Peter Sloane's War Story
Strategic Litigation Leads to Victory
General Counsel for a global leader in the gaming and lottery industries reached out to me about a year into a case being handled by a large general practice firm. The client and its customers (state lotteries) were embroiled in a blunderbuss litigation commenced by a registered trademark owner. Trademark infringement and unfair competition claims were filed in state and federal courts and administrative proceedings were commenced before the Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office. The crux of the dispute involved our clients’ use of a certain mark for lottery cards, which the registrant claimed infringed its rights to the mark relative to board games.
Initially, our engagement was limited to a couple of discrete issues. However, in preparing to advise on those issues, it became abundantly clear to us that the registrant was using discovery to drive up costs (presumably to make its eight-figure settlement demand more palatable). Excessive amounts of money were being spent on discovery, especially third-party discovery whose relevance to the operative merits was attenuated, at best. With no clear end in sight, we proposed an endgame to the GC that we believed would be worthwhile to discuss with the general practice firm.
Shortly thereafter, we were pleasantly surprised that the client sought further counseling concerning our proposal and, ultimately humbled, when we were instructed shortly thereafter to assume control of all federal, state, and administrative cases for the dispute. As lead counsel, we immediately set out to consolidate each diverse matter around a single consolidated, cohesive narrative that the registrant had done its best to obscure during its abuse of the discovery process, namely, that no one was likely to be confused by our clients’ use of the mark based on, inter alia, the paucity of board game sales behind the registrant’s registration. Indeed, upon being granted full access to the record, we immediately recognized that registrant was essentially a “trademark troll,” litigating the matter as if its trademark was a patent (an all too common occurrence). That is, it was clear that registrant was focused only on our clients’ use of the mark and not the vulnerabilities with its trademark registration.
Upon assuming leadership of the litigations, we moved swiftly to stay the state and administrative matters in order to focus an attack on the weakest part of the registrant’s federal case. Thereafter, we filed a motion for summary judgment as to a discrete, but case dispositive, issue that registrant’s excessive discovery efforts had failed to develop (i.e., registrant’s own use). Arguing that registrant had ample opportunity to develop the issue after a yearlong, nationwide discovery campaign (especially since most of the information could be found in its own files), we quickly secured a victory on that issue that ultimately led to the unraveling of registrant’s entire case. The federal judge ultimately found that the registrant did not own a legally protectable trademark, which we leveraged into dismissal with prejudice of registrant’s trademark infringement, unfair competition, breach of contract, and associated business torts. We then used the same battleplan to prevail on summary judgment in the state action. Finally, after an unsuccessful appeal to the Second Circuit, registrant capitulated and agreed to dismiss the administrative proceedings with prejudice without further litigation.
The most teachable moment from this case is that, in litigation, brute force is often a poor substitute for artful strategy. By concentrating on identifying potential endgames early and often, our litigation team provided our clients with a complete and total victory at a fraction of the cost they paid to BigLaw.