Sometimes trademark infringement can feel like a David versus Goliath, with Goliath a trademark infringement Plaintiff and Defendant seemingly with everything to lose. The trademark infringement attorney you retain will making a lot of decisions quickly, trying to stay within your attorney fee budget.
The fact pattern is often straight forward for Plaintiff’s seeking damages in trademark infringement lawsuits.
Understanding how and when attorney fess are awarded in trademark infringement lawsuits can become an important issue so you can assess liability and participate in settlement discussions. In the article, we will explore how and when attorney fees can be awarded in a trademark infringement lawsuit.
One of the most common misconceptions about an award of fees is that the door swings both ways. Not only might the Defendnats have attorney fee exposure, but Plaintiff may ultimately be liable for damages in a trademark infringement case. The Lanham Act authorizes that “The court in exceptional cases may award reasonable attorney fees to the prevailing party.” See 15 USC 1117(a). Plaintiffs often leverage attorney fees as part of damages, and as leverage in settlement. Defendants can also avail themselves of this provision.
Depending upon the Circuit Court for the underlying case, the standard for an exceptional case so as to warrant ordering of attorneys’ fees to either party was historically difficult to meet. This may have recently changed now that the Ninth Circuit has clarified what some others (such as the Fifth Circuit, which controls Texas, and Sixth Circuit, which controls Michigan) have been following. In particular, in SunEarth, Inc. v. Sun Earth Solar Power Co., Ltd., the Ninth Circuit has stated 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.
Here is an example of an exceptional case award of attorney fees in trademark infringement litigation trial attorney Enrico Schaefer handled for Plaintiff, against Media Insight Group, LLC, Vacation Store of Miami. (Judge Federico Moreno, United States District Court for the Southern District of Florida (Miami Division).
[pdf-embedder url=”https://www.traverselegal.com/wp-content/uploads/2016/11/2019-02-15-Dkt-280-TRIAL-ORDER.pdf” title=”Trademark Infringement”]
This totality of the circumstances test is now one that Plaintiffs and Defendants alike should consider pre-litigation and throughout. Trademark attorneys will always tell their clients that attorney fee awards are rare in intellectual property cases. A Court may exercise its discretion can look to the facts, law and conduct of the parties (and their counsel) in order to determine if a party’s position is frivolous, unreasonable, vexatious, or pursued in bad faith. Whereas a Plaintiff makes a calculated choice to pursue a lawsuit and understands that it may or may not recover damages, a Defendant is typically left with no choice but to defend. This clarification from the Ninth Circuit tends to provide the Defendant with greater clarity as to its opportunity to recover its attorneys fees in doing so, especially depending upon the merits of the case and Plaintiffs’ actions. Put simply, Plaintiffs need to litigate with more care since Defendants may now turn the proverbial tables on a Plaintiff who brings a specious claim (i.e. bad facts or law) or acts unreasonably in litigating the same.
This interpretation becomes more important where the financial stature of the litigating parties are not equal. David as a Defendant may have a bigger stone than Goliath had thought, and Goliath better thinks hard about the damages it may face despite being a Plaintiff. Trademark infringement litigators must advise their clients about the best case and worst case scenarios, which necessarily includes the discretion of the court to award attorneys’ fees to the prevailing party, Plaintiff or Defendant, in an exceptional case.