On The Case

Louis Vuitton spared from fee-shifting in 'obvious' parody case; appeal expected

(Reuters) - Neither U.S. District Judge Jesse Furman nor the 2nd U.S. Circuit Court of Appeals thought much of Louis Vuitton’s trademark and copyright case against a small company that sold canvas tote bags riffing on Vuitton’s hallowed toile monogram design. Judge Furman granted summary judgment  to My Other Bag in January 2016, holding that the canvas totes were an “obvious” parody that, if anything, enhanced the power of Vuitton’s brand. The 2nd Circuit affirmed summary judgment a mere two weeks after the court heard oral arguments – during which Judge Gerard Lynch said Vuitton was trying to “bully” My Other Bag and would be “laughed out of the room” if it asserted its trademark dilution arguments to jurors or jury consultants.

Nevertheless, Judge Furman on Monday denied a request for fee-shifting from My Other Bag’s lawyers at Koppel Patrick Heybl & Philpott, Miller Korzenik Sommers and the Public Citizen Litigation Group. MOB lawyer David Korzenik told me Thursday that his team is probably going to appeal Judge Furman’s ruling, which, according to Korzenik, is a big setback for defendants claiming fair use.

MOB’s lawyers, who have said in filings that they’ve borne much of the cost of defending My Other Bag, asked for about $800,000 arguing that Louis Vuitton should pay their fees under the “exceptional case” test established in the U.S. Supreme Court’s 2014 decision in Octane Fitness v. Icon Health & Fitness. They argued that Vuitton knew its suit was unwinnable yet ran up the cost of the litigation to intimidate My Other Bag. MOB urged Judge Furman to award their fees to dissuade Vuitton – “a shameless trademark bully” – from abusive litigation against defendants making fair use of Vuitton trademarks.

“What makes this case exceptional, and LV’s position objectively unreasonable … is the fact that LV did not file and pursue this lawsuit to win on the merits (manifestly lacking as they were),” MOB’s fee memo said. “The reality is that LV sued MOB to economically browbeat a defendant whose message it didn’t like and to signal to others that it will be costly even if they were to prevail.”

Louis Vuitton brought in Gibson Dunn & Crutcher to ward off the fee request. (Gibson Dunn also filed a petition for Supreme Court review of the 2nd Circuit decision affirming summary judgment, which the justices denied last October.) Vuitton said in its opposition brief that its My Other Bag suit wasn’t brought or prosecuted unreasonably, let alone in bad faith. Judge Furman’s summary judgment decision, Vuitton pointed out, acknowledged genuine uncertainty in the 2nd Circuit about the intersection of parody, fair use and trademark dilution. Litigating an unresolved question of law cannot be considered unreasonable, Vuitton said.

The company also argued that it’s not a “trademark bully” but rather a fierce protector of its intellectual property. Throughout the My Other Bag litigation, MOB has cited a few cases in which Vuitton acted extremely aggressively, such as its suit against Hyundai for displaying a Vuitton-inspired basketball in a commercial poking fun at consumerism; its litigation against a company called Haute Diggity Dog for selling “Chewy Vuitton” pet treats; and its threat to sue the University of Pennsylvania for parodying Vuitton’s trademark in a poster advertising a symposium on trademark law. But Gibson Dunn said a full accounting of Vuitton’s IP enforcement would show that courts routinely side with the company when it sues to protect its image. (Vuitton’s brief listed more than a half-dozen recent cases in which the company was awarded damages or fees for prosecuting IP claims.)

“If this court were to find that Louis Vuitton’s attempt to prevent the use of its intellectual property by others renders this case ‘exceptional,’ trademark owners will have to choose between defending their marks (and risking punitive attorney’s fee awards) or allowing infringers and diluters to diminish or deplete altogether the value of the marks,” Vuitton’s brief said.

Judge Furman ended up agreeing with that argument. The judge said the standard for awarding fees in trademark cases remains unclear in the 2nd Circuit, which has not yet explicitly adopted the Octane Fitness test. But Furman said Vuitton’s suit wouldn’t qualify as exceptional under Octane, let alone a bad-faith case under the 2nd Circuit’s pre-Octane standard. “Although the court (and, by all appearances, the 2nd Circuit) did not find this case to be a particularly close call, it cannot say that Louis Vuitton’s arguments were so objectively unreasonable (as either a legal or factual matter) that no party ‘could see an opening ... through which the arguments could be squeezed,’” Judge Furman wrote.

The best argument for imposing fee-shifting on Vuitton, he said, was to deter litigation abuse, which is particularly worrisome “where, as here, litigation is brought by the proverbial Goliath against the proverbial David.” But the judge said My Other Bag hadn’t provided evidence of bullying that is compelling enough to outweigh Louis Vuitton’s legitimate right to enforce its trademarks.

“A court should proceed cautiously before imposing fees on a trademark owner, lest it present trademark owners with the Hobson’s Choice of either defending their marks and risking punitive attorney’s fee awards or turning a blind eye to infringement and dilution and risking the loss of their rights,” Judge Furman wrote. “MOB’s ability to cite a few isolated examples of arguable overreach — some of which were resolved amicably, no less — does not provide a statistically significant basis to conclude that Louis Vuitton has engaged in litigation abuse on a systemic level. Finally, its conclusory aspersions regarding Louis Vuitton’s motives aside, MOB does not point to any concrete evidence suggesting that Louis Vuitton was solely, or even primarily, motivated in this case by an improper desire to chill parody or stamp out a smaller competitor.”

MOB lawyer Korzenik said Judge Furman’s analysis of the plausibility of Vuitton’s case “contains disturbing language for fair use defendants.” The judge said it was difficult for Vuitton to predict the fate of its trademark dilution and infringement claims because the inquiries are “subtle” and fact-specific, “leaving room for a range of reasonable assessments about the merits of a given argument.” Korzenik said the judge’s interpretation “bolsters plaintiffs’ cynical argument that fair use defense is unpredictable because it’s multi-factored,” he said. “It’s not.”

Via Gibson Dunn, Louis Vuitton declined to comment on Judge Furman’s ruling.