7th Circuit (Posner, J.) decision on proper standards for finding case "exceptional" under Lanham Act

The 7th Circuit today published an interesting decision, written by Judge Posner, on the proper standards for determining whether a case is “exceptional” under the Lanham Act, 15 U.S.C. § 1117(a). The opinion reviews the standards in the other circuits, notes that they seem to differ, and then goes back to “first principles” to try to see if it’s possible both to articulate the proper standard and to reconcile the various circuits’ seemingly different tests.

To cut to the chase, the court held:

We conclude that a case under the Lanham Act is “exceptional,” in the sense of warranting an award of reasonable attorneys’ fees 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.

The court believed that this test “captures the concerns that underlie the various tests and offers a pathway through the semantic jungle.” In arriving at its holding, the court was swayed by, among other things, the “practical concern” about the misuse of the Lanham Act “to obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor.”

The case is Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, No. 10-2327 (7th Cir. Nov. 23, 2010).