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Royal Palm Properties, LLC v. Pink Palm Properties, LLC

Today we decide if civil lawsuits are more like regular or postseason National Football League (NFL) games. That is, can they end in a tie or must a winner always be named?

We think they are more like regular season games. Courts, unlike the NFL, are not in the business of declaring winners; they are in the business of settling legal disputes. And, sometimes, legal disputes do not have a clear winner (in legalese, a “prevailing party”). As such, courts are not required to declare a winner—or a “prevailing party”—in every case.

The answer to this question—whether legal cases can end in a tie or if a prevailing party must be named—is significant because the prevailing party of a lawsuit is ordinarily entitled to recover its costs, see Fed. R. Civ. P. 54(d)(1), and also can be eligible for fee awards under various fee-shifting statutes. In the case at hand, Royal Palm Properties, LLC (Royal Palm) sued Pink Palm Properties, LLC (Pink Palm) for trademark infringement and Pink Palm countersued. Both parties ultimately lost on their claims. Pink Palm asserted that it was the prevailing party, and thereby entitled to costs under Rule 54 and “exceptional case” fees under the Lanham Act, because it successfully defended the initial infringement claim. Because there was a split judgment and both parties lost on their claims, however, the district court ruled that there was “no clear winner” and, thus, no prevailing party. After careful review we agree that there was no prevailing party in this case and affirm the judgment of the district court.

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