Telegram Messenger Inc v. Lantah, LLC

Background

Telegram and Lantah disputed use of the GRAM mark for cryptocurrency. Telegram sued Lantah for false designation of origin, common-law trademark infringement, and unfair competition. Lantah filed counterclaims asserting that it, rather than Telegram, had priority in the GRAM mark.

The court had previously granted Telegram a preliminary injunction barring Lantah from using the mark and denied Lantah’s summary-judgment motion. The preliminary injunction was later affirmed on appeal. The court then stayed discovery and dispositive motions. Separately, the Securities and Exchange Commission sued Telegram in New York. That litigation ended in a settlement under which Telegram agreed to return funds from its GRAM purchase agreements, pay an $18.5 million civil penalty, and give notice to the agency before certain future digital-asset issuances.

Motion and Positions

Telegram moved under Federal Rule of Civil Procedure 41(a)(2) to voluntarily dismiss its claims without prejudice and without conditions. Telegram explained that it had stopped pursuing its cryptocurrency network and was no longer interested in continuing the trademark litigation based on its current use of GRAM, while preserving the possibility of using the mark for another related product in the future.

Lantah asked the court to rule against Telegram’s claims as a matter of law. Alternatively, Lantah sought dismissal with prejudice and an award of reasonable attorneys’ fees and costs. Lantah also asked the court to vacate the preliminary injunction even if dismissal without prejudice were granted.

Court’s Analysis

The court allowed Telegram to dismiss its claims rather than deciding them on the merits. It concluded that the case was still at a relatively early stage despite Lantah’s work, appeal of the preliminary injunction, and other litigation expenses. The court also found that Telegram had been diligent and had adequately explained its reason for dismissal. The court rejected Lantah’s argument that Telegram was seeking dismissal only to avoid a likely adverse judgment, noting Telegram’s prior success and the absence of a ruling in the Securities and Exchange Commission litigation that Telegram’s use of GRAM was unlawful.

The court granted dismissal without prejudice. That means the order did not bar Telegram from bringing the claims again, although the court imposed conditions on the dismissal.

The first condition was vacatur of the preliminary injunction. The court reasoned that the injunction’s original basis had changed because Telegram had dismissed its claims, stopped using GRAM in connection with cryptocurrency services, and undone its GRAM transactions.

The second condition was an award of reasonable attorneys’ fees and costs to Lantah. The court found that Lantah had incurred expenses and could face some duplicated costs in future litigation. It also concluded that the litigation had not progressed meaningfully toward trial and that Telegram had acted diligently in seeking dismissal. The court stated that Lantah could recover only amounts meeting the applicable standards, including work that was not useful in any continuing litigation and costs that were not excessive or avoidable.

Disposition

The court granted Telegram’s motion to dismiss without prejudice, vacated the preliminary injunction, and awarded Lantah reasonable attorneys’ fees and costs. The amount was not set in the order. The parties were directed to meet and confer; if they could not agree, Lantah could submit records and a proposal, Telegram could respond, and Lantah could reply under the page and timing limits stated by the court.

Because Lantah had pleaded counterclaims, the court directed Lantah to advise it within 20 days how it wished to proceed with those counterclaims. The order therefore resolved Telegram’s claims but did not state that Lantah’s counterclaims were dismissed.