United States District Court, S.D. New York
December 16, 2014
CROSS COMMERCE MEDIA, INC., Plaintiff/Counterclaim Defendant,
COLLECTIVE, INC., Defendant/Counterclaim Plaintiff
For Cross Commerce Media, Inc., Plaintiff: Jason Andrew Roth, Marc Joseph Rachman, Neal Howard Klausner, Davis & Gilbert LLP, New York, NY; John Mark Lane, Koo Larrabee Lau-Kee & Lane, L.L.P, White Plains, NY.
For Collective, Inc., Defendant: Eric J. Andalman, PRO HAC VICE, Dentons U.S. LLP (Chicago), Chicago, IL; Samuel Fifer, PRO HAC VICE, Dentons Us LLP, Chicago, IL; David Robert Baum, Dentons U.S. LLP (NY), New York, NY.
For Collective, Inc., Counter Claimant: Eric J. Andalman, PRO HAC VICE, Dentons U.S. LLP (Chicago), Chicago, IL; Samuel Fifer, PRO HAC VICE, Dentons Us LLP, Chicago, IL; David Robert Baum, Dentons U.S. LLP (NY), New York, NY.
For Cross Commerce Media, Inc., Counter Defendant: Jason Andrew Roth, Marc Joseph Rachman, Neal Howard Klausner, Davis & Gilbert LLP, New York, NY.
MEMORANDUM DECISION & ORDER
KATHERINE B. FORREST, United States District Judge.
On August 21, 2014, this Court granted a motion for summary judgment by plaintiff Cross Commerce Media, Inc. (" Cross Commerce") seeking a declaration of non-infringement of the registered mark of defendant Collective, Inc. (" CI"). Now pending before the Court are two final motions, the resolution of which terminates this action. First, Cross Commerce seeks an order cancelling CI's trademark registrations for " Collective Network" (Reg. No. 3538489) and " Collective Video" (Reg. No. 3671913), and requiring that the term " collective" be disclaimed from CI's trademark registration for " C Collective The Audience Engine" (Reg. No. 3929580). Second, Cross Commerce moves for attorneys' fees and sanctions.
For the reasons set forth below, and incorporating the Court's prior decisions in this matter for facts and context, the Court GRANTS Cross Commerce's motion as to the registrations, and directs the Patent and Trademark Office (" PTO") to cancel the registrations for " Collective Video" and " Collective Network, " and to disclaim the term " collective" from the mark " C Collective the Audience Engine." In addition, the Court GRANTS Cross Commerce's motion for attorneys' fees, DENIES its motion for sanctions as essentially duplicative, and DENIES AS MOOT the parties' pending Daubert motions.
I. THE REGISTRATIONS
Cross Commerce commenced this lawsuit after discussions between them regarding their respective uses of the word " collective" in their businesses' names fell apart and CI threatened suit. CI counterclaimed for the mirror-image relief sought by Cross Commerce. Despite its aggressive pre-litigation position, CI did what this Court would characterize as " very little indeed" to develop its position with regard to its use of the word " collective" in connection with a series of marks, particularly with regard to " C Collective the Audience Engine." As the Court has discussed at length in prior decisions, CI failed to put forward any real evidence showing that its mark was more than merely descriptive: it failed to submit any marketing materials, survey research, or even an affidavit supporting suggestiveness. CI pursued this course of action even after this Court informed it specifically that it would need to provide something along these lines to avoid summary judgment. For whatever reason, it did not.
The Court's summary judgment opinion sets forth the basis for its decision that CI's mark lacked secondary meaning and that the word " collective" is not protectable. For those same reasons, the Court may, pursuant to the statutory authority provided in 15 U.S.C. § 1119, require that the PTO take certain action with regard to CI's marks.
In that regard, the Court's August 2014 decision leads inexorably to the Court's determination that the disclaimer of the word " collective" in the mark " C Collective the Audience Engine" is required. CI makes frivolous arguments that the Court is somehow divested of its ability to require such relief based on its August decision and its elimination of a case or controversy thereby. This makes no sense. The Court of course has the power to do precisely that which the statute authorizes it to do.
The marks " Collective Network" and " Collective Video" were part of the original complaint filed in April 2013. Indeed, the registrations relating to those marks were appended to that complaint. (ECF No. 1 ex. B.) As both parties have noted in the briefing on the instant motion, there was deposition testimony on the use of those marks (or the lack thereof) in commerce. That the record focused more on one of the marks--" C Collective the Audience Engine" --and not the others, does not mean that Cross Commerce withdrew its claim as to those marks. It did not.
In the context of this motion, Cross Commerce asserts that these two marks have been abandoned. Its motion in this regard is akin to one for summary judgment--asserting that as a matter of law it is entitled to judgment on these marks. However, it has not cast its motion as such--it has not, for instance, submitted a Local Rule 56.1 statement. Nevertheless, the parties have had a full opportunity to bring to the Court any facts and argument relevant to whether these two marks have been used in commerce or abandoned. There is no suggestion by CI that it has any evidence to offer in this regard beyond that already reviewed by the Court.
Accordingly, the undisputed evidence reveals that CI has not used the marks " Collective Video" or " Collective Network" in commerce. Therefore, as a matter of law it has by clear and convincing evidence abandoned them, which is grounds for cancellation of registration. 15 U.S.C. § 1064; see also Citigroup Inc. v. City Holding Co., No. 99 Civ. 10115 (RWS), at *44-46 (S.D.N.Y. Feb. 7, 2013) (A registration may be cancelled at any time if it has been abandoned. . . . [A]bandonment of a mark must be proven by clear and convincing evidence . . . ."). The Court grants summary judgment to Cross Commerce on its claims with regard to these two marks.
As a result of that determination, the Court also grants Cross Commerce's motion pursuant to 15 U.S.C. § 1119 and directs the PTO to cancel the registrations for " Collective Video" and " Collective Network, " and to disclaim the term " collective" from the mark " C Collective the Audience Engine." Cross Commerce shall submit an appropriate order as to the relief hereby granted regarding all three of the above marks within 14 days.
II. ATTORNEYS' FEES
Courts have the discretion to grant attorneys' fees to the prevailing party in exceptional Lanham Act cases. 15 U.S.C. § 1117(a); Mister Softee of Brooklyn, Inc. v. Boula Vending, Inc., 484 Fed.App'x 623, 624 (2d Cir. 2012) (summary order). The Second Circuit has found that a case is exceptional when there has been a finding of willfulness, bad faith or fraud.
Mister Softee, 484 Fed.App'x at 624 (citing Louis Vuitton Malletier S.A. v. LY USA, Inc., 676 F.3d 83, 108-09 (2d Cir. 2012)). Pursuing frivolous, meritless or otherwise baseless litigation has been found to meet the standard, and failing to develop evidence to support a litigation position has been found persuasive of such a finding. See, e.g., Therapy Prods., Inc. v. Bissoon, No. 07 Civ. 8696(DLC), 2009 WL 2709279, at *2-3 (S.D.N.Y. Aug. 26, 2009) (" Courts have inferred bad faith where a plaintiff's claims are meritless." (citations omitted)); Juicy Couture, Inc. v. L'Oreal USA, Inc., No. 04CIV7203(DLC), 2006 WL 2591478, at *5 (S.D.N.Y. Sept. 11, 2006) (same); IMAF, S.p.A. v. J.C. Penney Co., 810 F.Supp. 96, 100 (S.D.N.Y. 1992) (awarding fees to defendant " forced to incur expenses and devote time to defend against a lawsuit that continued for six years and utterly lacked a solid legal foundation").
In April 2014, the Supreme Court considered the standard for determining the " exceptional case" standard in the patent context in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S.Ct. 1749, 188 L.Ed.2d 816 (2014). The standard the Supreme Court articulated was lower than that discussed in previous cases in this district with regard to the Lanham Act. There, the Court stated that an " exceptional" case is " simply one that stands out from others with respect to the substantive strength of a party's litigating position . . . or the unreasonable manner in which the case was litigated." Id. at 1756.
For all of the reasons set forth in this Court's prior decisions, CI's position in this litigation has lacked any merit. It never had a protectable mark in the word " collective, " and indeed never made any real effort to demonstrate otherwise. The Court finds that this is an exceptional case within the standard articulated in this district, as well as within the more lenient standard set forth by the Supreme Court in Octane, to the extent it is applicable.
Included in this Court's determination is not only the weakness of CI's legal position--a weakness that should have been evident before the litigation was threatened, and a weakness that should have prevented the filing of counterclaims--but also the unreasonable positions CI took during discovery. The manner and timing of its production of documents, as well as its position that its Chief Marketing Officer did not have relevant information when she clearly did (and the failure to maintain all of her documents) are further support for the Court's decision.
This Court shall award Cross Commerce reasonable attorneys' fees and costs. Within 14 days, Cross Commerce shall submit appropriate materials setting forth a granular breakdown of tasks, hours, rates, and costs incurred, on a schedule to be agreed by the parties and presented to the Court. CI shall then have an opportunity to respond 30 days thereafter, and Cross Commerce a reply within 7 days after that.
For the reasons set forth above, the Court GRANTS Cross Commerce's motion as to the registrations, GRANTS Cross Commerce's motion for attorneys' fees, DENIES its motion for sanctions as essentially duplicative, and DENIES AS MOOT the pending Daubert motions..
The Clerk of Court is directed to close the motions at ECF Nos. 99, 109, 182 and 191, and to terminate this action.