Penshurst Trading Inc. v. Zodax , 652 F. App'x 10 ( 2016 )

15-2557
Penshurst Trading Inc. v. Zodax
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER
FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT
FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC
DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE
A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
At a stated term of the United States Court of Appeals for the Second Circuit, held at
the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York,
on the 13th day of June, two thousand sixteen.
PRESENT: GERARD E. LYNCH,
ROBERT D. SACK,
Circuit Judges,
J. GARVAN MURTHA
District Court Judge.*
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PENSHURST TRADING INC.,
DBA JULISKA
Plaintiff—Counter-Defendant—Appellee,
v. No. 15-2557
ZODAX L.P.,
Defendant—Counter-Claimant—Appellant.
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FOR APPELLANT: MICHAEL HARRIS (Steven C. Sereboff, M. Kala
Sarvaiya, on the brief), SoCal IP Law Group LLP,
Westlake Village, CA.
FOR APPELLEE: EDWARD T. COLBERT (Jonathan W. Thomas, on the
brief), Kenyon & Kenyon LLP, Washington, DC.
*
The Honorable J. Garvan Murtha, of the United States District Court for the
District of Vermont, sitting by designation.
Appeal from the United States District Court for the Southern District of New
York (Richard J. Sullivan, J.).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,
AND DECREED that the judgment of the district court is AFFIRMED.
Appellant Zodax appeals from the district court’s denial of its motion for
attorney’s fees pursuant to the fee-shifting provisions of the Copyright Act and the
Lanham Act. Zodax argues that the district court abused its discretion in holding that
Appellee Penshurst’s copyright, trademark, and trade dress claims, which were
voluntarily dismissed, did not present a sufficiently “exceptional” case to warrant an
award of attorney’s fees to Zodax. We assume the parties’ familiarity with the underlying
facts, the procedural history of the case, and the issues on appeal.
“Our review of the denial of an award of attorneys’ fees is ‘highly deferential to
the district court.’” Raishevich v. Foster, 247 F.3d 337, 344 (2d Cir. 2001), quoting
Alderman v. Pan Am World Airways, 169 F.3d 99, 102 (2d Cir. 1999). The district court
“is intimately familiar with the nuances of the case, [and] is in a far better position to
make certain decisions than is an appellate court, which must work from a cold record.”
Matthew Bender & Co. v. West Publ’g. Co., 240 F.3d 116, 121 (2d Cir. 2001) (internal
quotation marks omitted). Accordingly, “the district court's determination will be reversed
on appeal only for an abuse of discretion.” Alderman, 169 F.3d at 102.
The court may award attorney’s fees to a prevailing party under the Lanham Act
only in “exceptional cases.” 15 U.S.C. § 1117(a). Zodax was the prevailing party in light
of Penshurst’s voluntary dismissal of this action with prejudice. See, e.g., Nemaizer v.
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Baker, 793 F.2d 58, 60 (2d Cir. 1986). Historically, we have held that a case may be
“exceptional” only where it involves “fraud or bad faith or willful infringement.” Louis
Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 111 (2d Cir. 2012) (internal quotation
marks omitted) (citing Patsy's Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 221 (2d
Cir. 2003). The Supreme Court recently clarified that a case may be “exceptional” under
the Patent Act even without proof of such culpable intent, as long as the case “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.” Octane Fitness, LLC v. ICON Health & Fitness, Inc.,
134 S. Ct. 1749, 1756 (2014). We have not yet decided whether this rule applies in the
context of the Lanham Act, but we need not do so here. Even assuming, without deciding,
that Octane Fitness applies, we nonetheless affirm the district court’s denial of attorney’s
fees.
Zodax notes potential weaknesses in Penshurst’s Lanham Act claims that might
direct an ultimate decision on the merits, arguing that the district court erred in not
awarding attorney’s fees on that basis. But the task before us is not an adjudication on the
merits, but rather a determination as to whether Penshurst’s claims were so “exceptional”
as to warrant fee-shifting. Penshurst alleged in its complaint that a representative of
Zodax approached Penshurst’s chief executive officer, stating, “Do you like our ‘Juliska-
ish’ products?” A. 88. While this alone might not be sufficient to prevail on the merits, it
indicates, as the district court noted, that Penshurst’s trademark claim was something
more than frivolous or a mere “shakedown.” A. 16. The same is true of Penshurst’s trade
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dress claim, which characterized the design of the company’s glassware as a protectable
source identifier based on several relevant forms of evidence, including unsolicited media
coverage and attempts to plagiarize. The district court did not abuse its discretion in
holding that, even if we assume arguendo that the more lenient standard of Octane
Fitness applies, Penshurst’s claims were not “exceptional.”
Similarly, Zodax’s argument that the district court erred when it exercised its
discretion not to award attorney’s fees under the Copyright Act must fail. A claim of
copyright infringement has two elements: (1) ownership of a valid copyright, and
(2) copying of constituent elements of the work that are original. Feist Publ’ns, Inc. v.
Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). The district court determined that
Penshurst’s registration of copyright was “probative of the objective reasonableness of
Plaintiff’s belief that its designs were copyrightable, even if such beliefs were ultimately
erroneous.” A. 17 (emphasis removed). The similarity in appearance between Juliska’s
products and Zodax’s allegedly infringing ones demonstrates that a belief that the work
was copied was also objectively reasonable.
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In sum, the district court did not abuse its discretion in declining to award
attorney’s fees to Zodax under either the Lanham Act or Copyright Act. We have
considered Zodax’s remaining arguments and find them to be without merit.
Accordingly, we AFFIRM the judgment of the district court.
FOR THE COURT:
CATHERINE O’HAGAN WOLFE, Clerk of Court
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