Attorneys’ fees are generally not awarded to the winning party in a suit. However, under the patent statute1 a court may award reasonable attorney fees in “exceptional” cases. The Federal Circuit has addressed how to decide if a patent lawsuit is exceptional, and now the Supreme Court has decided to review that decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc.2
The fact that the Supreme Court is continuing to guide the Federal Circuit is more important than eventual ruling itself. The Federal Circuit has ways of applying general federal civil procedure statutes to patent lawsuits in a manner different from application to general lawsuits.
For example, the Federal Circuit created a rule based on the declaratory judgment statute3. This rule clarified when an accused patent infringer could sue a patentee for a declaration of noninfringement without having to wait for the patentee to file an infringement suit first. The Supreme Court reversed the Federal Circuit decision. While the rule was useful and made sense, the rule did not have a firm basis in the statute it was supposed to interpret.
The Supreme Court has decided that in the absence of a reason to the contrary, the Federal Circuit should not interpret federal law differently for patent cases. This guidance should help make the Federal Circuit’s decision making process more consistent with that of other federal appeals courts and provide greater certainty in interpreting general civil procedure laws in patent cases.
1. 35 U.S.C. § 285 (2012)
2. 496 Fed. Appx. 57; 2012 U.S. App. LEXIS 22096; cert granted, 186 L. Ed. 2d 962, 2013 U.S. LEXIS 5133 (U.S. 2013)
3. 28 U.S.C. § 2201 (2012)
In Microsoft Corp. v. I4I Limited Partnership, Case No. 10–290, the Supreme Court rejected Microsoft’s attempt to make patents more difficult and expensive to enforce. The Court did this by reinforcing the principal that clear and convincing evidence is necessary to invalidate a patent.
A patent must be valid to be enforceable. Section 282 of Title 35 of the United States Code states, “A patent shall be presumed valid.” Therefore, if the Patent Office has decided that the invention is patentable, this decision should not be overruled unless the evidence against patentability is “clear and convincing.” The decision of the Patent Office is entitled to deference because it has examined the patent application and, in its expertise, has judged that the patent application was worthy of issuance as a patent.
However, problems arise when the accused infringer presents evidence that the Patent Office did not consider. Should the clear and convincing standard disappear? Is the decision of the Patent Office now suspect? Should a lower level of evidence now be required to show that the patent is invalid?
The Supreme Court said “No” to these questions. New evidence presented to the Patent Office must be considered. It will be given more significance than evidence already considered. However, the “clear and convincing” standard remains in place.
This is important for a number of reasons. A patent defense attorney can virtually always find prior publications related to patentability that were not considered by the Patent Office. The defense will insist that the new evidence is material and that it renders the original decision of the Patent Office meaningless. Because the “clear and convincing” evidentiary standard must be met, the cost for the accused infringer to prove its case is higher. Also, the patentee faces a lower bar to demonstrate that the accused infringer’s arguments of invalidity are inadequate. This translates into a cost saving for the patentee.
These considerations are very significant when an infringement suit begins. A great deal of legal maneuvering occurs early on, perhaps years before a case is in a posture for trial. This Supreme Court decision will be helpful to a patentee who is formulating a legal and financial strategy for a suit.