Monday, August 21, 2017

Bad dilution claims are so common that they aren't "exceptional" for fee-shifting, court rules

Parks, LLC v. Tyson Foods, Inc., 2017 WL 3534993, No. 15-cv-00946 (E.D. Pa. Aug. 17, 2017)

Tyson sought attorneys’ fees in this Lanham Act case after its summary judgment victory was affirmed by the Third Circuit. The court found that this was not an exceptional case meriting an award of fees, despite the novelty of Parks’ main legal theories.

There was an unusual degree of discovery trouble in the case, but not because of “wasteful procedural maneuvers” or “dilatory tactics.” Instead, the parties just didn’t seem to understand each other’s claims or to work collaboratively at discovery; this didn’t mean that one side litigated the case in an unreasonable manner.

Tyson argued that all three of Parks’ Lanham Act theories—false advertising, false association, and trademark dilution—were frivolous, but the court disagreed. The primary claims were for false advertising and false association. The first theory was that Tyson’s use of the name “Park’s Finest” was false, or at least misleading, because it conveyed to consumers that Tyson was selling Parks’s finest product. From early on, the evident problem was that this seemed to simply duplicate the false association claim.  But that didn’t weigh against a fee award, because “at the time Parks brought the claim, there was little case law—particularly in this circuit—addressing the dividing line between claims of false advertising and claims of false association.”  On appeal, the Third Circuit also noted that this case offered an opportunity to “clarify” what it had never before directly held about that line.  “Given the state of the governing law at the time this case was filed, Parks’s decision to attempt a claim under the banner of false advertising was not ‘unreasonable.’”

Anyway, the collapse of theory one into theory two (false association) meant that the merits were the same as to both, and the false association claim was not so “exceptionally meritless” as to warrant fee shifting. But really, this case was about failed proof: the Parks name “once enjoyed widespread recognition” as a result of an ad campaign that was at one time “ubiquitous and long-running,” so much so that the appellate judges recalled it at oral argument.  That recognition, it appeared, no longer existed, but this past glory “differentiates this case from the mine-run of frivolous trademark infringement suits brought by plaintiffs who seek to prevent others from infringing on marks that do not and have never had the sort of recognition in the marketplace that would entitle them to protection.” The similarity of the parties’ marks and goods also made the suit potentially meritorious.  “Even now, Tyson perhaps does not appreciate how close it may have come to a different result in this case.… A properly-designed survey (and perhaps a bit more modesty in the geographic area Parks sought to protect) might have changed the course of this case.”

As for Parks’s claim for trademark dilution, which was voluntarily withdrawn at summary judgment, it “had little chance of success from the start,” but a fee award isn’t about how great the disparity was between the parties’ positions—it’s about whether the present case “stands out from others.”  And dilution claims are commonly “tacked on to claims for trademark infringement or false association,” despite the rarity of true fame; as a result, “the vast majority of attempted dilution claims not only fail, but had very little chance of ever succeeding.”  Fees could be available for some non-meritorious dilution claims, but in light of the Parks name’s former strength, “the company’s attempt to characterize its mark as ‘famous’ is not so different from numerous other plaintiffs that have tried the same thing, despite having hardly any chance of being considered alongside that pantheon of truly famous marks.” [Urgh.]

Parks’s motivation, though not dispositive, also seemed legitimate to the court: Parks “genuinely viewed Tyson’s use of the name ‘Park’s Finest’ as an existential threat—a potential final blow to the once-prominent company, inflicted by a competitor that, by revenue, is approximately four thousand times its size.” Parks’ good faith was relevant, and also weighed against a fee shift.

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