Sugar Alcohol Case Not So Sweet for Lawyers

One thing is sure in litigation. The attorneys will get paid.

Well, that's a half-truth because one side may not get anything. Plaintiffs' lawyers -- especially the contingency fee kind -- know this all too well.

But in Xlear v. Focus Nutrition, it remains to be seen whether the defense attorneys will get their fees. A trial court awarded them, but the U.S. Tenth Circuit Court of Appeals wants the trial judge to rethink it.

Sugar Alcohol

It started with sweetener containing the sugar alcohol xylitol. XLear and Focus Nutrition had similar products, but XLear claimed its competitor sold products in boxes that looked like XLear boxes.

A trial judge took a look at the boxes, along with packages from other vendors, and nearly dismissed the case.

"I've had dozens of trade dress cases through the years," the judge said at a hearing. "It just seems as weak a case as I can imagine from a company that is upset that some former employees went out and did exactly what it seems like a lot of other companies are doing with this same Xylitol product and artificial sweeteners."

That did the trick, and the parties went out into the proverbial hall and settled the case. Each party dismissed its claims, but reserved the right to ask the court for attorneys' fees.

The $26,674 Question

Two weeks later, the defendant moved for $26,674 in attorney's fees under the Lanham Act. The judge gave it to them.

On appeal, the Tenth Circuit said that was a mistake because the defendant was not a prevailing party. Although the trial judge had expressed doubts about the plaintiff's case, that did not make the defendant a prevailing party.

However, the appeals court remanded the case for the trial judge to consider the fee request under the state's Truth in Advertising Act. The lawyers may get paid under the Act when if the judge finds their fees were reasonable.

Related Resources:

• Kris Kobach Sanctioned and Loses Kansas Voter ID Case (FindLaw's U.S. Tenth Circuit Blog)
• Court Upholds Utah's Signature-Gathering Law (FindLaw's U.S. Tenth Circuit Blog)
• United States Tenth Circuit Cases (FindLaw's Cases & Codes)