ABUSE OF PROCESS REQUIRED FOR A CASE TO BE EXCEPTIONAL UNDER THE LANHAM ACT

The Lanham Act authorizes courts to award attorneys’ fees to the prevailing party in “exceptional cases.” 15 U.S.C § 1117. The Seventh Circuit addressed what it means for a case to be exceptional last year in Nightingale Home Healthcare v. Anodyne Therapy. The Seventh Circuit settled on the following standard.

[A] case under the Lanham Act is “exceptional,” in the sense of warranting an award of reasonable attorneys’ fess to the winning party, if the losing party was the plaintiff and was guilty of abuse of process in suing, or if the losing party was the defendant and had no defense yet persisted in the trademark infringement or false advertising for which he was being sued, in order to impose costs on his opponent.

Abuse of process the court explained, is the misuse of legal process primarily to accomplish a purpose for which it was not designed, such as in a Lanham Act case, suing “to obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor.”

The abuse of process standard for exceptional Lanham Act cases in the Seventh Circuit is less exacting than the Federal Circuit’s test for finding an exceptional case for purposes of awarding attorneys fees in a patent case, discussed in my April 14, 2011 post. The Federal Circuit requires not only subjective bad faith but objective unreasonableness to qualify a patent case as exceptional.

The court surveyed precedent nationwide and found an absence of consensus on a precise standard. That portion of the opinion is a good resource for litigants in every circuit. A researcher can start there and then move to the authorities cited from the particular court in which he is litigating.
 

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