[00:00:01] Speaker 02:
May it please the court.

[00:00:02] Speaker 02:
I'm Jesse Salem from Shepard Mullen on behalf of the appellant, Bill Float, Inc.

[00:00:08] Speaker 02:
Honors, I'd like to reserve four minutes of my time today for rebuttal.

[00:00:15] Speaker 02:
This case provides this court an opportunity to define the threshold of admissibility of survey evidence under the Daubert standard in accordance, I'm sorry, in accordance with the Daubert standard.

[00:00:30] Speaker 02:
This court has previously held that defects, technical defects in market surveys, go to the weight of the evidence and not its invisibility.

[00:00:42] Speaker 02:
But there has to be a line.

[00:00:44] Speaker 02:
And technical defects can cross that line into making the survey evidence completely inadmissible and unhelpful to the jury.

[00:00:55] Speaker 02:
If ever there is a case where a survey should have been excluded, this is it.

[00:01:05] Speaker 02:
So, Your Honors, we pointed out in our briefing multiple defects that were serious in nature.

[00:01:11] Speaker 02:
And I'm not going to go into each of those.

[00:01:13] Speaker 02:
I think we can highlight one of those defects and explain why that defect made the survey unreliable under Daubert and should have called for the exclusion of the survey evidence.

[00:01:25] Speaker 02:
So I'd like to focus on the use of controls in the survey.

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Now, both experts in this case

[00:01:34] Speaker 02:
agree that a survey must have a valid control in order to reduce noise in the survey.

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That was an uncontroverted piece of testimony from both sides.

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And they also agreed what that control should look like.

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So in this case, the market survey was designed to test likelihood of confusion.

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And the survey was supposed to test confusion as to the use of defendant smart business funding.

[00:02:03] Speaker 02:
The smart business funding mark, as used in commerce, was shown on a website.

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And that's how survey respondents saw it, on the defendant's website.

[00:02:13] Speaker 02:
And it's pretty easy to see in a picture, Your Honors, if it's in the record and in our briefing on page 13.

[00:02:20] Speaker 02:
But the picture, it really helps.

[00:02:22] Speaker 02:
And you can see what their website looked like.

[00:02:23] Speaker 02:
It was brown and yellow.

[00:02:24] Speaker 02:
It had the word smart business funding at the top.

[00:02:30] Speaker 02:
It looked different than the Planis website for SmartBiz, which had a blue and green appearance.

[00:02:41] Speaker 02:
So when you pick a control, both experts agree that the control in order to reduce noise should look exactly or as close to

[00:02:50] Speaker 02:
The defendant's website, the smart business funding website is possible, except for the thing being tested.

[00:02:56] Speaker 02:
Here we're trying to test confusion between the trademarks.

[00:02:58] Speaker 02:
The smart business funding trademark that appears at the top of that website and a control would be replaced by some control mark, like the word pursuit or something else.

[00:03:07] Speaker 02:
That would be fine, and both experts agree that's how it should be done.

[00:03:10] Speaker 02:
That's what the leading authority in that field says.

[00:03:14] Speaker 02:
Dr. Sherry Diamond said that that's how you should pick a control.

[00:03:18] Speaker 02:
Defendant's expert agreed that he could have picked a control that looked just like the website, except changing that name, but chose not to do so.

[00:03:28] Speaker 02:
He felt he didn't have to.

[00:03:30] Speaker 02:
Instead, he picked a control, and this is on page 14 of our brief, and there's record sites as well that I could point you to, but he picked three different controls, and they all looked much more like the Smart Biz website than the Smart Business Funding website, like the plaintiff's website, the exact opposite of what he should have done.

[00:03:49] Speaker 02:
So why is this important?

[00:03:51] Speaker 02:
It's important because it controls how you reduce the noise in a survey, and you reduce the noise by subtracting out the number of people who are confused with the control mark.

[00:04:02] Speaker 02:
from the number of people that are confused with the smart business funding mark.

[00:04:05] Speaker 01:
That gives you the confusion rate.

[00:04:07] Speaker 01:
So the real question we have is everything you say makes sense except there are some restrictions on us.

[00:04:17] Speaker 01:
Number one, we're looking at abuse of discretion.

[00:04:19] Speaker 01:
You're saying, well, no, this is a downward issue and therefore it should have been an upfront decision by the judge.

[00:04:25] Speaker 01:
But the precise arguments that you're making are the kind of arguments that you make to the jury.

[00:04:31] Speaker 01:
of what's wrong with this expert and not necessarily on threshold admissibility.

[00:04:36] Speaker 01:
And you say, no, this is a case where we can draw the line.

[00:04:40] Speaker 01:
So what is the line we would draw in your view?

[00:04:46] Speaker 02:
Thank you, Your Honors.

[00:04:48] Speaker 02:
The line should be when, and this goes back to Dauber, and I agree we're working against the standard of discretion.

[00:04:55] Speaker 02:
So we understand that.

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But I think the problem is that this Court may have not actually set a standard yet for where that line is.

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And like I said, this is an opportunity to do that.

[00:05:09] Speaker 02:
And I think in the case, looking at Daubert as a guideline, you pick a standard that ensures that the survey evidence that you get, that the methodology is reliable, and that there is fit, that the opinion fits to the facts of the case.

[00:05:23] Speaker 02:
In Daubert, there is an example of an opinion about an expert giving an opinion about the phases of the moon, and that those phases of the moon would have no relevance to whether or not

[00:05:36] Speaker 02:
a drug was safe or not, they're unrelated.

[00:05:40] Speaker 02:
We have the same issue here, even though this is a survey evidence, and even though the trademark issue was shown in the survey, there needed to be a way to pull the noise out of the survey, to pull the noise.

[00:05:54] Speaker 01:
But isn't that what your expert does?

[00:05:56] Speaker 01:
I mean, I'm still trying to have an understanding.

[00:05:59] Speaker 01:
We have these squirt surveys.

[00:06:03] Speaker 01:
Typical trademark case, two experts dueling experts always.

[00:06:08] Speaker 01:
And what they're dueling about usually is methodology, noise, what I could have done, what I should have done.

[00:06:19] Speaker 01:
So I'm still not quite understanding what the bright line you're suggesting is.

[00:06:25] Speaker 01:
that would put this case in a different posture than most of those where we say, you know, it's a technical issue, leave it to the jury.

[00:06:33] Speaker 02:
I think in this case, Your Honor, the expert here knowingly picked the wrong control.

[00:06:39] Speaker 02:
And the way that the control was picked skewed the survey results or biased the results towards a no confusion finding.

[00:06:49] Speaker 02:
They did so because they overinflated the noise

[00:06:54] Speaker 02:
that was basically injected noise into the survey instead of reducing the noise.

[00:06:59] Speaker 02:
Certainly, if there was no control at all, no control used, both experts would have agreed that doesn't comport with generally accepted principles.

[00:07:07] Speaker 01:
Right.

[00:07:08] Speaker 02:
But here I think both experts still agreed that picking the control that defendant's expert picked does not comport with generally accepted principles, that the control needs to look like the defendant's website and not the plaintiff's website.

[00:07:21] Speaker 02:
So I think the line here, and this is going to be, it always needs to be based on the facts of the case, I understand that it's hard to pick a

[00:07:29] Speaker 02:
completely bright-line rule.

[00:07:31] Speaker 02:
But again, Daubert gave us the guidelines.

[00:07:33] Speaker 02:
If you create an unreliable, if you have an unreliable expert opinion or one that doesn't fit the facts, then it needs to be excluded.

[00:07:42] Speaker 02:
The gatekeeper function, the judge must be a gatekeeper in that case.

[00:07:47] Speaker 02:
And Daubert says you have, you can't show that evidence to the jury.

[00:07:51] Speaker 02:
And here, the issue is that

[00:07:53] Speaker 02:
It's not just that there was no control.

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It's not just that the control was bad.

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The control actually was picked to skew the results the other way.

[00:08:02] Speaker 02:
And it was done knowingly, because there's admissions from the expert that he could have picked a control that would have been better.

[00:08:10] Speaker 02:
He didn't do that.

[00:08:11] Speaker 02:
and admitted that he knew what the standard was.

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He didn't comport with it.

[00:08:15] Speaker 02:
So I know that Daubert changed the standard from generally, we don't look at generally accepted as the only guide, but it's still a guide.

[00:08:23] Speaker 02:
And Daubert left that as a guide that if it's the reason that we don't have the generally accepted standard is because sometimes

[00:08:29] Speaker 02:
There's new science, new expert evidence or methodologies that can come into play, and you don't want to exclude those if they're reliable.

[00:08:39] Speaker 02:
Here, this isn't a matter of there being something new.

[00:08:42] Speaker 02:
Squirt surveys have been around.

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People know how to do them.

[00:08:45] Speaker 02:
There's treatises on them.

[00:08:46] Speaker 02:
The experts agreed that Dr. Sherry Diamond is the leading expert on this and has a treatise that tells you how to do it.

[00:08:54] Speaker 02:
The defendant's expert just ignored it, just did something different, and knowing that it was going to be wrong.

[00:09:01] Speaker 02:
And it resulted in survey results that were skewed and confusing to the jury.

[00:09:07] Speaker 02:
I agree that you can cross-examine the expert to point that out.

[00:09:13] Speaker 02:
But at some point, and this is what the court and Daubert said as well, there needs to be a higher burden here, because experts say things.

[00:09:22] Speaker 02:
and give opinions, and they're allowed to give opinions in a case, but they need to do so under the protection of the district court's judge, the district court judge, to make sure that what the opinion is is not going to be wrong and confuse the jury, because the jury's apt to believe it.

[00:09:37] Speaker 02:
And even with the cross-examination, jurors are going to see an expert smarter than the attorney questioning them, right?

[00:09:43] Speaker 01:
Well, you know, we kind of have like a double abuse of discretion standard here.

[00:09:46] Speaker 01:
We've got the Daubert, and then we have

[00:09:50] Speaker 01:
the abuse of discretion standard that we look at when we're looking at survey evidence and whether, you know, it does fall into some kind of downward exclusion.

[00:10:01] Speaker 01:
So I guess I'm still, and I appreciate that.

[00:10:04] Speaker 01:
I think you understand our situation here when we're looking at what the district court did, not what it could or what the district court could have done.

[00:10:17] Speaker 01:
Even if we might say, well, in our view, if I were the district court or if we could rule de novo, we might do X, how do we get across the abuse of discretion standard?

[00:10:29] Speaker 02:
So, Your Honor, the district court judge actually was required to make a reliability finding in the survey.

[00:10:35] Speaker 02:
The district court judge did not do that in this case.

[00:10:37] Speaker 02:
There's—and it can't be implicit.

[00:10:40] Speaker 02:
It has to be an explicit finding that the survey was reliable.

[00:10:44] Speaker 02:
That would comport with Albert.

[00:10:45] Speaker 02:
The district court didn't do that here.

[00:10:47] Speaker 02:
There's nothing on the record.

[00:10:48] Speaker 02:
The judge just didn't make a reliability finding.

[00:10:51] Speaker 02:
He said these are defects that generally go to the weight.

[00:10:53] Speaker 02:
He was following this court's Click Billiards decision in saying that.

[00:10:56] Speaker 02:
But Click Billiards also says that survey evidence needs to be reliable.

[00:11:02] Speaker 02:
And if it's reliable, then you can look at defects and say, OK, well, the universe is a little bit off.

[00:11:06] Speaker 02:
The questions aren't exactly the same as what an expert would have picked.

[00:11:09] Speaker 02:
But picking a control that completely skews the results, the district court judge here, I think, feeling compelled by this court's prior precedent saying, hey,

[00:11:19] Speaker 02:
things go to weight of evidence and not to admissibility, maybe he just didn't make that call.

[00:11:26] Speaker 02:
He didn't make the call at all.

[00:11:27] Speaker 02:
He didn't say it was reliable or unreliable.

[00:11:30] Speaker 02:
He needed to do that.

[00:11:31] Speaker 02:
At the very least, his court should demand for the judge to make a reliability determination.

[00:11:35] Speaker 01:
Do you have any other circuit case that would support the position you're making on how to apply Daubert in this kind of situation?

[00:11:46] Speaker 02:
The Fifth Circuit, I believe, Your Honor.

[00:11:50] Speaker 02:
And I, Your Honors, if you could, I don't have the, I can pull the site if it's okay.

[00:11:57] Speaker 02:
I can do that on rebuttal.

[00:11:58] Speaker 00:
You bet, fine.

[00:11:59] Speaker 00:
You've reserved some time.

[00:12:01] Speaker 02:
Yeah, all right.

[00:12:02] Speaker 02:
Thank you, Your Honors.

[00:12:30] Speaker 03:
Good morning, Your Honors.

[00:12:31] Speaker 03:
May it please the Court, my name is Gordon Gray, and I represent the Cross Appellants and Appellees, Abraham Cohen and Collins Cash, Inc.

[00:12:39] Speaker 03:
The appellant, Bill Float, Inc.

[00:12:40] Speaker 03:
has a trademark registration for SmartBiz, and despite entering a marketplace having existing trademarks of Smart Funding Solutions, Smart Bank, Biz Loans, Smart Loans, and Smart Business, and the PTO telling it that there was no likelihood of confusion between these marks, and years of coexistence

[00:12:59] Speaker 03:
between these parties, including doing business together for two years, appellants still filed suit against my client's use of smart business funding.

[00:13:08] Speaker 03:
Now, most of what Bill Float's counsel addressed today was the survey evidence.

[00:13:15] Speaker 03:
There's no indication that the jury relied on the survey for this ruling or for its verdict.

[00:13:24] Speaker 03:
Instead, there is a mass of evidence supporting each of the sleek craft factors and substantial evidence that there's no likelihood of confusion between these marks.

[00:13:38] Speaker 03:
The survey was just icing on the cake.

[00:13:41] Speaker 03:
The survey that they complain about, they say, had many faults.

[00:13:46] Speaker 03:
However, they had a golden opportunity to do their own, and they didn't.

[00:13:50] Speaker 03:
They also had the opportunity to say how it should be done.

[00:13:54] Speaker 03:
Dr. Patulis, their expert, said there should have been a fictional control, a new website created for the control.

[00:14:03] Speaker 03:
Mr. Keegan used natural controls from the actual marketplace.

[00:14:07] Speaker 03:
He didn't create these to cause confusion or noise in the survey.

[00:14:11] Speaker 03:
He picked them out of the actual marketplace.

[00:14:14] Speaker 03:
Dr. Patulas didn't show us what a proper questionnaire should look like.

[00:14:19] Speaker 03:
Dr. Patulas didn't show us what a proper control should look like.

[00:14:22] Speaker 03:
They're just pointing and saying, these aren't adequate.

[00:14:25] Speaker 03:
That's not enough.

[00:14:27] Speaker 03:
That doesn't meet the standard.

[00:14:28] Speaker 00:
The court has a gatekeeping function for any expert testimony.

[00:14:34] Speaker 00:
And they don't have to have an opposing expert or a competing survey.

[00:14:38] Speaker 00:
You're not arguing that.

[00:14:39] Speaker 00:
I appreciate that.

[00:14:40] Speaker 00:
But in order to exercise its gatekeeping function, this has to be sufficiently reliable.

[00:14:47] Speaker 00:
And I haven't heard you.

[00:14:47] Speaker 00:
Could you go to that, please, and tell me why you think there wasn't error here?

[00:14:50] Speaker 03:
I don't think there was error because the district court pointed to the various instances.

[00:14:55] Speaker 03:
For example, they talk about how the website shouldn't have been shown in the way they were shown in the survey.

[00:15:03] Speaker 03:
Instead, the district court said, this is very common, just like anybody keeping multiple tabs open on their browser and pointed to it specifically.

[00:15:10] Speaker 03:
So the court went through their various complaints and addressed them and said why this was reliable and accepted practices.

[00:15:17] Speaker 03:
So yes.

[00:15:19] Speaker 03:
court is correct, they don't have to do that, but they sure didn't either.

[00:15:24] Speaker 03:
The best thing they could have done.

[00:15:26] Speaker 00:
And he started by saying, yeah, I'm not going to run through all of my list of complaints.

[00:15:30] Speaker 00:
But he started with what seems to me to be the most apparent, which is the very different colors used when we're talking about confusion.

[00:15:38] Speaker 00:
What's your response to that?

[00:15:39] Speaker 03:
So first of all, Bill Float makes the

[00:15:43] Speaker 03:
Well, it was pointed out during trial that BillFloat's used over 500 different logos during its history.

[00:15:49] Speaker 03:
There's no debate on the weakness of the mark because of that.

[00:15:54] Speaker 03:
They point at that and they say, well, this is a word mark registration.

[00:15:58] Speaker 03:
It should only be the words.

[00:16:00] Speaker 03:
And now they're complaining about colors in the survey.

[00:16:03] Speaker 03:
So is the marketplace important or isn't it?

[00:16:06] Speaker 03:
So I think they're speaking out of both sides of their mouths there.

[00:16:09] Speaker 03:
This situation is we've got a marketplace

[00:16:12] Speaker 03:
that Mr. Keegan was modeling.

[00:16:15] Speaker 03:
Every model is imperfect.

[00:16:16] Speaker 03:
It can't have an exact representation of the marketplace.

[00:16:19] Speaker 03:
And he was modeling it.

[00:16:20] Speaker 03:
He used actual websites.

[00:16:22] Speaker 03:
There's no debate about that, that he somehow created or picked a website that didn't exist or something like that.

[00:16:28] Speaker 03:
These are real websites.

[00:16:30] Speaker 03:
If there's a bunch of people using blue and green, that's the marketplace.

[00:16:34] Speaker 03:
It's not Mr. Keegan's creation.

[00:16:37] Speaker 03:
So if there's noise, that's natural noise.

[00:16:42] Speaker 03:
It's not created by Mr. Keegan.

[00:16:44] Speaker 01:
Well, I think his argument, as I understood it, is that there wasn't really a threshold reliability determination.

[00:16:53] Speaker 01:
But instead, you have the judge saying, well, this, this, and this, those are technical defects that go to the jury.

[00:17:00] Speaker 01:
But Council for Bill Float, I think, is backing it up and saying, we're not talking about that.

[00:17:06] Speaker 01:
We're talking about a fundamental choice of control that in its view goes against accepted practice that it claims your expert essentially agreed with.

[00:17:20] Speaker 03:
So the court, I think, rather than saying generalized there's reliability, actually went to their specific complaints about reliability and answered those questions.

[00:17:30] Speaker 03:
So for example, they questioned the controls.

[00:17:32] Speaker 03:
And the district court said, there are controls.

[00:17:34] Speaker 03:
Here are the controls.

[00:17:36] Speaker 03:
This is how they're shown.

[00:17:37] Speaker 03:
They're shown like they are in the marketplace.

[00:17:38] Speaker 03:
These are things from their natural controls from the marketplace.

[00:17:42] Speaker 03:
And so those statements addressing the concerns of the plaintiff are the reliability statements.

[00:17:50] Speaker 03:
The key here is that Bill Float's request that there be a bright line test on reliability.

[00:17:57] Speaker 03:
Surveys are highly factual.

[00:18:00] Speaker 03:
Every likelihood of confusion termination is highly factual.

[00:18:03] Speaker 03:
The sleet craft factors is long.

[00:18:05] Speaker 03:
And so when there's a survey done, if you draw some kind of bright line test, I don't think it serves the public or the trademark bar for how to do a proper survey because every survey is so different.

[00:18:21] Speaker 03:
So to move on from the survey, we're also seeking, the cross appellants are seeking attorney's fees determination.

[00:18:34] Speaker 03:
They reverse and remand on a part of the attorney's fees determination.

[00:18:38] Speaker 03:
That is both on the contract that was alleged to have been breached and also under the Lanham Act.

[00:18:44] Speaker 03:
Now the Lanham Act is abuse of discretion.

[00:18:47] Speaker 03:
And that's a much higher amount decline, obviously.

[00:18:49] Speaker 03:
But focusing on the state statute, that's a de novo review.

[00:18:53] Speaker 03:
And here, 1717 is pretty clear that we're dealing with a mutuality of remedies.

[00:18:58] Speaker 03:
And even in the Barnhart case, specifically says that even if there's no contract, it doesn't exist or it doesn't apply.

[00:19:08] Speaker 03:
It's inapplicable.

[00:19:10] Speaker 03:
There's still mutuality of remedies available.

[00:19:12] Speaker 03:
So the point at the court's ruling regarding why there wasn't a breach doesn't affect the 1717 determination on attorney's fees.

[00:19:23] Speaker 03:
Instead, we should be looking at how did the plaintiff plead this?

[00:19:28] Speaker 03:
And there's dramatic overreach there, and they should be held account for it.

[00:19:31] Speaker 03:
They said that the breach itself was the willful, or intentional in this case, trademark infringement of their mark.

[00:19:39] Speaker 03:
They were dead wrong, and they lost at summary judgment.

[00:19:42] Speaker 03:
And that's why there should be a 17-17 mutuality of remedy that anything having to do with this intentional trademark infringement should be available, particularly Mr. Keegan's survey, which would have been needed for the breach of contract claim on intentional trademark infringement, which cost $46,000.

[00:20:00] Speaker 03:
That all was done prior to the summary judgment ruling and should have been part of the trademark

[00:20:07] Speaker 03:
or the trademark attorney's fees or the attorney's fees award from the court at minimum.

[00:20:12] Speaker 01:
If it's de novo and we're looking at the contract, it's not clear to me that the despite the breadth of the pleading that the claim actually that the trademark infringement arises out of the partnership agreement.

[00:20:30] Speaker 01:
Why?

[00:20:31] Speaker 01:
Can you enlighten me on that?

[00:20:33] Speaker 03:
Well, the ultimate ruling from the district court was that it didn't at all.

[00:20:38] Speaker 03:
So I agree there.

[00:20:39] Speaker 03:
However, that's how defendants win contract cases.

[00:20:43] Speaker 03:
If mutuality or remedy is going to mean anything, and the Barnhart case is pretty clear on this, is even if a plaintiff makes up out of whole cloth that there's a contract that exists, and they're wrong, and they make some broad claim about

[00:20:58] Speaker 03:
Well, there's a contract saying you won't infringe our trademark and you lose.

[00:21:01] Speaker 03:
Now you have to pay us.

[00:21:03] Speaker 03:
The mutuality of remedies means that the defendant has to be allowed to recover its attorney's fees.

[00:21:09] Speaker 03:
If they're not, then the plaintiff can overreach on its pleadings knowing that, oh, well, if we don't win,

[00:21:15] Speaker 03:
We're not going to lose our attorney's fees, because the court will just have found that there's no contract at issue, or the contract doesn't read to that.

[00:21:24] Speaker 03:
So I think in this case, we have to look to the plaintiff's pleadings and hold them to account for them.

[00:21:36] Speaker 03:
Also, going to the Lanham Act, while I think it is an abuse of discretion situation that's difficult to meet, I think we meet it here.

[00:21:44] Speaker 03:
I think that the plaintiff's conduct during the case, the discovery abuses, the numerous things that occurred during this case, certainly point to an exceptional instance that meets the Lanham Act standard, particularly as revised in the more recent cases.

[00:22:05] Speaker 03:
It only has to be out of the ordinary.

[00:22:07] Speaker 03:
It doesn't have to be some kind of large, egregious thing.

[00:22:11] Speaker 03:
It has to be out of the ordinary, and this is certainly out of the ordinary.

[00:22:14] Speaker 03:
From the overreaching contract claims to the discovery abuses and whatnot, I think each of these meet the situation where plaintiff, again, needs to be held to account for what they were seeking, what was going, what they were looking to

[00:22:28] Speaker 03:
put Bill Float 2, including at or put Collins Cash 2, including adding Mr. Cohen as a defendant in this case.

[00:22:36] Speaker 03:
There was no alter ego evidence offered, certainly no alter ego finding in the case, that's for sure.

[00:22:44] Speaker 01:
It seems to me when you're making those kind of arguments, you're almost conflating Rule 11 type arguments with a determination of whether this was an exceptional trademark case.

[00:22:56] Speaker 01:
And I'm not sure that those two overlap in the way that you're arguing.

[00:23:00] Speaker 01:
I mean, you said there's discovery abuses.

[00:23:03] Speaker 01:
They were bad people.

[00:23:04] Speaker 01:
I'll accept all of that for purposes just of your argument.

[00:23:07] Speaker 01:
But then I say, but was the trademark case exceptional?

[00:23:12] Speaker 01:
And the district court said no.

[00:23:16] Speaker 03:
Well, it's correct.

[00:23:17] Speaker 03:
The district court said no, and we believe he abused as a discretion to do so.

[00:23:21] Speaker 03:
I think that the Rule 11 case, Rule 11 isn't applicable here because there is the Lanham Act.

[00:23:30] Speaker 03:
The Lanham Act specifically calls it out for a reason about exceptionality to allow that because of the nature.

[00:23:37] Speaker 01:
Well, that doesn't somehow cross out Rule 11.

[00:23:40] Speaker 03:
Oh, it doesn't cross it out, but it's, Rule 11 is a very high bar.

[00:23:44] Speaker 01:
I understand.

[00:23:46] Speaker 01:
So is the exceptional case.

[00:23:49] Speaker 03:
I think based on the... Can I just ask you, what's your strongest argument this is an exceptional case?

[00:23:58] Speaker 03:
I think the strongest argument is the discovery abuses in the case and adding Mr. Cohen as a defendant.

[00:24:05] Speaker 00:
So you know the obvious response is that the district court is much better suited to recognize the severity of any discovery abuse than we are.

[00:24:14] Speaker 00:
So your response to that is?

[00:24:16] Speaker 03:
My response to that is that I think just on the record that we presented, and I'm getting to it because after 1717 for a reason, is that on the record stated, the number of things that the plaintiff pursues

[00:24:33] Speaker 03:
without any kind of evidentiary support and, in fact, evidence to the contrary is clear.

[00:24:38] Speaker 00:
So the complaint was overblown, you had to gear up as though it was all real, and then your position is there was no there there.

[00:24:45] Speaker 00:
Exactly.

[00:24:45] Speaker 00:
And you went to do all this extensive work to defend.

[00:24:48] Speaker 03:
Yes.

[00:24:49] Speaker 03:
And on top of that, the district court

[00:24:54] Speaker 03:
We have to recognize that it's extremely hard to win a summary judgment.

[00:24:59] Speaker 03:
Many times, a plaintiff will say, well, we won on summary, or we survived summary judgment.

[00:25:04] Speaker 03:
And that can't be the line for exceptional case, because likelihood of confusion, again, is an extremely factual determination.

[00:25:12] Speaker 03:
And so district court is very unlikely to say, enter summary judgment against such a case.

[00:25:18] Speaker 03:
Instead, it's much easier to let it go forward to trial or see if it sorts itself out.

[00:25:24] Speaker 03:
And so I think it's important to apply that exceptional case standard properly in this case and hold plaintiff to account.

[00:25:34] Speaker 03:
Unless the court has any other questions, thank you.

[00:25:36] Speaker 00:
It doesn't appear that we do.

[00:25:36] Speaker 00:
Thank you for your argument.

[00:25:47] Speaker 02:
Your Honors.

[00:25:49] Speaker 02:
So I'll just quickly answer the question that was pending before about the authority from other circuits.

[00:25:55] Speaker 02:
So first of all, this circuit has at least affirmed dismissals or exclusions of survey evidence before.

[00:26:03] Speaker 02:
That's the M2 case and the FTC case that are in our briefs.

[00:26:09] Speaker 02:
FTC is 815, F3, 593.

[00:26:12] Speaker 02:
and M2 software's 421, F3rd 1073.

[00:26:15] Speaker 02:
The Third Circuit has excluded surveys for not conforming with accepted principles in Citizens Financial versus Citizens National, 383, F3rd 110.

[00:26:28] Speaker 02:
And the Fifth Circuit has also done so based on a improper universe in Ansar Corp v. Domino's Pizza, 615, F2nd 252.

[00:26:41] Speaker 02:
So let's quickly.

[00:26:43] Speaker 01:
I'm familiar with those cases from your brief, actually.

[00:26:46] Speaker 01:
But they don't seem to answer the question of, it comes up on appeal to say, did the district court abuse its discretion in excluding the survey?

[00:26:58] Speaker 01:
And then in those cases, there's a record as to why the district court did it.

[00:27:01] Speaker 01:
And then the circuit court says, no abuse of discretion.

[00:27:05] Speaker 01:
So it's a little bit the flip side of what you're asking, I realize.

[00:27:08] Speaker 02:
That's true.

[00:27:09] Speaker 02:
And Your Honor, obviously, we have

[00:27:11] Speaker 02:
tried to find as much authority as we can.

[00:27:13] Speaker 02:
I think that's why this is an opportunity here, because there isn't that authority in this circuit on the other side of that question.

[00:27:21] Speaker 02:
And here, certainly, combining the defects that the district court absolutely found were there, right?

[00:27:28] Speaker 02:
The district court recognized these were defects in the survey.

[00:27:31] Speaker 02:
But when you actually look at how the survey was given and appreciate that

[00:27:35] Speaker 02:
Their smart business funding mark was shown.

[00:27:38] Speaker 02:
The smart biz website was shown.

[00:27:40] Speaker 02:
And then you have these three controls.

[00:27:43] Speaker 02:
And the question was, for each one, who put out the website here?

[00:27:48] Speaker 02:
Who put out the website?

[00:27:50] Speaker 02:
And the answer to that question becomes a matching game.

[00:27:53] Speaker 02:
These look like they're similar because there's blue and green on this one and blue and green on the other one, or the word loans appears on both of them.

[00:28:01] Speaker 02:
There's these similarities that are very easy to see because a survey was given showing only a single group, not a control group in another group, only a single group saw all of these and got to match.

[00:28:14] Speaker 02:
And that's what happened.

[00:28:15] Speaker 02:
We saw the responses from the actual survey respondents that said that's why they were picking the controls.

[00:28:21] Speaker 01:
I don't want you to run out of time, but I do have a question on the exceptional fees because the heart of the argument I think that they're making is that there were thousands of documents naming the wrong person and that the pleadings were such that it would encompass this contract and therefore at least

[00:28:47] Speaker 01:
not under the exceptional side, but under the state law side, 1717, that fee should have been awarded.

[00:28:56] Speaker 02:
Sure.

[00:28:56] Speaker 02:
Two points on that, Your Honor.

[00:28:58] Speaker 02:
Under 1717, the statute starts off with

[00:29:03] Speaker 02:
addresses mutuality with respect to potential parties that might have a fees decision awarded if the plaintiff wins, for example, but it won't apply to the defendant in that case, but it relates to the contract still.

[00:29:17] Speaker 02:
Right.

[00:29:18] Speaker 02:
And that statute's supposed to even that up.

[00:29:20] Speaker 02:
If you're taking advantage, the mutuality is if you're taking advantage of the fees provision on your side, then the other side should also get the benefit of that provision.

[00:29:28] Speaker 01:
I think what they were saying, though, is that the pleadings say the

[00:29:33] Speaker 01:
breach of the contract was the willful infringement, and therefore it falls in the contract.

[00:29:38] Speaker 01:
Could you just respond to that?

[00:29:40] Speaker 02:
Sure.

[00:29:41] Speaker 02:
So, first of all, the reason they won at summary judgment was because the district court found the opposite, found that there was no relationship between the contract and

[00:29:52] Speaker 02:
the infringement claim.

[00:29:53] Speaker 02:
So even though the pleadings may have said that, we had a good faith basis to try to make that argument.

[00:29:58] Speaker 02:
The district court didn't believe it, and they got the benefit of that.

[00:30:02] Speaker 02:
Now, if this court was inclined to remand on that issue and say that the case that there is a relationship, then we would suggest that that also throws out the summary judgment decision that was decided on that exact point.

[00:30:16] Speaker 02:
So

[00:30:17] Speaker 02:
They already got the benefit of summary judgment.

[00:30:20] Speaker 02:
They won.

[00:30:20] Speaker 02:
We're not disputing the attorney's fees that they were awarded for the contract up through the point of summary judgment.

[00:30:29] Speaker 02:
It's just what happens afterwards.

[00:30:33] Speaker 02:
Your Honor, I know I'm over time, so if there aren't any more questions.

[00:30:36] Speaker 00:
It doesn't appear that there are.

[00:30:37] Speaker 00:
Thank you for your argument.

[00:30:39] Speaker 02:
Thank you.

[00:30:40] Speaker 00:
We'll take that case under advisement and go on to the final case on the calendar.