Court Affirms Nike Will Pay Millions for Opponent’s Legal Fees After ‘Outrageous’ Conduct

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A Pennsylvania judge has doubled down on his ruling stating that Nike must pay attorneys’ fees to Lontex Corp as part of its loss in a trademark suit brought by the smaller sportswear company over its “Cool Compression” mark.

The case, first filed at the very end of 2018, has taken years to put to bed, partially because Nike appealed the decision handed down by Pennsylvania’s Eastern District Court, which ruled that it had lost the trademark case and had, in fact, infringed on Lontex knowingly and willingly.

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In that judgment, the district court judge ordered Nike to pay Lontex’s attorney fees because the case was “exceptional” in how the company’s attorneys chose to litigate it. The appeals court Nike argued its case before again ruled in favor of Lontex but noted that, on the issue of attorneys’ fees, the district court needed a more compelling argument that the case could truly be considered “exceptional” under the Lanham Act.

As such, the attorneys’ fees debate was remanded back to the district court for re-examination.

As part of the vetting process, Judge Michael Baylson, the district court judge, appointed now-retired Pennsylvania Supreme Court Judge Jane Greenspan, who now serves as an arbitrator for JAMS, as a special master, tasked with helping him determine whether Nike’s conduct was extreme and “outrageous” enough to warrant paying millions of dollars’ worth of its opponent’s legal fees.

In late September, Greenspan shared her recommendation with Baylson; it stated that, based on her review of the case, there was sufficient evidence to characterize Nike’s conduct as “exceptional,” and thus, the company should pay out the legal fees.

It seems Baylson took Greenspan’s recommendation seriously. On October 16, the judge issued an order upholding the court’s previous position that the case was “exceptional” enough from Nike’s end that it caused undue cost and effort to the plaintiff and prevailing party, Lontex. His order was based in large part on what Greenspan wrote in her recommendation.

“Nike’s conduct was in several instances unreasonable and improper,” he wrote, noting that when he ordered Nike to bring a managerial witness that could share information about its sales strategy, the company failed to do so, which meant the court had to order the company to do so a second time.