Supreme Court Sets New Standards for Attorneys' Fees in Patent Infringement Lawsuits

04/29/2014

In a pair of unanimous decisions issued today, the United States Supreme Court has substantially lowered the bar for the prevailing party’s recovery of attorneys’ fees under § 285 of the Patent Act. 35 U.S.C. § 285 provides that a prevailing party may recover attorneys’ fees in an “exceptional case.” Historically, the Federal Circuit has placed a high bar on the “exceptional case,” requiring proof by clear and convincing evidence that either (1) the plaintiff has acted inappropriately in the litigation or (2) the case is “objectively baseless” and “brought in subjective bad faith.” But as of today, that standard has been replaced by something much less rigid and more deferential to the district court.

Specifically, in Octane Fitness, LLC v. ICON Health & Fitness, Inc., the Court rejected the Federal Circuit’s historical two-part test and held instead that an 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 is litigated.” The determination of whether a case is exceptional under this definition is a discretionary inquiry devoid of any evidentiary burden. In the companion case of Highmark Inc. v. Allcare Health Mgmt. System, Inc., the Court further emphasized that the discretion in determining an exceptional case lies with the trial court, not the court of appeals, and that court’s findings are reviewed under the highly deferential abuse of discretion standard of review. Taken together, Highmark and Octane Fitness mark a noted change in the deference given to district courts in deciding whether an exceptional case exists, which could prove to be a powerful tool in challenging frivolous patent infringement lawsuits.

If you would like more information about these decisions or the firm’s Appellate and Intellectual Property Litigation practices, please contact one of the attorneys below.

Debbie J. McComas
214.651.5375
debbie.mccomas@haynesboone.com

 

Russ Emerson
214.651.5328
russ.emerson@haynesboone.com

Kenneth G. Parker
949.202.3014
kenneth.parker@haynesboone.com

 

 

Thomas B. King
949.202.3059
thomas.king@haynesboone.com

 

 

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