Sunearth, Inc. v. Sun Earth Solar Power Co.
839 F.3d 1179
| 9th Cir. | 2016Background
- SunEarth, Inc. and The Solaray Corporation (plaintiffs) appealed a district court decision concerning award of attorney fees under the Lanham Act; the Ninth Circuit granted en banc review to reconsider its fee-award jurisprudence.
- Section 35(a) of the Lanham Act permits fee awards to the prevailing party in "exceptional" cases; Ninth Circuit precedent required a showing of "malicious, fraudulent, deliberate or willful" conduct and applied de novo review.
- The Supreme Court decisions in Octane Fitness and Highmark clarified fee-shifting under the Patent Act: Octane requires a "totality of the circumstances" inquiry and preponderance standard; Highmark requires appellate review for abuse of discretion.
- The Ninth Circuit interpreted the Lanham Act in tandem with the Patent Act and considered recent authority from other circuits applying Octane to Lanham Act disputes.
- The en banc court concluded Octane and Highmark apply to Lanham Act fee requests, overruled Ninth Circuit precedent to the contrary, and remanded the case to the three-judge panel for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper standard to determine an "exceptional" Lanham Act case | Ninth Circuit should retain prior heightened willfulness standard | Octane's totality-of-the-circumstances standard should govern | Apply Octane: examine totality of the circumstances using nonexclusive Fogerty factors |
| Burden of proof for fee entitlement | Require clear and convincing evidence | Preponderance of evidence suffices | Use preponderance of the evidence standard (Octane) |
| Standard of appellate review of fee rulings | Continue de novo review of exceptional-case findings | Review for abuse of discretion per Highmark | Review under abuse of discretion (Highmark) |
| Whether to overrule existing Ninth Circuit precedent | Preserve Ninth precedent requiring willfulness and de novo review | Overrule to conform with Supreme Court and other circuits | Overruled prior Ninth Circuit cases to adopt Octane/Highmark framework |
Key Cases Cited
- Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) (sets totality-of-the-circumstances standard and preponderance burden for fee awards)
- Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014) (appellate review of fee awards is for abuse of discretion)
- Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) (identifies nonexclusive factors informing fee-shifting discretion)
- Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400 (9th Cir. 1993) (prior Ninth Circuit standard requiring malicious or willful conduct)
- Secalt S.A. v. Wuxi Shenxi Constr. Mach. Co., 668 F.3d 677 (9th Cir. 2012) (prior Ninth precedent applying de novo review)
- Georgia-Pacific Consumer Prods. LP v. von Drehle Corp., 781 F.3d 710 (4th Cir. 2015) (applied Octane framework to Lanham Act fees)
- Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303 (3d Cir. 2014) (applied Octane to Lanham Act disputes)
- Slep-Tone Entm’t Corp. v. Karaoke Kandy Store, Inc., 782 F.3d 313 (6th Cir. 2015) (same)
- Baker v. DeShong, 821 F.3d 620 (5th Cir. 2016) (same)