Supreme Court to Examine Award of Attorney Fees in Patent Cases

October 1, 2013. The Supreme Court granted certiorari in Octane Fitness v. ICON Health & Fitness, Sup. Ct. No. 12-1184, a patent infringement case in which the sole issue before the Supreme Court is the award of attorney fees. See, October 1, 2013 Orders List [2 pages in PDF].

The question presented is "Does the Federal Circuit's promulgation of a rigid and exclusive two-part test for determining whether a case is ``exceptional´´ under 35 U.S.C. § 285 improperly appropriate a district court's discretionary authority to award attorney fees to prevailing accused infringers in contravention of statutory intent and this Court's precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements from defendants?". (Parentheses in original.)

35 U.S.C. § 285 provides in full that "The court in exceptional cases may award reasonable attorney fees to the prevailing party."

The U.S. Court of Appeals (FedCir) devoted few words to this issue. It wrote in its October 24, 2012 opinion that "Octane relies on ICON's allegedly unreasonable claim construction positions, its privilege assertions over its pre-suit investigation, and emails allegedly supporting bad faith litigation in an effort to "go after" Octane. In addition, Octane seeks to lower the standard for exceptionality to "objectively unreasonable" to rebalance what it alleges as the power of large companies over smaller companies in patent infringement litigation. However, we have reviewed the record and conclude that the court did not err in denying Octane's motion to find the case exceptional. We have no reason to revisit the settled standard for exceptionality."

When and why to award costs and attorneys fees in patent litigation is also at the center current debates in the Congress regarding reforming patent procedure to reduce meritless claims asserted by non-practicing entities, patent assertion entities, and/or patent trolls.

See, for example, HR 845 [LOC | WW], the "Saving High-Tech Innovators from Egregious Legal Disputes Act of 2013", or "SHIELD Act", introduced on February 27, 2013 by Rep. Peter DeFazio (D-OR), and stories titled "Rep. DeFazio and Rep. Chaffetz Introduce SHIELD Act" and "Summary of HR 845, the SHIELD Act" in TLJ Daily E-Mail Alert No. 2,529, March 4, 2013.

See also, story titled "Summary of Pending Patent Reform Bills" in TLJ Daily E-Mail Alert No. 2,592, August 29, 2013.

(Published in TLJ Daily E-Mail Alert No. 2,608, October 2, 2013.)