Wednesday, August 9, 2017

Federal Circuit: Standard for Awarding Attorney's Fees Is the Same in Patent and Trademark Cases

This morning the court issued an opinion in Romag Fasteners, Inc. v. Fossil, Inc., vacating a district court judgment granting attorneys' fees under § 285 of the Patent Act and denying fees under § 1117(a) of the Lanham Act.  (The district court also awarded fees under the Connecticut Unfair Trade Practice Act (CUTPA), the propriety of which does not appear to be discussed in the Federal Circuit opinions.)  The author of the principal opinion is Judge Dyk, joined by Judge Hughes; Judge Newman concurs in part and dissents in part.

This is the third time this case has come up on appeal.  In 2016, the Federal Circuit approved a reduction in damages due to laches (Romag's delay in filing suit until the eve of the Christmas shopping season in 2010), see discussion here.  Earlier this year the Federal Circuit vacated and remanded this aspect of the opinion in light of the Supreme Court's opinion in SCA Hygiene  that laches is no longer a defense to a claim for damages incurred within the statute of limitations.  This third appeal is all about attorneys' fees.  Following a jury trial, the district court entered judgment for Romag on its claims for patent infringement, trademark infringement, and violation of CUTPA, relating to Fossil's sales of handbags bearing allegedly infringing magnetic snap fasteners.  The court awarded fees in connection with the patent claim, finding the case to be "exceptional" under the Octane Fitness standard, but not for trademark infringement, based on the Second Circuit's understanding that Lanham Act § 1117(a) permits awards of attorneys' fees only for bad faith or fraudulent conduct.  (In a case like this one, the courts are supposed to apply regional circuit law to the non-patent issues, and here the case was litigated in the District of Connecticut, which is within the Second Circuit.)  The Federal Circuit, however, holds that after Octane Fitness the standard for awarding fees under the two statutes is identical:
Before Octane, the Second Circuit allowed recovery of attorney’s fees under 15 U.S.C. § 1117(a) only if there was bad faith or willful infringement on the part of the defendants. . . . The question is whether this standard survives after Octane. There have been no Second Circuit decisions on this issue since Octane. . . .   [H]owever, there is intervening relevant Supreme Court authority which, we think, would lead the Second Circuit to follow other circuits which have held that the Octane standard applies to the Lanham Act. . . . 
Since Octane was decided, the Third, Fourth, Fifth, Sixth, and Ninth Circuits have all held that the Octane “Court was sending a clear message that it was defining ‘exceptional’ not just for the fee provision in the Patent Act, but for the fee provision in the Lanham Act as well.” Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 315 (3d Cir. 2014) . . . .Indeed, no circuit has specifically considered Octane and then declined to apply it to the Lanham Act.
This is unsurprising, as the language of the Patent Act and the Lanham Act for attorney’s fees is identical. Both statutes provide that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U.S.C. § 285; 15 U.S.C. § 1117(a). “[W]hen Congress uses the same language in two statutes having similar purposes, . . . it is appropriate to presume that Congress intended that text to have the same meaning in both statutes.” Smith v. City of Jackson, 544 U.S. 228, 233 (2005).
The court therefore remands for the district court to reconsider the award of fees for trademark infringement.  Judge Newman joins in this aspect of the majority opinion. 

On the question of fees for patent infringement, however, the majority (Judge Newman dissenting) also vacates and remands, holding that the district court erred in concluding (1) that Fossil had not withdrawn its anticipation and obviousness challenges until after judgment was entered; (2) that the district judge who presided over an earlier part of the litigation had found Fossil's indefiniteness argument to be "woefully inadequate," words that the panel majority believes were taken out of context; and (3) that the impact of Romag's own conduct in delaying suit until shortly before the 2010 holiday season had been adequately addressed by the court's refusal to award fees in connection with Romag's motion for a TRO.  However, while the majority agrees with Romag that the district court's denial of a plaintiff's motion for judgment as a matter of law on the issue of infringement doesn't preclude a finding that the defendant's position was frivolous, the court finds that the district judge properly evaluated the strength of Fossil's position and sees "no error in the district court's refusal to consider this issue as an adverse factor in the totality of circumstances" (p.19).  Finally, the court sets aside an award of expert witness fees incurred in connection with Fossil's motion for summary judgment on indefiniteness.

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