July 24, 2014 | Posted in:IP Law, Patents

The Supreme Court Clarifies Standard for Recovery of Attorney Fees in Patent Litigation

Clients often ask if they can get their attorney’s fees paid by the other side and there are several ways that could happen. The Patent Statute provides for an award of reasonable attorney fees to the prevailing party in “exceptional cases”. So what will make a case exceptional?

For a plaintiff suing on its patent, a finding that the defendant’s infringement was willful will generally suffice to prove the case is “exceptional” and allow the court to award attorney’s fees to the patent owner. On the other side, if the plaintiff’s patent was procured by fraud on the patent office, the defendant can establish that the case is “exceptional” and get an award of its attorney’s fees. However, where one party to the litigation has acted unreasonably or pursued a frivolous claim or defense, the standard previously set by the United States Court of Appeals for the Federal Circuit for whether a case is “exceptional” was difficult to satisfy.

In Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014), the Supreme Court discarded the Federal Circuit test and decided that the meaning of the word “exceptional” in the patent statute is simply its ordinary common meaning. The Supreme Court referred to dictionary definitions and explained that a case is “exceptional” if it “stands out from others with respect to the substantive strength of a party’s litigating positions or the unreasonable manner in which the case was litigated.” In other words, has the litigant set itself apart by its bad behavior? In addition, the Supreme Court lowered the burden of proof for establishing an exceptional case so that rather than having to prove with clear and convincing evidence, a party only has to show that on the evidence, it is more likely than not that the case is exceptional.

The result in Octane Fitness should make it easier for a litigant to recover attorney fees in patent cases involving potentially frivolous claims or defenses or litigation misconduct. The District Courts will now exercise their discretion by looking at all the circumstances and deciding whether or not a case is “exceptional”.

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