In two major cases recently ruled on by the Supreme Court, the highest court in the land found that "(1) the prior standard used by the U.S. Court of Appeals for the Federal Circuit for determining whether a case is "exceptional" pursuant to 35 U.S.C. § 285 was unduly restrictive and inconsistent with the statutory text, and (2) a district court's finding of an "exceptional case" is subject to the district court's discretion and should be reviewed for an abuse of discretion, not de novo."
The first of these cases, Octane Fitness v. Icon Health, was regarding a patent for exercise equipment. In this case, Icon Health sued Octane for violating a patent on an elliptical machine, but Octane was ultimately able to show that they did not violate this patent. After doing so, they filed a motion for legal fees, which the district court turned down on the basis that this case was not exceptional and did not show a baseless claim, in bad faith. The Supreme Court determined that district courses have the ability to determine what is an exceptional case, on a case-by-case basis taking into account the totality of the circumstances of the decision.
"The Supreme Court rejected the litigation misconduct portion of the Brooks Furniture standard as too restrictive because it appeared to apply only to independently sanctionable conduct. The court explained that "sanctionable conduct" is not the appropriate benchmark. Rather, a district court may award fees in the rare case in which a party's unreasonable conduct is "exceptional" enough to justify an award of fees even if the conduct is not sanctionable. The Supreme Court also found that the second prong of the Brooks Furniture standard, requiring a finding that the litigation was objectively baseless and that the claims were brought in subjective bad faith, to be unduly restrictive. The court found that a case presenting either subjective bad faith or "exceptionally meritless claims" may suffice for a finding of an exceptional case."
This case is important because it greatly broadened the basis on which penalties can be applied for frivolous litigation. This is a huge step towards curbing the patent wars we have seen in recent years, as well as deterring patent trolls from arbitrarily suing companies left and right, another phenomenon that has taken off in the last decade and threatens to undermine our patent protection process.
Source: http://www.mondaq.com/unitedstates/x/311714/Patent/Unanimous+Supreme+Court+Exceptional+Patent+Cases+Determined+At+District+Courts+Discretion+With+Appellate+Review+Only+For+Abuse
The first of these cases, Octane Fitness v. Icon Health, was regarding a patent for exercise equipment. In this case, Icon Health sued Octane for violating a patent on an elliptical machine, but Octane was ultimately able to show that they did not violate this patent. After doing so, they filed a motion for legal fees, which the district court turned down on the basis that this case was not exceptional and did not show a baseless claim, in bad faith. The Supreme Court determined that district courses have the ability to determine what is an exceptional case, on a case-by-case basis taking into account the totality of the circumstances of the decision.
"The Supreme Court rejected the litigation misconduct portion of the Brooks Furniture standard as too restrictive because it appeared to apply only to independently sanctionable conduct. The court explained that "sanctionable conduct" is not the appropriate benchmark. Rather, a district court may award fees in the rare case in which a party's unreasonable conduct is "exceptional" enough to justify an award of fees even if the conduct is not sanctionable. The Supreme Court also found that the second prong of the Brooks Furniture standard, requiring a finding that the litigation was objectively baseless and that the claims were brought in subjective bad faith, to be unduly restrictive. The court found that a case presenting either subjective bad faith or "exceptionally meritless claims" may suffice for a finding of an exceptional case."
This case is important because it greatly broadened the basis on which penalties can be applied for frivolous litigation. This is a huge step towards curbing the patent wars we have seen in recent years, as well as deterring patent trolls from arbitrarily suing companies left and right, another phenomenon that has taken off in the last decade and threatens to undermine our patent protection process.
Source: http://www.mondaq.com/unitedstates/x/311714/Patent/Unanimous+Supreme+Court+Exceptional+Patent+Cases+Determined+At+District+Courts+Discretion+With+Appellate+Review+Only+For+Abuse
I'm glad that the Supreme Court ruled this review with the discretion that exceptions can be made on a case by case basis by the district court. This allows the ability to prevent patent trolls from taking a case too far, as you mentioned. Hopefully this will determine a more structured approach to the multiple layers of the courts and allow frivolous cases to go much further into the system, wasting money and time.
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