Octane Fitness and Highmark Apply to Ninth Circuit Attorney Fee Awards under the Lanham Act

On October 24, 2016, the Ninth Circuit Court of Appeals, sitting en banc, held that district courts analyzing a request for attorney fees under the Lanham Act should consider the totality of the circumstances, as set forth in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).  Section 35(a) of the Lanham Act provides that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.”  In determining whether a case is “exceptional,” courts in the Ninth Circuit are now required to apply a less “precise rule or formula,” and look to the totality of the circumstances under a preponderance of the evidence standard.  The Ninth Circuit Court also held that review of a district court’s decision on fees is pursuant to an abuse of discretion standard, following Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1748-49 (2014) (determining review standard for fee awards under the Patent Act).

The Ninth Circuit’s en banc decision came in SunEarth, Inc. v. Sun Earth Solar Power Co.  In that case, the district court denied attorney fees under the Lanham Act after enjoining infringement of SunEarth’s trademarks. SunEarth appealed the denial of fees to the Ninth Circuit.  The Ninth Circuit relied on the Ninth Circuit’s previous test for determining attorney fee liability under the Lanham Act:  “malicious, fraudulent, deliberate or willful” infringement.  Under the previous standard, the Ninth Circuit affirmed the denial of attorney fees.  The “malicious, fraudulent, deliberate or willful” infringement standard was overruled on October 24, 2016 by the en banc court, and the matter has been remanded.

The Ninth Circuit’s decision to apply the Octane Fitness test to the Lanham Act’s attorney fee provision is in line with the majority of other circuits, including the Third, Fourth, Fifth, and Sixth Circuits, which have recognized that Octane Fitness changed the standard for determining fee awards under the Lanham Act.