Gracie v. Gracie
217 F.3d 1060 (2000)
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Rule of Law:
Under the Lanham Act, a district court must cancel a federal trademark registration when a jury returns a special verdict finding the mark invalid. Furthermore, when awarding attorney's fees in an exceptional case of willful infringement, the court must apportion the fees to cover only work performed on the successful Lanham Act claims.
Facts:
- Carley Gracie and Rorion Gracie are first cousins from a prominent Brazilian family known for practicing and teaching a form of jiu-jitsu.
- In the early 1970s, Carley came to the United States and began teaching jiu-jitsu, using the name 'Gracie' in connection with his business.
- In the late 1970s, Rorion came to the U.S. and began teaching what he called the 'Gracie method' of jiu-jitsu, using the term 'Gracie Jiu-Jitsu' to identify his business.
- Rorion's business grew into a nationwide chain, which he publicized using the 'Gracie Jiu-Jitsu' name and a 'Triangle Design' logo depicting two grappling figures within an open triangle.
- In 1988, Rorion obtained a California state registration for the Triangle Design logo.
- In 1989, Rorion obtained federal registrations for both the 'Gracie Jiu-Jitsu' service mark and the Triangle Design logo.
- Rorion actively enforced his rights in these marks through litigation against others.
- Carley used a logo for his own jiu-jitsu instruction business that was similar, but not identical, to Rorion's registered Triangle Design logo.
Procedural Posture:
- Carley Gracie sued Rorion Gracie in the United States District Court for the Northern District of California, seeking cancellation of Rorion's federal trademark registrations.
- Rorion Gracie filed counterclaims against Carley, alleging infringement of his registered 'Gracie Jiu-Jitsu' service mark and 'Triangle Design' logo.
- The district court granted partial summary judgment in Rorion's favor on several of Carley's claims, but the infringement counterclaims proceeded to trial.
- A jury returned a special verdict finding that: 1) Rorion's 'Gracie Jiu-Jitsu' mark was invalid; 2) Rorion's 'Triangle Design' logo was valid; 3) Carley willfully infringed the 'Triangle Design' logo; and 4) Carley's profits from the infringement were $108,000.
- Following post-trial motions, the district court entered an amended judgment that declared the 'Gracie Jiu-Jitsu' mark invalid but did not order its cancellation from the federal register.
- The judgment awarded Rorion $108,000 in profits, issued a permanent injunction against Carley, and awarded Rorion $620,000 in attorney's fees as the prevailing party on the Triangle Design infringement claim.
- The district court denied Carley's motion for a new trial on the infringement claim and his motion for attorney's fees for his successful defense against the 'Gracie Jiu-Jitsu' claim.
- Carley Gracie, as appellant, appealed the judgment concerning the infringement finding, the award of profits and attorney's fees, and the denial of his motions to the United States Court of Appeals for the Ninth Circuit.
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Issue:
Under the Lanham Act, must a district court cancel a federal trademark registration that a jury has found to be invalid, and when awarding attorney's fees in an exceptional case, must the court apportion the fees between successful Lanham Act claims and other claims?
Opinions:
Majority - O'Scannlain, J.
Yes, a district court is required to cancel a trademark registration found invalid by a jury and must apportion attorney's fees to cover only successful Lanham Act claims. The court reasoned that refusing to cancel a registration after a jury's special verdict of invalidity is an error inconsistent with the duty to give effect to the verdict. Regarding attorney's fees, the court held for the first time in the Ninth Circuit that while the Lanham Act allows for fee awards in exceptional cases (such as the jury's finding of willful infringement here), the prevailing party can only recover fees for work on the successful Lanham Act claims. The district court must attempt to apportion the fees between Lanham Act and non-Lanham Act claims, or between successful and unsuccessful claims, unless it is impossible to do so. The court affirmed the infringement verdict against Carley, holding that infringement can be based on confusing similarity, not just exact copying, and that an award of profits for willful infringement does not require proof of actual consumer confusion.
Analysis:
This decision establishes a significant precedent in the Ninth Circuit regarding the calculation of attorney's fees in multi-claim trademark litigation. By mandating apportionment, the court limits the ability of a prevailing party to recover fees for work on unsuccessful or unrelated claims, promoting a more precise and equitable fee-shifting process under the Lanham Act. The ruling also reinforces the finality and power of a jury's special verdict on trademark validity, requiring judicial action to conform the federal register to the verdict. Finally, it confirms that willful infringement is the primary prerequisite for recovering profits and attorney's fees, lowering the evidentiary bar for plaintiffs who can prove intent but may struggle to show actual consumer confusion.
