Black v. Irving Materials, Inc.

Background

Jeffery Dean Black sued Irving Materials, Inc. over the imi.com domain name. Black sought a declaration that his registration and use of the domain name were not unlawful under the Anti-Cybersquatting Consumer Protection Act (ACPA), and he also asserted a claim under the ACPA’s provision concerning knowing and material misrepresentations in domain-name proceedings. Irving counterclaimed for cybersquatting and sought a declaration that Black had violated the ACPA.

In an earlier summary-judgment order, the court entered judgment for Irving on Black’s misrepresentation-based claim under 15 U.S.C. § 1114(2)(D)(iv). The court allowed Irving’s cybersquatting counterclaim and declaratory-relief counterclaim, along with Black’s claim under § 1114(2)(D)(v), to proceed to trial. The court explained that Black’s remaining claim sought a declaration that he had not violated the ACPA; it was not an affirmative claim that Irving had violated the law.

At trial, the jury found that Irving had not proved its ACPA cybersquatting counterclaim. In an advisory capacity, the jury found that Black had proved he had not violated the ACPA. The court later found that the jury’s verdict was supported by substantial evidence and found that Irving had not proved its separate declaratory-relief counterclaim. Black then moved for attorney’s fees.

Legal standard

The Lanham Act permits a court to award reasonable attorney’s fees to the prevailing party in an “exceptional” case. Under the standard applied by the court, an exceptional case is one that stands out because of the strength of a party’s legal or factual position or because of the unreasonable way the case was litigated. The court also considered factors such as frivolousness, motivation, objective unreasonableness, and the need for compensation or deterrence.

Court’s analysis

Black argued that fees were warranted because Irving’s cybersquatting counterclaim was objectively unreasonable, Irving had an improper motivation, and Black had succeeded on his own declaratory-relief claim. The court rejected each argument.

First, the court held that Irving’s counterclaim was not objectively unreasonable. Irving had to prove, among other things, that its IMI trademark was distinctive when Black registered imi.com in 1994 and that Black acted with bad-faith intent to profit from the mark. The court had previously found genuine disputes of material fact on both issues, which supported allowing the claim to go to trial. The court reasoned that Irving’s failure to persuade the jury did not by itself make the claim objectively unreasonable.

The court also identified evidence supporting Irving’s positions. Irving had evidence that its trademark had been federally registered without requiring proof of secondary meaning and argued that the mark was inherently distinctive. Irving also presented evidence that Black used the website primarily to advertise the domain name for sale, sought at least $2 million for it, later increased the requested price to $4 million, and changed the website after the related domain-name proceeding. The court stated that these facts could support a finding of bad faith, even though Irving ultimately failed to prove that element.

Second, the court found that Black had not shown an improper motivation by Irving. Irving’s desire to make its brand more consistent and obtain the imi.com domain name reflected business considerations, which the court found were not improper without additional evidence. The court also found no evidence that Irving acted to harass Black or knowingly pursued a meritless claim.

Third, the court rejected Black’s argument that prevailing on the § 1114(2)(D)(v) declaratory-relief claim automatically made the case exceptional. The court noted that this provision does not itself contain an attorney’s-fee provision. It also explained that the question was whether this case stood out compared with ordinary cases, not whether successful claims under that provision were uncommon. Black’s success therefore did not independently justify a fee award.

Finally, the court considered Black’s conduct during the litigation. Despite repeated explanations and orders that his § 1114(2)(D)(iv) claim had been resolved in Irving’s favor and was no longer part of the trial, Black’s counsel continued to request relief and jury instructions based on that claim. The court found that these repeated attempts to pursue a removed claim showed an unreasonable manner of litigation and weighed against awarding fees to Black.

Disposition

The court concluded that Black had not shown by a preponderance of the evidence that the case was exceptional under the Lanham Act. It therefore denied Black’s motion for attorney’s fees. The order did not add a prejudice qualification to that denial.