On April 29, the Supreme Court issued two landmark patent opinions – Octane Fitness, LLC v. Icon Health & Fitness, Inc. and Highmark Inc. v. Allcare Health Management System, Inc.. Both cases dealt with the Federal Circuit’s application of 35 U.S.C. § 285, which allows courts to award attorney’s fees for patent litigation to the prevailing party in “exceptional cases.” In the past, the Federal Circuit made “exceptional case” determinations under a fairly specific standard, reviewing a lower court’s award de novo. However, Octane and Highmark have fundamentally altered the Section 285 analysis, expanding the discretion of district courts to award attorney’s fees and raising the bar to overturn Section 285 determinations on appeal. As a result, courts have already taken steps to modify their approach when dealing with the exceptional case issue in patent law.
Octane Fitness, LLC v. Icon Health & Fitness, Inc.
In Octane, plaintiff ICON Health & Fitness brought a claim against Octane Fitness, alleging infringement of a patent directed to exercise machine equipment. The Minnesota District Court granted summary judgment in favor of Octane, who promptly moved for an award of attorney’s fees under Section 285 of the Patent Act. However, the District Court declined to designate the case as an “exceptional case” warranting attorney’s fees, despite the fact that ICON never sold any products incorporating the patented technology. On appeal, the Federal Circuit affirmed summary judgment, and also affirmed that the case was not exceptional. Both courts cited the standard set forth in Brooks Furniture Mfg. v. Dutailier Int’l, Inc.,1 where the Federal Circuit held that exceptional cases must either involve material inappropriate conduct, or litigation that is both objectively baseless and brought in subjective bad faith.
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