Making the Nonprevailing Party Pay: Statistics on Exceptional Cases Four Years after Octane and Highmark

By R. Benjamin Cassady, Lionel M. Lavenue, and Sean D. Damon

Published in Landslide Vol. 11 No.2, ©2018 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Four years ago, in two decisions that issued on the same day, the Supreme Court confronted the ever-increasing concerns regarding frivolous patent infringement suits by making it easier for prevailing parties to recover attorney fees in “exceptional” cases under the patent law fee-shifting statute, 35 U.S.C. § 285. The first decision, Octane Fitness, LLC v. ICON Health & Fitness, Inc.,1 significantly relaxed the criteria for determining when district courts adjudicating patent cases may award attorney fees to the prevailing party. Under the new standard, 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.”2 Now, a prevailing party need only prove the case is exceptional by a preponderance of the evidence, rather than by clear and convincing evidence. The second decision, Highmark Inc. v. Allcare Health Management System, Inc.,3 revised the standard of review for attorney fees decisions. The Supreme Court ruled that attorney fees awards under § 285 should be reviewed for an abuse of discretion, not de novo.

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