The government as trademark troll: Union County (N.J.) hit with $40K bill in First Amendment case

In May, I blogged about how Union County (N.J.) tried to get a critic of the County government to stop using the County seal on her blog. The trouble was that the County claimed that the blogger (Tina Renna) violated a registered trademark, and U.S. trademark law expressly prevents local government seals from being registered trademarks; and, more broadly, neither the federal trademark law nor the New Jersey criminal law that the County cited actually applied here. Whoops!

So Renna won - and now a Magistrate Judge has recommended that the County be ordered to pay Renna $39,500 in legal fees and $500 in court costs. A winning party in trademark cases can generally recover attorney fees only if the case is "exceptional," but the magistrate concluded that this was indeed an exceptional case (Renna v. County of Union (D.N.J. Jan. 7, 2015), some paragraph breaks added):

After considering the totality of the circumstances, the Court concludes that this case is "exceptional." Arguably, Defendant [Union County] legitimately believed that the Seal warranted the same protection as a legally protected mark. Still, there is a significant disparity in the merits of the parties' respective litigation positions in this case. The record demonstrates that Defendant litigated this case by asserting that Plaintiff violated a registered trademark, which Defendant knew, or should have known, did not exist. If Defendant was not aware of that fact when it sent the First Letter, it is reasonable to expect Defendant to have been aware of it by the Second Letter, and surely by the time Plaintiff commenced this litigation. Nonetheless, the Defendant, as the District Court described it, "doubled down" and continued to assert trademark violations based largely on federal and state statutes that, by their terms, did not provide trademark protection for the Seal.

The District Court did not find that Defendant acted in bad faith, fraudulently, or maliciously; nor does this Court. But the more flexible standard under Octane Fitness and Fair Wind Sailing makes clear that is not a sine qua non of the exceptionality analysis. It is enough to conclude, as this Court does, that there is a significant disparity in the merits of the parties' respective positions, and that certain of Defendant's positions were objectively unreasonable. First, as the District Court noted, Defendant relied on the Lanham Act despite the fact that Section 2(b) of the Act makes clear that insignia such as the Seal "shall be refused registration." Defendant also relied on N.J.S.A. 56:3-13-2(c), which similarly does not permit registration of official insignia such as the Seal, even after the USPTO had denied trademark registration for the Seal.

Second, as the District Court noted, the Second Letter "carried the misleading implication that [the Seal was trademarked when] the opposite was the case." Indeed, when Defendant sent the Second Letter, the USPTO had denied Defendant's trademark application, and issued a Notice of Abandonment because Defendant did not timely appeal the USPTO's denial.

Third, as the District Court emphasized, it is "hard to discern any purpose, other than general intimidation, for [Defendant's] citation of [a] criminal statute in an official communication to a citizen, even one represented by counsel." That is particularly true considering that N.J.S.A. 52:2-4 refers to the Great Seal of New Jersey, not the Seal of Union County, which is at issue here.

These factors collectively persuade the Court that Defendant pursued this matter by sending the letters to Plaintiff and maintaining its position in this litigation through summary judgment motion practice, despite ample notice that the Seal could not be trademarked. As a result, the Court will award Plaintiff's attorneys fees and costs ….