535, 551 (4th Cir. 2004), abrogated on other grounds by Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014), rather than “the totality of the circumstances,” Verisign, 891 F.3d at 483 (internal quotation marks omitted), we discern no material difference between these standards, both of which require a broad, holistic approach.