Bad faith and/or litigation misconduct is no longer required for a case to be deemed “exceptional.”
The Court of Appeals for the Seventh Circuit issued its opinion in LHO Chicago River, LLC v. Perillo, et al., vacating the decision of the district court in denying the defendants’ motion for attorneys’ fees and costs. The court followed the path of other circuits and extended the decision of the U.S. Supreme Court in Octane Fitness v. ICON Health & Fitness[1] to the Lanham Act. [Note: Duane Morris represented the defendants in their appeal to the Seventh Circuit.]
Under the Octane standard, trademark cases filed under the Lanham Act can obtain attorneys’ fees and costs under its cost-shifting provision[2] without the burden of demonstrating bad faith or litigation misconduct. An exceptional case under the Lanham Act in the Seventh Circuit is “simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.”[3]
In the case, the defendants moved for fees after the plaintiff dismissed its trademark infringement suit after the plaintiff was unsuccessful in obtaining a preliminary injunction to enjoin the defendants from using the name HOTEL CHICAGO for a new Chicago-based hotel. The district court denied the plaintiff’s request for the injunction for lacking enforceable rights in a descriptive mark. The defendants moved for attorneys’ fees and costs for, among other bases, pursuing the case when it knew (or should have known) its “would-be” mark was descriptive and unenforceable. After the district court denied the defendants’ motion for fees under the pre-Octane standard, the defendants appealed to the Seventh Circuit.
The decision aligns the Seventh Circuit with many sister circuits and lowers the bar for the finding of an exceptional case under the Lanham Act. Bad faith and/or litigation misconduct is no longer required for a case to be deemed “exceptional” and for the award of attorneys’ fees under the Lanham Act.
For More Information
If you have any questions about this Alert or the application of the Octane standard, please contact Alain Villeneuve, John E. Munro, any of the attorneys in our Trademark, Copyright, Entertainment and Advertising Group, or the attorney in the firm with whom you are regularly in contact.
[1] 572 U.S. 545 (2014) (lowering the standard to find a case “exceptional” under the Patent Act).
[2] 15 U.S.C. § 1117(a)
[3] Octane, 572 U.S. at 554.
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