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The Gameologist Group, LLC v. Scientific Games International

April 26, 2012

THE GAMEOLOGIST GROUP, LLC, PLAINTIFF,
v.
SCIENTIFIC GAMES INTERNATIONAL, INC., AND SCIENTIFIC GAMES CORPORATION, INC.,
DEFENDANTS.



The opinion of the court was delivered by: John G. Koeltl, District Judge:

MEMORANDUM OPINION AND ORDER

The plaintiff, the Gameologist Group, LLC ("Gameologist" or "the plaintiff"), brought this action against the defendants, Scientific Games International, Inc. and Scientific Games Corporation, Inc. (collectively, "Scientific" or "the defendants"), alleging claims of trademark infringement, false designation of origin and unfair competition, and false advertising under the Lanham Act, 15 U.S.C. § 1051 et seq., as well as several claims under New York law. In October 2011, this Court granted the defendants' motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure and dismissed all of the plaintiff's claims. See Gameologist Grp., LLC v. Scientific Games Int'l, Inc., No. 09 Civ. 6261, 2011 WL 5075224, at *20 (S.D.N.Y. Oct. 25, 2011). The defendants now move for attorney's fees and costs pursuant to Rule 54 of the Federal Rules of Civil Procedure.

I.

The following facts are undisputed, unless otherwise indicated.

Gameologist is a limited liability company that was formed to develop several gaming concepts, including a concept for a casino table game called "Bling Bling." Gameologist, 2011 WL 5075224, at *2-3. In 2005 and 2010, respectively, the U.S. Patent and Trademark Office issued trademark registrations to Gameologist's original Managing Member, Jeffrey McGill, for the mark "BLING BLING 2002" for "entertainment in the nature of online three dice casino games" and for "casino games and equipment therefor, namely, board games." Id. at *2.

In December 2003, Gameologist entered into a license agreement with representatives of MDI Entertainment, LLC, a company that had been acquired by defendant Scientific Games International. Id. at *3. The agreement granted MDI rights to use the plaintiff's mark in connection with lottery tickets. Id. In April 2004, MDI and the plaintiff agreed to cancel the license agreement. Id.

The defendants, who manufacture lottery tickets and provide lottery-related services to state lottery commissions throughout the United States and abroad, have sold several thousand instant lottery tickets to state lottery commissions that feature the word "bling." Id. at *5. These tickets were developed and launched between 2007 and 2010, at least three years after the termination of the license agreement between MDI and the plaintiff. Id. The plaintiff claims that the defendants stole the plaintiff's "Bling Bling" concept following termination of the license agreement with MDI and used these ideas for the defendants' own commercial benefit by producing lottery tickets featuring the term "bling." The defendants stated at oral argument on the summary judgment motion that they had knowledge of the plaintiff's mark at the time they created the lottery tickets in question. (Hr'g Tr. 6-7, Sept. 27, 2011.)

The plaintiff has not entered into any license agreement with any party other than MDI for use of the plaintiff's mark in connection with lottery-related goods or any other goods or services. Gameologist, 2011 WL 5075224, at *4. The plaintiff has never successfully marketed a "Bling Bling" lottery ticket to a state lottery commission or released a product with the "Bling Bling" mark in the lottery industry. Id. The only product that the plaintiff actually has sold featuring the mark "BLING BLING 2002" is a board game of which four sales are documented, although the plaintiff claims that additional sales were made in unrecorded transactions in cash. Id. at *5.

The plaintiff brought this action alleging claims of trademark infringement, false designation of origin and unfair competition, and false advertising under the Lanham Act, 15 U.S.C. § 1051 et seq., as well as claims of unfair competition, passing off, breach of contract, unjust enrichment, and quantum meruit under New York law. In October 2011, this Court granted the defendants' motion for summary judgment and dismissed all of the plaintiff's claims. In granting summary judgment dismissing the plaintiff's Lanham Act claims, this Court concluded that the plaintiff's mark was not entitled to trademark protection because the plaintiff had failed to raise a genuine issue of material fact either that the plaintiff engaged in sufficient use of its mark in commerce, id. at *9, or that the defendants' use of the term "bling" in connection with lottery tickets was likely to cause consumer confusion, id. at *17.

The defendants then brought the present motion seeking an award of attorney's fees and costs pursuant to section 35 of the Lanham Act, 15 U.S.C. § 1117(a); 28 U.S.C. § 1927; Rule 11 of the Federal Rules of Civil Procedure; the inherent authority of the Court; and New York General Business Law § 360-m. The defendants assert that they have incurred attorney's fees of $952,603.25 and costs of $24,204.70.

II.

The defendants first move for attorney's fees and costs under section 35 of the Lanham Act, which provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 15 U.S.C. § 1117(a). "Such fees are available only in 'exceptional cases,' which generally means that fees will be awarded to the defendant only if the plaintiff filed the action in bad faith." Nike, Inc. v. Already, LLC, 663 F.3d 89, 99 (2d Cir. 2011); see also Patsy's Brand, Inc. v. I.O.B. Realty, Inc., 317 F.3d 209, 221 (2d Cir. 2003); Gordon & Breach Sci. Publishers S.A. v. Am. Inst. of Physics, 166 F.3d 438, 439 (2d Cir. 1999) (per curiam).

The defendants argue that a finding of bad faith is appropriate here because the plaintiff's claims were so frivolous as to compel the conclusion that the plaintiff brought this action for an improper purpose. While it is true that bad faith can be inferred when a plaintiff's claims are entirely baseless, see Altvater Gessler-J.A. Baczewski Int'l (USA) Inc. v. Sobieski Destylarnia S.A., No. 06 Civ. 6510, 2011 WL 2893087, at *5 (S.D.N.Y. July 14, 2011) (collecting cases), "the mere fact that a plaintiff ultimately did not succeed in its Lanham Act claims does not dictate an inference of bad faith," Farberware Licensing Co., LLC v. Meyer Mktg. Co., Ltd., No. 09 Civ. 2570, 2009 WL 5173787, at *2 (S.D.N.Y. Dec. 30, 2009), aff'd, 428 F. App'x 97 (2d Cir. 2011) (summary order); see also Gordon, 166 F.3d at 439. Instead, when "courts have found bad faith based on the meritlessness of a plaintiff's claims, '[t]he circumstances were generally such . . . that a court could draw no inference other than that the actions had been brought for improper purposes.'" Farberware, 2009 WL 5173787, at *2 (quoting Multivideo Labs, Inc. v. Intel Corp., No. 99 Civ. 3908, 2000 WL 502866, at *2 (S.D.N.Y. Apr. 27, 2000)).

In this case, while the plaintiff did not succeed, the plaintiff's claims were not so completely without merit as to compel the conclusion that these claims were brought in bad faith. Although the Court granted the defendants' motion for summary judgment, the plaintiff's claims were not so baseless that the Court was able to dispose of them without the benefit of substantial proceedings. Instead, the Court held oral argument on the summary judgment motion, received additional ...


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