False Claim of Registered Trademark Rights Justified Award of Attorneys’ Fees

In a recent decision, the New Jersey District Court awarded a declaratory judgment plaintiff, the producer of a public access television program, an award of attorneys’ fees in a trademark infringement case after concluding the case was “exceptional” based upon the “unreasonable manner” in which the defendant, New Jersey’s Union County, litigated the case.

Plaintiff’s public access program, which frequently included criticisms of Union County’s legislators, included a depiction of the seal of the government of Union County in its programming. A year following the program’s launch, Union County filed an application with the USPTO to register its seal as a trademark and shortly thereafter sent plaintiff a demand letter alleging trademark infringement in its use of the Union County Seal.

Union County’s application was refused registration under Section 2(b) of the Lanham Act which prohibits registration of anything that “consists of or comprises the flag or coat of arms or other insignia of the United States, or any State or municipality, or any foreign nation, or any simulation thereof.” Despite the denial of registration, in a follow-up demand letter to plaintiff, Union County misrepresented the status of its mark as registered, and asserted a further claim for infringement, damages, and criminal penalties under a New Jersey statute allegedly covering the Great Seal of the State of New Jersey. Plaintiff responded with a declaratory judgment action of noninfringement and other claims in the New Jersey District Court.

The District Court granted the plaintiff’s summary judgment motion for non-infringement without oral argument finding that the County had no claim under Section 32 of the Lanham Act as the mark in question was not only unregistered, but unregistrable. The Court referred to a magistrate the question of whether the case was “exceptional” so as to justify a grant of attorney’s fees and costs under 15 U.S.C. § 1117.

As an initial matter, the magistrate noted that under New Jersey Supreme Court precedent, a finding of exceptionality could be based upon a number of factors including “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence,” but did not require a showing of fraud, bad faith, or maliciousness. He concluded that the combination of: (i) the County’s assertion that it had obtained a federal trademark registration, when it knew or should have known this was not true; (ii) its continued assertion of trademark violations based on “federal and state statutes that, by their terms, did not provide trademark protection for the Seal,” and (ii) its reliance on a New Jersey Great Seal Statute which, by its express terms, did not cover the mark in question, evidenced that the case had been litigated in a manner that was unreasonable, and for “general intimidation,” thereby qualifying as “exceptional.” The plaintiff was ultimately awarded legal fees and costs of $40,000.