Octane Fitness Standard Applies to Awards of Attorneys' Fees in Lanham Act Cases: Fifth Circuit | Practical Law

Octane Fitness Standard Applies to Awards of Attorneys' Fees in Lanham Act Cases: Fifth Circuit | Practical Law

In Baker v. DeShong, the US Court of Appeals for the Fifth Circuit relaxed the standard for awarding attorneys' fees in Lanham Act cases by adopting the US Supreme Court's reasoning in Octane Fitness, LLC v. Icon Health and Fitness, Inc., a patent infringement case.

Octane Fitness Standard Applies to Awards of Attorneys' Fees in Lanham Act Cases: Fifth Circuit

by Practical Law Intellectual Property & Technology
Published on 05 May 2016 • USA (National/Federal)
In Baker v. DeShong, the US Court of Appeals for the Fifth Circuit relaxed the standard for awarding attorneys' fees in Lanham Act cases by adopting the US Supreme Court's reasoning in Octane Fitness, LLC v. Icon Health and Fitness, Inc., a patent infringement case.
On May 3, 2016, in Baker v. DeShong, the US Court of Appeals for the Fifth Circuit issued an opinion in which it joined the US Courts of Appeal for the Third and Fourth Circuits in holding that the US Supreme Court's decision in Octane Fitness, LLC v. Icon Health and Fitness, Inc., relaxes the standard for awarding attorneys' fees in Lanham Act cases ( (5th Cir. May 3, 2016)) (134 S. Ct. 1749 (2014)).
The Office of Medical and Scientific Justice, Inc. (OMSJ), a non-profit corporation, and its Chief Executive Officer, Clark Baker, sued Jeffery Todd DeShong in the US District Court for the Northern District of Texas alleging trademark infringement in violation of the Lanham Act and various Texas state law claims. The OSMJ alleged that DeShong, by creating websites that incorporated OSMJ's organization's name, infringed OSMJ's trademark.
The district court dismissed OSMJ's Lanham Act claims, concluding that, even taking the allegations as true, no reasonable person could confuse the content of DeShong's websites with the OMSJ's trademark. The district court also declined to exercise jurisdiction over the remaining state law claims. DeShong then moved for attorneys' fees under 15 U.S.C. § 1117(a), which the court denied under then-current Fifth Circuit precedent.
On appeal, the Fifth Circuit analyzed the Supreme Court's decision in Octane Fitness, which examined when a district court may award fees in exceptional cases under the Patent Act. In that case, the Supreme Court had unanimously decided that the word "exceptional" does not limit an award of attorneys' fees in a patent lawsuit to cases in which a party's bad faith conduct is shown by clear and convincing evidence.
For more information on the Supreme Court's Octane Fitness decision, see Legal Update, Supreme Court Reverses Federal Circuit's Rigid Fee Shifting Standard in Patent Cases.
The Fifth Circuit explained that the statutory authorization for attorneys' fees in the Lanham Act, like the Patent Act:
  • States that a "court in exceptional cases may award reasonable attorney fees to the prevailing party."
  • Requires the application of a flexible standard for whether a case is exceptional and attorney fees are warranted.
  • Does not create a rigid yardstick for culpable conduct.
Therefore, the Fifth Circuit, joining the Third and Fourth Circuits, adopted the Supreme Court's reasoning in Octane Fitness that parties seeking to establish an exceptional case warranting attorneys' fees under the Lanham Act need not show bad faith by clear and convincing evidence. The Fifth Circuit held that an award of attorneys' fees are warranted where either:
  • The case stands out from others with respect to the substantive strength of a party's litigating position, considering both governing law and the facts of the case.
  • The unsuccessful party has litigated the case in an unreasonable manner.
The Fifth Circuit remanded the case to the district court to determine whether attorneys' fees were proper in the first instance.