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Romag Fasteners, Inc. v. Fossil, Inc.

United States District Court, D. Connecticut

August 16, 2018

ROMAG FASTENERS, INC., Plaintiff,
v.
FOSSIL, INC., FOSSIL STORES I, INC., MACY'S, INC., and MACY'S RETAIL HOLDINGS, INC., Defendants.

          RULING ON PLAINTIFF'S REQUEST FOR REINSTATEMENT OF PATENT ACT ATTORNEY'S FEES AND COSTS AND AN AWARD OF LANHAM ACT ATTORNEY'S FEES AND COSTS

          Janet Bond Arterton, U.S.D.J.

         After a jury returned a verdict finding Defendants Fossil, Inc. (now known as Fossil Group, Inc.), and Fossil Stores I, Inc., liable for trademark infringement, false designation of origin, state common law unfair competition, violation of the Connecticut Unfair Trade Practices Act ("CUTPA"), and patent infringement, [1] the Court granted Plaintiff Romag's request for attorney's fees under the Patent Act and CUTPA, but not under the Lanham Act. The parties both appealed that Ruling, and as discussed below, the Federal Circuit vacated and remanded. Plaintiff now moves[2] [Doc. # 543] for reinstatement of the Patent Act attorney's fees and costs and for an award of Lanham Act attorney's fees and costs. Oral Argument was held on April 17, 2018. For the following reasons, Plaintiffs Motion is denied and the attorney's fee award is reduced by $265, 736.00, resulting in a final award of $2, 391, 616.04, plus prejudgment and post-judgment interest, with costs reduced by $54, 877.54 for a total of $102, 830.92.

         I. Background

         The Court assumes the parties' familiarity with the procedural history of this case, but includes below a brief summary of the Court's earlier relevant findings, as well as the Federal Circuit's decision vacating and remanding this case for determination of attorney's fees consistent with its findings.

         A. Sanctions

         In the Court's July 2014 Memorandum of Decision it found that the Reiter Declaration, which Plaintiff had filed in support of its motion for a Temporary Restraining Order ("TRO"), was misleading. Romag Fasteners, Inc. v. Fossil, Inc., 29 F.Supp.3d 85, 105 (D. Conn. 2014) (hereinafter "Romag I"), aff'd, 817 F.3d 782 (Fed. Cir. 2016), cert, granted, judgment vacated, 137 S.Ct. 1373 (2017), and vacated in part, 686 Fed.Appx. 889 (Fed. Cir. 2017). The Court sanctioned Romag for this deception.

         Specifically, Mr. Reiter's declaration suggested that he had discovered the counterfeit snaps in November by mere happenstance, conflicting with his testimony at trial that "he went to Macy's that day with the express purpose of confirming his suspicions that Fossil was using counterfeit ROMAG snaps in their handbags," and his acknowledgement that he had strong suspicions by late October that counterfeit snaps (the existence of which he had been informed about in May 2010) were being used in Fossil bags. Id. Based upon these findings, inter alia, the Court concluded that Romag acted in bad faith by delaying its TRO filing until the beginning of the holidays-intentionally sitting "on its rights between late May 2010 and late November 2010 to orchestrate a strategic advantage and improperly obtain emergency injunctive relief on a timetable of its choosing, not on the irreparability of its harm." Id. at 106. Consequently, the Court sanctioned Plaintiff, precluding it "from recovering its expenditures in relation to the prosecution of its TRO." Id.

         B. The Court's Original Award of Attorney's Fees

         On August 14, 2014, the Court issued its Ruling on Plaintiffs Motion for Attorney's fees, in which it denied Plaintiff Lanham Act fees, while granting attorney's fees under the Patent Act and CUTPA. See Romag Fasteners, Inc. v. Fossil, Inc., No. 3:10CV1827 JBA, 2014 WL 4073204 (D. Conn. Aug. 14, 2014) (hereinafter "Romag II'').

         The Court denied Lanham Act fees based on (1) Fossil's non-willful infringement; (2) the finding that Fossil had not "acted fraudulently or in bad... faith" in its non-infringement position; (3) the Court's ruling denying Romag's Rule 50(a) motion on Fossil's non-infringement argument, which precluded a frivolousness finding; and (4) the finding that Fossil's "arguments with respect to non-infringement were not entirely groundless." Id. at *5.

         However, it held that "based on the totality of the circumstances and a consideration of the factors suggested in Octane Fitness, ... this is an 'exceptional' case within the meaning of the Patent Act and ... Plaintiff is entitled to recover its reasonable attorney's fees under that statute." Id. at *4. The Court found that Fossil's defense "bordered on frivolous," based on the "tenor" of Judge William Young's indefiniteness summary judgment decision and that Fossil "fail[ed] to formally withdraw its remaining invalidity defenses until after the close of evidence," which, the Court stated, "Plaintiff argue[d] necessitated its presentation of evidence with respect to patent validity in its case-in-chief." Id. at *3-4. Finally, it reasoned that Fossil "aggressively pursue[d] invalidity counterclaims ... to prolong litigation and exponentially" increase litigation cost and risk. Id. at *4.

         With respect to fashioning the appropriate award, the Court found that the CUTPA claim, under which the Court had also awarded fees, "was so intertwined with its other causes of action that the vast majority of its costs and fees cannot be apportioned between the claims at issue in this case." Id. at *8. The Court did, however, exclude from the award those costs and fees that were incurred solely in relation to Plaintiffs claim for an award of Defendant's profits under the Lanham Act. Id.

         Thereafter, judgment entered in favor of Romag and the Court awarded $2, 657, 352.04 in attorney's fees and $157, 708.46 in costs.[3]

         C. Federal Circuit Ruling

         The parties appealed and cross-appealed the Court's fee awards, and on August 9, 2017, a majority of the Federal Circuit panel vacated the fee awards and remanded to this Court based upon several key findings.

         The Federal Circuit held that this Court should have applied Octane to its Lanham Act "exceptional case" determination. Romag Fasteners, Inc. v. Fossil, Inc., 866 F.3d 1330, 1334-36 (Fed. Cir. 2017) (hereinafter "Romag IV). It also faulted the Court's decision not to consider, "in connection with its totality of circumstances analysis, Romag's earlier litigation misconduct," for which the Court had issued sanctions. Id. at 1340. Indeed, it held that "the fact that this misconduct has already been sanctioned should be weighed more heavily, rather than be excluded." Id.

         Additionally, the Federal Circuit held that the Court erred in the following ways:

(1) Finding that Fossil had not withdrawn its invalidity defenses until after testimony was complete, which "[wa]s misleading and contradicted by the record." Id. at 1338.
(2) Finding as a key factor for awarding fees to Romag "that Fossil declined to abandon [invalidity] defenses until after the trial[, ]" as "[t]he record establishes that the defenses were withdrawn before trial." Id. at 1336.
(3) Holding that Fossil's indefiniteness defense bordered on frivolous," as the Federal Circuit did "not read Judge Young's opinion to be describing Fossil's indefiniteness defense as 'woefully inadequate' in the sense that Fossil's theory was objectively unreasonable"; or "to have a 'tenor' that indicates that Fossil's indefiniteness defense 'bordered on frivolous.'" Id. at 1339.
(4) Finding that the Court's earlier Rule 50(a) Ruling on infringement precluded it from basing an exceptional case ruling on Fossil's argument; but this Court's conclusion that Fossil's noninfringement position did not make the case exceptional was not error because "the [C]ourt also found that Fossil's arguments with respect to noninfringement were not entirely groundless." Id. at 1341.

         The Federal Circuit "remanded to the district court to consider the Lanham Act and the Patent Act attorney's fees and the claimed expert fees under the correct standard, free of the errors identified" in the Federal Circuit's Ruling. Id. at 1341-42.[4]

         II. Discussion

         On remand, Romag asks that the Court award it attorney's fees under the Lanham Act and that it reinstate its previous award of attorney's fees under the Patent Act, and expert witness fees under the Court's inherent authority. In the event the Court declines to reinstate the award of attorney's fees under the Patent Act, Plaintiff contends that this Court, consistent with its prior decision that was not challenged on appeal, should modify the total fee award to deduct only those fees solely related to Romag's patent infringement claim. Finally, Romag claims entitlement to an award of pre- and post-trial interest on the patent damage award.

         A. Patent and Lanham Act Fees

         The Supreme Court in Octane Fitness held that for a case to be an "exceptional case" justifying an award of attorney's fees, a finding of fraud or bad faith is not required. Rather, the case must "simply [be] 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 . . ., considering the totality of the circumstances." Octane Fitness, LLC v. Icon Health & Fitness, Inc.,134 S.Ct. 1749, 1756 (2014). While Octane Fitness was a Patent Act case, the Federal Circuit anticipated that the Second Circuit would hold that the Lanham Act has the same standard for recovering attorney's fees ...


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