Judge John Koeltl
Overseas Direct Import Co. (ODI) sued Family Dollar Stores Inc. (FDS) for trademark and copyright infringement. It rejected FDS’s $150,000 offer of judgment under Rule 68. A jury returned verdict in FDS’s favor. FDS sought costs and attorney fees under 17 USC §505. ODI requested attorney fees incurred in responding to FDS’s motion. The court denied both requests. As to FDS’s request it observed that ODI’s copyright claim was not objectively unreasonable and that nothing indicated ODI’s pursuit of such claim in bad faith. In denying ODI’s fee request the court, applying the test outlined in Schlaifer Nance & Co. v. Estate of Andy Warhol, rejected ODI’s argument that FDS’s failure to recognize that Delta Air Lines v. August—holding that Rule 68′s costs provision does not apply when the defendant has “obtained the judgment”—rendered FDS’s Rule 68 claim meritless, and entitled it to attorney fees incurred in responding to FDS’s motion. In light of its reliance on a recent district court decision awarding attorney fees to a defendant under Rule 68, FDS’s claim under Rule 68 was not entirely without legal support. Nor was there an inference of bad faith on FDS’s part. Its error in relying on Rule 68 was a good faith error of law.
