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This is a landmark decision. The patent statute has always allowed courts to compel losers to pay winners' attorneys' fees, but only in fairly rare circumstanc
by jaredhansen 12y ago
This is a landmark decision.
The patent statute has always allowed courts to compel losers to pay winners' attorneys' fees, but only in fairly rare circumstances. The specific term used is that the case must be "exceptional" - which until yesterday, meant something very, very narrow, and fee awards were consequently very rare.
Yesterday's decision in Octane Fitness (along with the companion case Highmark v. Allcare, also decided yesterday), did three useful things for patent defendants:
1) Ended the requirement that fees can only be awarded when the case is BOTH "so unreasonable that no reasonable litigant could believe it could succeed" AND is actually known by the plaintiff to be baseless.
2) Ended the requirement that defendants prove by "clear and convincing evidence" that the case is "exceptional" (saying instead that there's "no specific evidentiary standard" defendants must meet).
3) Clarified the standard for appellate review of fee awards, finding that district court awards can be overturned only for "abuse of discretion"
As a result, district court judges have substantially more latitude to grant fee awards in patent cases, combined with significantly reduced fear of reversal. The outcome should be immediate, and will have a chilling effect on new frivolous litigation -- while simultaneously providing an incentive to current frivolous plaintiffs to drop their cases sooner or on better terms.
BTW, one other thing to note: most of the chatter is about non-practicing entities, aka patent trolls -- but the decision isn't limited to cases brought by NPEs. Frivolous patent plaintiffs, even if they're active competitors in the market, are in a much weaker position thanks to this decision.
This is a great step toward a more sane patent system, and many startup founders should be delighted.
- colechristensen 12y agoIn addition it should motivate more defendants to go to trial instead of settling which should (hopefully) speed the judicial changes to the patent system and gain more legislative attention to the issue.
- WildUtah 12y agoTrolls still always have the option of filing in East Texas. As long as they can rely on a nest of less than objective judges eager to serve troll interests, they don't have to worry about fee awards. The decision left a lot of power to the discretion of district judges so a single predictably biased district can corrupt the whole national system. The Rep. Goodlatte bill that was passed by the house would make fee awards routine and then East Texas judges would have to justify not awarding fees. That would be a much better reform. The Leahy senate bill will probably be a very tiny change in the existing language because Leahy's trial lawyer supporters don't want to loser pays principle to gain a foothold. Leahy -- and most trial lawyers -- have said that patent cases are an exception the the general principle, but they aren't ready to let any wholesale reform happen on this point. Usually trial lawyers argue that loser pays disadvantages vulnerable victims; most federal civil plaintiffs are much poorer and smaller than defendants. In patent cases, the opposite is true; patents are the tools of trolls and big companies to extort and destroy innovative small businesses. Most patent cases are brought by established wealthy troll agglomerators against companies that could not conceivably afford a full trial. See here for how biased cases are to E Texas already: http://patentlyo.com/patent/2014/04/district-courts-patent.html http://patentlyo.com/patent/2014/04/district-courts-patent.h...
- brownbat 12y agoJudges in Texas are elected. (Which is pretty ridiculous considering prosecutors, defenders, and litigants can contribute to judicial campaigns... during the course of a trial.) I'm surprised no one has run as a Judge in East Texas while soliciting campaign contributions from tech companies.
- koenigdavidmj 12y agoPatent cases are handled in federal court, so they are appointed, just like in other federal courts. This is the infamous East Texas court: http://en.wikipedia.org/wiki/United_States_District_Court_for_the_Eastern_District_of_Texas http://en.wikipedia.org/wiki/United_States_District_Court_fo...
- brownbat 12y agoUgh, stupid mistake, I feel like a 1L again. Thanks for correcting the record. :)
- deleted 12y ago[deleted]
- deleted 12y ago[deleted]
- uuid_to_string 12y agoAren't a couple of those "less than objective" judges coming up on retirement? What then?
- ghshephard 12y agoRegarding East Texas - doesn't it make sense to have patent lawsuits judged by those with a lost of experience in that field? I'm genuinely curious - is there any evidence to suggest, that other than efficiency, East Texas is more likely to find in favor of the Plaintiff?
- 12y ago
- rayiner 12y agoThis is an excellent summary of the Octane Fitness decision. I'll quote two bits of relevant language that lay out the standards the Supreme court has established. "Under the standard announced today, a district court may award fees in the rare case in which a party's unreasonable conduct-while not necessarily independently sanctionable-is nonetheless so 'exceptional' as to justify an award of fees." (Slip. Op. at 5). "Something less than 'bad faith,' we believe, suffices to mark a case as 'exceptional.'" (Slip. Op. at 6). In other words, the court interpreted section 285 to allow fee-shifting in cases that are not so weak that the court would be justified in sanctioning the plaintiffs under Rule 11 for pursuing a frivolous claim, or in cases where plaintiffs use tactics that do not quite rise to the level that would be sanctionable for bad faith. However, the Court did not give as much guidance to lower courts as one might have hoped. The Court stated that a case that is weak to a degree short of "sanctionable" may be the subject of fee shifting. It has not said how much stronger than "sanctionable" a case can be before awarding fees is an abuse of discretion on the part of the District Court. This is a question that will probably be raised to and resolved by the Federal Circuit in the coming years.
- acgourley 12y agoI just want to point out that the party who lost (Icon) is not a NPE. Although they litigate extremely aggressively against other fitness players.