A recent The Recorder story, “Appeals Court Eases Standard for Attorney Fees in Trademark Cases,” reports that ruling en banc without argument, the court unanimously adopted the “totality of the circumstances” test that the U.S. Supreme Court set for awarding fees in patent cases. SunEarth v. Sun Earth Solar Power comes just five months after the three-judge panel issued its opinion in the case.
The decision means SunEarth Inc., a Fontana-based manufacturer of solar water heaters, will get another crack at trying to recover fees for winning an injunction against Chinese solar panel maker Sun Earth Solar Power Co. U.S. District Judge Claudia Wilken of the Northern District of California enjoined Sun Earth Solar Power from using the Sun Earth mark in the United States, but declined to award fees, finding that Sun Earth’s conduct was unintentional and in some cases necessary to satisfy U.S. Customs requirements.
The Lanham Act and Patent Act use identical language for awarding attorney fees. They state simply that “the court in exceptional cases may award reasonable attorney fees to the prevailing party.” Previously, the U.S. Court of Appeals for the Ninth Circuit required that a plaintiff show a defendant engaged in “malicious, fraudulent, deliberate or willful” infringement. But the Supreme Court said in a 2014 patent case, Octane Fitness v. Icon Health and Fitness, that an exceptional case is simply one that stands out from others.
The high court said that means district judges should consider the totality of the circumstances when considering a fee request, including frivolousness, motivation, objective unreasonableness and the occasional need to advance compensation and deterrence. “The standard that we had adopted previously was quite a bit more strict than the totality of the circumstances,” Judge Jay Bybee said at the panel argument last May. “The [Supreme] Court lowered the bar quite a bit.”
But because another Ninth Circuit panel applied the circuit’s old standard after Octane Fitness was issued, the Ninth Circuit had to convene en banc to change its law and align it with the Supreme Court. According to the ruling, the Third, Fourth, Fifth and Sixth circuits also have adopted the Octane Fitness fee-shifting formula for trademark cases. The Second and Seventh have stuck with their previous standards.
The Ninth Circuit also said in the ruling that it will review trademark fee awards more deferentially, pursuant to the Highmark companion case to Octane Fitness. The ruling is a win, at least for now, for Stephen Mosier of Hayes Soloway. James Foster of Hayes Messina Gilman & Hayes argued to the panel for Sun Earth Solar Power.
IP litigator Lawrence Townsend of Owen, Wickersham & Erickson, who’s not involved in the case, said the court is clearly easing the standard for awarding attorney fees. But still, no one should expect them in garden variety trademark cases. “It’s still a high bar,” he said. “It’s not like the prevailing party ‘shall be awarded’ attorneys fees.”
The Ninth Circuit panel that heard SunEarth back in May seemed to suggest as much in its opinion. “Given the district court’s findings,” the court stated, “we have little doubt that this case is unexceptional even under Octane Fitness‘s totality of the circumstances test.”