Clark Baker v. Jeffrey Deshong
2016 U.S. App. LEXIS 8014
| 5th Cir. | 2016Background
- Plaintiffs Clark Baker (CEO of OMSJ) and the Office of Medical and Scientific Justice (OMSJ) operate a website promoting an “HIV Innocence Group.”
- Defendant Jeffery DeShong created websites using names like “HIV Innocence Group Truth” to challenge OMSJ’s claims about HIV/AIDS.
- Baker/OMSJ sued DeShong in federal court asserting Lanham Act trademark infringement, Texas state trademark claim, defamation, and business disparagement.
- The district court dismissed the Lanham Act claim for lack of likely confusion, declined pendent jurisdiction over state claims, and denied DeShong’s request for attorney’s fees under 15 U.S.C. § 1117(a).
- DeShong appealed the denial of fees, arguing the case was "exceptional" and that the Fifth Circuit should adopt the Supreme Court’s Octane Fitness standard for fee awards.
- The Fifth Circuit held that Octane Fitness’s broader, flexible definition of an “exceptional” case under the Patent Act applies to § 1117(a) of the Lanham Act, reversed the denial of fees, and remanded for reconsideration under that standard.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 1117(a) requires bad faith and clear-and-convincing proof to award fees | Baker: existing Fifth Circuit precedent requires bad faith shown by clear and convincing evidence | DeShong: Octane Fitness replaced that rigid standard; § 1117(a) should be interpreted like § 285 to allow fees for "exceptional" cases without the heightened proof requirement | The court adopted Octane Fitness’ flexible definition of “exceptional” for § 1117(a) and rejected the strict bad-faith + clear-and-convincing standard |
| What test defines an “exceptional” case under § 1117(a) | Baker: rely on prior Fifth Circuit cases requiring bad faith and clear-and-convincing evidence | DeShong: use Octane Fitness factors (substantive weakness, objective unreasonableness, frivolousness, litigation misconduct, deterrence, etc.) and lower evidentiary standard | Court: an exceptional case is one that ‘‘stands out’’ for the substantive weakness of a party’s position or unreasonable litigation conduct; courts should consider totality of circumstances |
| Whether the district court’s denial of fees should be affirmed on the record | Baker: district court applied controlling Fifth Circuit precedent | DeShong: district court used an overturned framework and must re-evaluate under Octane Fitness | Court: reversed and remanded so the district court can reevaluate fees under the new standard |
| Appropriate evidentiary burden to award fees under § 1117(a) | Baker: Fifth Circuit required clear-and-convincing proof | DeShong: Octane Fitness rejected a heightened evidentiary standard; discretionary inquiry suffices | Court: rejected clear-and-convincing requirement for § 1117(a) and instructed district courts to apply a discretionary, case-by-case inquiry |
Key Cases Cited
- Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014) (redefined “exceptional” in patent-fee statute and rejected rigid bad-faith/clear-and-convincing framework)
- Scott Fetzer Co. v. House of Vacuums, 381 F.3d 477 (5th Cir. 2004) (Fifth Circuit’s prior bad-faith standard for Lanham Act fee awards)
- CJC Holdings, Inc. v. Wright & Lato, Inc., 979 F.2d 60 (5th Cir. 1992) (Fifth Circuit precedent discussing clear-and-convincing requirement)
- Noxell Corp. v. Firehouse No. 1 Bar–B–Que Rest., 771 F.2d 521 (D.C. Cir. 1985) (interpreting “exceptional” under the Lanham Act as not limited to bad faith)
- Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) (factors for fee awards under copyright statute: frivolousness, motivation, objective unreasonableness, compensation, deterrence)
- Alyeska Pipeline Service Co. v. Wilderness Soc’y, 421 U.S. 240 (1975) (common-law bad-faith exception to the American rule on fee-shifting)
- Georgia–Pac. Consumer Prods. LP v. von Drehle Corp., 781 F.3d 710 (4th Cir. 2015) (applying Octane Fitness framework to § 1117(a))
- Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303 (3d Cir. 2014) (importing Octane Fitness standard into Lanham Act fee analysis)
- Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378 (Fed. Cir. 2005) (prior Federal Circuit test for patent-fee awards rejected by Octane Fitness)