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Potential Changes to Attorney’s Fees in Trademark Lawsuits

Each branch of intellectual property has its own statutes and rules, but every so often, decisions in one sphere can bleed over into another. Such a situation might be happening now with regard to a patent law decision that is making ripples in trademark cases. Last year, the United States Supreme Court decided the case Octane Fitness LLC. v. ICON Health and Fitness Inc., which dealt with the issue of what standard courts should use when determining whether to award attorney’s fees to the prevailing party in a patent lawsuit. This decision is now having an effect on trademark cases because the statutory language for when to award attorney’s fees is identical between the federal patent statute and the federal trademark statute. This has left courts debating whether to apply the new patent standard in trademark cases.

Octane Fitness

The Octane Fitness case examined the standard for awarding attorney’s fees in patent litigation, and ultimately lowered it. Federal law gives judges the right to award the prevailing party attorney’s fees in “exceptional cases.” However, the law provided no clarity on when something qualified as an exceptional case. The previous rule was that it had to involve either “material inappropriate conduct,” or it had to be “objectively baseless,” and “subjectively brought in bad faith,” which was quite a high bar.

The Court revisited this standard, focusing specifically on the statutory language of “exceptional cases.” The Court held that the old standard was too rigid, and that it improperly constrained judges when they were supposed to be applying a much more flexible standard. Instead, courts should now just read the language plainly, awarding fees whenever they think a case is exceptional enough to merit it. This same rationale is now being applied to trademark cases in some circumstances.

Octane’s Aftermath

This focus on the statutory language is important because the Lanham Act, the federal law governing trademarks, also says that the court “in exceptional cases may award reasonable attorney’s fees,” which is identical language to the language in the Patent Act. However, the Supreme Court made no reference to this in their Octane Fitness opinion. This has left courts unsure of whether they should also be applying this standard in trademark cases. At present, courts across the country are splitting over the issue.

The most senior court to consider the issue so far has been the Third Circuit, a federal appeals court. They ruled that the new standard did apply to trademark cases as well, giving trial court judges more discretion about when to award attorney’s fees. A federal trial court within Florida has also made that same decision, but there has not been a decision by an appeals court yet. Still other courts are going the other way, holding to the stricter interpretation that the Supreme Court was interpreting the Patent Act, so the new standard only applies with regard to the Patent Act.

Trademark law is a rapidly changing field, and it can be important to have an experienced attorney. If you are involved in a trademark dispute, contact a Florida trademark attorney at Pike & Lustig, LLP today.

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