Two Supreme Court decisions issued on April 29 significantly alter the standards for awards of statutory attorneys’ fees in patent cases. Octane Fitness, LLC v. Icon Health & Fitness, Inc. overruled the Federal Circuit’s overly rigid test for determining whether a case is “exceptional” – thereby permitting a fee award under 35 U.S.C. § 285 -- holding that “an ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Highmark Inc. v. Allcare Health Management System, Inc. clarified that all aspects of a district court’s Section 285 decision should be reviewed under an abuse-of-discretion standard.
Beginning with the Federal Circuit’s decision in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378 (Fed. Cir. 2005), the appellate court adopted a restrictive test for determining whether a case was exceptional: “when there has been some material inappropriate conduct” or when the litigation is both “brought in subjective bad faith” and “objectively baseless.” And the Federal Circuit had subjected some aspects of district courts’ fee-shifting decisions to de novo review. The Supreme Court unanimously determined that the Federal Circuit’s approach was overly rigid and inconsistent with the statute.
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