The Lanham Act and the Patent Act both provide that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 15 U.S.C. § 1117(a)(3) (codifying § 35(a) of the Lanham Act); 35 U.S.C. § 285. The Supreme Court recently held in relation to the Patent Act that “an ‘exceptional’ case 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” and that a district court should consider “the totality of the circumstances” in determining whether a case is exceptional. Octane Fitness, LLC v. Icon Health & Fitness Inc., 134 S. Ct. 1749, 1756 (2014).
The Third Circuit recently adopted Octane’s standard in the Lanham Act context, reasoning that not only is the Patent Act provision identical to the Lanham Act provision, but Congress referenced the Patent Act provision in passing the Lanham Act provision. Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 315 (3d Cir. 2014). In its own take on Octane, the Fair Wind court held that fees may be awarded when there is an unusual discrepancy in the merits of the positions taken by the parties or the losing party has litigated the case in an “unreasonable” manner. A district court in the Third Circuit is no longer cabined by a threshold requirement that the losing party acted culpably.
While other circuits have addressed attorney fees under the Lanham Act post-Octane, none have expressly considered whether Octane applies. With the circuit courts’ Lanham Act precedent largely unchanged, district courts have felt constrained to apply old precedent. One district court in California, however, has attempted to reconcile Octane with existing precedent, holding that “the Ninth Circuit’s more flexible formulation of determining what constitutes an ‘exceptional case’ in Lanham Act cases still applies after Octane Fitness.” Apple Inc. v. Samsung Elecs. Co., No. 11-cv-01846, 2014 WL 4145499, at *6 n.1 (N.D. Cal. Aug. 20, 2014). Additionally, a district court in Georgia has applied the holding in Octane to the identical attorney fees provision in the Plant Act. See AGSouth Genetics, LLC v. Georgia Farm Servs., LLC, 1:09-CV-186 WLS, 2014 WL 2117451, (M.D. Ga. May 21, 2014).
The circuit courts should bring their Lanham Act precedent in line with Octane because of the identical language of the Lanham Act and Patent Act provisions and the Supreme Court’s reference to the Lanham Act in Octane, but that may take some time. Additionally, it is unclear whether circuit courts will attempt to retain existing tests – typically requiring culpable conduct such as willful infringement – as part of any post-Octane analysis, as the district court did in Apple. Accordingly, in the absence of an express circuit court holding adopting Octane, practitioners would be well served to include a circuit’s pre-Octane test along with any analysis under Octane’s totality of the circumstances test in any motion for attorney fees under the Lanham Act.