## Facts

- LHO owned an upscale downtown Chicago hotel rebranded in February 2014 as “Hotel Chicago,” a Marriott-affiliated property.
- In May 2016, Joseph Perillo and related entities opened another hotel about three miles away using the name “Hotel Chicago.”
- LHO sued under the Lanham Act (15 U.S.C. § 1125(a)) and Illinois trademark and deceptive trade practices law.
- After more than a year of litigation, LHO moved to voluntarily dismiss all claims with prejudice; the district court granted the motion and entered judgment on February 21, 2018.
- Defendants, as prevailing parties, moved for attorney’s fees under 15 U.S.C. § 1117(a), which permits fees in “exceptional cases.”
- The district court denied fees, applying the Seventh Circuit’s older “abuse of process” standard rather than the Supreme Court’s totality-of-the-circumstances approach in Octane Fitness.

## Issues

1. Whether the Octane Fitness “exceptional case” standard governs attorney-fee motions under Lanham Act § 1117(a), displacing the Seventh Circuit’s prior “abuse of process” test.

## Decision

- The Seventh Circuit reversed the denial of attorney’s fees and remanded.
- The court held that Octane Fitness supplies the governing interpretation of “exceptional case” for Lanham Act § 1117(a).
- The court declined to decide whether this litigation was “exceptional” or what amount of fees, if any, should be awarded, leaving those determinations to the district court on remand.

## Legal Principles

- For Lanham Act § 1117(a), an “exceptional” case is one that stands out from others based on (1) the substantive strength of a party’s litigating position (law and facts) or (2) the unreasonable manner in which the case was litigated.
- The “exceptional case” determination is discretionary and must be made case-by-case under the totality of the circumstances, without a rigid formula.
- Relevant, nonexclusive considerations include frivolousness, motivation, objective unreasonableness (factual and legal), and the need for compensation and deterrence.
- Prior Seventh Circuit precedent limiting “exceptional” to “abuse of process” is no longer controlling for § 1117(a) fee requests.

## Conclusion

The Seventh Circuit held that Lanham Act fee shifting under § 1117(a) uses Octane Fitness’s flexible totality-of-the-circumstances definition of “exceptional case,” and it remanded for reconsideration of the prevailing defendants’ fee motion under that standard.


LHO Chi. River, L.L.C. v. Perillo, 942 F.3d 384 (7th Cir. 2019)