Supreme Court to Consider Awards to Successful Patent Defendants

Supreme Court to Consider Awards to Successful Patent Defendants

^{October 2, 2013 | Intellectual Property News}

The patent statutes allow the award of attorneys’ fees in a patent infringement lawsuit to the prevailing party—plaintiff or defendant—in exceptional cases. The Federal Circuit Court of Appeals has long held that a prevailing accused infringer must prove the plaintiff’s position was objectively unreasonable and that it was subjectively (that is, knowingly) asserted in bad faith. Some companies that have been sued for patent infringement contend that the standard should be lowered, making it easier for a successful defendant to recover its fees when defending against a weak patent infringement case. Now the Supreme Court has agreed to consider that question.

On October 1, the Supreme Court agreed to hear two similar cases. A first case involves Icon Health against Octane Fitness in which Octane prevailed but its request for attorneys’ fees was denied. Octane argued that the standard for exceptionality should be lowered to require objective unreasonableness, but not proof of subjective bad faith. In most cases, the subjective element is extremely difficult or impossible to prove. The Federal Circuit declined the request to lower the standard, and the Supreme Court has agreed to consider it.

The Supreme Court also agreed to review an appeal involving Highmark and Allcare Health. The issue in the Highmark appeal involves a similar issue related to the ability of the court of appeals to reconsider a decision made by the trial court. In Highmark, the trial court concluded that the case was exceptional and awarded $5 million in fees to Highmark. In part, the Federal Circuit concluded that the typically high amount of such fee awards is reason to make the standard to award them quite high. After evaluating the lower court decision, the Federal Circuit reversed the award. The issue to be considered by the Supreme Court is whether that reversal was proper, and the degree of deference that must be afforded to a trial court decision finding a case to be exceptional.

The Supreme Court will likely hear arguments and issue a decision sometime in summer, 2014.