Nos. 07-3882/08-1472/1655 URBAN OUTFITTERS INC. v. Bcbg Max Azria Group, Inc.; Street Beat Sportswear, Inc.; Max Rave, LLC

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 07-3882/08-1472/1655
URBAN OUTFITTERS INC.; URBAN OUTFITTERS
WHOLESALE, INC.; FREE PEOPLE, LLC
(Appellants in 08-1655)
v.
BCBG MAX AZRIA GROUP, INC.;
STREET BEAT SPORTSWEAR, INC.;
MAX RAVE, LLC
(Appellants in 07-3882 & 08-1472)
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D. C. No. 06-cv-04003)
District Judge: Hon. Michael M. Baylson
Submitted under Third Circuit LAR 34.1(a)
on March 2, 2009
Before: BARRY, WEIS and ROTH, Circuit Judges
( filed: March 30, 2009 )
O P I N I O N

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“To establish trademark infringement in violation of the Lanham Act, 15 U.S.C. §1
1114, a plaintiff must prove that (1) the mark is valid and legally protectable, (2) it owns
the mark, and (3) the defendant's use of the mark is likely to create confusion concerning
the origin of goods or services.” E.T. Browne Drug Co. v. Cococare Prods., Inc., 538
F.3d 185, 191 (3d Cir. 2008). The first two prongs are established if, as in this case, the
mark at issue is federally registered and has become incontestible. See Commerce Nat.
Ins. Servs., Inc. v. Commerce Ins. Agency, Inc., 214 F.3d 432, 438 (3d Cir. 2000).
ROTH, Circuit Judge:
This is a trademark case pursuant to 15 U.S.C. § 1114, the Lanham Act. BCBG
Max Azaria Group, Inc. (BCBG) appeals from the District Court’s permanent injunction
order and partial award of attorney fees in favor of Urban Outfitters, Inc. BCBG also
appeals the District Court’s dismissal of its counterclaim seeking cancellation of Urban
Outfitters’ Free People mark. Urban Outfitters cross-appeals the court’s denial of
“exceptional case” attorney fees under § 1117 and suggests the court erred in holding a
post-trial hearing on the matter. We assume the parties’ familiarity with the facts and the
record of prior proceedings, which we refer to only as necessary to explain our decision.
For the reasons given below, we will affirm in part, vacate in part, and remand for further
proceedings.
The District Court committed no error in finding, after balancing the Lapp factors,
that there was a likelihood of confusion between Urban Outfitters’ Free People and
BCBG’s True People marks. See Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d1
Cir. 1983) (establishing ten-factor balancing test to evaluate likelihood of confusion). In
this case, the District Court conducted an extensive and searching inquiry in the form of
hearings on various motions and, ultimately, a bench trial. Having reviewed the

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voluminous record and the careful opinions of the court, we will affirm the District
Court’s holding that BCBG infringed upon Urban Outfitters’ Free People mark.
We are additionally assured the District Court did not abuse its discretion by
awarding attorney fees to Urban Outfitters in connection with its February 2007
emergency motion. The court determined BCBG had violated the commitments it made
to the court in the Papouchado Declarations by distributing a brochure for the True People
line at the February 2007 clothing trade show. Previously, the court had warned BCBG
that severe sanctions would result from a violation of the representations BCBG had
given to the court; therefore, BCBG was on notice that the court intended to hold BCBG
to its word. We will, therefore, affirm the District Court’s award of $26,562 in attorney
fees to Urban Outfitters.
Next, we will affirm the District Court’s denial of BCBG’s counterclaim seeking
the cancellation of the Free People mark. The District Court did not err in determining
that BCBG had not demonstrated that Urban Outfitters made a false statement in the
registration of the mark.
On the issue of “exceptional case” attorney fees under § 1117 of the Lanham Act,
we will remand to the District Court. Though the District Court indicated it considered
BCBG’s discovery misconduct when rejecting Urban Outfitters claim, the court failed to
explain whether it had considered the other examples of BCBG’s chicanery that Urban

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Specifically, Urban Outfitters suggests Albert Papouchado lied about not having2
heard of the Free People mark, about BCBG’s plans to open freestanding stores to sell
True People clothing, and about his promise to not distribute brochures for True People at
the February 2007 Magic Show. Urban Outfitters also suggests Michel Amar lied about
the pink True People tag that resembled a Free People tag. It contends a third witness,
Maryann Casale-Tooker, lied about Amar’s whereabouts so he couldn’t be questioned
about the Parallel concept, saying he was in China when he was in fact in the United
States. Urban Outfitters finally suggests BCBG withheld the Parallel concept booklet for
months and failed to produce numerous other documents responsive to their discovery
requests. It raises, as well, a variety of allegations of misconduct on behalf of BCBG’s
counsel.
In remanding for further consideration of “exceptional case” fees, we do not suggest3
a particular outcome must result.
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Outfitters has identified. As such, we will now remand to the District Court for further2
proceedings to permit the court to set out its conclusions on all the allegations in the
record of BCBG’s misconduct.3
Finally, we reject out of hand Urban Outfitters’ claim that the District Court acted
improperly when it held a hearing on the “exceptional case” issue. Even though the
granting of attorney fees is a fundamentally discretionary act, a district court’s decision to
hold a hearing to make additional findings to reach a decision on the issue is not in error.
For the foregoing reasons, we will affirm in part, vacate in part, and remand for
further proceedings.

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