Octane Fitness Rejects Rigid Test For Determining What Is An "Exceptional Case," Giving Great Discretion to District Courts.
In Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. __, Case No. 12-1184 (U.S. Supreme Ct. Apr. 29, 2014), SCOTUS rejected a more rigid Federal Circuit test for determining what is an "exceptional case" for purposes of awarding attorney’s fees to winning patent litigants under 35 U.S.C. section 285. The Federal Circuit defined an "exceptional case" as one which either involves "material inappropriate conduct" or is both "objectively baseless" and "brought in subjective bad faith," requiring that this test be established by clear and convincing evidence. (Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005). SCOTUS found the Federal Circuit test overly rigid, adopting a broad factually intensive test and rejecting the notion that a clear and convincing evidence standard should apply to fee-shifting statutes like the one before it.
Highmark Decided That Appellate Courts Should Review All Aspects of a Section 285 Fee Determination for Abuse of Discretion.
The issue in the companion case of Highmark Inc. v. Allcare Health Management System, Inc., 572 U.S. __, Case No. 12-1163 (U.S. Supreme Ct. Apr. 29, 2014) was whether an appellate court should accord deference to a district court’s determination that litigation was "objectively baseless" for purposes of a section 285 award or use a de novo standard of review. Based on the ruling in Octane Fitness, SCOTUS ruled that all aspects of a 285 "exceptional case" determination should be reviewed under an abuse of discretion standard—given that the inquiry is generally rooted in factual determinations.
BLOG PREDICTION RESULTS—On March 2, 2014, we posted on these cases after the oral argument. How did we do? Basically, went 2-0, although we may have missed out on the breadth of the decision eventually authored in Octane Fitnesss.