Telegram Messenger Inc v. Lantah, LLC

Background

Telegram sued Lantah over the GRAM trademark, which both companies intended to use for cryptocurrency. Telegram asserted claims for false designation of origin, common-law trademark infringement, and unfair competition. Lantah answered and filed counterclaims asserting that it—not Telegram—had priority over the GRAM mark.

The court previously granted Telegram a preliminary injunction and denied Lantah’s motion for summary judgment. The Ninth Circuit affirmed the preliminary injunction. The case was later stayed while Telegram faced a separate enforcement action by the Securities and Exchange Commission. Telegram ultimately abandoned its cryptocurrency network and voluntarily dismissed its claims without prejudice. The court allowed that dismissal on the conditions that the preliminary injunction be vacated and Telegram pay Lantah’s reasonable attorneys’ fees and costs.

Lantah then moved to voluntarily dismiss its counterclaims without prejudice. Telegram opposed that motion and asked the court to require Lantah to pay Telegram’s reasonable fees and costs as a condition of dismissal. Lantah also sought $1,615,140 in attorneys’ fees and $6,737.35 in costs under the condition previously imposed on Telegram’s dismissal.

Voluntary dismissal of Lantah’s counterclaims

The court granted Lantah’s motion for voluntary dismissal of its counterclaims without prejudice. Because the dismissal was without prejudice, the opinion states that the counterclaims were not permanently barred from being brought again. The court conditioned the dismissal on Lantah paying Telegram’s reasonable attorneys’ fees and costs.

The court applied factors concerning possible duplicated expenses in later litigation, Telegram’s preparation efforts, how far the case had progressed, and Lantah’s diligence in seeking dismissal. The court found that Telegram had incurred at least some fees and costs defending the counterclaims and that some of that work could be duplicated in future litigation. The court also found that the case had not progressed meaningfully toward trial and that Lantah’s timing weighed against awarding fees. The court nevertheless held that Telegram was entitled to recover reasonable fees and costs, with the amount to be determined through additional submissions.

Lantah’s attorneys’ fees and costs

The court granted in part Lantah’s motion for attorneys’ fees and costs. It awarded Lantah $618,240 in attorneys’ fees and $6,737.35 in costs. The fee award was based on 1,030.4 compensable hours at a $600 hourly rate. The court rejected Lantah’s request for a higher $900 hourly rate because Lantah had not shown that rate was the prevailing market rate in the relevant legal community. The court also denied any multiplier, which would have increased the basic fee calculation.

The court substantially reduced the requested hours. It reduced time billed during the case stay from 382.1 hours to 38.2 hours; time for a summary-judgment reply brief from 110.2 hours to 55.1 hours; time for opposing Telegram’s voluntary-dismissal motion from 165.1 hours to 90.8 hours; time for Lantah’s fee motion from 144.4 hours to 65 hours; time for Lantah’s answer and counterclaims from 60.2 hours to 42.1 hours; and time for Lantah’s appeal of the preliminary injunction from 360.7 hours to 252.5 hours. The court also reduced certain block-billed hours from 446.7 to 312.7.

Under the governing rule, a defendant receiving fees as a condition of a voluntary dismissal may recover only for work that would not be useful in future litigation between the parties. The court therefore excluded or reduced work related to issues that could remain relevant later, including whether Telegram’s Purchase Agreements were a lawful use in commerce and an unclean-hands defense. The court found that Lantah’s block billing made it difficult to separate recoverable from nonrecoverable work and to determine whether particular tasks were reasonably timed.

Disposition

The court granted Lantah’s motion for voluntary dismissal without prejudice on the condition that Telegram receive reasonable attorneys’ fees and costs, to be determined through additional briefing. The court also granted in part Lantah’s motion for attorneys’ fees and costs and awarded $618,240 in fees and $6,737.35 in costs. Charles R. Breyer signed the order as United States District Judge.