Circuit Backs One Attorneys' Fees Rule for Patent, TM Cases

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By Peter Leung

May 3 — The U.S. Supreme Court's standard for determining whether to award attorneys' fees to the winner in a patent dispute should be applied to trademark cases as well, a federal appeals court ruled May 3.

In denying defendant Jeffrey Todd DeShong's motion for attorneys' fees, the trial court applied the incorrect standard of what constitutes an “exceptional” case, the U.S. Court of Appeals for the 5th Circuit ruled.

In the decision, the 5th Circuit joins several other federal appeals courts in finding that the same standard should apply for awarding attorneys' fees in both patent and trademark cases.

Plaintiff Clive Baker and his organization, the Office of Medical and Scientific Justice Inc., sued DeShong for trademark infringement under the Lanham Act. The OMSJ has a service called the HIV Innocence Group, and DeShong has several websites, including www.hivinnocencegrouptruth.com, which purport to expose the OMSJ's misdeeds. Baker's lawsuit is based on claims that DeShong's website infringes his trademarks.

The district court dismissed the claims, and DeShong moved for attorneys' fees under § 1117 of the Lanham Act. The court denied the motion, saying that the case was not “exceptional” because DeShong did not prove by clear and convincing evidence that the plaintiffs brought the suit in bad faith.

Section 1117 authorizes attorneys' fees awards to the prevailing party in “exceptional” trademark cases.

The 5th Circuit reversed. It found that the Supreme Court's ruling in Octane Fitness LLC v. ICON Health & Fitness Inc., 134 S. Ct. 1749, 2014 BL 118431, 188 L. Ed. 2d 816, 110 U.S.P.Q.2d 1337, 134 S. Ct. 1749, 2014 BL 118431, 188 L. Ed. 2d 816, 110 U.S.P.Q.2d 1337 (U.S. 2014) applies, even though that case discussed the section of law authorizing attorneys' fees award in patent and not trademark cases.

The court explained that § 1117 of the Lanham Act and the Patent Act's fees provision contain identical language, which means that Octane applies to trademark cases as well. Under this analysis, the party seeking fees does not have to prove that the other party acted in bad faith. Furthermore, the winning party does not have to prove that a case was exceptional under the higher “clear and convincing” standard (83 PTD, 4/30/14).

The trial court erred in requesting both bad faith and proof under the higher standard. Instead, an “exceptional” case justifying an attorneys' fees award is one that stands out from others with respect to the substantive strength of a party's litigating position, or where the losing party litigated the case in an unreasonable manner.

Not All Intellectual Property

Though the trademark and patent laws use identical language in authorizing attorneys' fees awards, the Copyright Act's provision uses different language. The Supreme Court is mulling this issue in Kirtsaeng v. John Wiley & Sons Inc., having heard oral arguments in that case on April 25 (80 PTD, 4/26/16).

To contact the reporter on this story: Peter Leung in Washington at pleung@bna.com

To contact the editor responsible for this story: Mike Wilczek in Washington at mwilczek@bna.com

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