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4 Pillar Dynasty LLC v. N.Y. & Co.

United States Court of Appeals for the Second Circuit

August 28, 2018, Argued; August 8, 2019, Decided

Docket Nos. 17-2398 (L), 17-2399 (XAP)

Opinion

 [*206]  Carney, Circuit Judge:

In this trademark infringement case brought under the Lanham Act, 15 U.S.C. § 1111 et seq., Defendants-Appellants—Cross-Appellees New York & Company, Inc., and New York & Company Stores, Inc. (collectively, "Defendants" or "NY & C") appeal from a judgment of [**3]  the U.S. District Court for the Southern District of New York (Rakoff, J.), entered after a jury trial, awarding Plaintiffs-Appellees—Cross-Appellants 4 Pillar Dynasty LLC and Reflex Performance Resources Inc. (collectively, "Plaintiffs") an amount equal to Defendants' gross profits from sales of yoga clothing and activewear that infringed Plaintiffs' "Velocity" trademark.

On appeal, Defendants contend primarily that the District Court erred in substantially denying their post-trial motions. They argue that (1) the evidence adduced at trial was insufficient to show that Defendants acted willfully in their infringing actions, a prerequisite for an award of disgorgement of profits; and that (2) to obtain such an award, Plaintiffs were required and yet failed to demonstrate actual consumer confusion. Defendants further contend that the District Court abused its discretion by concluding that this was an "exceptional" case under certain provisions of the Lanham Act, see 15 U.S.C. § 1117(a), and awarding Plaintiffs attorney's fees and prejudgment interest on the disgorgement award. For their part, on their cross-appeal, Plaintiffs argue that the District Court abused its discretion by amending the first-entered [**4]  judgment to eliminate the trebled portions of its profits award.

We conclude that the District Court did not clearly err in determining that the Defendants' infringing acts were willful, as well as when it amended the initially-entered judgment to remove the trebled portion of the profits award. We further reject Defendants' argument that Plaintiffs were required to demonstrate actual consumer confusion as a prerequisite to a profits award, and clarify that, under the Lanham Act, a district court may award to a plaintiff trademark holder the profits made by a willful infringer, without requiring that the plaintiff demonstrate actual consumer confusion. See George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532 (2d Cir. 1992). We therefore affirm the District Court's judgment in these respects.

We vacate, however, the District Court's award of attorney's fees and prejudgment interest to Plaintiffs and its determination that this was an "exceptional" case under the Lanham Act. While this appeal was pending, we held that the standard for determining an "exceptional" case under the Patent Act, see Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 134 S. Ct. 1749, 188 L. Ed. 2d 816 (2014), applies also to cases brought under the Lanham Act, see Sleepy's LLC v. Select Comfort Wholesale Corp., 909 F.3d 519 (2d Cir. 2018). Because the District Court applied a prior standard, under which a finding of willfulness determined [**5]  the right to attorneys' fees absent mitigating circumstances, and was not in a position to apply our holding concerning Octane Fitness, we remand the cause to the District Court to allow it to apply the more flexible Octane Fitness standard in the first instance.

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933 F.3d 202 *; 2019 U.S. App. LEXIS 23713 **; 2019 U.S.P.Q.2D (BNA) 294676; 2019 WL 3719971

4 PILLAR DYNASTY LLC, REFLEX PERFORMANCE RESOURCES INC., Plaintiffs-Appellees-Cross-Appellants, -v.- NEW YORK & COMPANY, INC., NEW YORK & COMPANY STORES, INC., Defendants-Appellants-Cross-Appellees.

Prior History:  [**1] Defendants-Appellants—Cross-Appellees New York & Company, Inc., and New York & Company Stores, Inc. ("Defendants") appeal from a judgment of the United States District Court for the Southern District of New York (Rakoff, J.) awarding Plaintiffs-Appellees—Cross-Appellants 4 Pillar Dynasty LLC and Reflex Performance Resources Inc. ("Plaintiffs") the gross profits earned by Defendants from sales of yoga clothing and activewear that infringed Plaintiffs' "Velocity" trademark. Plaintiffs, in turn, cross-appeal from the District Court's decision, after post-trial briefing, to amend the judgment by removing the trebled portion of the profits award.

We discern no clear error in the District Court's determination that Defendants' infringement was willful and in its award to Plaintiffs of the gross profits derived by Defendants from their infringement. We rule further that the court did not err by amending the judgment to remove the trebled portion of the profits award. We also take the opportunity to clarify that, under our precedent in George Basch Co. v. Blue Coral, Inc., 968 F.2d 1532 (2d Cir. 1992), a plaintiff prosecuting a trademark infringement claim need not in every case demonstrate actual consumer confusion to be entitled to an award of an infringer's [**2]  profits.

We vacate, however, the District Court's award of attorney's fees and prejudgment interest to Plaintiffs and its determination that this was an "exceptional" case under the Lanham Act. While this appeal was pending, we held that the standard for determining an "exceptional" case under the Patent Act, see Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 134 S. Ct. 1749, 188 L. Ed. 2d 816 (2014), applies also to cases brought under the Lanham Act, see Sleepy's LLC v. Select Comfort Wholesale Corp., 909 F.3d 519 (2d Cir. 2018). Because the District Court was not in a position to apply this holding when it ruled on this issue, we remand the case to the District Court to allow it to apply the Octane Fitness standard in the first instance.

4 Pillar Dynasty LLC v. New York & Co., 257 F. Supp. 3d 611, 2017 U.S. Dist. LEXIS 102872 (S.D.N.Y., July 3, 2017)

Disposition: AFFIRMED in part and VACATED and REMANDED in part.

CORE TERMS

infringement, profits, district court, willfulness, trademark, consumer confusion, Lanham Act, attorney's fees, deterrence, prejudgment interest, factors, products, witnesses, awarding, selling, trebled, cases, bad faith, disgorgement, gross profit, product line, accounting, damages, courts, deter, sales

Trademark Law, Causes of Action Involving Trademarks, Infringement Actions, Burdens of Proof, Damages, Types of Damages, Profits, Remedies, Equitable Relief, Equitable Accountings, Business & Corporate Compliance, Determinations, Copyright Law, Copyright Infringement Actions, Civil Infringement Actions, Elements, Trademark Law, Trademark Protection, Lanham Act, Standards of Review, Clearly Erroneous, Governments, Courts, Judicial Precedent, Civil Procedure, Judicial Officers, Judges, Discretionary Powers, Abuse of Discretion, Remedies, Costs & Attorney Fees, Prejudgment Interest, Appeals, Judgments, Relief From Judgments, Altering & Amending Judgments, Treble Damages