Nursery Decals and More Inc v. Neat Print Inc

District Court, N.D. Texas·Decided June 3, 2022·No. 3:19-cv-02606·Unknown

Opinion

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION NURSERY DECALS AND MORE, INC. § § Plaintiff, § § v. § CIVIL ACTION NO. 3:19-CV-2606-B § NEAT PRINT, INC., § § Defendant. § MEMORANDUM OPINION AND ORDER Before this Court are Defendant Neat Print, Inc. (“Neat Print”)’s Motion for Attorneys’ Fees (Doc. 118) and Plaintiff Nursery Decals and More, Inc. (“Nursery Decals”)’s Motion for Attorneys’ Fees (Doc. 120). For the following reasons, the Court DENIES both motions. I. BACKGROUND This is a trademark case. Nursery Decals, an online seller of novelty t-shirts, claimed that Neat Print, a rival seller, obtained non-functioning trademarks through fraud on the United States Patent and Trademark Office (“USPTO”) and then tortiously used those trademarks as the basis for a takedown notice that it sent to Etsy, causing Nursery Decals to lose online sales on Etsy and Amazon. On summary judgment, the Court found in favor of Nursery Decals that the marks at issue were descriptive without secondary meaning and therefore unprotectable under the Lanham Act, -1- and ordered the marks cancelled. Nursery Decals & More, Inc. v. Neat Print, Inc., 2021 WL 4942192, at *12 (N.D. Tex. Oct. 22, 2021), recons. denied, 2021 WL 5987682 (N.D. Tex. Dec. 16, 2021). The Court found in favor of Neat Print on Nursery Decals’s tortious interference with existing and

prospective contract claims based on sales through Amazon, id. at *15, and on the tortious interference with existing contract claim based on Etsy sales. Id. at *16. The Court found that genuine issues of material fact remained as to: (1) whether Neat Print’s founder, Dejean Raca (“Raca”), committed fraud on the USPTO in obtaining the marks, and (2) if Mr. Raca did obtain the marks by fraud and knew that the marks were fraudulently obtained, whether he tortiously interfered with Nursery Decals’s prospective contracts with Etsy shoppers when he sent Etsy the takedown notice. Id. Specific to the Etsy tortious interference with prospective contract claim, the

Court held: Nursery Decals has established a genuine issue of material fact as to whether Neat Print fraudulently obtained the four registrations. If a jury resolved this question in Nursery Decals[’s] favor, finding that Mr. Raca did knowingly and fraudulently obtain the registrations, it could likewise reasonably find that Neat Print intentionally sent a [takedown] notice it knew to be fraudulently procured—arguably an independently tortious act. Therefore, the Court concludes that Neat Print has not established that [the “independently tortious act” element of a tortious interference with prospective contract claim under Texas law] fails as a matter of law. Id. at *16. Accordingly, two claims proceeded to trial: (1) fraud on the USPTO, and (2) tortious interference with prospective contract, with the second claim requiring an affirmative finding of the first. Id. at *17. The day before the pretrial conference and jury selection, Neat Print—which had previously argued that the Court lacked jurisdiction to decide any of Nursery Decals’s claims because Neat Print -2- mooted them by filing a Covenant Not to Sue, see id. at *6—filed an Amended Covenant Not to Sue and motion to reconsider the subject-matter jurisdiction ruling. See Nursery Decals, 2021 WL 5987682, at *2. The Court denied this motion on the record at the pretrial conference,

finding that the Amended Covenant Not to Sue eliminated any future injury to Nursery Decals from the contested marks but did not eliminate the legally cognizable past injury of the surviving tortious interference claim. Id. at *3–6. Trial proceeded on the fraud and tortious interference claims. After Plaintiff rested, the Court denied Neat Print’s timely motion for judgment as a matter of law under Rule 50(a). Doc. 110, Elec. Min. Entry. After both sides closed, the Court denied Nursery Decals’s timely motion for judgment as a matter of law under Rule 50(a). Doc. 111, Elec. Min. Entry. The jury returned a verdict that,

for each of the four marks at issue, it did not “find that Nursery Decals proved, by clear and convincing evidence, that Neat Print committed fraud on the [USPTO] when it registered the marks[.]” Doc. 113, Verdict, 16. The jury further found that Neat Print did not tortiously interfere with Nursery Decals’s prospective business relationships. Id. at 20. Consistent with the jury’s verdict and the Court’s prior summary judgment, on December 20, 2021, the Court entered final judgment ordering that Nursery Decals take nothing and directing the USPTO to cancel the marks. Doc. 116,

Final J. Within the time allowed under the Federal Rules of Civil Procedure, Nursery Decals renewed its motion for judgment as a matter of law under Rule 50(b), Doc. 122, Pl.’s Renewed Mot., and Neat Print filed a motion to modify and/or vacate the judgment or alternatively for relief from judgment pursuant to Rules 59(e) and 60(b)(4). Doc. 125, Def.’s Mot. Vacate, 1, 3–4. The Court

-3- denied both motions. Nursery Decals & More, Inc. v. Neat Print, Inc., 2022 WL 1018401, at *1 (N.D. Tex. Apr. 5, 2022). Each party then filed motions for attorneys’ fees under 15 U.S.C. § 1117(a). Doc. 118, Def.’s

Mot. Fees, 1; Doc. 120, Pl.’s Mot. Fees, 1. The Court considers each motion below. II. LEGAL STANDARD The Lanham Act permits the Court to award attorneys’ fees to the prevailing party in “exceptional cases.” 15 U.S.C. § 1117(a). The prevailing party is “‘a party in whose favor judgment is rendered’ or ‘one who has been awarded some relief by the court.’” All. for Good Gov’t v. Coal. for Better Gov’t, 919 F.3d 291, 295 n.16 (5th Cir. 2019) (quoting Kiva Kitchen & Bath, Inc. v. Cap.

Distrib., Inc., 319 F. App’x 316, 322 (5th Cir. 2009)).1 A party need not win damages in order to be the prevailing party in the Lanham Act context. See id. (holding that a party obtaining judgment in the form of injunctive relief was the prevailing party). A party may still be the prevailing party even if it does not prevail on all of its claims, but “a district court should make efforts to award fees only for successful Lanham Act claims.” Id. at 297–98 (emphasis added) (citing Procter & Gamble Co. v.

1 The attorneys’ fee provision of the Lanham Act uses the definite article “the” in reference to “prevailing party,” possibly indicating that only one party may be the prevailing party entitled to fees. See 15 U.S.C. § 1117(a). However, the Fifth Circuit has repeatedly used the phrase “a prevailing party” in the Lanham Act context, leaving ambiguity as to whether more than one party may prevail in a single case where, as here, opposing parties succeed on different claims. See, e.g., All. for Good Gov’t, 919 F.3d at 295 n.16; Wickfire, LLC v. Woodruff, 989 F.3d 343, 353 (5th Cir. 2021). While acknowledging the possible ambiguity under § 1117(a), the Court follows other courts in assuming that there could be more than one prevailing party in a case where opposing parties succeed on different Lanham Act claims. See, e.g., Roche Diagnostics Operations, Inc. v. Abbott Diabetes Care, Inc., 2017 WL 4391735, *15–16 (D. Del. 2017) (discussing Hensley v. Eckerhart, 461 U.S. 424

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