Clarifying Prevailing-Party Status and Recognising Joint Trademark Ownership:
Commentary on Zioness Movement, Inc. v. The Lawfare Project, Inc. (2d Cir. 2025)

Introduction

The Second Circuit's summary order in Zioness Movement, Inc. v. The Lawfare Project, Inc. (No. 24-974-cv, decided 13 Aug 2025) arises from an acrimonious dispute between two non-profit organisations that collaborated—then split—over a progressive Zionist advocacy initiative. Although designated a “summary order” (and therefore formally non-precedential under Local Rule 32.1.1), the opinion addresses four doctrinally significant questions:

  • Whether two organisations can jointly own a single trademark where each has materially contributed to its creation and use.
  • Whether a party that secures the voluntary dismissal with prejudice of an opponent’s copyright claim qualifies as a “prevailing party” for purposes of attorneys’ fees under 17 U.S.C. § 505.
  • The scope of the district court’s discretion in tailoring monetary sanctions for discovery misconduct.
  • The extent to which waiver principles restrict post-trial challenges to verdict forms, jury instructions and allegedly inconsistent verdicts.

The appellants—Zioness Movement, Inc. (“ZMI”) and its founder Amanda Berman—sought to overturn a jury verdict that declared co-ownership of the “ZIONESS” mark between ZMI and The Lawfare Project, Inc. (“LPI”), challenged discovery-related sanctions and pursued attorneys’ fees after LPI abandoned its copyright counterclaim. The Second Circuit affirmed on most points but vacated and remanded the denial of attorneys’ fees, holding that LPI’s dismissal with prejudice rendered ZMI and Berman prevailing parties entitled to Fogerty analysis.

Summary of the Judgment

1. Trademark Co-Ownership Affirmed: Sufficient evidence supported the jury’s finding that the parties are joint owners of the ZIONESS mark, given LPI’s initial funding and development and ZMI’s subsequent registration and use. ZMI’s Rule 50 and Rule 59 challenges failed, largely because ZMI had waived objections to the verdict form and did not demonstrate fundamental error.

2. Discovery Sanctions Sustained: The district court did not abuse its discretion in capping the sanction at $20,000 after finding ZMI’s claimed expenses unreliable.

3. Prevailing-Party Status Clarified: LPI’s voluntary dismissal with prejudice of its copyright claims materially altered the parties’ legal relationship; accordingly, under § 505 ZMI and Berman are prevailing parties. The appellate court vacated the denial of fees and remanded for an application of the Fogerty factors.

4. Remaining Arguments Rejected: All other assignments of error lacked merit.

Analysis

A. Precedents Cited

  • Manganiello v. City of New York, 612 F.3d 149 (2d Cir. 2010) – sets the de novo standard of review for Rule 50 decisions.
  • Vangas v. Montefiore Medical Center, 823 F.3d 174 (2d Cir. 2016) – articulates when a jury verdict may be set aside.
  • Kosmynka v. Polaris, 462 F.3d 74 (2d Cir. 2006) & Lavoie v. Pacific Press, 975 F.2d 48 (2d Cir. 1992) – highlight waiver of objections to verdict inconsistency and instructions.
  • Shade v. Housing Auth. of New Haven, 251 F.3d 307 (2d Cir. 2001) – defines “fundamental error” doctrine.
  • Fogerty v. Fantasy, 510 U.S. 517 (1994) – establishes factors governing fee awards under the Copyright Act.
  • Carter v. Inc. Village of Ocean Beach, 759 F.3d 159 (2d Cir. 2014) – holds that dismissal with prejudice confers prevailing-party status.
  • Penshurst Trading Inc. v. Zodax L.P., 652 F. App'x 10 (2d Cir. 2016) – applies prevailing-party rule in a summary order, foreshadowing the present decision.
  • Lanham Act § 2(d), 15 U.S.C. § 1052(d) – authorises concurrent trademark registrations where more than one entity has right to use the mark.

Although the court relied on settled doctrine, its synthesis of these cases reinforces the legal propositions that (i) co-ownership of a mark is doctrinally permissible, and (ii) dismissal with prejudice triggers fee-shifting eligibility under § 505.

B. Legal Reasoning

  1. Evidence of Joint Trademark Ownership
    The panel recited extensive record evidence: LPI’s expenditure of funds, initial creation of the logo and website, Berman’s simultaneous employment by LPI while incorporating ZMI, and ZMI’s later registration of the mark. Joint ownership therefore survived Rule 50 scrutiny. The court emphasised that the Lanham Act’s concurrent-use provisions rebut the notion that consumer-confusion policies invariably bar co-ownership.
  2. Waiver and Fundamental Error
    Because ZMI did not object to the verdict sheet’s “both” option or to the verdict before the jury was discharged, any challenge required demonstration of “fundamental error”—a threshold the appellant could not cross once the court acknowledged that trademark co-ownership is possible under federal law.
  3. Discovery Sanctions Discretion
    The district judge initially promised half of ZMI’s discovery expenses but later found the submitted billing records “not credible” and imposed a round-number sanction. The appellate panel deferred, reiterating the “abuse-of-discretion” standard and the judiciary’s authority to assess credibility in fee/sanction calculations.
  4. Prevailing-Party Analysis Under § 505
    The crux of the remand: under Carter and Penshurst, a voluntary dismissal with prejudice operates as a merits adjudication preventing future litigation; thus the defendants (here, ZMI/Berman) are prevailing parties. The district court erred in conflating trademark issues (on which ZMI achieved only partial success) with the copyright claim (which LPI surrendered entirely). On remand, the lower court must apply the Fogerty factors to decide whether, and how much, to award.

C. Impact of the Decision

  • Trademark Practice: Marketing collaborations, joint ventures and incubation arrangements should expect heightened scrutiny over ownership assertions. Where factual intermingling resembles the LPI/ZMI timeline, joint ownership may be a viable, if sub-optimal, judicial outcome.
  • Litigation Strategy: Plaintiffs contemplating voluntary dismissal of IP claims face increased risk of fee exposure in the Second Circuit; such dismissals now more clearly convert defendants into “prevailing parties.”
  • Settlement Leverage: Knowing that fee petitions survive a with-prejudice dismissal, defendants may negotiate from a stronger position when plaintiffs consider abandoning claims to streamline trial.
  • Discovery Conduct: The ruling reaffirms that district judges wield broad power to reduce sanctions where claimed expenses are inflated or inadequately supported, nudging counsel to maintain meticulous, consistent billing records.
  • Waiver Doctrine: Litigants must timely object to verdict forms and instructions; silence at the charge conference or before jury discharge severely limits appellate relief.

Complex Concepts Simplified

  • Summary Order – An appellate disposition that, while publicly available and citable, is not formally precedential. It guides parties but does not bind future panels.
  • Rule 50 (Judgment as a Matter of Law) – A motion arguing that no reasonable jury could reach the verdict given the evidence; denies the jury’s right to decide disputed facts.
  • Rule 59(a) (New Trial) – Requests a fresh trial because the existing verdict is against the weight of evidence or compromised by legal error.
  • Dismissal “with prejudice” – Terminates a claim permanently; the plaintiff cannot re-file it.
  • Prevailing Party – A litigant who gains a material alteration in legal rights (e.g., via judgment or dismissal with prejudice) and may seek statutory fees.
  • Fogerty Factors – Equitable considerations (frivolousness, motivation, objective unreasonableness, compensation/deterrence) that guide courts in awarding copyright attorneys’ fees.
  • Concurrent Use Registration – The Lanham Act mechanism allowing two or more unrelated entities to register similar marks for geographically distinct or otherwise limited uses, reflecting the possibility of co-ownership or co-existence.

Conclusion

The Second Circuit’s decision provides a multifaceted lesson. First, it underscores that trademark rights can, in uncommon but factually supported scenarios, be shared. Second, it clarifies—perhaps more forcefully than prior dicta—that a voluntary dismissal with prejudice triggers prevailing-party status under the Copyright Act, exposing the dismissing party to potential fee liability. Third, it illustrates the deference accorded to trial courts in sanctioning discovery abuse and the critical importance of accurate billing submissions. Finally, the opinion is a cautionary tale about procedural waiver: counsel must vigilantly object to verdict forms and instructions to preserve appellate challenges.

While technically non-precedential, Zioness will likely be cited for persuasive authority in future Second Circuit district courts confronting similar issues of joint IP ownership and fee-shifting. Practitioners should heed its teachings when structuring collaborative branding projects, framing IP pleadings, and navigating the strategic terrain of pre-trial dismissals.