ROY B. DALTON JR., United States District Judge.
This cause is before the Court on the following:
Upon consideration, the Court finds that Plaintiffs' objection is due to be sustained, the Report and Recommendation is due to be rejected, and the Motion is due to be granted.
Plaintiffs — CarMax Auto Superstores, Inc. and CarMax Business Services, LLC (collectively,
StarMax also offers services related to the sale of used vehicles. (Id. ¶ 20.) In doing so, StarMax uses marks confusingly similar to the CarMax Design Marks (
CarMax represents that its customers have complained about StarMax and have expressed confusion as a result of the Infringing Marks. (Id. ¶ 25.) Consequently, in February 2013, February 2014, and January 2015, CarMax sent StarMax written correspondence: (1) notifying StarMax that the Infringing Marks were causing confusion in the marketplace and violated CarMax's rights; and (2) demanding that StarMax cease use of the Infringing Marks (
The four-count Complaint alleges claims against StarMax for: (1) infringement of CarMax's federally registered trademarks; (2) false designation of origin and unfair competition; (3) common law trademark infringement; and (4) common law unfair competition. (Id. ¶¶ 36-75.) Most notably, CarMax asserts that StarMax's "acts of trademark infringement have been committed with the intent to cause confusion, mistake, or deception," in connection with the sale of goods and services that directly compete with those offered by CarMax. (Id. ¶¶ 42, 57.) The Complaint also includes side-by-side images of the CarMax Design Marks and the Infringing Marks as an illustration of the confusing similarity of the marks. (Id., ¶ 22.) Further, CarMax alleges that StarMax's continued use of the Infringing Marks is willful, deliberate, and intentional, as evidenced by StarMax's broken promises to remedy the infringement in response to the Pre-Suit Notification. (See id. ¶¶ 30, 42, 60.)
As StarMax failed to file a responsive pleading within twenty-one days after it was served with the Complaint, the Clerk entered default against StarMax pursuant to Federal Rule of Civil Procedure 55(a).
On December 10, 2015, CarMax moved for attorney fees and costs on the ground that the instant action constitutes an "exceptional" case under the Lanham Act. (Doc. 19 (
When a party objects to a magistrate judge's findings, the district court must "make a de novo determination of those portions of the report... to which objection is made." 28 U.S.C. § 636(b)(1). The district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." Id. The district court must consider the record and factual issues based on the record independent of the magistrate judge's report. Ernest S. ex rel. Jeffrey S. v. State Bd. of Educ., 896 F.2d 507, 513 (11th Cir.1990).
CarMax primarily objects to Magistrate Judge Smith's finding that the instant action is not an exceptional case under the Lanham Act and, therefore, does not warrant an award of attorney fees. (See Doc. 21.) Specifically, CarMax argues that this case is exceptional in light of: (1) its extra-judicial efforts over a three-year period to halt StarMax's infringing conduct; (2) StarMax's continued infringement despite its pre-suit promises to cease infringement, the initiation of this action, and the Court's Injunction; (3) the stark discrepancy between the parties' litigation positions; and (4) the unreasonable way in which StarMax has handled the matter. (Id. at 2, 8.) For the reasons explained below, the Court agrees with CarMax that this is an exceptional case warranting an award of attorney fees.
Pursuant to the fee-shifting provision in 15 U.S.C. § 1117(a), the Court may award reasonable attorney fees to the prevailing party in exceptional trademark infringement cases. Prior to the U.S. Supreme Court's decision in Octane Fitness, LLC v. Icon Health & Fitness, Inc., ___ U.S. ___, 134 S.Ct. 1749, 188 L.Ed.2d 816 (2014), the U.S. Court of Appeals for the Eleventh Circuit defined "an exceptional case" as "one that can be characterized as malicious, fraudulent, deliberate and willful." Tire Kingdom, Inc. v. Morgan Tire & Auto, Inc., 253 F.3d 1332, 1335 (11th Cir. 2001). However, construing a similar fee-shifting provision for patent infringement actions, the Octane Court applied a more liberal definition — holding that "an exceptional case is simply 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." Octane Fitness, 134 S.Ct. at 1756. Under this standard, "[d]istrict courts may determine whether a case is `exceptional' in the case-by-case exercise of their discretion,
In light of the almost identical fee-shifting provisions under the Lanham and Patent Acts, courts within this Circuit and elsewhere have applied the Octane Fitness standard in considering whether attorney fees are warranted in trademark infringement actions.
Upon consideration, the Court finds that both Octane Fitness factors are met here. First, the substantive strength of CarMax's litigating position distinguishes this action from others. A side-by-side comparison of the CarMax Design Marks and the Infringing Marks — as provided in the Complaint (Doc. 1, p. 7) and the Objection (Doc. 21, p. 5) — easily reveals the strength of CarMax's infringement claims. Further, pursuant to the Default Judgment,
The present facts are similar to those presented in High Tech Pet Products, Inc. v. Shenzhen Jianfeng Electronic Pet Product Company, Ltd. See No. 6:14-cv-759-Orl-22TBS, 2015 WL 926048 (M.D.Fla. Feb. 12, 2015), adopted and confirmed by 6:14-cv-759-Orl-22TBS, 2015 WL 926023 (M.D.Fla. Mar. 4, 2015). In High Tech, the plaintiff — a manufacturer of electronic pet fencing and behavior modification systems — initiated a trademark infringement action against entities that used the plaintiff's registered and unregistered marks, as well as confusingly similar trade dress, in advertising and selling their own electronic pet fencing and behavior modification systems. 2015 WL 926048, at *1. As in the instant action, the High Tech defendant failed to answer" the complaint and defaulted. Id. Upon motion by the plaintiff, the High Tech court entered: (1) default judgment in favor of the plaintiff; and (2) a permanent injunction enjoining the defendant from further acts of infringement. 2015 WL 926023, at *2-3. Ultimately, the High Tech court found that the case was exceptional and imposed attorney fees based on the substantive strength of the plaintiff's litigating position and the "significant disparity of the merits of the parties'
Though the Court agrees with Magistrate Judge Smith's conclusion that the entry of default judgment does not automatically translate into a finding that a case is exceptional (see Doc. 20, p. 6), the Court finds that the totality of the circumstances in the present action are akin to those in High Tech. As previously intimated, both CarMax and StarMax offer competing products and services. It is no mistake that their name and marks are confusingly similar. Consequently, the exceptional disparity between the parties' litigating positions warrants an award of attorney fees.
Courts have found that similar imbalances between parties' litigating positions are sufficient to award attorney fees under the Lanham Act. E.g., Donut Joe's, 116 F.Supp.3d at 1293-94; High Tech, 2014 WL 926203, at *2. However, the Court also finds the case to be exceptional under the second factor of Octane Fitness. Although the Supreme Court characterized this factor as the "unreasonable manner in which the case was litigated," Octane Fitness, 134 S.Ct. at 1756 (emphasis added), the Octane Court also authorized district courts to award fees "in the rare case in which a party's unreasonable conduct — while not necessarily independently sanctionable — is nonetheless so exceptional as to justify an award of fees," id. at 1757 (emphasis added). As such, the Court agrees with CarMax that the unreasonable conduct referenced by the Octane Court extends to all circumstances surrounding the litigation event, not solely the conduct within the confines of the immediate litigation. (See Doc. 11, p. 21.)
Considering the totality of the circumstances, StarMax's conduct was, and continues to be, patently unreasonable. Despite more than two years of extra-judicial efforts to resolve this issue without litigation, StarMax remained indifferent to CarMax's intellectual property rights in its Design Marks, forcing StarMax to incur attorney fees to enforce its rights. Then, despite CarMax's communication with StarMax regarding the initiation and progress of the instant suit, StarMax continued to ignore both the suit and the Court's Default Judgment and Injunction. While, as Magistrate Smith contends, StarMax's decision to default may be preferable to litigating a meritless position (Doc. 20, p. 6), the Court is especially troubled by its decision to continue to infringe the CarMax Design Marks despite years of presuit notification and communication, initiation of a federal lawsuit, the entry of default judgment, and a Court-issued injunction. Indeed, the Court issued the Injunction on December 1, 2015 (Doc. 17), yet documentation submitted by CarMax demonstrates that StarMax continued to use the Infringing Marks on its website as late as December 29, 2015 (Doc. 21-1). Accordingly, the Court finds the instant action to be an exceptional case under the Lanham Act and finds that the Motion for attorney fees is due to be granted.
Having determined that CarMax is the prevailing party and is otherwise entitled to an award of attorney fees, the Court must now determine whether the fees requested are reasonable. "The first step in computing a reasonable fee is to determine the lodestar, which is the product of the number of hours reasonably worked by a lawyer and a reasonable hourly rate." Dillard v. City of Greensboro, 213 F.3d 1347, 1354 (11th Cir.2000). "A reasonable hourly rate is the prevailing market
"The applicant bears the burden of producing satisfactory evidence that the requested rate is in line with prevailing market rates." Id. "Evidence of rates may be adduced through direct evidence of charges by lawyers under similar circumstances or by opinion evidence." Id. At a minimum, satisfactory evidence "is more than the affidavit of the attorney performing the work." Id. Nonetheless, the Court "is itself an expert on the question and may consider its own knowledge and experience concerning reasonable and proper fees and may form an independent judgment either with or without the aid of witnesses as to the value." Id. at 1303 (quoting Campbell v. Green, 112 F.2d 143, 144 (5th Cir.1940)).
In its Motion, CarMax requests a total of $25,936.60 in attorney fees. (Doc. 19, p. 1.) Specifically, CarMax requests: (1) $3,118 for work performed by the law firm of Allen, Dyer, Doppelt, Milbrath & Gilchrist, P.A. (
According to Luther's declaration, he is a shareholder at Allen Dyer — the largest intellectual property boutique firm in the State of Florida. (Id. at 52.) He has more than fourteen years of experience in intellectual property litigation, including litigation involving trademark infringement. (Id.) Luther's declaration and billing records represent that Luther billed 8.9 hours at a rate of $345 an hour, while Allen Dyer paralegal, Shelley Hotz, billed 0.5 hours at a rate of $95 an hour. (Id. at 53-61.)
Thomas is a partner at Parker Poe with more than twelve years' experience in trademark infringement litigation. (Id. at 2.) Thomas's declaration and billing records reflect that he billed 53.1 hours at the rate of $306 an hour, staff attorney Michael J. Crook (
CarMax retained Hathaway as an independent expert witness on the amount of reasonable attorney fees in the Orlando market. (Id. at 63.) Hathaway has practiced in Central Florida for approximately sixteen years. (Id.) He is currently a shareholder of Dean, Mead, Egerton, Bloodworth, Capouano & Bozarth, P.A. where he serves as chair of the litigation department. (Id.) His practice involves counselling clients on intellectual property matters. (Id.) Based on this experience in Central Florida, he opines that the range of prevailing market rates for attorneys with comparable experience, skill, and reputation is as follows: (1) $325 to $395 per hour as to Luther; (2) $335 to $400 per hour as to Thomas; (3) $225 to $275 per hour as to Crook; and (4) $100 to $180 per how" as to paralegals of similar experience as Mayhew and Hotz. (Id. at 65.)
"The next step in the computation of the lodestar is the ascertainment of reasonable hours." Norman, 836 F.3d at 1301. To this point, Hathaway reviewed CarMax's prelitigation efforts at resolution, as well as the filings and briefing submitted after Car" Max initiated suit. (Doc. 19-1, p. 66.) Ultimately, Hathaway opined that a reasonable number of hours for the work performed in this action would normally range from 75 to 125 hours (
Multiplying the rates billed by the amount worked, the lodestar is $25,936.60. However, "the court has the opportunity to adjust the lodestar to account for other considerations that have not yet figured in the computation, the most important being the relation of the results obtained to the work done." Dillard, 213 F.3d at 1353. "If the result was excellent, then the court should compensate for all hours reasonably expended." Norman, 836 F.2d at 1302. On the other hand, "[i]f the result was partial or limited success, then the lodestar must be reduced to an amount that is not excessive." Id. Upon consideration of the outcome of this action — which yielded a Default Judgment in favor of CarMax and a permanent Injunction against StarMax — the Court sees no reason to depart from the lodestar. The Court will, therefore, award CarMax $25,936.60 in attorney fees.
Finally, CarMax requests $480 in costs pursuant to Federal Rule of Civil Procedure 54(d). (Doc. 19, p. 20.) "Generally, [Rule 54(d)] authorizes an award of costs to prevailing parties as a matter of course, while 28 U.S.C. § 1920 enumerates the types of costs that may be recovered." Tiramisu Int'l, LLC v. Clever Imports, LLC, 741 F.Supp.2d 1279, 1297-98 (S.D.Fla.2010). Under § 1920, recoverable costs include:
Here, CarMax requests: (1) $400 for its filing fee; and (2) $80 for the cost of its third-party process server. (See Doc. 22.) The face of the docket confirms that CarMax paid a $400 filing fee to initiate this suit. (See Docket Entry Text at Doc. 1.) However, Magistrate Judge Smith recommends that the Court deny CarMax's request
Accordingly, it is hereby
