LANARD TOYS LIMITED

v.

TOYS "R" US-DELAWARE, INC.

THIS CAUSE is before the Court on the matter of attorneys’ fees and costs. On March 21, 2019, the Court entered an Order (Doc. 468) granting Defendants’ Motion for Summary Judgment and directing the Clerk of the Court to enter Final Judgment (Doc. 469) in favor of Defendants on all counts of the Second Amended Complaint and Demand for Jury Trial (Doc. 103). Plaintiff appealed and the United States Court of Appeals for the Federal Circuit affirmed the Court’s Order in a decision issued on May¹⁴, 2020. See Opinion (Doc. 500). Having fully prevailed in this Court and on appeal, Defendants seek an award of the attorneys’ fees and costs incurred in this action. See Defendants’ Renewed Motion for Attorneys’ Fees and Memorandum of Law (Doc. 518; Motion for Fees); Defendants’ Motion to Tax Costs Pursuant to Federal Rule of Civil Procedure 54(d)(1), 28 U.S.C. § 1920, Local Rule 4.18, and for Costs under FDUTPA, and Supporting Memorandum of Law (Doc. 477; Motion for Costs). The Court referred the Motions to the Honorable Patricia D. Barksdale, the United States Magistrate Judge assigned to this case, who issued two reports on the matter. See Report and Recommendation (Doc. 535; First Report), entered August 20, 2021, and

Supplemental Report and Recommendation (Doc. 551; Second Report) entered on February², 2022. Over the span of 213 total pages, along with an 834-page appendix, the Magistrate Judge finds that Defendants are entitled to fees on two of the four claims raised in this action and further determines that a reasonable fee award on the two compensable claims is $1,630,203.54. See First Report at 120; Second Report at 91. In addition, Judge Barksdale recommends awarding taxable costs to Defendants in the amount of $21,256.11 and denying Defendants’ request for non-taxable costs.¹ See Second Report at

91. For the reasons that follow, the Court finds that the Magistrate Judge’s recommended award on fees and costs is due to be adopted.

However, a party waives the right to challenge on appeal any unobjected-to factual and legal conclusions. See 11th Cir. R. 3-1.2 As such, the Court reviews those portions of the Magistrate Judge’s findings to which no objection was filed for plain error and only if necessary, in the interests of justice. See id.; see also Thomas v. Arn, 474 U.S. 140, 150 (1985) (“It does not appear that Congress intended to require district court review of a magistrate [judge’s] factual or legal conclusions, under a de novo or any other standard, when neither party objects to those findings.”); Dupree v. Warden, 715 F. 3d 1295,

1304-05 (11th Cir. 2013) (recommending the adoption of what would become 11th Circuit Rule 3-1 so that district courts do not have “to spend significant amounts of time and resources reviewing every issue—whether objected to or not.”).

II. Reports and Objections

In the First Report, the Magistrate Judge addressed the question of

Defendants’ entitlement to an award of fees on the four claims set forth in the Second Amended Complaint: specifically, Plaintiff’s claims of copyright infringement, patent infringement, trade dress infringement under the Lanham Act, and unfair competition under the Lanham Act, FDUTPA,³ and

Florida common law. Upon consideration of the relevant fee provisions and applicable law, the Magistrate Judge recommended that the Court enter an order determining that Defendants “are entitled to an award of fees under the Lanham Act and FDUTPA but not under the Copyright Act or Patent Act.” See

First Report at 120. Judge Barksdale further recommended that the Court direct her to “expeditiously prepare a report and recommendation on reasonable attorney’s fees and non-taxable costs” and defer final rulings on the Motion for Fees and Motion for Costs pending that determination. Id.

Significantly, Plaintiff did not raise any objections to the Magistrate Judge’s First Report, thereby waiving any challenge to Judge Barksdale’s recommended finding that Defendants are entitled to an award of fees under the Lanham Act and FDUTPA. But, as to her determination that fees are not warranted under the Copyright Act or Patent Act, Defendants did assert an

Entitlement), filed September³, 2021. In their Objections on Entitlement, Defendants argued that the findings in the First Report are sufficient to demonstrate their entitlement to fees under those Acts, but if not, the Court should resolve certain “open factual issues” which, in Defendants’ view, would demonstrate that fees are warranted. Id. at 5-6. Alternatively, Defendants asserted that, “even if limited to recovering fees under the Lanham Act and FDUTPA, Defendants may still recover all or the vast majority of their requested fees.” Id. at 18. As such, Defendants

“propose[d] that the Court defer ruling on [the stated] objections until the Magistrate Judge has prepared a report and recommendation on reasonableness.” Id. In Defendants’ view, “[o]nly if the fees are allocated in a way that the precise statutes under which defendants are entitled to recover becomes consequential will the Court need to rule on [the stated] objections.” Id. Plaintiff filed a response on September 17, 2021. See Plaintiff’s Response to Defendants’ Objection to Report and Recommendation on Renewed Motion for Attorneys’ Fees (Doc. 531; Response on Entitlement). In its Response on

Entitlement, Plaintiff asserted that the Magistrate Judge correctly determined that fees were not warranted under the Copyright Act and Patent Act. In addition, Plaintiff argued that “apportionment and allocation of the fees associated with the patent and copyright claims is necessary so that they may be properly excluded in any fees award.” See Response on Entitlement at 13-

14. According to Plaintiff, it would violate preemption principles to allow Defendants to recover their copyright and patent fees through the FDUTPA claim. See id. at 10-13. Considering those arguments, and given that Defendants’ entitlement to fees under FDUTPA and the Lanham Act was unchallenged, the Court recommitted the matter to the Magistrate Judge for a recommendation on the parties’ allocation arguments and the amount of a reasonable award of fees and non-taxable costs. See Order (Doc. 532), entered September 30, 2021. The

Magistrate Judge requested and received supplemental briefing as to the reasonable amount of fees, conducted a hearing on the matter, and obtained additional briefing after the hearing. See Second Report at 2. On February², 2022, the Magistrate Judge entered the Second Report.

In the Second Report, Judge Barksdale recommends that the Court find that a fee award of $1,630,203.54 is reasonable in this case. See Second Report at 83, 91. The Magistrate Judge used the lodestar method to reach this total, first determining reasonable rates for the various defense attorneys and paralegals involved in this lawsuit, see id., Part H, and then calculating the reasonable number of hours expended, see id., Part I. In determining reasonable hours, Judge Barksdale analyzed, at length, the voluminous billing records identifying problems such as block billing, insufficient detail, vagueness, redundancy, excessiveness, and billing for travel time, among other issues. See id., Part I, ¶¶ 1-6. Judge Barksdale also addressed the issue of allocation of time between those claims for which Defendants are entitled to fees (the Lanham Act and FDUTPA claims) and those for which she believed they are not (the copyright and patent claims). See id. at 71-79. In their billing records, Defendants allocated each entry into one of four categories: Copyright, Patent, Trade Dress & FDUTPA, and Joint.⁴ The allocation issue pertains to those fees categorized as “joint.”5 Defendants contend that the Court should award the “joint” fees because the claims in this action are intertwined. See Defendants’ Response to Court Order Dated October 19, 2021 DE 533 (Doc. 536; Defendants’ Supplemental Brief) at 12-16. The Magistrate Judge agreed, finding that Defendants had “satisfied their burden of showing the four claims (copyright,

The Magistrate Judge then considered how to calculate the number of reasonable hours given the foregoing issues. Because the billing records are quite voluminous, with nearly 3500 entries, rather than conduct a line-by-line analysis of each entry, Judge Barksdale applied an across-the-board percentage reduction of thirty percent. See Second Report at 51, 79. Judge Barksdale explained that the thirty-percent reduction selected was to “account for block billing, insufficient detail, vagueness, redundancy or duplication, excessiveness, and other issues affecting reasonable hours . . . as well as allocation conceded by the defendants.” Id. at 79. The reasonable rates multiplied by the total hours requested, discounted by thirty percent, total $1,630,203.54.6 The

Recommendation (Doc. 529) and the Supplemental Report and Recommendation (Doc. 551) on Defendants’ Entitlement to Attorneys’ Fees and Costs (Doc. 552; Conditional Objection), filed February¹⁶, 2022. Specifically, Defendants maintain their previous Objections on Entitlement “only in the event that the Court reduces the award of attorneys’ fees recommended by the Magistrate Judge’s [Second Report] in the amount of $1,630,203.54.” Id. at 2.7 Defendants advise the Court that they withdraw this Objection, “[i]f there is no claim. See Second Report at 76-79, n.67. Rather than engage in a line-by-line analysis, and to avoid a double discount, the Magistrate Judge accounted for all allocation in the thirty percent reduction. See Second Report at 50 (explaining that to avoid doubly discounting hours, courts are not permitted to conduct both an hour-by-hour analysis and an across-theboard reduction of hours (citing Bivins v. Wrap It Up, Inc., 548 F. 3d 1348, 1351-52 (11th Cir. 2008))); id. at 79; see also Order (Doc. 558) at 1 n.1. As such, to the extent Plaintiff objects to the Second Report based on a purported clerical error, this objection is due to be overruled. However, the Court does clarify a scrivener’s error in the Second Report. On page eighty-three of the Second Report, the sentence that reads “Thirty percent of that amount [the lodestar] is $1,630,203.54,” is more correctly stated “The lodestar amount reduced by thirty percent is $1,630,203.54.” 7 Defendants subsequently agreed to accept $1,490,554.42, in light of Plaintiff’s argument that the Magistrate Judge committed a clerical error. See Defendants’ Response to Plaintiff Lanard Toys Limited’s Objection to the Supplemental Report and Recommendation (Doc. 557; Defendants’ Response) at 1-2, 4, 15. reduction of” the recommended attorneys’ fees award. Id. Plaintiff filed a response to Defendants’ Conditional Objection on February 23, 2022. See

Lanard’s Responses to Defendants’ Objections to Supplemental Report and Recommendation (Doc. 556). Plaintiff also filed objections to the Second Report. See Lanard’s Objections to Supplemental Report and Recommendation (Dkt 551) (Doc. 553;

Plaintiff’s Objections). In Plaintiff’s Objections, Plaintiff asserts that the Magistrate Judge’s recommended fee award is unreasonable and the Court should award no more than $606,405.20 in fees. See id. at 2. Specifically, Plaintiff contends that the Magistrate Judge erred in her calculation of reasonable hours by failing to properly allocate the joint fees between compensable and non-compensable claims.⁸ Id. at 2-3. Because the Magistrate Judge determined that Defendants are not entitled to fees under the Patent or Copyright Acts, Plaintiff contends that any award of fees under

FDUTPA that includes work related to the patent or copyright claims is preempted. Id. at 4-6. Likewise, Plaintiff argues that the Magistrate Judge improperly relied on FDUTPA to place the burden on Plaintiff to demonstrate which joint fees should be excluded as related to the copyright and patent

As to the Lanham Act, Plaintiff maintains that Defendants are not entitled to the full amount of the joint fees because Defendants failed to meet their burden of demonstrating that allocation is “not feasible.” Id. at 9-10. In support, Plaintiff proposes various alternative methods for allocating the joint fees that it maintains are “feasible.” Id. at 10-13. Not surprisingly, Plaintiff’s proposed methods all result in a drastically reduced fee award. Plaintiff maintains that the Court should reject the recommended $1.6 million fee award as “excessive,” and points to the fact that when it initiated this lawsuit, it had a registered patent and registered copyright, as well as evidence that Defendants used Plaintiff’s product in their design process. Id. at 12. Plaintiff further contends that the FDUTPA and Lanham Act claims were mere “add-on, tag-along claims” such that allowing Defendants to recover the majority of their fees based on these claims is “overkill.” Id. Defendants filed a response to Plaintiff’s Objections on March², 2022. See Defendants’ Response to Plaintiff Lanard Toys Limited’s Objection to the Supplemental Report and Recommendation (Doc. 557; Defendants’ Response). On this record, this matter is ripe for review.

III. Discussion

To resolve the Objections, the Court need only consider whether the award of joint fees is appropriate under the Lanham Act.⁹ Plaintiff contends that to be entitled to the joint fees, Defendants must show that allocation is “not feasible.” According to Plaintiff, although the Magistrate Judge found that the claims were intertwined, she did not find, and Defendants have not shown, that

“the issues were so intertwined that allocation is not feasible.” See Plaintiff’s Objections at 10. Plaintiff asserts various ways that, in its opinion, the Magistrate Judge could have “feasibly” allocated the joint fees to particular claims. Plaintiff’s arguments are unavailing.

To the extent Plaintiff contends that the Magistrate Judge failed to apply the correct standard, this contention is without merit. See Plaintiff’s Objections at 10. In Yellow Pages Photos, Inc. v. Ziplocal, LP, 846 F. 3d 1159 (11th Cir. 2017), the Eleventh Circuit explained that if compensable and non-

compensable claims “are intertwined and share a ‘common core’ of facts or a

Nevertheless, it is undisputed that some allocation of the fees is possible. In their billing records, Defendants identified approximately nine percent of the fees as being solely related to the patent or copyright claims. In addition, upon

See Second Report at 75. Even a cursory review of the billing records reveals numerous entries properly allocated as joint that Plaintiff’s method would arbitrarily exclude. Compare, e.g., Second Report, Attachment A, entries 28, 84, 95, 166, 182 (related to settlement); entries 400-401, 416-418, 420, 425 (related to case management conference and initial disclosures) with Plaintiff’s Objections, Ex. 1. Moreover, this exercise proves precisely why the Magistrate Judge was entirely correct in declining to conduct a comprehensive line-by-line analysis here—the billing records are quite voluminous and reviewing each of the nearly 3500 billing entries would be impractical and an egregious waste of judicial resources. See Loranger v. Stierheim,¹⁰ F. 3d 776, 783 (11th Cir. 1994). The Magistrate Judge opted to account for the allocation issues through an across-the-board percentage reduction of the lodestar and the undersigned finds that this approach is the appropriate way to address the allocation issues in this case. In its Objections, Plaintiff also proposes a percentage reduction that it maintains reflects a more appropriate “allocation” of the joint fees. See

Plaintiff’s Objections at 13.13 Plaintiff asserts that the Court should award only 37.2% of the joint fees, which in its view is more proportional to the importance of the trade dress and unfair competition claims in this litigation. See id. Plaintiff derived this number by totaling all the “non-Joint fees” (i.e.,

the fees in the patent-only, copyright-only, and trade dress & FDUTPA-only columns) and then determining the percentage of those fees that were trade dress & FDUTPA-only fees. Id. But Plaintiff fails to explain how this method rationally reflects the amount of time spent working on the claims jointly, and cites no legal authority in support of this manner of allocation. Regardless, the Court finds that a nearly seventy-percent reduction of the joint fees is not warranted here given Defendants’ showing that the four claims are substantially intertwined. See Sprint Solutions, Inc. v.⁴ U Cell, LLC, No. 2:15cv605-PAM-CM, 2017 WL 11632645, at *3 (M.D. Fla. June⁹, 2017) (explaining that because the compensable and non-compensable claims “inevitably overlap,” defendants are entitled to a “full fee” except “when defense

See Yellow Pages Photos, 846 F. 3d at 1163 n.3. Ultimately, the question before the Court is whether $1,630,203.54 constitutes a reasonable fee award for the Lanham Act claims in this case. Plaintiff insists that a seven-figure award is excessive and amounts to an undue punishment. See generally Plaintiff’s Objections. According to Plaintiff, it has “already suffered great losses,” including the nearly $2 million paid to its own attorneys, the loss of “two large retail customers,” and the invalidity of its

$1,630,203.54 is a reasonable fee award for the Lanham Act claims in this case.¹⁵ Accordingly, it is

(Doc. 553) are OVERRULED.

See First Report at 98. The existence of a registered copyright notwithstanding, Plaintiff’s copyright infringement claim was a transparent attempt to seek “protection over any and all expressions of the idea of a pencil-shaped chalk holder.” See Lanard Toys Ltd. v. Dolgencorp LLC, 958 F. 3d 1337, 1346 (Fed. Cir. 2020). However, Plaintiff’s experienced counsel is undoubtedly well-aware of the black letter law that copyright protection does not extend to an “idea” itself. See 17 U.S.C. § 102(b); Feist Publications, Inc. v. Rural Telephone Serv. Co., Inc., 499 U.S. 340, 344 (1991) (“The most fundamental axiom of copyright law is that ‘[n]o author may copyright his ideas . . . .’” (quoting Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 556 (1985))); see also Baby Buddies, Inc. v. Toys R Us, Inc., 611 F. 3d 1308, 1317 (11th Cir. 2010) (“But every sculpture of a teddy bear shares these features simply because these features are what defines a teddy bear. To protect this basic combination of features would in effect give Baby Buddies exclusive rights over the very idea of a plastic sculpted teddy bear, which is expressly precluded under the copyright laws.”). Yet remarkably, Plaintiff never made any serious attempt to identify its protected expression as anything other than the general idea of a pencil shaped chalk holder. See, e.g., Plaintiff’s Response in Opposition to Defendants’ Motion for Summary Judgment (Doc. 322) at 21 (characterizing the “protectable expression” as “a pencil-shaped chalk holder toy”). This is perhaps because, once the idea itself is set aside, the only remaining similarities between the works are those that stem from the plainly unprotected design elements of the ubiquitous no. 2 pencil itself. As such, Plaintiff’s copyright claim stands out to the Court as one involving substantial overreach. See Baby Buddies, Inc. v. Toys “R” Us, Inc., No. 8:03-cv-1377, ECF No. 129 (M.D. Fla. Sept. 20, 2011) (order granting fees in copyright infringement action) (“It was objectively unreasonable for Plaintiff to pursue the theory that Plaintiff’s total design was protected.”). This overreach is compounded by the fact that Plaintiff sought substantial damages on a theory that it could recover the lost sales of its unrelated products stemming from its decision to sue its own retail customers for infringement. While the Court did not reach the issue of damages, it is noteworthy that Plaintiff combined an exceptionally weak copyright claim with a particularly expansive theory of damages without citation to a single case where any court awarded such damages or otherwise recognized the viability of such a theory. See, e.g., Plaintiff’s Response to Defendants’ Motion in Limine Nos. 11 and 12 on Unrelated Product and DUTPA Damage Issues (Doc. 455) at 8; Plaintiff’s Response in Opposition to Defendants’ Motion for Summary Judgment (Doc. 322) at 24-25. Nevertheless, in light of Defendants’ conditional waiver, the Court need not decide whether Plaintiff’s copyright claim was so exceptional as to warrant a fee award. But, were a de novo review on entitlement necessary, the Court would likely exercise its discretion to award fees in order to deter the type of overaggressive use of the copyright laws exhibited in this action. See Fogerty v. Fantasy, Inc., 510 U.S. 517, 527 (1994) (“[D]efendants who seek to advance a variety of meritorious copyright defenses should be encouraged to litigate them to the same extent that plaintiffs are encouraged to litigate meritorious claims of infringement.”). 2. Defendants’ Objection to Report and Recommendation on Defendants’ Entitlement to Attorneys’ Fees (Doc. 530) are deemed WAIVED as set

forth in Defendants’ Conditional Objections to Report and Recommendation and the Supplemental Report and Recommendation on Defendants’ Entitlement to Attorneys’ Fees and Costs (Doc. 552). 3. The resolutions set forth in the Report and Recommendation (Doc. 535)

and the Supplemental Report and Recommendation (Doc. 551) are

ADOPTED.¹⁶

4. Defendants’ Motion to Tax Costs Pursuant to Federal Rule of Civil Procedure 54(d)(1), 28 U.S.C. § 1920, Local Rule 4.18, and for Costs

under FDUTPA, and Supporting Memorandum of Law (Doc. 477) is GRANTED, in part, and DENIED, in part. A. The Motion is GRANTED to the extent the Court awards taxable costs to Defendants in the amount of $21,256.11.

B. Otherwise, the Motion is DENIED.

5. Defendants’ Renewed Motion for Attorneys’ Fees and Memorandum of Law (Doc. 518) is GRANTED, in part, and DENIED, in part.

B. Otherwise, the Motion is DENIED.

6. The Clerk of the Court is directed to enter JUDGMENT for Defendants and against Plaintiff in the amount of $21,256.11 in costs, and $1,630,203.54 in attorney’s fees. DONE AND ORDERED in Jacksonville, Florida this 22nd day of June, 2022.

United States District Judge

Ie¹¹ Copies to: Counsel of Record The Hon. Patricia D. Barksdale United States Magistrate Judge