No Basis For Fees Under Lanham Act “Exceptional Case” Fee Shifting, With Fee Reductions Made For Partner Heavy Staffing, Inefficiencies, Unsuccessful Work Effort, And The Fee-Shifting Policy Underlying Copyright Act.
Beastie Boys sued Monster Energy Company for copyright and trademark (false endorsement) infringement against Monster Energy Company, the maker of the Monster energy drinks. BB won a $1.7 million jury verdict, after the jury found willful copyright and trademark infringement. BB then sought to recover a little shy of $2.4 million for its use of a “Cadillac” litigation team after voluntarily trimming $100,000 from the request.
U.S. District Judge Paul A. Engelmayer, in Beastie Boys v. Monster Energy Company, 12 Civ. 6065 (PAE) (S.D.N.Y. Doc. 216, filed June 15, 2015), awarded BB $667,849.14 in fees under 17 U.S.C. § 505 (the copyright fee-shifting provision which allows a fee award consistent with the purposes underlying the Copyright Act).
Under section 505, District Judge Engelmayer found that Monster’s overall conduct was not objectively unreasonable except for its failure to concede copyright infringement until the brink of trial—which drove up BB’s fees. He found the case to be close, but did credit the jury’s willful copyright infringement finding by observing that even recklessness could be a proper predicate for a fee award.
The district judge determined, however, that the case was not an “exceptional” one to justify a fee award under 15 U.S.C. § 1117(a), the Lanham Act fee-shifting provision. Using the U.S. Supreme Court’s reasoning from the patent area in Octane Fitness, he determined that the defense positions were not unreasonable in nature.
Although finding impressive lawyering on both sides, District Judge Engelmayer made a wholesale 30% reduction mainly for partner-heaving staffing, especially at the pre-trial stage—after all, BB’s “Cadillac” litigation firm billed 2.5 times as many partner hours as associate hours. He then reduced the request another 20% for time spent on unsuccessful work efforts. Then, consistent with the charge to award fees under section 505 as necessary to vindicate copyright rights, the district judge then sliced 50% from the remaining amount.
Here are some poignant observations made in the fee award: “The court's review of Sheppard Mullin’s bills suggests that the Beastie Boys opted to pay for, and received, the Cadillac Escalade, not the Honda Civic. It was the Beastie Boys’ prerogative to commission or approve such staffing. But the issue for this court is whether it is reasonable to shift the resulting fees to Monster. … Here, plaintiffs’ case could similarly have been pursued with leaner, less-partner-heavy staffing.”
First General Motors Car: 1908 Cadillac. Library of Congress.
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