In Flexible Benefits Council v. Feltman, 2009 WL 1351653 (E.D.Va. 2009), the Court granted Plaintiff's request for an award of statutory damages, attorney's fees, and costs based on Defendants' misconduct under 15 U.S.C. 1125(a)(the Lanham Act) and 15 U.S.C. 1125(d)(the Federal Anticybersquatting Consumer Protection Act). The Court awarded costs under 15 U.S.C. 1125(a)(3), attorney's fees under 15 U.S.C. 1117(a),and $20,000 in statutory damages under 15 U.S.C. 1125(d). The award of costs and attorney's fees was based on the fact that Defendants' conduct rose to the level of exceptional circumstances showing both willful and deliberate infringement and bad faith, and that such an award was within the Court's discretion given the circumstances.
Plaintiff The Flexible Benefits Council was incorporated in 1981 as "Employers Council on Flexible Compensation," a non-profit which promoted flexible benefits compensation programs through lobbying. Defendant Feltman was responsible for Plaintiff's management and operations between 1985 and July 2007. Feltman purposefully let Plaintiff’s corporate charter lapse in retaliation for Plaintiff’s allegations that Feltman had stolen millions from it. Feltman did not inform Plaintiff of this until March 31, 2008, after which Feltman and Defendant Hawk had formed a new company called "Employers Council on Flexible Compensation, Ltd.", applied to the United States Patent & Trademark Office for marks identical to those of Plaintiff, and set up a website at ecfc.com which was nearly identical to Plaintiff’s. Plaintiff filed for reinstatement on April 10, 2008 but was unable to reinstate under its former name and instead chose “The Flexible Benefits Council” although it kept its old website, “ecfc.org.” Plaintiff sued Defendants on a number of legal theories. Defendants admitted liability for trademark infringement and cybersquatting which left the Court to decide Plaintiff’s requests for two of the types of damages available: attorney’s fees and costs, and statutory damages.
15 U.S.C. 1117(a) provides for the possibility of an award of attorney’s fees to the prevailing party “in exceptional cases.” “An ‘exceptional case’ warranting attorney's fees is one that involves malicious, fraudulent, willful or deliberate conduct.” Flexible Benefits Council v. Feltman, 2009 WL 1351653, *3 (E.D.Va. 2009) (citing Scotch Whisky Ass'n v. Majestic Distilling Co., 958 F.2d 594, 599 (4th Cir.1991) cert. denied, 506 U.S. 862 (1992)). “Such conduct can occur during the infringement itself or during the course of litigation regarding the infringement.” Id.at *4.
The Fourth Circuit has a slightly higher standard for attorney’s fees than other circuits and also requires bad faith on the defendant’s part for an award of attorney’s fees. Id. at *3. Once a determination of exceptional circumstances is made, the court then has discretion to determine “whether awarding attorney’s fees is warranted given the circumstance of the case.” Id. After thoroughly examining Defendants’ conduct both during the infringement and during the litigation, the Court found that this was an exceptional case in which Defendants’ demonstrated willful and deliberate misconduct and bad faith and that in the Court’s discretion, the circumstances of the case weighed in favor of an award of attorney’s fees.
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