Seventh Circuit relaxes limits on trademark attorneys’ fees
The US Court of Appeals for the Seventh Circuit has revised its stance on awarding attorneys’ fees in trademark disputes in favour of a “more relaxed” approach.
In a decision issued Friday, November 8 the Seventh Circuit ruled that the precedent that had governed its awarding of attorneys’ fees in trademark cases was overly “rigid”.
Both the Lanham and Patent Acts, which govern trademark and patent law, respectively, hold that a court can award attorneys’ fees in “exceptional cases”.
But the “exceptional” standard has been interpreted differently in both patent and trademark law, as well as by different jurisdictions.
Previously, the Seventh Circuit only granted attorneys’ fees if a case constituted an “abuse of process” under the precedent set in the 2015 case Burford v Accounting Practice Sales.
In that case, the court said that an “abuse of process” warranting a fees award would include claims that were “objectively unreasonable” or “frivolous”.
The court has now opted to bring its position on fees in line with the prevailing standards in patent law, and other jurisdictions.
In 2014, the US Supreme Court said that an exceptional case was: “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,”
“District courts may determine whether a case is ‘exceptional’ in the case‐by‐case exercise of their discretion, considering the totality of the circumstances,” the Supreme Court added.
This standard will now be applied to trademark disputes before the Seventh Circuit.
The change was prompted by an appeal brought by hotel-owner LHO Chicago River, who sued businessman Joseph Perillo for trademark infringement.
Perillo was victorious in the suit, but appealed to the Seventh Circuit after the US District Court for the District of Northern Illinois decided against awarding attorneys’ fees.
The district court had held that LHO’s claim was not an “abuse of process”.
The Seventh Circuit has now vacated the district court’s fees ruling, and sent it back for review under the new precedent.
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