U.S. Supreme Court Agrees to Hear Two 'Exceptional Case' Appeals

On Oct. 1, 2013, the U.S. Supreme Court granted certiorari in two different patent infringement cases involving the issue of fee shifting in “exceptional cases” under 35 U.S.C. Section 285. Both of the cases, Highmark Inc. v. Allcare Health Management Systems¹ and Octane Fitness v. ICON Health & Fitness,² involve fee awards sought against non-practicing entities (NPEs), or so-called “patent trolls.” Depending on how the court rules, it may become easier for defendants to recover their attorney fees when forced to defend “objectively baseless” infringement suits brought by patent trolls and others.

Section 285 provides that a “court in exceptional cases may award attorney fees to the prevailing party.” Differing legal standards for what constitutes an “exceptional case” for plaintiffs and defendants have developed under Federal Circuit case law. If a plaintiff is able to prove willful infringement, that will typically provide the basis for the district court to find the requisite bad faith, find the case “exceptional” and award attorney fees, as well as enhanced damages, up to treble the actual damages found.³