Hanginout Voluntarily Dismisses Trademark Suit, But Must Pay Google’s Litigation Costs

On June 23, 2015, the Southern District of California agreed to let social media company Hanginout, Inc. voluntarily dismiss its trademark suit against Google with prejudice, but awarded Google its costs associated with litigating the action.

In July 2012, Hanginout filed an application to register the mark HANGINOUT (the brand for its interactive video-response platform) with the USPTO.  About a year later, Google launched a video-chat service titled “Hangouts” and filed a trademark application to register the title as a word mark.  However, the USPTO suspended Google’s application because Hanginout’s mark (if granted) might bar registration of Google’s mark based on a likelihood of confusion.

In late 2013, Hanginout filed suit in district court accusing Google of infringing its unregistered mark under Section 1125(a).

In 2014, Google filed an opposition to Hanginout’s trademark application before the TTAB, and then moved the TTAB to suspend its proceedings pending resolution of the district court litigation.

In 2015, Hanginout tried, but failed to extricate itself from the district court litigation through unsuccessful motions to stay (pending resolution of the TTAB action) and to dismiss the case without prejudice.  Finally, faced with the costs of both the TTAB and the district court action (and, according to Hanginout, Google’s “nearly unlimited resources”), Hanginout concluded it lacked the money to pursue its district court case.  Therefore, after over eighteen months of litigation, after fact discovery had closed, and six days before expert reports were due, Hanginout moved the court to dismiss its case with prejudice.

Although the general rule is that courts do not award fees or costs when granting a motion to voluntarily dismiss a case with prejudice, the court found that the facts here supported a different result, at least with respect to Google’s costs.  According to the court, costs would account for: (1) the length of the proceedings, (2) the timing of Hanginout’s request, and (3) the expenses Google incurred for work that could not be used in the TTAB or any future district court litigation involving a registered trademark.  Although dismissal would secure for Google a decision on the merits relative to the unregistered mark, the litigation might have resolved more than that claim alone.  Instead, dismissal of the infringement action would result in a resumption of the stayed TTAB proceedings and Hanginout could bring a further infringement lawsuit under Section 32 (as it had threatened) if and when its HANGINOUT mark registers.

The court denied Google’s requests to predicate dismissal on: (1) an award of attorneys’ fees, (2) an order precluding Hanginout from bringing future trademark infringement claims, or (3) an order binding Hanginout to all of its discovery responses concerning the current state of facts in this action, and precluding Hanginout from relying on any new facts in the future concerning past actions.  With respect to these last two points, the court refused “to make determinations that could affect subsequent litigation, the nature and scope of which is unknown.”