A recent Texas Lawyer story, “Fifth Circuit Makes It Easier to Recover Attorney Fees in Trademark Cases,” reports that, in a decision that will make it easier for litigants to recover attorney fees when they are forced to defend baseless trademark infringement complaints, the U.S. Fifth Circuit Court of Appeals has loosened the standard for what constitutes a legally "exceptional" case under the Lanham Act in a recent decision.
The case, Baker v. DeShong, involves Clark Baker, a private investigator who believes HIV does not cause AIDS and markets his services under the federally registered "HIV Innocence Group" trademark. Baker sued Jeffrey DeShong, who publishes information on a website that is critical of Baker, for trademark infringement, alleging that DeShong's website infringed on Baker's trademark.
According to the decision, after the trial court dismissed Baker's claim for failure to state a claim under the Lanham Act, DeShong moved for attorney fees under § 1117(a) of the Lanham Act requesting $49,706.86. Relying on Fifth Circuit precedent, the trial court determined that DeShong failed to show that the suit was an "exceptional" case warranting the award of attorney fees. The court concluded that DeShong had not shown by clear and convincing evidence that Baker had pursued the case in bad faith.
DeShong later appealed the case to the Fifth Circuit, arguing that the court should adopt the exceptional standard the U.S. Supreme Court's standard set out in its 2014 decision Octane Fitness v. Icon Health and Fitness. The ruling gave federal trial judges a much freer hand in awarding attorney fees against parties who filed baseless patent infringement claims under U.S.C. § 285. Octane Fitness eliminated the requirement that a patent claim must be brought in subjective bad faith to be "exceptional," but rather that the case must "stand out" from others in the way it was litigated.
In its ruling, the Fifth Circuit agreed with DeShong's argument and joined other circuit courts in applying Octane Fitness's definition of exceptional to trademark infringement cases.
"We merge Octane Fitness's definition of 'exceptional' into our interpretation of § 1117(a) and construe its meaning as follows: an exceptional case is one where (1) in considering both governing law and the facts of the case, the case stands out from others with respect to the substantive strength of a party's litigating position; of (2) the unsuccessful party has litigated the case in an 'unreasonable manner,'" wrote Chief Justice Carl Stewart.
The decision reverses the trial court's decision denying DeShong's attorney fee request and remands for consideration of awarding him fees.
Paul Alan Levy of Public Citizen Litigation Group, who represents DeShong, said the decision will go a long way in encouraging attorneys to represents clients who are the victims of trademark bullying. "It's easier for them to find a pro bono lawyer in a bullying case. And that's why we thought it was important to do a case like this to change the bad faith standard," Levy said. "If you have to spend money to defend a case like this, you've already lost.''