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Low Octane Levels? Octane Fitness’ Impact in the Trademark and Trade Secret Realms

We have previously addressed the Supreme Court’s decision in Octane Fitness, LLC v. Icon Health & Fitness, Inc., 12-1184, Slip Op. at 7 (2014), which relaxed the standard for awarding attorney’s fees under Section 285 of the Patent Act (“§285”) and ruled that decisions on §285 are entitled to deference on appeal. In the patent litigation realm, the Octane Fitness decision does not seem to have led to an overwhelming trend toward awarding fees. It does, however, beg the question: how has this impacted the standard for awarding attorney’s fees in other types of intellectual property cases, such as trademarks and trade secrets?

Half a year since Octane

It’s been nearly half a year since the Supreme Court, in Octane Fitness, ostensibly lowered the standard for finding a patent case to be exceptional for purposes of fee-shifting. At the time, Octane generated much commentary and speculation, with some predicting a flood of fee awards and others predicting even more confusion at the district court level.

The Supreme Court Gave District Courts more Power to Award Attorney’s Fees in Patent Litigation

In two related decisions, the Supreme Court relaxed the standard to award attorney’s fees under Section 285 of the Patent Act (“§285”) and ruled that decisions on §285 are entitled to deference on appeal. In the first case, the Court found that the Federal Circuit’s test for §285, as described in Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378, 1380 (Fed. Cir. 2005), is “unduly rigid” and inconsistent with the statutory language. Octane Fitness, LLC v. Icon Health & Fitness, Inc., 12-1184, Slip Op. at 7 (2014). The Court reasoned that the only constraint imposed by the text of §285 on a district court’s discretion to award attorney’s fees is that the case must be exceptional. Id. According to its ordinary meaning, the Court held, “an ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated.”[1] Id. at 7-8. Further, district courts should consider the totality of the circumstances and make a case-by-case determination on §285 questions. Id. at 8. Finally, the Court held that the evidentiary burden for §285 is a preponderance of the evidence, not clear and convincing evidence as required by the Federal Circuit. Id. at 11.