One of the least-endearing features of the U.S. legal system is the American Rule the default rule requiring all parties to civil litigation to bear their own costs (including lawyers fees), win or lose, unless theres a special statutory fee-shifting provision applicable to the case. (Contrasted with the English Rule, under which the default is that the loser pays the winners fees unless a specific statutory provision provides otherwise.)
Among other undesirable consequences, the American Rule encourages, or even invites, a particularly nasty form of litigation bullying: filing lawsuits with little or no hope of prevailing in order either to extract a settlement payment (Ill take $X to go away, which is less than the $10X youll have to spend defending the case) or to force a defendant to cease and desist from perfectly lawful behavior that the plaintiff would like to eliminate (Our pockets are much deeper than yours, and your lawyers fees will bankrupt you long before we run out of dough).
Louis Vuitton Malletier, the high-fashion handbag and accessory manufacturer/distributor, owns one of the most valuable trademarks on the planet the well-known LV toile logo, #14 on Forbes trademark value list, worth around $28 billion. It is, as it candidly acknowledged in a recent court filing, an active and aggressive enforcer of its rights in the logo a euphemism, in the eyes of many observers, for trademark bully. (See Techdirts characterization of LVs ridiculous trademark bullying here.)
LVs hyper-aggressive pursuit of alleged trademark infringers has included what is surely the poster child of trademark bullying LVs ridiculous assertion that Penn Law Schools Student Intellectual Property Groups use of the distinctive LV pattern in its posters for a symposium it was holding on fashion law was egregious action [that] is not only a serious willful infringement and knowingly dilutes the LV Trademarks, but also may mislead others into thinking that this type of unlawful activity is somehow legal or constitutes fair use details here.
The latest episode involved a suit against My Other Bag, whose canvas tote bags have the text My Other Bag in large letters on one side, and drawings meant to invoke the iconic handbags of luxury designers (including LV) on the other an obvious play on the old My other car is a bumper sticker joke. (See pictures of the MOB bags here.)
A couple of weeks ago, U.S. District Judge Jesse Furman of the Southern District of New York dismissed LVs claim that this use by MOB was diluting and infringing its trademark.
Louis Vuitton is, by its own description, an active and aggressive enforcer of its trademark rights. In some cases, however, it is better to accept the implied compliment in [a] parody and to smile or laugh than it is to sue.[This] is such a case. MOBs use of Louis Vuittons marks in service of what is an obvious attempt at humor is not likely to cause confusion or the blurring of the distinctiveness of Louis Vuittons marks; if anything, it is likely only to reinforce and enhance the distinctiveness and notoriety of the famous brand. Accordingly, MOB is entitled to summary judgment on all of Louis Vuittons claims
The decision is undoubtedly correct (see Rebecca Tushnets excellent analysis here), and a small blow for common sense in a field of law in which common sense often does not prevail.
And things get more interesting. Public Citizen has agreed to represent MOB in an action asking the court to award MOB its attorneys fees (which amounted to more than $350,000, a sum exceeding the companys entire revenues last year). The federal trademark statute, the Lanham Act, does allow courts to award attorneys fees in exceptional cases, and though the Second Circuit has taken the position that a case can be deemed exceptional only where the losing party was acting in bad faith, Public Citizens brief argues that this high bar was lowered by the Supreme Court in its recent decision in the Octane Fitness case, which construed a similar provision allowing fee awards for exceptional patent cases in circumstances that go well beyond bad faith.
In addition, and perhaps more importantly, Public Citizen argues that the court should consider not merely the groundless nature of LVs claims in this case, but also LVs prior conduct as a serial trademark bully, in determining whether a fee award is appropriate.
Awards of attorney fees can not only encourage critics of big companies to stand up to bullying, but also encourage public-spirited lawyers to follow the example of Philpott and Korzenik and stand up for such companies pro bono. The prospect of having to pay several-hundred-thousand dollars in attorney fees to a small company that a bully hoped to victimize (trademark cases are notoriously expensive) can also make the bullies think twice about bringing baseless claims.
The bullying tactics on display in this litigation reflects are nothing new for Louis Vuitton: this company has long been identified as a shameless trademark bully. See Grinvald, Shaming Trademark Bullies, 2011 Wis. L. Rev. 625, 652 fn. 156 (2011).
To a company such as Louis Vuitton, it almost doesnt matter if its litigation of particular cases like this one is unsuccessful, because the chilling effect remains. When small companies, or artists, or others, receive threats, they cannot be sure that they will have the resources to litigate toe-to-toe with a litigant with the size and ferociousness of Louis Vuitton, and they have to worry that, as happened to MOB here, they may lose business as retailers hesitate to carry their product because they are afraid of facing litigation, or even peremptory seizures, themselves. Louis Vuitton doesnt need to win to have its way. As in this case, it doesnt even need to have evidence of actual confusion or real harm; it doesnt need to be able to establish even a single factor to the satisfaction of a court. Many victims cave because they cannot afford to fight. Plaintiffs status as a serial abuser of the trademark laws brings considerations of deterrence into play as an additional basis for treating this lawsuit as exceptional.