In two decisions issued yesterday, the Supreme Court relaxed the standard for awarding fees in patent cases. Both decisions should have the effect of reducing baseless patent suits.
In the first (Octane Fitness, LLC v. ICON Health & Fitness), the Court rejected the Federal Circuit's previous rule that an award of fees is proper only in "objectively baseless" cases that are "brought in subjective bad faith." The Court instead interpreted the "exceptional case" language of 35 U.S.C. § 285 as requiring a case that "stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated." This is a significant softening of the previous rule imposed by the Federal Circuit.
In the second (Highmark v. Allcare Health Management Systems, Inc.), the Court rejected the previous rule that a judge's decision to award attorney's fees should be reviewed anew on appeal. Now, lower court fee decisions are to be reviewed on an "abuse-of-discretion" standard. Thus, a win at the district court level on attorney fees is much more meaningful.