US Supreme Court changes standard for awarding attorney fees in patent infringement cases.

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THE IP LEGAL MINUTE
APRIL 2014: PATENT TROLLS DOWN, BUT NOT OUT
In a pair of decisions, the U.S. Supreme Court confirmed today that a loser of a patent infringement case who
engages in unreasonable litigation conduct might wind up paying the winner’s legal fees.
In Octane Fitness v. Icon Health & Fitness, 12-1184, the Court found that the previous standard used by the
Federal Circuit to find a case “exceptional” under 35 U.S.C. § 285 in awarding attorney fees was overly rigid.
The Federal Circuit’s previous standard was applied in two instances:
 when there has been some material misconduct; or
 when the litigation is brought in subjective bad faith and is objectively baseless.
The Court ruled that instead, District Courts should look to the totality of the circumstances in awarding fees
under 35 U.S.C. § 285. The Court held that an “exceptional” case is simply one that stands out from others with
respect to the substantive strength of the 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 should determine
whether a case is exceptional in a “case-by-case” exercise of their discretion. The Court re-affirmed that there
is no precise rule for making the determination that a case is “exceptional.”
In Highmark v. Allcare Health Management Systems, 12-1163, the U.S. Supreme Court ruled that determination
of a case being exceptional is reviewed only for abuse of discretion.
Given that the rigid formula followed by the Federal Circuit has been overturned, the Octane Fitness decision
will likely result in more motions for an award of attorney fees being filed by the winner in patent cases. And
with more motions being filed, more attorneys fee awards will be made. And with the new standard set by
Highmark, more of those awards will likely be upheld on appeal.
For those currently—or considering—fighting NPEs, these two decisions will serve as a valuable tool in your
fight against them. More importantly, these decisions will also serve as an invaluable weapon in your
negotiations with them.