US Supreme Court to Determine Whether Federal Circuit’s “Exceptional” Test is Improper in Patent Cases

In the case of Octane Fitness, LLC v. Icon Health and Fitness, Inc., the US Supreme Court is scheduled to determine whether the Federal Circuit’s two-part standard for finding an “exceptional case” for awarding attorneys’ fees improperly appropriates a district court’s discretion.

The case involves Icon, a manufacturer and seller of exercise equipment which owns US Patent No. 6,019,710 for an “Exercise Device with Elliptical Movement.”

Icon sued Octane, a start-up exercise equipment company that made elliptical exercise equipment.  Octane claimed that its machines were based on licensed patents that pre-dated the ‘710 patent and that its linkage system was nothing like the one described in the ‘710 patent.

In its petition for certiorari to the Supreme Court, Octane claimed that Icon “recognized Octane’s success and hatched a plan to extort royalties out of Octane with a weak patent case,” using an “old patent…that was sitting on the shelf.”

Octane spent $1.3 million defending itself against Icon’s patent infringement lawsuit and prevailed at summary judgment.  However, the district court did not award Octane attorneys’ fees, finding that under the Federal Circuit’s two-part test the case was not “objectively baseless” or brought in “subjective bad faith.”

Although in US courts the parties generally bear their own legal fees, the Patent Act provides for the award of attorneys’ fees to the prevailing party in “exceptional cases.”  This provision is intended as a deterrent to “improper bringing of clearly unwarranted suits” for patent infringement.

The Federal Circuit affirmed the summary judgment for Octane and also affirmed the district court’s decision on fees.

Octane argued in its petition that the “exceptional-case” standard applied by the Federal Circuit was “inexplicably and unfairly” high and almost impossible for a defendant in a patent infringement case to meet.

Stay up-to-date on the latest Intellectual Property Law news from Sheldon Mak & Anderson.


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