IP Law Daily Octane Fitness standard adopted in trademark case; fee denial reversed
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Wednesday, May 4, 2016

Octane Fitness standard adopted in trademark case; fee denial reversed

By Peter Reap, J.D., LL.M.

In a trademark infringement case brought against a website operator (Jeffrey DeShong) by a private investigator (Clark Baker) who headed the HIV Innocence Group, the U.S. Court of Appeals in New Orleans has specifically adopted the Supreme Court’s reading of the Patent Act’s “exceptional” standard under Octane Fitness and merged that definition into the court’s construction of “exceptional” under the Lanham Act (Baker v. DeShong, May 3, 2016, Stewart, C.). Thus, a ruling by the federal district court in Dallas denying DeShong’s request for an award of attorney fees was reversed and the district court ordered to consider the propriety of awarding fees to DeShong in light of the aforementioned standard.

Baker is the Chief Executive Officer of the Office of Medical and Scientific Justice, Inc. (the “OMSJ”), a non-profit corporation which investigates medical and scientific corruption cases. In 2010, the OMSJ launched the website www.omsj.org to promote numerous medical, legal and investigative services for individuals involved in criminal or civil suits. One such service is the OMSJ’s “HIV Innocence Group,” a non-profit organization that facilitates the representation of individuals accused of the intentional or reckless infection of another person with HIV.

In 2011, DeShong launched two websites of his own: www.hivinnocencegrouptruth.com and www.hivinnocenceprojecttruth.com. According to DeShong, each was created in order to deconstruct the OMSJ’s alleged misrepresentation of the effects of HIV and AIDS and allegedly false research that the OMSJ promulgated on its “HIV Innocence Group” webpage.

Baker and OMSJ asserted four claims against DeShong: (1) trademark infringement under the Lanham Act; (2) trademark infringement under the Texas Business and Commerce Code; (3) defamation; and (4) business disparagement. The district court dismissed the Lanham Act claims, concluding that even taking Baker’s allegations as true, he failed to raise an inference that a reasonable person could confuse the content of DeShong’s website with the OMSJ’s “HIV Innocence Group” trademark. The district court declined to exercise jurisdiction over Baker’s remaining state law claims. DeShong moved for attorney fees under § 1117(a) of the Lanham Act, which the court denied, relying on current Fifth Circuit precedent.

Prior to Octane Fitness, the Federal Circuit held that patent litigants may only recover attorney’s fees under § 285 with proof by clear and convincing evidence of either (1) litigation-related misconduct of an independently sanctionable magnitude or (2) a suit brought in subjective bad faith that is objectively baseless.Octane Fitness, LLC v. Icon Health and Fitness, Inc., 134 S. Ct. 1749 (2014). With Octane, the Supreme Court embraced an expansive reading of the word “exceptional,” explaining that the current standard articulated by the Federal Circuit was an inflexible framework superimposed onto statutory text that is inherently flexible. The Court defined an “exceptional” case under § 285 as any case which “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.” Id. at 1756. In addition, the Court rejected the “clear and convincing” evidentiary hurdle established by the Federal Circuit.

Like the Patent Act, the Lanham Act’s text establishes a flexible standard for whether a case is “exceptional,” the court noted The text of § 1117(a), identical to § 285, says in full that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” In light of the Supreme Court’s clear guidance under § 285—and given the parallel purpose, structure, and language of § 1117(a) to § 285—the Fifth Circuit joined its sister circuits in their reading of “exceptional” under Octane Fitness and construed the same meaning here.

Octane Fitness’s definition of “exceptional” was merged into the Fifth Circuit’s interpretation of § 1117(a) and construed to mean as follows: an exceptional case is one where (1) in considering both governing law and the facts of the case, the case stands out from others with respect to the substantive strength of a party’s litigating position; or (2) the unsuccessful party has litigated the case in an “unreasonable manner,” the court held. See Octane Fitness, 134 S. Ct. at 1756. The district court must address this issue “in the case-by-case exercise of their discretion, considering the totality of the circumstances.” See id.

Thus, the district court’s denial of attorney fees was reversed and the case remanded.

The case is No. 14-11157.

Attorneys: Paul Alan Levy, Public Citizen Litigation Group, for Jeffrey Todd Deshong.

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