Weak TM case won't justify fee award to defendants

Gameologist Group, LLC v. Scientific Games Intern., Inc., 2012 WL 1446922 (S.D.N.Y.)

Gameologist sued Scientific for various TM and false advertising claims, and the court granted Scientific’s motion for summary judgment. Scientific moved for attorneys’ fees and costs.

The undisputed facts: Gameologist developed a concept for a casino table game called Bling Bling, and secured registrations for “BLING BLING 2002” for “entertainment in the nature of online three dice casino games” and for “casino games and equipment therefor, namely, board games.”  Gameologist entered into a license with MDI, a company that had been acquired by Scientific, granting MDI rights to use the mark for lottery tickets, and then the parties cancelled the license.  Scientific, which is in the lottery business, sold several thousand instant lottery tickets featuring the word “bling” between 2007 and 2010, at least three years after the termination of the license.  Gameologist didn’t license anyone other than MDI for any goods or services, never successfully marketed a “Bling Bling” lottery ticket, or released a “Bling Bling” product in the lottery industry.  It only documented four sales of a BLING BLING 2002 board game.  Summary judgment was granted because Gameologist failed to raise a genuine issue of material fact either that the plaintiff engaged in sufficient use of its mark in commerce or that the defendants' use of the term “bling” in connection with lottery tickets was likely to cause consumer confusion.

Defendants claimed nearly $1 million in fees.  They argued that Gameologist’s claims were so frivolous as to compel the conclusion that they were brought in bad faith.  Baseless claims can indeed allow an inference of bad faith, but mere failure to win isn’t enough.  Here, Gameologist’s claims were not “so completely without merit as to compel the conclusion that these claims were brought in bad faith.”  Disposing of them required oral argument, additional briefing, and extensive analysis, “not the hallmarks of a purely frivolous filing.”  Furthermore, there was no reason to doubt Gameologist’s subjective belief in the merits of its claims.  Though Gameologist was mistaken in thinking that the terminated license agreement indicated that Scientific misappropriated the “Bling Bling” concept for its own commercial advantage, a flawed or misguided understanding of the law is insufficient to constitute bad faith. 

This also disposed of Scientific’s argument that a fee award was justified based on the court’s inherent power to manage proceedings; though Scientific argued that Gameologist’s counsel engaged in negligent or reckless behavior by failing to conduct a reasonable investigation into the merits of the case before filing this action, a sanction in the absence of bad faith is only allowed when the attorney’s behavior violates a court order or is otherwise misconduct not undertaken for the client’s benefit.  Here, even assuming there was negligence/recklessness, counsel was representing the client.  Nor did Rule 11 justify sanctions.  Even after discovery ended, it wasn’t “patently” clear that there was no chance of success.  “While the plaintiff's assertions regarding use in commerce and likelihood of confusion certainly were weak, these standards are fact-dependent in their application, and the plaintiff could reasonably have believed that it had some chance of success, albeit minimal, on its claims.”  A long shot isn’t necessarily sanctionable.  And finally, NY GBL §360-m provided no basis for a fee award; that provision provides remedies for plaintiffs injured by willful infringement, rather than for parties whose adversaries acted wrongfully in conducting the litigation.