Nike Must Pay Lontex’s Legal Fees in Trademark Suit, Judge Rules

A federal judge in Pennsylvania ordered Nike Inc. to pay all of Lontex Corp.’s attorneys’ fees “and almost all of its expenses” after the smaller company’s lawyers, “showing great skill,” convinced a jury that Nike is liable for contributory trademark infringement.

But Judge Michael M. Baylson, in an opinion Thursday in the U.S. District Court for the Eastern District of Pennsylvania, cited “a major difference between the outcomes in the bifurcated trial” in denying Lontex’s request for fees paid to its damages experts.

A jury last November awarded more than $500,000 in damages for Nike’s contributory infringement of Lontex’s “cool compression” trademark on athletic wear, and Baylson tripled some of that figure, increasing the award to $791,000. Still, the judge called the damages “nominal” in comparison to the projections of Lontex’s trial experts, who had asked jurors for more than $100 million.

Lontex apparently isn’t satisfied with the award—it’s appealing the judge’s March 3 denial of its bid for a new trial on damages and for Nike’s profits from the sale of infringing products. And though Baylson lauded Lontex’s lawyers for their handling of the “complex and lengthy” case against a company “with much larger resources,” he said “it would be inappropriate to make Nike pay” for Lontex’s damages experts “when the jury soundly rejected the projections of these experts.”

Baylson called the jury’s damages verdict “understandable” given “the very incisive cross examination” by a Nike lawyer during the damages phase. The judge said that considering Nike’s cross-examination, coupled with “the huge projections of lost sales/profits arguably far beyond any reasonable potential for Lontex to achieve, the jury’s rejection of the projections should not be of surprise to Lontex.”

The court “is not finding that Nike engaged in any unfair, improper litigating strategy or that it litigated this case in a ‘unreasonable manner,’” Baylson said. Lontex “does correctly note that Nike was basically unwilling to enter into any serious settlement negotiations and put Lontex through the burden of proving its case. Nike cannot be criticized for doing this, but at the same time, having the jury agree with Lontex completely on liability, if only partially on damages, nonetheless entitles Lontex to claim all of its attorneys’ fees and almost all of its expenses.”

Baylson also said that trademark cases are “very expensive to litigate,” and the “prospect of Nike compensating Lontex, if successful, is an incentive to file.”

“Representation of a plaintiff in a case like this should be rewarded in the form of attorneys’ fees against the defendant as a matter of policy and also to provide further deterrence of trademark infringement by large corporations,” he said. Since the damages awarded were “relatively low,” Baylson’s award of fees and costs “will likely make the case very worthwhile for both Lontex and its counsel.”

Lontex is represented by Troutman Pepper Hamilton Sanders LLP. Nike is represented by DLA Piper LLP.

The case is Lontex Corp. v. Nike Inc., E.D. Pa., No. 2:18-cv-5623, opinion issued 3/17/22.