Almost Two Years Later, Will US Courts Use Octane Fitness Standard For Attorney Fee-Shifting More Consistently In Trademark Cases?

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Almost Two Years Later, Will US Courts Use Octane Fitness Standard For Attorney Fee-Shifting More Consistently In Trademark Cases?

In the previous Blog posting I discussed most significant trademark cases of 2015. This installment deals with a particular issue, which perhaps did not get enough coverage in the media: fee-shifting remedy imposed on trademark bullies and gross intentional trademark infringers.

In 2014, this Blog was one of the first sources that recognized that the U.S. Supreme Court's Octane Fitness ruling on fee-shifting in patent cases should be extended to trademark and unfair competition cases under the Lanham Act. Under Octane Fitness, it should be much riskier to bring questionable trademark claims and counter claims or behave badly during litigation. The Third Circuit (Pennsylvania) was the first Circuit to make such an extension and patent-trademark analogy official.

Why is this issue important? European lawyers and many clients barely understand the so-called American Rule. Under the American Rule, each litigant pays his own attorneys’ fees, win or lose. In most other countries, the prevailing party generally gets to recover the costs of litigation including its attorneys’ fees from the losing party. This would be the system even in England from which our legal system originated, let alone Continental Europe and the rest of the world.

2015 saw more cases and more courts follow Third Circuit. In April 2015, the Sixth Circuit (MI, OH, KY, TN) noted that the fee provisions in patent and trademark law are identical and that such matching provisions “should generally be interpreted consistently.” Sending a trademark case back to the lower court, the panel ordered it to “assess the applicability of Octane Fitness before determining whether it is necessary to reassess if this case qualifies as extraordinary under [the Lanham Act].”

However, some district courts continue to apply the old standard, notably in the Second (New York, Connecticut) and Ninth Circuits (West Coast states). In August 2014, a Connecticut federal judge refused to use the new standard and denied a Lanham fee award against Fossil Inc. based on a tougher, existing legal standard in the Second Circuit. The justices in Octane Fitness were “interpreting only the Patent Act and not the Lanham Act,” the judge wrote, meaning "the Second Circuit cases interpreting the fee provision of the Lanham Act remain good law and represent binding precedent on this court.”
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So, 2016 should be interesting as to whether or not courts will apply the fee-shifting provision to trademark cases under Octane Fitness, an important weapon against trademark bullies and trademark trolls as well as repeat trademark infringers. It remains to be seen whether Octane will take hold in trademark law.

Text © Maxim A. Voltchenko 2016

* This piece is not intended to be a review of U.S. court cases. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.