The Supreme Court’s decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), provided an opening for a more liberal standard for fees in trademark cases. Octane Fitness was a patent case where the Supreme Court interpreted the Patent Act’s identical attorney fees language: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35. U.S.C. § 285.
Before Octane Fitness, attorneys’ fees were only recoverable in an “exceptional case” under the Lanham Act if there was evidence that the defendant acted in bad faith or willfully infringed the plaintiff’s trademark rights. Both acts were very different to prove, so attorneys’ fees awards were very rare in trademark infringement cases.
Octane Fitness held that, “an ‘exceptional case’ is simply one that stands out from others with respect to the substantive strength of a party’s litigation position (considering both the governing law and facts of the case) or the unreasonable manner in which the case was litigated.” The Third, Fourth, Fifth, Sixth, and Ninth Circuits have held that Octane Fitness applies to awards of attorneys’ fees under the Lanham Act. The remaining circuits are expected to follow suit.
Under the old, exceptional case standard, a failure to search alone was insufficient to conclude that a defendant acted in bad faith or willfully infringed the plaintiff’s mark. In fact, in some judicial circuits, a finding of actual confusion is a condition precedent to an award of attorneys’ fees, which Octane Fitness does not change.
Under the new, more liberal Octane Fitness standard, a failure to search alone will still be unlikely to warrant an attorneys’ fee award. But it may be a consideration when weighing substantive strength of a party’s litigation position. Defendants that did not conduct a search and do not have reasonable arguments supporting the absence of a likelihood of confusion need to carefully consider the decision of protracted litigation.
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