In less than two weeks, the Supreme Court will hear the first patent case of this session, which raises the question of when to award attorney’s fees in patent cases under 35 U.S.C. § 285. The statute provides for the award of attorney fees only in “exceptional cases.” Under the rule established in Brooks Furniture Mfg. v. Dutailier, Inc., the Federal Circuit determined that to meet this threshold a case must (1) be brought in subjective bad faith, and (2) the litigation is objectively baseless.

This standard has come under fire over the past year. In particular, critics of non-practicing entities (NPE’s), also known as patent trolls, have proposed shifting fees as a method of combatting abusive litigation tactics. Chief Judge Rader himself has suggested that federal judges are too reluctant to award fees after finding section 285 fee shifting in only twenty of 3,000 patent cases filed in 2011. He proposed that the “court should return to the rule that a district court may shift fees when, based on the totality of the circumstances, it is necessary to prevent a gross injustice.” The White House also joined the debate, recommending legislation that allows “more discretion in awarding fees . . . in patent cases.” Congress has taken the hint and included provisions in the Innovation Act.

The Supreme Court case combines two appellate cases, Octane Fitness, LLC v. Icon Health & Fitness, Inc. and Highmark Inc. v. Allcare Management Sys., Inc. Octane asks whether the Federal Circuit’s rigid Brooks Furniture test “improperly appropriates a district court’s discretionary authority to award attorney fees . . . thereby raising the standard for accused infringers (but not patentees) to recoup fees.” Similarly, Highmark questions whether a lower court’s determination of fees should be given deference at the Federal Circuit.

Commentators are expecting change, but the direction and scope remain unclear. Among the parties and over a dozen amici briefs, only ICON (no surprise) has argued for maintaining the Federal Circuit’s current test. In its amici brief, Apple took the opportunity to highlight how NPE’s harm innovation by filing opportunistic and profiteering nuisance suits and argued for a factor-balancing approach to evaluate the appropriateness of fees. Other amici have argued that defendant litigation practices are often just as harmful as NPE’s and just as deserving of fee shifting. Or perhaps the court will follow Chief Judge Rader’s recent suggestion in Kilopass Tech., Inc. v. Sidenese Corp. that a preponderance of the evidence of objective baselessness should be enough for an award of attorney fees.

–Zachary Loney

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