## Facts

- Two cousins in the Gracie family operated competing Brazilian jiu-jitsu instruction businesses in California and used “Gracie”-related branding.
- One party obtained federal service-mark registrations for “Gracie Jiu-Jitsu” and a “Triangle Design” logo depicting two grappling figures within an open triangle, and asserted rights through enforcement efforts.
- The other party sued to challenge the validity of the registrations and asserted related federal and state claims; the registrant counterclaimed for infringement of both registered marks.
- After summary judgment disposed of many claims, a jury returned a mixed verdict: it found no valid trademark rights in “Gracie Jiu-Jitsu,” but found the Triangle Design valid and willfully infringed, awarding $108,000 in the infringer’s profits.
- Post-trial, the district court awarded the registrant $620,000 in attorneys’ fees under the Lanham Act’s “exceptional case” provision without apportioning between Lanham Act and non-Lanham work.
- The challenger appealed, including the failure to cancel the “Gracie Jiu-Jitsu” registration and the full fee award.

## Issues

1. Whether a federal registration must be canceled when a jury finds the registered mark invalid and the registrant has no valid rights in it.
2. Whether willful infringement of a registered logo can support an accounting of profits without proof of actual consumer confusion.
3. Whether the case qualified as “exceptional” for Lanham Act fee shifting and, if so, whether the court had to apportion fees between Lanham Act and non-Lanham claims.

## Decision

- Reversed the district court’s refusal to cancel the federal registration for “Gracie Jiu-Jitsu” and ordered cancellation consistent with the jury’s invalidity finding.
- Affirmed the jury’s verdict that the Triangle Design was valid and willfully infringed, and affirmed the $108,000 profits award.
- Vacated the $620,000 attorneys’ fee award and remanded for a reasonable allocation between fee-shifting Lanham Act work and non-Lanham work, with an adequate explanation.

## Legal Principles

- When adjudication establishes that a registered mark is invalid, the court should order cancellation to prevent the federal register from reflecting rights inconsistent with the factfinder’s determination.
- Under the Lanham Act, willful infringement may justify an accounting of the infringer’s profits even without direct proof of actual consumer confusion, based on deterrence and unjust enrichment rationales.
- A finding of willful infringement may support “exceptional case” status for attorneys’ fees under the Lanham Act.
- Where a case includes both Lanham Act and non-Lanham claims, a court must make a reasonable, good-faith effort to apportion fees; awarding an undifferentiated total without meaningful allocation is an abuse of discretion.

## Conclusion

The Ninth Circuit required cancellation of a federally registered mark found invalid, upheld profits for willful infringement of a registered logo without requiring proof of actual confusion, and held that fee awards in mixed-claim litigation must be reasonably apportioned and explained.


Gracie v. Gracie, 217 F.3d 1060 (9th Cir. 2000)