In an August 12, 2013 ruling, Judge Colleen McMahon denied defendant Conduit Limited's post-trial motions for judgment as a matter of law and plaintiff MyPlaycity, Inc.'s ("MPC") motion for attorneys' fees in what the Court characterized as a "long, tortuous" litigation. Before trial, Judge McMahon had entered summary judgment of liability in favor of MPC on its Lanham Act claims, common law trademark infringement and unfair competition claims, and unjust enrichment claim. The Court "also concluded that Conduit had acted in bad faith as a matter of law." After a damages trial, the jury awarded $500,000 in disgorgement of Conduit's profits. Despite the clear wording of 15 U.S.C. § 1117(a) that the plaintiff need only prove the defendant's sales in seeking an award of profits and the burden is on the defendant to prove any offsets, Conduit argued that "MPC bore the burden of distinguishing between Conduit's profits flowing from its infringing activity and from its non-infringing uses of MPC's trademark." The defendant's argument was based principally on Burndy Corp. v. Teledyne Indus., Inc., 748 F.2d 767 (2d Cir. 1984). Judge McMahon considered that case and the cases discussing it, and concluded that "Conduit is wrong to assert that Burndy (or any other of the cases it cites) required MPC to do more than demonstrate the gross amount of Conduit's . . . profits from activity related to" MPC's use of the mark. It then became Conduit's burden under Section 35(a) of the Lanham Act to prove that this entire amount was to unjust enrichment." The Court considered, and rejected, a variety of other attacks on the damages award, and ultimately upheld it in its entirety.MPC also moved for an award of attorneys' fees, arguing that the case was exceptional under 15 U.S.C. § 1117(a) in light of the Court's finding of MPC's bad faith. Judge McMahon noted that a finding of bad faith is necessary for an award of fees, but does not automatically make a case exceptional. In considering the request for fees, the Court stood by her earlier observation "that this trademark dispute is, at the end of the day, entirely 'garden-variety,'" and concluded that "this is a plain-vanilla trademark infringement case, not an exceptional case in which an award of attorneys' fees is appropriate."
