Attorney’s fees for Winning? Not so Fast!

The Federal Appeals Court in Munchkin v Luv ‘N Care this month tightened up the rules for when a prevailing party in a patent or trademark infringement suit is entitled to enhanced damages and attorney’s fees. Their ruling sets a high bar for meeting the Supreme Court’s standard for attorney fees set out in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014)

In Munchkin, Inc. v. Luv ‘N Care, Ltd, decided June 8, 2020, the Federal Circuit Court of Appeals reversed the district court’s award of attorney fees. The district court had found that the case was “exceptional” on the basis that the Plaintiff’s (Munchkin’s) patent and trademark claims were exceptionally weak. However, on a appeal the Federal Circuit ruled that the prevailing party (Luv ‘N Care) had not presented enough facts to show the case was “exceptional” so as to stand out from what is “normal”. The purpose of the law awarding attorney’s fees in exceptional cases is not to punish a litigant simply for losing, but to achieve a measure of fairness when the law suit is “exceptional.”

The Federal Circuit ruled that the prevailing party did not ask the court to conduct a substantive analysis as to why the losing party’s position on either the patent or the trademark issues was so meritless as to stand out from the normal. Neither the prevailing party nor the district court had offered any details about how a piece of prior art, even though material to the claimed invention, would invalidate a patent claim, and why it would be unreasonable to suggest otherwise. As for the plaintiff’s trademark claim, the winning party has to go beyond showing a likelihood of confusion (or lack of same) and go further and prove why the losing party’s position was substantively unreasonable. That evidence was lacking, in the Federal Circuit’s view. In case Octane Fitness wasn’t clear before, a prevailing party needs a solid evidentiary basis for showing the losing party’s litigation theory was so unreasonable as to be “exceptional”.