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Healthmate International, LLC v. French

United States District Court, W.D. Missouri, Western Division

October 31, 2017

HEALTHMATE INTERNATIONAL, LLC, Plaintiff,
v.
TIMOTHY W.T. FRENCH, and RAMPANT LION LLC, Defendants.

          ORDER AND OPINION DENYING PARTIES' CROSS MOTIONS FOR ATTORNEY FEES AND COSTS

          BETH PHILLIPS, JUDGE UNITED STATES DISTRICT COURT.

         Plaintiff Healthmate International, LLC initiated this suit, asserting three claims of copyright infringement against Rampant Lion LLC and one of its co-owners, Timothy French. Defendants asserted several counterclaims, including one for false advertising under the Lanham Act. Plaintiff prevailed on two of its three copyright claims against Rampant Lion and on the Lanham Act counterclaim. Rampant Lion prevailed on one of the three copyright claims, and French prevailed on all three of the copyright claims asserted against him. Now pending are the parties' cross motions for attorney fees and costs, in which the parties contest who prevailed and the extent to which each party engaged in inappropriate conduct during the litigation.[1] Both motions, (Doc. 255 and Doc. 262), are DENIED.[2]

         I. BACKGROUND

         Healthmate and Rampant Lion are in the business of selling TENS units. “TENS” stands for Transcutaneous Electrical Nerve Stimulation, and generally speaking TENS units administer electrical current to portions of the body in order to relieve pain. Healthmate has a Certificate of Registration for three copyrights for graphical displays used on TENS units it sells. All three displays contain a series of picture-based icons that symbolize the TENS unit's various functions. Healthmate alleged that each of the Defendants infringed on all three copyrights by copying them for use on TENS units sold by Rampant Lion.

         Healthmate operates a website through which it sells its products, and its website described some of its products as “FDA approved.” As the Court explained in its Order on the summary judgment motions, “[g]iven the technical meanings accorded to the phrases, Plaintiff's products are ‘FDA cleared' but not ‘FDA approved.' Thus, it was incorrect to say that Plaintiff's products were FDA approved, at least as that phrase is understood in terms of FDA regulations and procedures.” (Doc. 176, p. 9.)[3] This false statement gave rise to Defendants' counterclaim under the Lanham Act.

         The Lanham Act and the Copyright Act each have separate fee-shifting provisions, and both are at issue. For ease of discussion, the Court will address the Lanham Act first. Additional facts about the claims will be discussed as well.

         II. DISCUSSION

         A. Rampant Lion's Lanham Act Counterclaim[4]

         Healthmate relies on its victory on Rampant Lion's Lanham Act counterclaim to justify its fee request. The Lanham Act provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 17 U.S.C. § 1117(a). There is no question that Healthmate was the prevailing party on Rampant Lion's Lanham Act claim; the question is whether this was an “exceptional case.” Interpreting similar language in the patent statutes, the Supreme Court held that an exceptional case is “one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is ‘exceptional' in the case-by-case exercise of their discretion, considering the totality of the circumstances.” Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S.Ct. 1749, 1756 (2014). Before Octane Fitness addressed the Patent Act's fee provision, the Eighth Circuit held (in a case involving the Lanham Act) that “[a]n exceptional case is one where the plaintiff's claim is groundless, unreasonable, vexatious, or pursued in bad faith.” Blue Dane Simmental Corp. v. American Simmental Ass'n, 178 F.3d 1035, 1043 (8th Cir. 1999) (quotation omitted). In addition, “[b]ecause the statute states that the court ‘may' award attorney's fees in exceptional cases, the district court retains discretion as to the award of attorney's fees even if it finds a case to be exceptional.” First Nat'l Bank in Sioux Falls v. First Nat'l Bank S. Dakota, 679 F.3d 763, 771 (8th Cir. 2012).

         Healthmate argues that this was an exceptional Lanham Act case because Rampant Lion had no evidence of customer confusion, the Lanham Act claim was asserted as a litigation tactic solely to increase the cost of litigation, and Rampant Lion unreasonably rejected Healthmate's settlement offers. Rampant Lion contends that the fact that it lost the Lanham Act claim does not make it frivolous, and there was nothing exceptional justifying imposition of fees and costs. The Court agrees with Rampant Lion.

         In its summary judgment ruling the Court held that Healthmate's statement that its products were “FDA approved” was inaccurate, so to that extent there was a basis for Rampant Lion's claim. Rampant Lion had no evidence of customer confusion, but it sought to avoid the need for it by contending - as permitted by such cases as United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998) - that Healthmate's statement that its TENS units were “FDA approved” was literally false.[5] The Court rejected this characterization of Healthmate's representation, and held that the general public would not necessarily and unavoidably understand Healthmate's statement to be false. (Doc. 176, pp. 12-13.) Thus, summary judgment was granted because (1) the Court held that Rampant Lion had to present evidence of customer deception and (2) Rampant Lion conceded that it had no evidence of customer deception.

         The fact that the Court disagreed with Rampant Lion's analysis does not make the case exceptional; to hold otherwise would make every case in which a party loses “exceptional” and destroy the distinction between the Lanham Act's fee provision and other fee-shifting provisions that merely require that a party prevail to recover fees. Similarly, the fact that Healthmate had to participate in the discovery process did not make this case extraordinary. Finally, the Court declines Healthmate's invitation to consider Defendants' unwillingness to settle. Even if the parties' settlement negotiations could be considered, the relevance of such facts are dubious: the settlement discussions involved a myriad of claims, including Healthmate's copyright claims, and it appears that Healthmate obtained less relief at trial than it would have received in any of its settlement demands, which seems to vindicate Defendants' refusal to settle. Defendants' rejection of a global settlement in this case does not demonstrate that the Lanham Act claim was exceptional.

         Healthmate prevailed on the Lanham Act claim, but there was nothing extraordinary about the claim that justifies imposition of fees and costs. Healthmate's request for fees and costs under the Lanham Act is therefore denied.

         B. Healthmate's ...


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