Supreme Court Makes It Easier To Seek Sanctions For Frivolous Patent Suits

Jackson Walker

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The Supreme Court issued decisions in two cases yesterday that will make it easier for defendants to seek sanctions against non-practicing entities or any other entity for abusive patent litigation. In Highmark Inc. v. Allcare Health Management Systems Inc., the Court struck down the current standard for awarding sanctions, such as attorneys' fees, which required a district court to find that the plaintiff brought suit in objective bad faith before the district court could award sanctions. Under the new standard enacted by the Supreme Court, sanctions can be awarded if the district court finds that the case merely "stands out from others" with respect to either the merits of the case or the litigation conduct. That lowered standard will make it easier for defendants to seek sanctions against non-practicing entities that file frivolous lawsuits, where there is no evidence of infringement, or when the case is based on implausible claim constructions.

In the second case, Octane Fitness LLC v. Icon Health & Fitness Inc., the Supreme Court ruled that a district court's decision to award attorneys' fees is entitled to deference on appeal, instead of allowing the Federal Circuit the right to review such decisions de novo. Under the de novo standard, the Federal Circuit was not bound by any factual findings by the district court, and could ignore such findings in striking down an award of attorneys' fees. Under the new standard, the Federal Circuit must find that an award of sanctions was an abuse of discretion before it can reverse the award.

Based on these two decisions, it will be easier for defendants to seek sanctions against any plaintiff that brings a weak or frivolous patent suit.

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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