Judge Eyes Fees Award as Sanction in Patent Dispute

Judge Eyes Fees Award as Sanction in Patent Dispute Photo: kickers/iStockphoto.com

A Connecticut federal judge expressed concern about the costs and risks of patent litigation for small companies in allowing a snap-fastener company to seek attorney fees.

U.S. District Judge Janet Bond Arterton issued the ruling last week for Romag Fasteners Inc. against clothing and accessories maker Fossil Inc. and retailer Macy’s Inc.

Romag sued Fossil, Macy’s and a couple of their subsidiaries in November 2010, alleging patent and trademark infringement and unfair competition under state and federal law. Romag accused Fossil of making and selling products with snap fasteners falsely branded as Romag items. It accused Macy’s of selling such products.

“This case raises special concerns regarding compensation and deterrence of patent infringement,” Arterton wrote.

Arterton noted that snap fasteners represent “minute” expenses and profits for Richardson, Texas-based Fossil. In contrast, the magnetic snap fastener patent at issue is the “primary business asset” of Orange, Conn.-based Romag.

“Thus, there is a risk that plaintiffs similar to Romag could be discouraged from bringing claims that may garner only small awards but are nonetheless vital to the survival of their businesses where defendants, as was the case here, aggressively pursue invalidity counterclaims in an attempt to prolong litigation and exponentially increase the cost and risk of pursuing a lawsuit,” Arterton wrote.

In April, a jury awarded Romag royalties of about $51,000 against Fossil and $15,300 against Macy’s for patent infringement. The jury issued an advisory award of $91,000 against Fossil for unjust enrichment through trademark infringement plus another $6.7 million as deterrence.

Following a bench trial on the remaining issues, Atherton cut the royalty against Fossil to $41,900 and to $12,600 against Macy’s.

Romag sought sanctions against its opponents and about $3 million in attorney fees and costs under the Patent Act, the Lanham Act and Connecticut Unfair Trade Practices Act. Atherton held that Romag wasn’t entitled to attorney fees under the Lanham Act because the jury found that Fossil’s infringement was not willful, but could seek them under the other two statutes.

But she ordered the defendants to respond to the plaintiff’s subpoena seeking their own billing records; Romag requested those records to fight their contention that its fee requests were unreasonable. Then she wants the defendants to indicate which plaintiffs fees it believes should be excluded.

Romag president Howard Reiter declined to comment on the ruling because case is still pending. Romag’s lawyers at New Haven firms Brenner, Saltzman & Wallman and Wiggin and Dana declined to comment.

Plaintiffs lawyers at New York-based Cooper & Dunham did not respond to requests for comment. So did defense attorneys at Hartford-based intellectual property boutique Cantor Colburn declined to comment. Neither did defense lawyers at several New York firms did not respond, including Axinn, Veltrop & Harkrider; Gibney, Anthony & Flaherty; the Law Offices of Lauren S. Albert; and Reavis Parent Lehrer of New York.

Sheri Qualters can be contacted at squalters@alm.com.

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