District Judge Used Wrong Legal Standards, Failing to Look at Defendant’s Conduct in Examining Request.
Plaintiffs won a Lanham Act claim by obtaining an injunction (but no damages) against defendants, who run a DMV for-profit website that was found to have unlawfully fostered the belief that it was run or endorsed by the state DMV. However, plaintiffs were unhappy when the district judge denied their request for fees under Lanham Act section 35 (15 U.S.C. § 1117(a)), which permits an award of fees to a prevailing party in exceptional cases (generally focusing on whether defendants’ conduct was fraudulent, deliberate, or willful in nature).
The district judge denied fees because plaintiffs did not win damages and he found that plaintiffs were guilty of unclean hands.
Above: Unclean Hands.
On appeal, given that the unclean hands determination could not stand according to the reviewing federal court, the Ninth Circuit proceeded to reverse the fee denial. The reason is that the district court only focused on the relief awarded to plaintiffs, ignoring the crucial inquiry into defendants’ conduct–application of the wrong legal standard in failing to consider the substantial benefits resulting from plaintiffs’ injunction or the impact from defendants’ bad acts when determining whether to award fees.
The case is TrafficSchool.com, Inc. v. Edriver Inc., Case No. 08-56518 (9th Cir. July 28, 2011) (for publication) and was authored by Chief Circuit Judge Kozinski.