Amarte USA Holdings, Inc. v. Kendo Holdings Inc.

Background

Amarte sued Kendo, Marc Jacobs International, Sephora USA, and the Neiman Marcus Group for federal trademark infringement and related claims. Amarte sold skincare products, including EYECONIC eye cream. Defendants sold beauty products, including MJB EYE-CONIC eye shadow. The court had previously granted summary judgment for Defendants, finding no likelihood of confusion between the products.

Defendants moved for attorney fees under the Lanham Act, which permits fees to the prevailing party in an “exceptional” case. Defendants argued that Amarte’s case was substantively weak and that Amarte acted unreasonably during the litigation. They sought approximately $1.3 million, plus fees for preparing and litigating the fee motion. Amarte challenged both whether fees should be awarded and whether the requested amount was reasonable.

Reasons for the Fee Award

The court held that a case may be exceptional because of unreasonable litigation conduct alone; the party’s legal position need not also be substantively weak. The court concluded that Amarte’s conduct crossed that line based on three categories of behavior:

1. Repeated motions to add defendants. Amarte tried three times to amend its complaint to add parent companies and retailers. The court denied each attempt, finding the proposed allegations insufficient. The court emphasized that Amarte repeated deficient allegations even after receiving guidance about what additional facts were needed.

2. Factual misrepresentations. The court found that Amarte gave misleading information about the goods sold under the EYECONIC mark and made inaccurate statements in court filings about how the competing products were sold. The court also found that Amarte repeated one of those statements after Defendants showed that it lacked a factual basis.

3. Discovery obstruction. The court found that Amarte resisted producing settlement agreements from similar trademark litigation and failed to supplement its damages disclosures as required by the Federal Rules of Civil Procedure. The court viewed this conduct together with Amarte’s other actions as an effort to obscure issues, delay the case, broaden the litigation, and pressure Defendants to settle.

The court stated that the merits of Amarte’s case were not independently so weak as to justify fees, although the merits informed some of the conduct analysis. The court also declined to treat certain other alleged actions, including refusal to recognize binding precedent and an allegedly improper expert-evidence motion, as misconduct independently sufficient to support fees.

Amount of the Award

The court evaluated the requested amount using the “lodestar” method, which multiplies the reasonable hours worked by a reasonable hourly rate. It rejected Amarte’s challenges to Defendants’ lawyers’ rates and hours. The court found that the rates were consistent with current rates for similarly situated lawyers and that the work was reasonable in light of Amarte’s repeated efforts to expand the litigation. It also declined to reduce the award based on the proportion of partner time because paralegals and other legal professionals performed significant work at lower rates.

Disposition

The court GRANTED Defendants’ motion and AWARDED Defendants $1,383,663.50 in attorney fees, plus an additional amount to be determined for time spent preparing and litigating the fee motion. The parties were instructed to meet and confer and submit the updated amount to the court.