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A $620,000 attorneys’ fee award was reversed by the 9th U.S. Circuit Court of Appeals July 6 on the basis that the district court failed to apportion the fee between the Lanham Act and non-Lanham Act claims raised in the case, failed to determine a presumptive loadstar amount, and failed to consider the factors relevant to setting a fee award ( Gracie v. Gracie, 9th Cir., Nos. 98-15672, 98-16386, July 6, 2000). In an opinion by Judge Diarmuid F. O’Scannlain, the court also found that the U.S. District Court for the Northern District of California erred in refusing to cancel the defendants’ trademark, but did not err in upholding a jury verdict of infringement based on the similarity of the parties’ logos, as opposed to “slavish copying.” FAMILY FEUD This action involved two members of the Gracie family of Brazil, which is known for popularizing, competing in, and teaching jiu-jitsu. Carley Gracie and Rorion Gracie are first cousins. Both moved to the United States and opened schools teaching jiu-jitsu. Both use the “Gracie” name to identify their schools. In 1989, Rorion applied for and obtained a federal trademark registration for the “Gracie Jiu-Jitsu” service mark and a triangle design logo that consists of two grappling jiu-jitsu figures outlined by an open triangle. Five years later, Carley sued Rorion challenging the validity of these marks. Carley’s complaint alleged nine separate federal and state causes of action. Rorion counterclaimed for trademark infringement. The case went to a jury, which found that: (1) Rorion did not have a valid service mark for “Gracie Jiu-Jitsu”; (2) Rorion had a valid service mark for the triangle design logo; (3) Carley infringed the triangle design logo; (4) Carley’s infringement was willful; and (5) Carley profited from the infringement in the amount of $108,000. After considering various post-trial motions, the district court entered an amended judgment in which it: (1) entered judgment in Rorion’s favor on the triangle design logo infringement claim; (2) entered judgment in Carley’s favor on the “Gracie Jiu-Jitsu” service mark infringement claim; (3) declared that Rorion did not have a valid service mark in “Gracie Jiu-Jitsu”; (4) awarded Rorion $108,000 on his logo infringement counterclaim; and (5) confirmed the grant of permanent injunctive relief to Rorion. The court also awarded $620,000 in attorneys’ fees to Rorion. Both sides appealed. ATTORNEYSFEES Carley contended on appeal that the district court abused its discretion in awarding Rorion attorneys’ fees. This argument actually encompassed two separate issues, the court said: (1) whether the award was proper; and (2) whether the amount of the award was properly determined. First, the court said, the Lanham Act permits an award of attorneys’ fees to the prevailing party in “exceptional cases.” 15 U.S.C. �1117(a). While the statute does not define “exceptional,” generally a case is deemed to be such “when the infringement is malicious, fraudulent, deliberate or willful.” Carley’s argument that the case at bar did not fall within this definition “is difficult to advance successfully,” the court found, since the jury explicitly found that Carley engaged in a “willful” infringement of the triangle design logo. The court’s decision to award attorneys’ fees “thus flows quite naturally from the jury’s finding of willful infringement and the legal standard for ‘exceptional cases’ under �1117,” the 9th Circuit said. Carley’s argument that the jury was not properly instructed as to infringement also lacked merit, the court ruled. However, Carley was more successful in arguing that the amount of fees awarded was improper. The amount — $620,000 — was “a substantial one, almost six times the size of the damages awarded to Rorion in this case,” the court noted. It was also the entire amount claimed by Rorion. The Lanham Act allows for awards of attorneys’ fees, but it does not address the proper procedure for determining a reasonable award where a case involves both Lanham Act and non-Lanham Act claims, the court said. Similarly, the 9th Circuit has not previously “addressed the question of whether the correct determination of attorneys’ fees in cases like the one at bar requires allocation or apportionment between Lanham Act and non-Lanham Act claims.” Several other courts, however, have held that such an allocation is required. The 6th U.S. Circuit Court of Appeals, for example, held that “under 15 U.S.C. �1117(a), attorneys’ fees are recoverable only for work performed in connection with claims filed under the Lanham Act.” U.S. Structures Inc. v. J.P. Structures Inc., 130 F.3d 1185 (6th Cir. 1997). Consistent with this and other decisions, the 9th Circuit held that as a general matter, a prevailing party in a case involving both Lanham Act and non-Lanham Act claims can recover attorneys’ fees only for work related to the Lanham Act claims. After stating its new general rule, the court noted an exception to it: a party can recover legal fees incurred in litigating non-Lanham Act claims if the Lanham Act claims and the non-Lanham Act claims are so intertwined that it is impossible to tell what work was performed on which claim. “Thus, despite the general rule of apportionment, in a specific case apportionment might not be required if ‘it is impossible to differentiate between work done on claims.’” However, the court held that the impossibility of making an exact apportionment does not relieve a district court of its duty to make an attempt to adjust the fee award. “In other words, apportionment or an attempt at apportionment is required unless the court finds the claims are so inextricably intertwined that even an estimated adjustment would be meaningless.” In this case, the court could not find any evidence that the district court attempted to make such an apportionment. Therefore, remand was required on this ground. A remand was also necessary, the court said, because the record was not sufficiently developed to establish the reasonableness of the total fee award. For example, the lower court apparently did not determine a presumptive loadstar figure or adjust that figure based on relevant factors. On remand, the district court was instructed to: (1) make an apportionment between the Lanham Act and non-Lanham act claims; and (2) determine a presumptive loadstar figure subject to possible adjustment based on the relevant factors. OTHER ISSUES On other issues raised by the parties on appeal, the 9th Circuit concluded that: (1) the district court erred by refusing to order cancellation of the “Gracie Jiu-Jitsu” service mark after the jury found it invalid; (2) the district court did not err by refusing to grant a new trial on the triangle logo infringement claim, since infringement could be found on the similarity of the marks and did not require that they be identical; and (3) that the district court did not err in entering judgment for Rorion in the amount of $108,000, because an award of profits does not require proof of actual consumer confusion. Thus, the court affirmed in part and reversed and remanded in part, ordering each party to bear its own costs.

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