Weekly IP Takeaways

Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.

1. A recent order from the Western District of Washington denied an award of attorneys’ fees in a trademark case even though the infringement was found to be willful. In Eko Brands v. Adrian Maynez Rivera Enterprises, the Court on April 2, 2020 denied the fee award, noting that willful infringement does not mandate a finding that a case is exceptional and fees are warranted. Applying Octane Fitness, the Court noted that the plaintiff withdrew a key element of its damages case at trial (after an Order to Show Cause from the Court), and also that the asserted marks were not particularly strong. Thus, the case was not one of such substantial strength to warrant fees. The Court also noted that the case was not litigated in an unreasonable manner, including that counsel were cordial to one another, and there were no discovery motions in the case. While it is disappointing not to receive a fee award after a finding of willful infringement, one takeaway from this order is that being professional and cordial as opposed to abrasive and belligerent, and avoiding discovery motions may be a recipe to avoid a fee award even if you lose the case.

2. In an appeal from a trademark Examining Attorney’s refusal to register product packaging trade dress based on a multi-color design because color cannot be inherently distinctive, which was subsequently affirmed by the Trademark Trial and Appeal Board (TTAB), the Federal Circuit reversed, holding that “color marks can be inherently distinctive when used on product packaging, depending upon the character of the color design.” Slip Op. at 6. The Federal Circuit carefully considered Supreme Court precedent on trade dress (e.g., Wal-Mart v. Samara Bros and Qualitex v. Jacobson Products, and determined that the Supreme Court never said that color marks could be protectable without a showing of acquired disctinctiveness. The Court concluded that “the Board erred in finding that a proposed product packaging mark consisting of multiple colors is not capable of being inherently distinctive.” Slip Op. at 8-9. Thus, the takeaway is the product packaging employing a distinctive color arrangement may be protectable as trade dress without a showing of secondary meaning.

3. In a civil procedure nerd’s dream, the Federal Circuit ruled that a stipulation of dismissal with prejudice, which did not mention attorneys’ fees or costs, is a sufficiently final disposition of a case so as to allow the filing of a motion for attorneys’ fees. The opinion is here. In a lawsuit filed by an employer against a former employee who patented an invention that the employer said was made on company time, the employer asserted claims for declaratory relief of non-infringement, declaratory relief of invalidity, breach of contract, trade secret misappropriation, and correction of inventorship on the former employee’s patent to add the company. The former employee gave a covenant not to sue to his former employer, and then filed a motion to dismiss, which disposed on the declaratory relief claims, but not the breach of contract or trade secret misappropriation claims. Thereafter, the parties submitted a joint stipulation of dismissal with prejudice of the remaining claims pursuant to Fed.R.Civ.P. 41(a)(1)(A)(ii), which does not require a court order to be effective. “The stipulation was silent as to costs and attorney’s fees.” Slip Op. at 3. Pursuant to Fed.R.Civ.P. 54(d) , the former employee filed a motion for attorneys’ fees 12 days later. The District of Oregon denied the fee award holding that a stipulation of dismissal with prejudice was not a “judgment” under Rule 54 upon which a motion for attorneys’ fees could be submitted. The Federal Circuit, distinguishing the Supreme Court case Microsoft v. Baker, determined that an actual judgment was not a requirement for filing a fee motion, but rather, a disposition that is final and will not result in piecemeal appeals, including a stipulation of dismissal with prejudice, was sufficient to support a motion for attorneys’ fees. The obvious takeaway here is that a stipulation of dismissal should include a term that each party will bear its own fees and costs (or some other agreement reached by the parties). This will likely become a much more heavily negotiated point in settlement talks, and the result may be more fee motions.