Supreme Court Reestablishes Standard for Attorneys’ Fees Under §285
On Tuesday, April 29, 2014, the Supreme Court in Octane Fitness v. ICON Health and Fitness issued a ruling that reestablishes the previous standard for awarding attorneys’ fees in the event of an exceptional case under 35 U.S.C. §285. In its opinion, the Court held that a case should be considered “exceptional” when it “is simply one that stands out from others with respect to the substantive strength of a party’s litigating position … or the unreasonable manner in which the case was litigated.” The Court instructed that this determination should be made on a “case-by-case” basis “considering the totality of the circumstances.”
The Supreme Court noted that this was the standard applied by the Federal Circuit for 20 years prior to its decision in Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F. 3d 1378 (2005). The Court concluded that the Federal Circuit in that decision improperly limited the circumstances under which attorneys’ fees might be awarded to circumstances “when there has been some material inappropriate conduct,” or when the litigation is both “brought in subjective bad faith” and “objectively baseless.” The Court also concluded the Brooks decision improperly required an exceptional case “must be established by clear and convincing evidence.”
The Court noted that under the totality of the circumstances standard, attorneys’ fees may be awarded when a party’s conduct is unreasonable, but not necessarily independently sanctionable, and when a party has pursued a claim with subjective bad faith or exceptionally meritless claims.
Whether or not this decision will result in an increase in the findings of exceptional case that warrant attorneys fees remains to be seen. Especially since the Supreme Court simply returned the standard to its pre-2005 requirements.
Gibbons will continue to monitor the application of the Supreme Court decision in this case.