Linking Patent and Trademark Attorney Fees

Romag Fasteners v. Fossil is a rare infringement case that involves allegations of both patent and trademark infringement.  The important aspect of the Federal Circuit’s decision here harmonizes the attorney fee requirements for trademark and patent cases.

A jury sided with Romag – finding that Fossil’s magnetic snaps infringed both the asserted patent and trademark (product design). (U.S. Patent No. 5,722,126 and U.S. Trademark Reg. No. 2,095,367).

The jury returned a verdict for Romag, finding that Fossil had engaged in patent and trademark infringement. The district court granted fees related to the patent portion of the case but denied fees on the trademark side.  On appeal, the Federal Circuit has vacated that judgment.

Lanham Act and Patent Act provide identical language for awardinging reasonable attorney fees to the prevailing party in exceptional cases: “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”  35 U.S.C. 285; 15 U.S.C. 1117(a).  Based upon the identical language of the statutes, the appellate court here ruled that the Supreme Court’s Octane Fitness approach to fees in patent cases also applies in Trademark cases.  The Second Circuit had previously (pre-Octane Fitness) required “evidence of fraud or bad faith.” Under Octane Fitness, that requirement is unduly strict and improper.  All of the other Circuit courts who have considered the issue agree with the Federal Circuit that Octane Fitness applies to TM cases under Section 1117(a). Because the court applied the incorrect standard, this TM portion of the case was remanded to determine whether fees are appropriate.

On the patent side, the appellate panel also found “several errors” by the district court – and thus vacated that grant of fees.  These errors include (1) a misstatement as to the timing of the defendant’s withdrawal of its defenses and that those defenses were pursued  in order to “prolong litigation;” (2) no conclusion as to the actual merit of the withdrawn defenses; (3) misstatements regarding prior court ruling on the inadequacy of the rejected indefiniteness defense as “woefully inadequate; and (4) failure to consider the totality of the circumstances, including the plaintiff’s bad-faith of waiting until just before Black Friday to file its case and request a TRO.  Coming together, these issues require vacatur of the fee award on the patent side.

On remand, the district court will be asked to again reconsider an award of fees to the successful plaintiff Romag.

The Majority opinion was penned by Judge Dyk and joined by Judge Hughes.  Judge Newman dissented-in-part. “I do not discern where, or how, the district court abused its discretion, for the district court reasonably observed that this case ‘stood out from the others,’ in the words of Octane Fitness, concluding that Fossil ‘aggressively pursue[d] invalidity counterclaims in an attempt to prolong litigation and exponentially increase the cost and risk of pursuing a lawsuit.'” Newman in dissent.

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For me, an interesting aspect of the case here involves the correct level of granularity for the “prevailing party” finding.  The court here divides of the portions of lawsuit between the various doctrines — patent; trademark; CT state unfair competition; etc.  For each, the court determined the ‘prevailing party’ and apportioned fees accordingly – even though the losing party had won on some smaller issues.  At this point, I do not believe that the Federal Circuit has strictly adopted this approach – rightly so because there is almost always overlap.  Here, for instance, the TM discovery was almost certainly overlapping with the patent discovery.

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I have not examined the full history here, but the Trademark appears to cover the product design, which is also to the subject of the patent.  TrafFix?