Teetex LLC v. Zeetex, LLC

Background

Teetex sued Zeetex, LLC and others for trademark infringement, alleging that the Zeetex mark was confusingly similar to the Teetex mark and caused customer confusion. Teetex also alleged trade-secret misappropriation. The court previously dismissed the trade-secret claims as time-barred, denied dismissal of the trademark claim at the pleading stage, and later granted summary judgment—a ruling without a trial when the evidence shows no genuine dispute requiring trial—in favor of the Zhu Defendants.

The Zhu Defendants moved for attorneys’ fees under the Lanham Act, the federal trademark statute; the Defend Trade Secrets Act; and the California Uniform Trade Secrets Act. They also asked the court to impose sanctions under its inherent authority, arguing that Teetex pursued the case in bad faith.

Fee Entitlement

The court held that the trademark claim made the case “exceptional” under the Lanham Act because Teetex never produced factual support for its assertion that customers were confused. Teetex had identified potential witnesses but ultimately conceded at summary judgment that it had no evidence of actual confusion. The court also noted that Teetex did not diligently pursue discovery, did not provide evidence of lost profits, and did not designate an expert.

The court found that the trade-secret claims were objectively specious, meaning they appeared superficially plausible but lacked supporting evidence. Teetex’s allegations identified broad categories of information rather than specific trade secrets, and much of the information was publicly available. The court also inferred subjective bad faith from Teetex’s reliance on a membership theory previously rejected in an earlier related proceeding, its inaccurate or evasive discovery responses, and its failure to develop evidence. The court therefore held that the Zhu Defendants were entitled to reasonable fees under both the federal and California trade-secret statutes.

The court did not award fees based on its inherent authority. It found that the record did not establish the type of egregious litigation conduct required for that separate basis, and it concluded that the statutory fee provisions were sufficient.

Amount of the Award

The Zhu Defendants requested $99,942.53. Teetex did not challenge the reasonableness of the reported hours or hourly rates, but the court independently reviewed the request. It found the $400 hourly rate reasonable in light of counsel’s experience and prevailing rates in the Northern District of California. It also found no need to reduce the fees incurred through April 30, 2022, because the submitted invoices adequately documented that work.

The court excluded additional fees claimed for work on the fee motion and reply, as well as paralegal time, because the Zhu Defendants did not provide adequate billing records showing the hours worked and tasks performed. The court declined to award $11,495.00 for that additional work and awarded $87,647.53 instead.

Disposition

Judge Jeffrey White granted in part and denied in part the Zhu Defendants’ motion for attorneys’ fees. The court awarded the Zhu Defendants $87,647.53 and denied their request to hold Dong Chen and Jing Li jointly and severally responsible because they had not provided sufficient supporting argument or authority.