Supreme Court Hears Arguments on Attorney’s Fees in Patent Cases

The Justices of the US Supreme Court challenged both sides during arguments about attorney’s fees in patent cases.

As we previously reported, the Supreme Court is hearing two cases this session that relate to attorney’s fees in patent cases:  Highmark Inc. v. Allcare Health Management Systems Inc. and Octane Fitness LLC v. Icon Health & Fitness Inc.

One case deals with the legal standards trial courts should apply in awarding attorney’s fees in patent cases, and the other case deals with whether a trial court’s award of fees should be entitled to deference on appeal.

Under existing law, attorney’s fees are normally paid by the party that incurred them.  One party can only be ordered to pay the other’s attorney’s fees in “exceptional” patent cases.

An “exceptional” case is defined as one that is objectively baseless and was brought in subjective bad faith.

During oral argument in the Octane case, Justice Stephen Breyer said that the existing standard might be too difficult to meet.  Justice Elena Kagen agreed.

Justice Breyer suggested that although the US Patent Office had issued many bad patents, the presumed validity of a patent made it hard to show that an infringement case was objectively baseless.

Although he did not use the term “patent troll,” Breyer described a scenario in which a patent owner asserted a patent with “very abstract language” against many defendants, hoping to encourage settlements and avoid the costs of litigation.

He said it was not clear that the plaintiff’s case in such a situation would be objectively baseless.

Octane’s attorney suggested that instead of applying the “objectively baseless” standard courts should shift fees if a case is “unreasonably weak.”

Justice Antonin Scalia took issue with that proposed standard, saying “You’ve got to give me something tighter than that.”

During oral argument on the Highmark case, Justice Samuel Alito said that many federal judges may not have the expertise to determine whether fees should be awarded in an “exceptional” patent case.

“Exceptional compared to what?” he said.

Justice Ruth Bader Ginsburg said that deferring to district courts could result in an inconsistent application of the law, with a “risk of large disparities from district judge to district judge.”

An attorney for Allcare argued that the Federal Circuit (which was created to hear patent cases) was best suited to review fee awards.

However, Chief Justice John Roberts challenged that assumption, saying, “The Federal Circuit was established to bring about uniformity in patent law, but they seem to have a great deal of disagreement among themselves.”

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

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