9th Circuit Extends Octane Fitness Standard for Fee-Shifting to Trademark Cases
On Oct. 24, 2016, the 9th U.S. Circuit Court of Appeals, sitting en banc, explicitly overturned its previous standard for awarding attorneys’ fees in trademark cases, expressly adopting the standard announced in the Supreme Court’s 2014 opinion Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749, 188 L. Ed. 2d 816 (2014). The 9th Circuit now stands with four other U.S. appeals courts in its adoption of the Octane Fitness standard in trademark cases governed by the Lanham Act's fee-shifting provision. The only two appellate courts to have applied earlier case law to Lanham Act fee disputes since the Octane Fitness decision came down are those in the 2nd and 7th Circuits.
In Octane Fitness, the Supreme Court held that an award of attorneys’ fees under the Patent Act was properly determined on a case-by-case basis, considering the totality of the circumstances. Where the totality of the circumstances supports a finding that the case is exceptional, meaning “simply [a case] that stands out from others with respect to the substantive strength of the party’s litigation position … or the unreasonable manner in which the case was litigated,” a trial court acts within its discretion to award attorneys’ fees.
The 3rd, 4th, 5th and 6th Circuits have already recognized that the Octane Fitness holding changed the standard for fee awards under the Lanham Act, which has a fee provision that is “parallel and identical” to the Patent Act. The 9th Circuit’s new decision, SunEarth, Inc. v. Sun Earth Solar Power Co., No. 13-17622, 2016 WL 6156039, at *1 (9th Cir. Oct. 24, 2016), joined suit, holding that district courts analyzing a request for attorneys’ fees under the Lanham Act should examine the totality of the circumstances to determine if the case was exceptional, exercising its equitable discretion — in light of such nonexclusive factors as frivolousness, motivation, objective unreasonableness and the need in particular circumstances to advance considerations of compensation and deterrence — and using a preponderance of the evidence standard. This new standard is vastly different from the 9th Circuit’s prior standard for awarding fees, which required a showing of “malicious, fraudulent, deliberate, or willful” infringement.
Notwithstanding the wholesale adoption of the Octane Fitness totality of the circumstances standard across five U.S. appeals courts, it remains to be seen whether the 7th Circuit will soon follow suit, overruling precedent applying the current “abuse of process” standard that permits an award of attorneys’ fees where the losing party is guilty of acting in bad faith, vexatiously, wantonly or for oppressive reasons. See Burford v. Accounting Practice Sales, Inc., 786 F.3d 582, 588 (7th Cir. 2015).
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