Litigators are concerned about the possibility of paying their adversary’s attorney fees after losing a patent infringement case. In Octane Fitness, LLC v. Icon Health & Fitness, Inc., and Highmark Inc. v. Allcare Health Management System, Inc., the U.S. Supreme Court removed an almost 20-year-old rule that granted attorney fees for baseless claims brought in bad faith. Now the winning party need only show that the case stands out from others to receive an award of attorney fees.

Redefining an “Exceptional Case”

The Patent Act provides that in exceptional cases, a court may award reasonable attorney fees to the prevailing party. 35 U.S.C. § 285. In 2005, the U.S. Court of Appeals for the Federal Circuit defined a case as exceptional when there has been some material inappropriate conduct, or when a case is both brought in subjective bad faith and is objectively baseless. Brooks Furniture Mfg. v. Dutailier Int’l, Inc. The Federal Circuit held that exceptionality must be proven by clear and convincing evidence.

Octane Fitness v. Icon involved a patent infringement suit. The U.S. District Court for Minnesota granted summary judgment to Octane for noninfringement, and Octane moved for attorney fees. Applying Brooks, the district court found that although Icon’s arguments were not ultimately successful, they were not frivolous or objectively baseless, and Octane had not demonstrated by clear and convincing evidence that Icon brought the case in subjective bad faith. As a result, the district court held that the case was not exceptional and an award of attorney fees was not warranted. On appeal, the Federal Circuit affirmed.

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