Friday, March 30, 2018

Open legal question doesn't preclude fees award where manner of litigating is exceptional

Tobinick v. Novella, 884 F.3d 1110 (11th Cir. 2018)

The court of appeals held that the Octane Fitness standard for “exceptional cases” applied to Lanham Act cases, and that the District Court here didn’t abuse its discretion in awarding attorney’s fees to Novella.  As you may recall, Tobinick claimed that a treatment he created works for spinal pain, neurological dysfunction, and Alzheimer’s disease.  Novella, a neurologist at Yale New Haven Hospital, wrote a blog post criticizing Tobinick’s treatment as unsupported by medical evidence, so Tobinick sued for (1) false advertising under the Lanham Act, and (2) unfair competition, trade libel, libel per se, and tortious interference with business relationships, all under state law.  After pretrial motions, the district court granted summary judgment to Novella, holding that the blog posts weren’t commercial speech as required by the Lanham Act.

Previously, the court of appeals had said that an exceptional case under the Lanham Act was one “where the infringing party acts in a malicious, fraudulent, deliberate or willful manner.” The District Court initially denied a motion for fees by one defendant (a nonprofit associated with Novella), determining that Tobinick had not pursued his Lanham Act claim maliciously or fraudulently. Novella also successfully brought a special motion to strike the state law claims under California’s anti-SLAPP statute, which was granted, entitling him to fees and costs as to those claims.  The district court held that this was now an exceptional case, since a showing of subjective bad faith or fraud was no longer required under Octane Fitness. The court noted that it had twice before ruled against the plaintiffs on the issue of commercial speech, and even after this, plaintiffs repeatedly sought to multiply the proceedings by adding new parties and claims, moving for sanctions, and accusing Novella of perjury. The court awarded fees as to those expenses incurred after the order granting summary judgment for the nonprofit, over $220,000 (added to a smaller amount for the anti-SLAPP claims for a total of almost $260,000).

Unsurprisingly, the court of appeals joined its fellows in holding that Octane Fitness’s interpretation of the identical patent statutory language applied equally to the Lanham Act. An “exceptional case” under the Lanham Act thus requires only that a case “stands out from others,” either based on the strength of the litigating positions or the manner in which the case was litigated.

The court of appeals held that the district court didn’t abuse its discretion.  That court had ruled against Tobinick in three separate orders, and “[p]laintiffs repeatedly failed to produce new arguments or evidence to distinguish the Court’s prior rulings.” After two adverse rulings on commercial speech, and more than eleven months, plaintiffs “repeatedly sought to multiply the proceedings by adding new parties and claims,” creating 131 new docket entries in 6 ½ months after that summary judgment, and bringing what the trial court viewed as baseless motions for sanctions and accusations of perjury.  The court of appeals, however, didn’t place much weight on the fact that Tobinick continued litigating his case even in the face of a number of adverse rulings on whether the blog posts qualified as “commercial speech,” because that was an open question in this circuit, resolved by a published decision on the merits in this case. Even so, Tobinick’s manner of litigating his suit was enough to make it an exceptional case.

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