October 24, 2016. In the matter of SunEarth, Inc. v. SunEarth Solar, the 9th Circuit has made less stringent the standard to shift fees to an adversary. In the past, appellate courts across the country reviewed fee award standards under the “exceptional” standard, which normally required really bad conduct in litigation or in behavior of the litigants–“malicious, fraudulent, deliberate or willful.” Also, findings were subject to de novo review rather than the abuse of discretion standard, which is more difficult to overturn. Looking to Supreme Court precedent from patent cases, such as Octane Fitness, the 9th Circuit recognized that the standards are the same and should be applied to trademark cases as well. So, now in both patent and trademark cases, the courts are to look to the “totality of the circumstances” and a list of nonexclusive factors which include: “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case), and the need in particular circumstances to advance considerations of compensation and deterrence.” The evidence supporting the allegation need only be by a preponderance, and not the tougher clear & convincing standard.
Practical Takeaway: Requests for fee awards will become more commonplace across the country in federal court. Any conduct, whether in the pretrial phases, or in the theoretical grounds of bringing a case, will likely be argued to justify fee shifting, and we expect the motion practice will increase on this front. Also, the ruling gives federal district judges more power when they issue awards, so it will be more critical than ever to “know your judge” and to figure out what levels of conduct will trigger fee award findings. It will also be more important than ever that attorneys make reasoned decisions about causes of action pursued, parties kept in/out, how to structure and behave in discovery. With this ruling, the litigation game just got a little riskier.
©2016 Buche & Associates, P.C. Article by John Buche, J.D., who is a civil litigator and trial attorney.