District Court Ordered to Reevaluated Whether Defendants Were Entitled to Fees in Trademark Dispute

The owner of an upscale downtown Chicago hotel sued a competing hotel elsewhere in the city for trademark infringement. After more than a year, the plaintiff company eventually voluntarily dismissed its suit. The defendants then moved for attorney fees. The district court initially denied the motion, finding that the plaintiffs had not brought the type of exceptional case that warranted fee-shifting after dismissing the claims. The defendants appealed, and the appellate panel determined that the district court applied the wrong standard in evaluating the motion for fee-shifting. The panel reversed the decision of the district court and remanded the case with instructions for the court to reanalyze the request for fees under the correct standard.

LHO Chicago River, LLC, owns an upscale downtown Chicago hotel that underwent a branding change in February 2014 when it became “Hotel Chicago,” a signature Marriott venue. Around May 2016, Joseph Perillo and his three associated entities opened their own “Hotel Chicago” only three miles from LHO’s site. LHO then sued the defendants for trademark infringement and unfair competition under the Lanham Act, as well as for trademark infringement and deceptive practices under Illinois state law.

After more than a year, LHO moved to voluntarily dismiss its claims with prejudice. The district judge granted LHO’s motion and entered judgment in February 2018. Defendants then made a post-judgment request for attorney’s fees pursuant to 15 U.S.C. § 1117(a). The district court denied the motion, finding that LHO had not brought an exceptional case warranting attorney’s fees. The defendants then appealed.

The appellate panel began by noting that there were two distinct standards for determining whether attorney’s fees could be awarded in the instant case. The first was the abuse-of-process standard, the prevailing standard in the 7th Circuit, which the district court applied. The second standard, a more relaxed totality of the circumstances analysis under the Patent Act, was announced by the Supreme Court in Octane Fitness, LLC v. ICON Health & Fitness, Inc. The panel noted that at the time of the district court’s decision, the 7th Circuit had not addressed whether Octane applied in a Lanham Act context.

The panel then noted that the Patent Act and the Lanham Act contain identical fee-shifting provisions. The panel then held that, given Octane’s rejection of a rigid standard for the fee-shifting provision of the Patent Act, and considering the Court’s reliance on trademark law in the Octane decision, the Octane standard should apply in the present context of the Lanham Act. The panel then noted that most circuits have extended Octane to the Lanham Act’s fee-shifting provision, relying on legislative history, the Patent Act’s identical language, and the Supreme Court’s use of trademark law in Octane. The panel then held that it adopted the Octane standard as the governing framework for attorney fee requests under the Lanham Act. The panel, therefore, reversed the decision of the district court and remanded the case with directions for the court to analyze the request for fees under the Octane standard.

You can view the Court’s decision here.

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