January 11, 2016 Articles

Fee-Shifting Decisions Can Trigger USPTO Ethics Investigations

The cost of Octane is that any court or media report of misconduct alerts the USPTO to a potential ethics violation

By Michael E. McCabe Jr.

On April 29, 2014, the Supreme Court issued landmark decisions in Highmark Inc. v. Allcare Health Management System, Inc., 134 S. Ct. 1744 (2014), and Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014). The Court's opinions fundamentally altered the patent litigation playing field by significantly easing the test for a prevailing party to obtain an award of attorney fees in a patent case under 35 U.S.C. § 285. Indeed, some commentators have observed, based on analysis of publicly available records, that the Court's rulings in Octane and Highmark have already resulted in a statistically significant increase both in the number of attorney fees motions filed in patent cases as well as in the rate of success by the party seeking to recover fees. See, e.g., Hannah Jiam, "Fee-Shifting and Octane: An Empirical Approach Toward Understanding 'Exceptional,'" 30 Berkeley Tech. L.J. (forthcoming 2015).

Although the Court's decisions in Octane and Highmark were predicated on "exceptional case" findings in patent litigation, the Court noted in dicta that the same "exceptional case" standard for attorney fees also applies, pursuant to 15 U.S.C. § 1117(a), in cases filed under the Lanham Act. See Octane, 134 S. Ct. at 1756. Indeed, at least two circuit courts have adopted the Octane standard in actions under the Lanham Act. See Georgia-Pacific Consumer Prods. LP v. Von Drehle Corp., 781 F.3d 710, 721 (4th Cir. 2015); Fair Wind Sailing, Inc. v. Dempster, 764 F.3d 303, 315 (3d Cir. 2014).

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