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Supreme Court Makes It Easier To Get Lawyers Fees In Patent Cases

Posted by Unknown on from the sudden-outbreak-of-did-all-nine-just-agree dept.

UnknowingFool (672806) writes "In a pair of unanimous rulings yesterday, the Supreme Court made it easier for defendants in patent cases to collect attorneys fees if the litigation was frivolous. In the first case, Octane Fitness v. Icon Health & Fitness, the court ruled that a standard used by lower courts to award attorney's fees was impossible to meet. The original standard under Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc. had ruled that a claim had to be both 'objectively baseless' and 'brought in subjective bad faith' before fees could be awarded. The high court ruled that fees should be awarded merely when the case is 'exceptional' and not when the defendant must prove there was zero merit.

In the second case, Highmark v. Allcare Health Management, the Supreme Court also noted the 'exceptional' standard in reversing the appellate court's decision but specifically ruled that appellate courts should give more deference to the lower courts on rulings of fact. In Highmark, the district court found that Allcare had engaged in a pattern of 'vexatious' and 'deceitful' conduct throughout the litigation and awarded fees. The appellate court while agreeing with the lower court about part of the case reversed the fees in their de novo review of the case. In de novo reviews, the court case is essentially retried with the higher court. The Supreme Court iterated that de novo reviews should be done typically for 'questions of law' and reviews on 'questions of fact' are done if there are clear errors with decisions on matters of discretion 'reviewable for "abuse of discretion."' In other words, the appellate courts can review a case if a lower court has not correctly interpreted law; however, they should not retry a lower case on facts unless the lower court made a clear error. Also unless the lower court abused their power in some way, the appellate court should not review their final decisions.

For example, if a person is tried for murder, an appellate court could rule that a district court misinterpreted a statute about sentencing if the person if found guilty. The appellate court should not retry the facts of the case unless the lower court had made a clear error like ruling that there was a DNA match when there was not. Also an appellate court should not reverse the lower court if they sentenced the person to a reasonable time. Now if the district court sentenced the person to 400 years for one murder, then the appellate court should intervene.

In effect the two rulings make it easier for companies to recover money should they be sued in frivolous patent lawsuits. This would make the risks greater for those who sue."

41 of 51 comments (clear)

  1. Exceptional by Iniamyen · · Score: 1

    Is there a legal definition of "exceptional?" Aren't these types of cases already so common that they wouldn't qualify as "exceptional?"

    1. Re:Exceptional by UnknowingFool · · Score: 4, Insightful

      There are other rulings that define "exceptional". For example, the SCO case would be called exceptional. Despite very public statements about their evidence against IBM, SCO had no reasonable evidence when the time came to present it to the court. Also, it appears that SCO did not even have the standing to sue on copyright claims and should have known this very early on when Novell challenged their claims of ownership of Unix.

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
    2. Re:Exceptional by Bacon+Bits · · Score: 4, Informative

      There's a reason the court documents are so often linked like this. It's on page one of the two page syllabus at the very beginning of the linked in the summary:

      (a) Section 285 imposes one and only one constraint on district courts’ discretion to award attorney’s fees: The power is reserved for“exceptional” cases. Because the Patent Act does not define “exceptional,” the term is construed “in accordance with [its] ordinary meaning.” Sebelius v. Cloer, 569 U. S. ___, ___. In 1952, when Congress used the word in 285 (and today, for that matter),“[e]xceptional” meant “uncommon,” “rare,” or “not ordinary.” Webster’s New International Dictionary 889 (2d ed. 1934). An “exceptional” case, then, is simply one 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. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. Cf. Fogerty v. Fantasy, Inc., 510 U. S. 517. Pp. 7–8.

      These are former lawyers working so lawyers don't get away with something they should not, and the court is expected to concretely justify its rulings. Everything is defined and stated as clearly as possible.

      --
      The road to tyranny has always been paved with claims of necessity.
    3. Re:Exceptional by SlaveToTheGrind · · Score: 1

      The Supreme Court created a new definition for an "exceptional" case in its Octane Fitness decision:

      We hold, then, that an “exceptional” case is simply one 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. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances

      So it's not necessarily so much the "type" of case per se -- it's where a given case falls on the spectrum of silliness, how [un]reasonable either side was in litigating the case, etc. The bottom line is that district court judges now have a lot more discretion to declare a case to be "exceptional" than they did before.

    4. Re:Exceptional by CanHasDIY · · Score: 1

      Everything is defined and stated as clearly as possible.

      At least, as clearly as is possible, when speaking legalese.

      --
      An enigma, wrapped in a riddle, shrouded in bacon and cheese
    5. Re:Exceptional by frovingslosh · · Score: 1

      My thoughts exactly. Some scumbag with one or more patents on something, often something that they never even built, will try to sue everyone even extremely remotely connected to any similar invention or device. Some people will just pay up the extortion, figuring it is cheaper than fighting, even though they know they are in the right. Such scumbags would now seem to be able to go to the lower courts and argue, when they lose frivolous cases, that they should not be held accountable for the expenses they caused because what they did to that client wasn't 'exceptional', it was what they and the rest of the trolls do to businesses every day.

      --
      I'm an American. I love this country and the freedoms that we used to have.
    6. Re:Exceptional by ackthpt · · Score: 1

      Everything is defined and stated as clearly as possible.

      At least, as clearly as is possible, when speaking legalese.

      Which still will be appealed, because that's the way the game is played.

      --

      A feeling of having made the same mistake before: Deja Foobar
    7. Re:Exceptional by UnknowingFool · · Score: 1

      I would disagree that SCOTUS created a new definition as it was already part of 35 U. S. C. 285. At best, SCOTUS clarified that using Brooks Furniture as the standard for awarding fees was too restrictive and that it was an impossible standard to meet. But your conclusion is correct: Combined with the second ruling, these two rulings give district courts more discretion about when fees should be awarded.

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
    8. Re:Exceptional by SlaveToTheGrind · · Score: 1

      I would disagree that SCOTUS created a new definition as it was already part of 35 U. S. C. 285.

      I don't think those words mean what you think they mean. 35 U.S.C. 285 simply uses the term "exceptional case[]" in a sentence, and simply using a term in a sentence doesn't define it. On the other hand, it seems clear enough that when a sentence from the Supreme Court starts with the words "We hold, then, that an 'exceptional' case is . . ." the latter part of the sentence will (as it did) provide a definition for the term.

    9. Re:Exceptional by UnknowingFool · · Score: 1

      I'm not sure you read the ruling. First Supreme Court says is that the common definition of "exceptional" in the English language is to be used. Second, it is up to the district court's discretion to determine what is and is not exceptional. Third, the Brooks Furniture standard set by a Federal Circuit court was too strict to be used as a standard.

      Because the Patent Act does not define “exceptional,” the term is construed “in accordance with [its] ordinary meaning.” Sebelius v. Cloer, 569 U. S. ___, ___. In 1952, when Congress used the word in 285 (and today, for that matter),“[e]xceptional” meant “uncommon,” “rare,” or “not ordinary.” Webster’s New International Dictionary 889 (2d ed. 1934). An “exceptional” case, then, is simply one 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. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. Cf. Fogerty v. Fantasy, Inc., 510 U. S. 517. Pp. 7–8.

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
    10. Re:Exceptional by SlaveToTheGrind · · Score: 1

      First, you say you're not sure I read the ruling, and then you proudly paste in the very section that I first cited from. Did YOU read my post before your knee-jerk reaction?

      Second, you're not saying anything that contradicts the substance of what I've said twice now. The Supreme Court said "exceptional" should be construed according to its ordinary meaning, and then provided that ordinary meaning in the context of an "exceptional case." You pasted the words from the opinion yourself.

      It seems that you just want to split hairs about whether that should be called a "definition" or a "standard." Let's just take that off the table -- go back and plug the word "standard" into my original post. Golf frickin' clap. Now, do you have anything actually useful to add to the dialogue?

    11. Re:Exceptional by UnknowingFool · · Score: 1

      First, you say you're not sure I read the ruling, and then you proudly paste in the very section that I first cited from. Did YOU read my post before your knee-jerk reaction?

      You pasted it but didn't seem to understand it. Your section explains EXACTLY what the Supreme Court did. They didn't create a new definition of "exceptional". They merely said use the common definition>

      Second, you're not saying anything that contradicts the substance of what I've said twice now. The Supreme Court said "exceptional" should be construed according to its ordinary meaning, and then provided that ordinary meaning in the context of an "exceptional case." You pasted the words from the opinion yourself.

      This is what you wrote above: "The Supreme Court created a new definition for an "exceptional" case in its Octane Fitness decision [supremecourt.gov]:". It's not a "new" definition. It's the same definition as every one uses.

      It seems that you just want to split hairs about whether that should be called a "definition" or a "standard." Let's just take that off the table -- go back and plug the word "standard" into my original post. Golf frickin' clap. Now, do you have anything actually useful to add to the dialogue?

      There is a huge world of difference between a legal standard and a definition when it comes to law. For example obscenity laws are based on the definition of "obscene" however the standard used to determine obscenity is extremely convoluted. In this case, the definition "exceptional" has always existed. The Brooks Furniture standard was set by a Federal District court and struck down by SCOTUS as too restrictive. To the high court, there was no need to apply such a standard. Use the common definition of the word.

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
    12. Re:Exceptional by SlaveToTheGrind · · Score: 1

      I see the answer is no -- you don't have anything useful to add to the dialogue other than picking at one word of my original post, having precisely nothing to do with its thrust. You must be a joy at parties.

      To the high court, there was no need to apply such a standard. Use the common definition of the word.

      Oh, so they replaced what you call a "standard" with what you call a "definition," eh? That creates a bit of a problem for you. Page 9: "Under the standard announced today . . ." (emphasis mine). Apparently you do agree, then, that "standard" and "definition" are interchangeable in this context?

      As I've said over and over, and now for the last time, the Supreme Court did indeed provide a definition for what constitutes an "exceptional case." That would be the part after the words, "An 'exceptional case,' then, is . . ." They used the dictionary definition for the word "exceptional" to inform their definition of the term "exceptional case." There's no "same definition that every one [sic] uses" for "exceptional case" -- please do share one if you have it. I'll not hold my breath.

      I feel quite comfortable predicting that, over the next several months if not weeks/days, there will be a large percentage of fee-shifting motions filed that contain the language (or very similar language, since my experience with you strongly suggests I need to spell that out) "the Supreme Court has held that 'an exceptional case is . . ." followed by the exact text from Octane Fitness that I've cited repeatedly, and arguing why the case at hand meets that definition, and a comparatively small percentage (maybe zero, but you can't account for knuckleheads) that ignore the Court's definition of "exceptional case" and just try to argue based on the dictionary definition of "exceptional."

      And, with that, I'm done troll-feeding for today.

    13. Re:Exceptional by UnknowingFool · · Score: 1

      I see the answer is no -- you don't have anything useful to add to the dialogue other than picking at one word of my original post, having precisely nothing to do with its thrust. You must be a joy at parties.

      When you are not precise with meanings and you get called out on it, don't get offended; get it right. Technically, there are differences between the two terms. If this was computer networking would you allow someone to order a switch when they needed a router?

      Oh, so they replaced what you call a "standard" with what you call a "definition," eh? That creates a bit of a problem for you. Page 9: "Under the standard announced today . . ." (emphasis mine). Apparently you do agree, then, that "standard" and "definition" are interchangeable in this context?

      Again you don't seem to understand the difference between standard and definition. There are not exactly interchangeable. For example in USC 17 107, it allows Fair Use exceptions to copyright. It does not define "Fair Use" and a number of different standards over the years have helped courts with one of the standards being transformativeness. But none of these are "definitions". In this case, SCOTUS is explicitly saying not to use the Brooks Furniture standard and to use the common English definition.

      As I've said over and over, and now for the last time, the Supreme Court did indeed provide a definition for what constitutes an "exceptional case." That would be the part after the words, "An 'exceptional case,' then, is . . ." They used the dictionary definition for the word "exceptional" to inform their definition of the term "exceptional case." There's no "same definition that every one [sic] uses" for "exceptional case" -- please do share one if you have it. I'll not hold my breath.

      The first use of the word "exceptional" in the English language is noted by 1787. It's not new. SCOTUS says use the common English meaning as noted by Webster. They didn't create a new word. They didn't create a new submeaning. The word means exactly as it means in the dictionary.

      I feel quite comfortable predicting that, over the next several months if not weeks/days, there will be a large percentage of fee-shifting motions filed that contain the language (or very similar language, since my experience with you strongly suggests I need to spell that out) "the Supreme Court has held that 'an exceptional case is . . ." followed by the exact text from Octane Fitness that I've cited repeatedly, and arguing why the case at hand meets that definition, and a comparatively small percentage (maybe zero, but you can't account for knuckleheads) that ignore the Court's definition of "exceptional case" and just try to argue based on the dictionary definition of "exceptional."

      What will be different that the counter motions can no longer cite Brooks Furniture as the reason why fees should not be awarded. Also any appeals will be less likely to overrule district courts when fees have been awarded.

      And, with that, I'm done troll-feeding for today.

      I don't think you understand what the word troll means either.

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
  2. Re:Republicans screw engineers again by Mr+D+from+63 · · Score: 1

    This has both positive and negative impacts on the small guy. He is in better shape to defend his patent against big companies who try to stop him from entering the market via lawsuits. He has a greater risk when defending his patent against inf ringers. If his case is solid, it shouldn't matter.

  3. 400 years for one murder by kruach+aum · · Score: 1, Offtopic

    This has very little to do with the article, but it's something that's always confused my about American law. Why in god's name would you sentence someone to 400 years in prison unless you believe in Highlanders? Similarly, what is the point of consecutive life sentences? Prima facie it seems to be that if one life sentence gets overturned, there's still a couple more to make sure the person stays in prison, but that makes the whole act of overturning a life sentence in the first place a farce.

    1. Re:400 years for one murder by ericloewe · · Score: 1

      Not really, if you're sentenced to life for several different reasons, it doesn't make sense to be set free if one of the reasons turns out to be invalid.

    2. Re:400 years for one murder by tomhath · · Score: 1

      Why in god's name would you sentence someone to 400 years in prison

      So 30 years in the future a parole board doesn't have the option of letting the psychopath loose.

    3. Re:400 years for one murder by funkman · · Score: 2

      Because a life sentence (and other sentences) doesn't mean it will happen for that whole period of time. You can be eligible for parole before the time is up. By having multiple sentences or ridiculous amounts of time, it raises the bar high enough to prevent some people from EVER getting out.

    4. Re:400 years for one murder by SailorSpork · · Score: 1

      You kind of hit on the point. There are certain things that can be done to reduce sentences and overturn rulings. In theory, having multiple life sentences and 400 year punishments should effectively deter any of them from actually allowing certain criminals to get out of prison early. I would assume it would also give the prison wardens some sort of way to rank and prioritize attention paid to inmates, work release programs treatments and privileges, and so forth. The guy serving 10 years for killing his wife in a fit of rage for cheating on him may get to try programs that the guy who did multiple unmentionable things many times over and is serving 10 consecutive life sentences will not. Maybe I'm giving the system too much credit.

      Also, who knows what medical breakthroughs we'll make in the next 400 years?

    5. Re:400 years for one murder by UnknowingFool · · Score: 1

      It was only an example of abuse of discretion. There are some jurisdictions where statutes do not clearly define maximum terms of sentencing. It is up to the discretion of the court. For the most part courts sentence people to more reasonable terms; however, there are occasional judge that goes overboard on sentencing for whatever reason. Sometimes it's an ego; sometimes the defendant makes them angry. Sometimes they want to show their constituents that they are tough on criminals (some jurisdictions elect judges).

      --
      Well, there's spam egg sausage and spam, that's not got much spam in it.
    6. Re:400 years for one murder by kruach+aum · · Score: 1

      Isn't that why "without chance of parole" exists as a sentence modifier?

    7. Re:400 years for one murder by Lord+Crc · · Score: 2

      Why in god's name would you sentence someone to 400 years in prison unless you believe in Highlanders?

      Here in Norway, the maximum sentence is 21 years, and doesn't stack beyond 21 years.

      First-degree murder has a maximum of 21 years. So, you could have two guys in jail, both serving 21 years, one which murdered one person, the other which murdered say 69.

      Now, I believe that taking 69 lives in cold blood is significantly worse than "just" one. However the sentence does not reflect this.

      So while 400 years for one murder is a bit much, sentencing the second guy to 69 * 21 = 1449 years in prison would at least more accurately reflect the crime he committed.

      How many of those years he must serve could be orthogonal, if society wants it that way.

    8. Re:400 years for one murder by kruach+aum · · Score: 1

      It's the same here in the Netherlands as well. A sentence of "life in jail" automatically gets commuted to 30 years, and it's the absolute maximum you can get, no matter how many crimes you've committed. That's why I asked.

    9. Re:400 years for one murder by BUL2294 · · Score: 1

      So, let's say society changes and a future court rules that "life" sentences are "cruel & unusual punishment" (as described by the US Constitution). You'd have chaos as all the lifers who only got life suddenly are released. A defined time, including "effectively life" (e.g. a 150 year sentence for a 71-y/o Bernie Madoff) now would need to be considered on a case-by-case basis--or at least the Supremes would have to come up with some sort of mathematical formula for "effectively life", which they generally don't like to do...

      --
      Windows 3.1x calc: 3.11 - 3.10 = 0.00
    10. Re:400 years for one murder by ZorglubZ · · Score: 2

      Almost, but not quite, true. In Norway, you get your sentence of e.g. 21 years imprisonment, then there's forvaring (translates to something like custodial sentence), which means you cannot be released until a board deems you to be rehabilitated. This can mean that you may get out of jail after 2/3rds of the sentence, i.e. 14 years (unless there's a different minimum specified), if the board thinks you've understood the seriousness of the crime and are remorseful; if they don't think so, you're stuck.

    11. Re:400 years for one murder by kruach+aum · · Score: 1

      No, it's not. Look at the Dutch wikipedia for levenslange gevangenisstraf.

    12. Re:400 years for one murder by kruach+aum · · Score: 1

      But a government site says otherwise. Oh well.

    13. Re:400 years for one murder by Lord+Crc · · Score: 1

      I deliberately left out "forvaring" as it's not intended to be a punishment. It's a means to keep people who are deemed too dangerous off the streets.

      My point was that perhaps the punishment should fit the crime, so to speak, even if the resulting number of years sound a bit silly.

  4. Re:Republicans screw engineers again by Kenja · · Score: 1

    You are assuming the small guys defense VS the big guys lawsuit has anything to do with the legitimacy of the bug guys claim. This is almost never the case.

    --

    "Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
  5. Re:Republicans screw engineers again by Nemesisghost · · Score: 1

    You sir are as others have pointed out a troll. 1st, what the hell does the GOP have to do with this ruling? I get that there are 5 conservative justices vs 4 liberal ones, but that has bitten the GOP in the ass as much as it has helped. So that can't be it. 2nd, this helps a small inventor as much as it hurts him. Like others will point out, if an inventor's claim is strong & not just adding to an old idea then the inventor will be able to file a lawsuit and get not only the infringement payment, but also the law suit fees. On the other hand, if a big IP troll comes after a mom & pop hotel b/c they use wireless routers, then they can make sure that they are able to fight the suit w/out having to worry about losing their business to paying for the lawsuit.

  6. Good Job Supreme Court! by Firethorn · · Score: 2

    I'll note that recovery of attorney fees is unlikely against true patent troll companies - they'll just use the standard tricks of using a shell company with no assets on the books, just enough money to pay for their lawyers. Though I've heard of that failing on occasion - there are ways to reach deeper into the shells in cases like this, such as charging the lawyers that brought the suit, the executives of the company(SOMEBODY has to be named), etc....

    But anything that raises the risk of engaging in patent trolling(and similar lawsuits) is a good thing.

    As always, awards should generally be limited to 'reasonable' fees. No spending $1M then charging the other guy for it, when $100k would have been enough...

    --
    I don't read AC A human right
    1. Re:Good Job Supreme Court! by jellomizer · · Score: 1

      I like the idea of a patent. However patents shouldn't be given for everything, only for exceptional creative ideas, having a patent should be so the little guy can stand up to the big guy. However with the tolling going on with these silly patients of lets invent this before someone else does. Turned patents from a force to protect the inventor, or a scam to leach companies and inventors of their earned money.

      If you are little guy the cost of defending yourself is often higher then the payout would be. So you are forced to get bullied by the troll. With this decision, that means if the tolls loose they will get a double expense whammy. So they would probably be more careful on who they want to attack.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    2. Re:Good Job Supreme Court! by Chris+Mattern · · Score: 1

      However patents shouldn't be given for everything, only for exceptional creative ideas,

      That's how it's supposed to work. The basic qualifications for a patent are that it a) be novel, b) be useful and c) be non-obvious. If it's not novel and non-obvious--in other words, creative--it shouldn't be patentable.

    3. Re:Good Job Supreme Court! by Anonymous Coward · · Score: 2, Insightful

      Unfortunately, over the years the USPTO has revised it's evaluation criteria such that:
      'novel' = "nobody has ever explicitly claimed to have done *exactly* this thing in *exactly* this way in patent application before", and
      'non-obvious [to a normally skilled practitioner of the art]' = "the patent evaluator, who has never worked in any field even remotely associated with the patent has never seen *exactly* this method discussed in a prior patent application".

  7. Re:Republicans screw engineers again by Mr+D+from+63 · · Score: 1

    I am not sure I understand your point. There certainly will be many cases where this ruling does not apply. I certainly was only speaking to the cases where it does apply. If it never applies, none of this matters to begin with.

  8. Re:Republicans screw engineers again by pubwvj · · Score: 1

    Speaking as a small inventor I say, YEAH! It is about time this went through. This will protect us from trolls by hurting the trolls.

  9. Re:Republicans screw engineers again by Wdomburg · · Score: 1

    Since when was a Supreme Court ruling "the Republicans"? Especially in a unanimous vote?

    And the knife cuts both way here. Not only would this make it riskier for a small inventor to assert patent infringement, but it protects the small inventor from being targeted with frivolous infringement claims. The latter strikes me as a far more common occurrence.

    And in the former case, the individual only incurs risk if they press a claim that is exceptionally weak or concerns an exceptionally weak patent. In which case, good. They should lose everything.

  10. Re:Because lawyers in legislatures have so by PopeRatzo · · Score: 1

    e used to have simple laws for things like murder with clear-cut sentences (i.e. death, "life", 40 years, etc). Over the decades, however, the legal class (actually both the lawyers in robes who sit on the bench, and the lawyers who get elected to legislatures) have added all sorts of loopholes and modifiers.

    Here, let me help you with your rant:

    http://youtu.be/j2zlPNGuPbw

    --
    You are welcome on my lawn.
  11. Re:Because lawyers in legislatures have so by wisnoskij · · Score: 1

    Most of which is probably a good idea.
    Most of the time you land in jail because of a series of bad judgements, not because you have proven themselves to be irredeemably evil.

    99% of young men who commit a life sentence offence should eventually be rehabilitated and let back into society. 15/30 years of a long time, there is no reason to believe that that person is at all the same as the one you locked up.

    --
    Troll is not a replacement for I disagree.
  12. Re:Republicans screw engineers again by NemosomeN · · Score: 1

    You can only lose on a procedural technicality if you are the Plaintiff, as that would result in the case being dismissed. Also, you don't appear to understand shell companies, or how they work, or what they can and can't protect you from.

    --
    I hate grammar Nazi's.