Change in Standards for Attorney Fee Awards in Patent Cases

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Two recent Supreme Court decisions changed the standards for the award of attorneys’ fees to the prevailing party in patent infringement suits. Section 285 of the Patent Act provides for the award of fees in “exceptional” cases. Prior to decisions in Octane Fitness v. Icon Health and Fitness and Highmark Inc. v. Allcare Health Management Systems, Inc., in accordance with Federal Circuit precedent, an exceptional case was one where the District Court found either material inappropriate conduct in the litigation or that the infringement allegation was objectively baseless (so unreasonable that no reasonable litigant could believe it could succeed) and brought in subjective bad faith. The Federal Circuit rule also required that exceptionality be established by clear and convincing evidence. The objectively baseless prong was reviewed by the Federal Circuit on appeal de novo.

Under the old standard, attorney fee awards were relatively seldom made, and they varied widely among particular districts. Between 2003 and 2013, in approximately 2,000 patent cases disposed of on their merits, fee awards were made in approximately 200 cases, or10 percent. A small majority was awards to plaintiffs, based largely on findings of willful infringement or litigation misconduct by defendants or their counsel. The awards to defendants were based on findings of inequitable prosecution misconduct, frivolous infringement contentions and/or litigation misconduct by plaintiffs. A large plurality of the fee awards came from the districts in which the most infringement actions were filed. Almost half came from the six districts with the heaviest infringement dockets.

Originally published on Law.com on June 11, 2014.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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