Addressing an award of attorney’s feeds under the Lanham Act and Second Circuit law, as well as under the Patent Act, the US Court of Appeals for the Federal Circuit vacated and remanded the issue of attorneys’ fees and recovery in a case involving unauthorized use of snap fasteners in handbags. Romag Fasteners, Inc. v. Fossil, Inc., et al., Case Nos. 16-1115; -1116; -1842 (Dyk, J) (Newman, J, concurring in part, dissenting in part). A jury previously found Fossil liable for trademark and patent infringement.
This case is no stranger to the Federal Circuit (IP Update, Vol. 19, No. 4). On this third trip to the Court, the issues were whether the district court abused its discretion in (1) declining to award attorneys’ fees to Romag under the Lanham Act and (2) granting attorneys’ fees to Romag under the Patent Act.
The district court did not find that Fossil had acted in bad faith or fraudulently, which the US Court of Appeals for the Second Circuit stated in 2012 was required for fees to be awarded under the Lanham Act. The Supreme Court of the United States, however, issued its Octane Fitnessdecision in 2014, holding that an exceptional case for awarding fees under the Patent Act was “simply one that stands out from the others” (IP Update, Vol. 17, No. 5). Because the Lanham Act and the Patent Act contain identical language concerning attorneys’ fees, the Federal Circuit reasoned that the Second Circuit would hold that the Lanham Act should have the same standard for recovering attorneys’ fees as the Patent Act. The Court thus remanded to the district court to consider whether an award of fees under the Lanham Act was warranted under Octane Fitness.
The Federal Circuit next considered the propriety of the district court’s award of fees to Romag under the Patent Act. The district court determined that a fee award was justified because Fossil had not withdrawn its invalidity defenses of anticipation and obviousness until the eve of trial. The Federal Circuit disagreed and found that the district court had clearly erred, because the record demonstrated that the parties understood that Fossil had withdrawn these defenses before trial. The Court also took issue with the district court’s conclusion that Fossil’s indefiniteness defense “bordered on frivolous”—rather, that defense was rendered moot in light of the district court’s claim construction decision. The Court further found that the district court erred in declining to consider Romag’s conduct in the litigation, because Octane Fitness requires the court to consider the totality of the circumstances, which necessarily includes the prevailing party’s conduct in the case.
Judge Newman agreed that the case should be remanded to the district court to consider whether fees should be awarded to Romag under the Octane Fitness standard with respect to Romag’s trademark infringement claims. However, she disagreed that the district court had abused its discretion in awarding attorneys’ fees to Romag under the Patent Act. Judge Newman also disagreed with the majority’s interpretation of Fossil’s pursuit of its invalidity defense, finding that the majority had failed to give proper deference to the district court’s findings.