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 awarding attorneys’ 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 difficult 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, Ninth, and Federal 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 impact protracted litigation may have on a possible attorneys’ fees award.
Most trademark attorneys advise their clients to obtain, at a minimum, all the top-level domain names associated with their trademark even if they will only use one of those domain names because the low-cost of a domain name registration is cheap insurance against the problem of cybersquatting compared to the cost associated wrestling a domain name away from a cybersquatter.
Conducting a reliable search using a reputable trademark search engine like BOB can function the same way as purchasing the available top-level domain names by assisting with a reasonable argument that no likelihood of confusion exists at a low cost.