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Supreme Court Makes it Easier to Recover Attorney's Fees in Patent Cases

The United States Supreme Court issued two opinions today that eliminated the Federal Circuit’s rigid two-part test a prevailing party must meet in order to recover attorney’s fees in a patent case, and heightened the appellate standard of review of a district court’s determination to award attorney’s fees.

In patent cases, district courts are allowed to award attorney’s fees to the prevailing party in “exceptional cases.” 35 U.S.C. § 285. Over the past decade, the Federal Circuit has marginalized the district court’s discretion in making the determination whether a case is exceptional. In Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378 (Fed. Cir. 2005), the Federal Circuit held that, absent litigation misconduct or misconduct in securing the patent, an “exceptional case” is one that is both (1) “objectively baseless” and (2) “brought in subjective bad faith.” Brooks Furniture also established a “clear and convincing evidence” burden of proof for the party seeking fees. Subsequent Federal Circuit decisions clarified and solidified the test and reflected the exceedingly high bar faced by the prevailing party.

In Octane Fitness LLC v. Icon Health & Fitness, Inc. (12-1184), a unanimous Court eliminated the Brooks Furniture test and established a more general “totality of the circumstances” test, stating:

[A]n “exceptional” case is simply one that stands out from the others with respect to the substantive strength of a party’s litigating positions (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances.

Importantly, the Supreme Court also rejected the clear and convincing evidence standard and held that there is “no specific evidentiary burden,” noting that the exceptional case determination is “a simple discretionary inquiry.” In a related decision, Highmark Inc. v. Allcare Health Mgt. Sys., Inc. (12-1163), the unanimous Court held that all aspects of a district court’s exceptional case determination should be reviewed for abuse of discretion, rather than de novo as had been the practice of the Federal Circuit under Brooks Furniture.

The upshot of the opinions is the Supreme Court’s emphasis on affording the district courts greater discretion to observe the manner in which a given proceeding is being handled and to make the determination whether fees should be awarded based on an intimate knowledge of the factual record. These decisions will make it much more difficult to disturb a district court’s determination, rendering it imperative that parties develop the record early in the case and throughout discovery in order to convince the court that fees are warranted.

Copyright © 2020 Womble Bond Dickinson (US) LLP All Rights Reserved.National Law Review, Volume IV, Number 120

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About this Author

John F. Morrow, Jr., Womble Carlyle Law Firm, Intellectual Property Attorney, Trademark Infringement Lawyer
Partner

John currently chairs Womble Carlyle’s Intellectual Property Litigation Group, where for the past 17 years he has focused his practice on handling all aspects of patent infringement, trademark infringement, unfair competition, copyright infringement, trade secret misappropriation, false advertising, and antitrust lawsuits.  John has vast experience in each arena, having served as first and second chair in state or federal courts sitting in North Carolina, Nevada, Texas, Wyoming, Pennsylvania, Delaware, Massachusetts, Ohio, New York, New Jersey, Connecticut, Georgia, South Carolina, Utah,...

336-721-3584
Barry J. Herman, Intellectual Property Attorney, Womble Carlyle, Baltimore, Trademark Disputes Lawyer
Partner

Barry Herman is a member of Womble Carlyle’s Intellectual Property Group practicing in the firm’s Baltimore office. A chemical engineer by training, Barry litigates matters across a wide array of technologies in the chemical, mechanical, and electrical arts. He represents both domestic and foreign clients in a full range of patent, trademark and other intellectual property disputes before the United States Federal District Courts, the International Trade Commission (ITC), and the United States Patent & Trademark Office.

Barry has significant first-chair trial experience and has consistently demonstrated the ability to provide cost-effective representation by tailoring strategy and staffing to meet the needs of the client for that particular case.

410-545-5830
Preston H Heard, Womble Carlyle Law Firm, Intellectual Property Attorney, Patent Review Lawyer
Associate

Preston Heard is an experienced patent litigation attorney who represents clients in a variety of industries, including the mechanical, computer and chemical sectors, in patent-related disputes.

 A registered patent attorney, Preston has represented patent clients in U.S. District Court in numerous states, as well as before the U.S. International Trade Commission. He works with patent owners to devise overall strategies to protect and enforce patent rights and to assess potential patent-related claims. He also works with clients to develop effective defenses against patent...

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