Jackpocket, Inc. v. Lottomatrix NY LLC

Background

Jackpocket sued Lottomatrix NY LLC and other defendants under federal and New York trademark laws. Jackpocket claimed that the defendants’ use of the JACKPOT and JACKPOT.COM marks infringed, diluted, or unfairly competed with Jackpocket’s JACKPOCKET and JACKPOCKET.COM marks. After an evidentiary hearing and a bench trial on Jackpocket’s equitable claims, the court denied Jackpocket’s request for a permanent injunction. The court found that Jackpocket’s marks were protected, but concluded under the relevant trademark-confusion factors that Jackpocket had not shown a sufficient likelihood of confusion. The court later entered final judgment for the defendants.

The defendants then moved under the Lanham Act and Federal Rule of Civil Procedure 54(d) for reasonable attorneys’ fees and related expenses, and for permission to file a detailed fee application. Under the Lanham Act, fees may be awarded to the prevailing party in an “exceptional” case—one that stands out because of the strength of a party’s position or the unreasonable way the case was litigated.

Reasons for the ruling

The court held that the case was not objectively unreasonable. Jackpocket had an incontestable mark; the defendants’ marks were similar in sound and effect; the parties sought to offer the same service; and Jackpocket had spent considerable amounts promoting its mark and had achieved sales success. Although Jackpocket ultimately lost, the court had not found its legal or factual arguments frivolous. Problems with Jackpocket’s surveys also did not make the lawsuit exceptional, particularly because both sides’ surveys had flaws and survey evidence involves judgment calls.

The court also rejected the defendants’ argument that Jackpocket brought the lawsuit with an anti-competitive or otherwise improper motive. The court found that Jackpocket litigated to enforce trademark rights it reasonably believed had been violated. Jackpocket sought to prevent use of marks it viewed as confusingly similar, not to prevent the defendants from entering the United States market altogether. The court further found no evidence that Jackpocket brought the case merely to obtain a nuisance settlement or to force the defendants to deplete their launch funds.

The court found that Jackpocket litigated in a professional and reasonable manner. Its resistance to expedited discovery and to a newly submitted expert report did not justify fees, and the defendants did not show that Jackpocket’s production of nearly 55,000 pages of discovery caused sufficient prejudice or amounted to substantial misconduct. Finally, deterrence and compensation did not support a fee award. The court found no broader pattern of abusive trademark litigation and concluded that the defendants’ decision to delay their launch was voluntary rather than compelled by an injunction.

Disposition

The court denied the motion for an award of attorneys’ fees and directed the clerk to close the fee-motion docket entry. To the extent the defendants’ reply was construed as a motion to strike new evidence submitted by Jackpocket, that motion was also denied.