L.A. TECH & MEDIA LAW FIRM – Intellectual Property & Technology Attorneys

Trademark Lawyer Fees in Business Litigation Cases

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Trademark disputes under the Lanham Act can become costly, especially when a company continues to use a contested trademark during litigation. In some cases, these actions can expose a business to not only significant damages but also attorneys’ fees and potential injunctions. Courts consider several factors when determining whether a case merits the awarding of trademark lawyer fees, particularly in situations where bad faith or willful infringement is suspected. Continuing to use a contested trademark in high-visibility advertisements, like nationwide cable TV campaigns, could result in severe legal consequences.

This comprehensive blog will delve into the complexities of trademark lawyer fees and injunctions, discussing the relevant legal standards under the Lanham Act, key case law, and best practices for businesses engaged in trademark litigation.

Table of Contents:

  1. Trademark Lawyer Fees and the Lanham Act: An Overview
  2. Potential for Egregious Trademark Infringement During Litigation
  3. Key Federal Trademark Cases on Lawyer Fees and Injunctions
  4. What Courts Consider When Awarding Trademark Lawyer Fees
  5. Understanding Injunctive Relief in Trademark Litigation
  6. Managing Legal and Financial Risks in Trademark Litigation
  7. Conclusion: Navigating Trademark Lawyer Fees and Injunctions
  8. Call to Action: Contact L.A. Tech and Media Law Firm for Expert Trademark Law Guidance

1. Trademark Lawyer Fees and the Lanham Act: An Overview

Under the Lanham Act, which governs trademark law in the United States, courts have the discretion to award trademark lawyer fees in “exceptional cases.” Section 35(a) of the Lanham Act (15 U.S.C. § 1117(a)) allows the prevailing party in a trademark infringement lawsuit to recover attorneys’ fees if the case meets this exceptional threshold.

However, the standard for determining what constitutes an “exceptional” case has evolved. Historically, courts required a finding of bad faith, fraud, or willful misconduct to justify awarding lawyer fees. But following the U.S. Supreme Court’s ruling in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014), courts now employ a more flexible totality-of-the-circumstances approach, considering factors such as the strength of a party’s legal position and the behavior exhibited during litigation.

The question of trademark lawyer fees becomes especially important in cases where one party continues to use a contested trademark in advertising or other public-facing content while litigation is ongoing.


2. Potential for Egregious Trademark Infringement During Litigation

Trademark infringement cases often hinge on the likelihood of consumer confusion, with courts using different factors to assess this likelihood depending on the jurisdiction—such as the Polaroid or Sleekcraft factors. However, when a party continues to use a contested trademark in high-visibility mediums like cable TV ads during litigation, this action could be seen as egregious or willful.

Likelihood of Confusion

If the trademarks in question are sufficiently similar and confusion among consumers is likely, continuing to run nationwide ads exacerbates the potential harm. This situation can be viewed as an intentional disregard for the possibility that consumers could be confused or misled, which the court may take as evidence of bad faith.

Intent and Bad Faith

Courts scrutinize the intent behind the continued use of the trademark. If a company is aware of the potential for confusion and continues to use the mark during litigation, this behavior may be deemed willful infringement. Willful infringement often serves as a basis for courts to consider a case “exceptional” under the Lanham Act, potentially triggering fee-shifting and enhanced damages.

Dilution of Market Value

In cases where the disputed trademark holds substantial goodwill, continued use during litigation may harm the original mark holder’s market position. This dilution of brand equity further strengthens arguments for egregiousness and could compel the court to take stronger actions, such as issuing an injunction or awarding trademark lawyer fees to the prevailing party.


3. Key Federal Trademark Cases on Lawyer Fees and Injunctions

Several federal cases across U.S. jurisdictions provide authoritative guidance on the awarding of trademark lawyer fees and the standards for granting injunctions. These cases are critical in understanding how courts approach situations where one party continues to use a contested trademark during litigation.

Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014)

  • Key Holding: This Supreme Court decision relaxed the standard for awarding attorneys’ fees, ruling that a case may be considered “exceptional” under the totality of the circumstances. While primarily a patent case, it has been applied to trademark litigation under the Lanham Act.
  • Relevance: In trademark cases, courts now use a flexible analysis to determine whether the behavior of the infringer—such as continuing to run ads during litigation—merits an award of attorneys’ fees.

Romag Fasteners, Inc. v. Fossil, Inc., 140 S. Ct. 1492 (2020)

  • Key Holding: The Supreme Court ruled that willfulness is not a strict prerequisite for awarding profits in trademark cases but remains an important factor when courts consider remedies such as attorneys’ fees.
  • Relevance: While willfulness is not required, it still plays a significant role in determining whether a party should be responsible for the other side’s attorney fees.

Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303 (3d Cir. 2014)

  • Key Holding: Applying the Octane Fitness standard, this case held that attorneys’ fees could be awarded in trademark cases where there is clear evidence of bad faith or willful infringement.
  • Relevance: Continuing to run high-visibility ads during litigation could be seen as willful conduct, thus triggering an award of trademark attorney fees.

Secalt S.A. v. Wuxi Shenxi Constr. Mach. Co., 668 F.3d 677 (9th Cir. 2012)

  • Key Holding: The Ninth Circuit reaffirmed that attorneys’ fees are appropriate in “exceptional” cases under the Lanham Act, where the infringer’s conduct is willful or malicious.
  • Relevance: This case is frequently cited in trademark cases, particularly when assessing willful or egregious behavior during litigation.

Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036 (9th Cir. 1999)

  • Key Holding: The Ninth Circuit held that irreparable harm is presumed in cases where there is a likelihood of consumer confusion.
  • Relevance: This case is important in seeking injunctions, particularly when ongoing use of a contested trademark during litigation leads to consumer confusion.

4. What Courts Consider When Awarding Trademark Lawyer Fees

When determining whether to award trademark lawyer fees, courts examine various factors, including the conduct of the parties and the strength of their legal arguments. Below are some of the key factors that courts typically consider:

Willful Infringement

If a party knowingly continues to infringe on a trademark, especially after being notified of the dispute, this may be viewed as willful infringement. Courts are more likely to award attorneys’ fees when they find clear evidence of willful misconduct.

trademark lawyer fees, L.A. Tech and Media Law Firm, attorney fees, business litigation, california startup lawyer, malibu technology lawBad Faith or Egregious Conduct

Bad faith actions, such as continuing to run high-visibility ads during litigation despite knowing the potential for confusion, can make a case exceptional. Courts tend to penalize parties that act egregiously by awarding fees to the opposing side.

Frivolous or Baseless Claims

If the losing party’s legal arguments were weak or lacked merit from the outset, courts are more inclined to award attorneys’ fees. This serves as a deterrent against filing baseless claims or defenses.

Totality of Circumstances

Under the Octane Fitness standard, courts consider the totality of the circumstances in deciding whether to award fees. This includes the strength of the case, the behavior of the parties during litigation, and the potential harm caused by continued infringement.


5. Understanding Injunctive Relief in Trademark Litigation

In addition to trademark lawyer fees, businesses facing ongoing trademark infringement during litigation may seek injunctive relief. Under the Lanham Act (15 U.S.C. § 1116), courts have the authority to issue injunctions to prevent further infringement, particularly when the continued use of a contested trademark causes consumer confusion or dilutes brand value.

eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)

This case set forth a four-factor test for issuing permanent injunctions, which includes:

  1. The plaintiff has suffered irreparable harm.
  2. Monetary damages are inadequate to remedy the harm.
  3. The balance of hardships favors an injunction.
  4. The public interest would not be harmed by the injunction.

In trademark cases, irreparable harm is often presumed when there is a likelihood of consumer confusion, but courts still require evidence of actual harm under recent case law.

Herb Reed Enterprises, LLC v. Florida Entm’t Mgmt., Inc., 736 F.3d 1239 (9th Cir. 2013)

Following the eBay decision, the Ninth Circuit emphasized that evidence of irreparable harm is necessary to support an injunction in trademark cases. Courts no longer presume irreparable harm based solely on the likelihood of confusion.

Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008)

This case reinforced that irreparable harm must be likely, not just possible, for a court to grant injunctive relief. In trademark disputes, courts will closely scrutinize evidence of harm when considering an injunction.


6. Managing Legal and Financial Risks in Trademark Litigation

Navigating the complexities of trademark litigation requires a well-developed strategy to manage both legal and financial risks. Here are several steps businesses can take to minimize exposure to trademark lawyer fees and the possibility of an injunction:

1. Evaluate the Strength of Your Legal Position

Before proceeding with litigation or continuing to use a contested trademark, assess the strength of your case. A weak case or willful infringement could result in the court awarding attorneys’ fees to the opposing party.

2. Engage in Good Faith Negotiations

Courts look favorably on parties that engage in settlement discussions and try to resolve disputes without resorting to litigation. Attempting to reach a settlement early on can reduce the likelihood of fee-shifting.

3. Mitigate the Risk of Injunction

If your company continues to use a contested trademark during litigation, consider the risk of an injunction. Courts are likely to grant an injunction if ongoing use causes consumer confusion or dilutes the value of the original trademark.

4. Be Prepared for Fee-Shifting

In cases where willful or bad faith infringement is at issue, be prepared for the possibility that the court may order you to pay the other party’s attorneys’ fees. Understanding this risk can help guide your litigation strategy.


7. Conclusion: Navigating Trademark Lawyer Fees and Injunctions

Trademark litigation under the Lanham Act can be a high-stakes endeavor, particularly when continued use of a contested trademark during litigation exposes a company to enhanced damages, trademark attorney fees, and potential injunctions. The legal landscape surrounding attorneys’ fees has evolved following the Octane Fitness decision, giving courts greater discretion to award fees based on the totality of the circumstances.

For businesses engaged in trademark disputes, understanding the factors that courts consider—such as willful infringement, bad faith, and the likelihood of confusion—can help mitigate legal risks and control litigation costs. Taking proactive steps, such as engaging in settlement discussions and evaluating the strength of your case, can minimize exposure to fee-shifting and injunctive relief.


8. Call to Action: Contact L.A. Tech and Media Law Firm for Expert Guidance

If your business is involved in trademark litigation or facing the potential for attorneys’ fees and injunctive relief, contact L.A. Tech and Media Law Firm today. Our experienced trademark attorneys can help you navigate the complexities of litigation, develop effective strategies, and protect your intellectual property rights. Schedule a consultation to discuss your trademark litigation needs.

Picture of David N. Sharifi, Esq.
David N. Sharifi, Esq.

David N. Sharifi, Esq. is a Los Angeles based intellectual property attorney and technology startup consultant with focuses in entertainment law, emerging technologies, trademark protection, and “the internet of things”. David was recognized as one of the Top 30 Most Influential Attorneys in Digital Media and E-Commerce Law by the Los Angeles Business Journal.
Office: Ph: 310-751-0181; david@latml.com.

Disclaimer: The content above is a discussion of legal issues and general information; it does not constitute legal advice and should not be used as such without seeking professional legal counsel. Reading the content above does not create an attorney-client relationship. All trademarks are the property of L.A. Tech & Media Law Firm or their respective owners. Copyright 2024. All rights reserved.

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