Tuesday, April 29, 2014

SCOTUS Decisions in Octane Fitness and Highmark: Awarding Attorney's Fees in Patent Cases

Today the Supreme Court issued unanimous decisions in Octane Fitness v. Icon Health and Fitness (No. 12-1184) and Highmark Inc. v. Allcare Management Systems, Inc. (No. 12-1163), two cases on fee-shifting in patent cases. Both opinions were authored by Justice Sotomayor.

The Octane Fitness opinion begins:

Section 285 of the Patent Act authorizes a district court to award attorney’s fees in patent litigation. It provides, in its entirety, that “[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party.” 35 U. S. C. §285. In Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378 (2005), the United States Court of Appeals for the Federal Circuit held that “[a] case may be deemed exceptional” under §285 only in two lim­ited circumstances: “when there has been some material inappropriate conduct,” or when the litigation is both “brought in subjective bad faith” and “objectively base­less.” Id., at 1381. The question before us is whether the Brooks Furniture framework is consistent with the statu­tory text. We hold that it is not. [Slip Op., p.1]

Rather, as Justice Sotomayor explains:

[A]n “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “excep­tional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. As in the comparable context of the Copyright Act, “‘[t]here is no precise rule or formula for making these determinations,’ but instead equitable discretion should be exercised ‘in light of the considerations we have identified.’” Fogerty v. Fantasy, Inc., 510 U. S. 517, 534 (1994). [pp.7-8 (footnote omitted)]

And here’s how the Highmark opinion begins:

We granted certiorari to determine whether an appellate court should accord deference to a district court’s determination that litigation is “objectively baseless.” On the basis of our opinion in Octane Fitness, LLC v. ICON Health & Fitness, Inc., ante, p. ___, argued together with this case and also issued today, we hold that an appellate court should review all aspects of a district court’s §285 determination for abuse of discretion. [Slip Op., p.1] 

 

 

 

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