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The IP Record - 2014 43
IPO’s 4-Star Federal Circuit Summaries™
Highmark Inc. v. Allcare Management Systems, Inc. 12-1163
U.S. SUPREME COURT HOLDS ABUSE OF The Supreme Court held abuse of discretion, not
DISCRETION PROPER STANDARD FOR de novo, was the proper standard of review for
REVIEWING EXCEPTIONAL CASE FIND- all aspects of a district court’s exceptional case
INGS FOR FEE SHIFTING — April 29, 2014 determination. Although questions of law could
— In an opinion by Justice SOTOMAYOR, the be relevant in some cases to the inquiry under
U.S. Supreme Court vacated a Federal Circuit section 285, that inquiry was “rooted in factual
de novo decision regarding an exceptional case determinations.” The holding in Octane dictated
fnding under Patent Act section 285, which cov- this outcome. “Because [section] 285 commits
ers attorney fee shifting to prevailing parties. the determination whether a case is ‘exceptional’
Allcare’s patent claimed a method for managing to the discretion of the district court, that decision
health care, including steps of entering data re- is to be reviewed on appeal for abuse of discre-
garding predetermined treatments and preventing tion.”
payment for treatment until authorized by an in-
surer. The district court found the case exception-
al and awarded attorney’s fees to Highmark. The
Federal Circuit reviewed that fnding de novo,
and overruled it in part.
Octane Fitness v. ICON Health and Fitness 12-1184
U.S. SUPREME COURT DECIDES FED- clear.” The plain and ordinary meaning of ex-
ERAL CIRCUIT’S TWO-PART TEST FOR ceptional meant a case “that stands out from oth-
EXCEPTIONAL PATENT CASE FOR AT- ers with respect to the substantive strength of a
TORNEY FEE SHIFTING “TOO RIGID” — party’s litigation position (considering both the
April 29, 2014 — In an opinion by Justice SO- governing law and the facts of the case) or the
TOMAYOR, the U.S. Supreme Court overruled unreasonable manner in which the case was liti-
a Federal Circuit decision that the case was not gated.” The determination whether to fnd a case
exceptional under Patent Act Section 285, which exceptional was within the district court’s discre-
covers attorney fee shifting to prevailing parties. tion, on a case-by-case basis, considering the to-
ICON claimed an elliptical exercise machine. tality of the circumstances. The Supreme Court
The district court granted summary judgment also rejected the Federal Circuit’s requirement
of no infringement, but denied Octane’s motion that parties establish their entitlement to attorney
for attorney’s fees. The Federal Circuit upheld fees by “clear and convincing evidence.” “. . .
the denial of attorney’s fees because ICON’s suit patent –infringement litigation has always been
was neither objectively baseless nor brought in governed by a preponderance of the evidence
subjective bad faith. standard . . . .”
The Supreme Court held the two-part test was
“overly rigid.” The statutory text was “patently
www.ipo.org
IPO’s 4-Star Federal Circuit Summaries™
Highmark Inc. v. Allcare Management Systems, Inc. 12-1163
U.S. SUPREME COURT HOLDS ABUSE OF The Supreme Court held abuse of discretion, not
DISCRETION PROPER STANDARD FOR de novo, was the proper standard of review for
REVIEWING EXCEPTIONAL CASE FIND- all aspects of a district court’s exceptional case
INGS FOR FEE SHIFTING — April 29, 2014 determination. Although questions of law could
— In an opinion by Justice SOTOMAYOR, the be relevant in some cases to the inquiry under
U.S. Supreme Court vacated a Federal Circuit section 285, that inquiry was “rooted in factual
de novo decision regarding an exceptional case determinations.” The holding in Octane dictated
fnding under Patent Act section 285, which cov- this outcome. “Because [section] 285 commits
ers attorney fee shifting to prevailing parties. the determination whether a case is ‘exceptional’
Allcare’s patent claimed a method for managing to the discretion of the district court, that decision
health care, including steps of entering data re- is to be reviewed on appeal for abuse of discre-
garding predetermined treatments and preventing tion.”
payment for treatment until authorized by an in-
surer. The district court found the case exception-
al and awarded attorney’s fees to Highmark. The
Federal Circuit reviewed that fnding de novo,
and overruled it in part.
Octane Fitness v. ICON Health and Fitness 12-1184
U.S. SUPREME COURT DECIDES FED- clear.” The plain and ordinary meaning of ex-
ERAL CIRCUIT’S TWO-PART TEST FOR ceptional meant a case “that stands out from oth-
EXCEPTIONAL PATENT CASE FOR AT- ers with respect to the substantive strength of a
TORNEY FEE SHIFTING “TOO RIGID” — party’s litigation position (considering both the
April 29, 2014 — In an opinion by Justice SO- governing law and the facts of the case) or the
TOMAYOR, the U.S. Supreme Court overruled unreasonable manner in which the case was liti-
a Federal Circuit decision that the case was not gated.” The determination whether to fnd a case
exceptional under Patent Act Section 285, which exceptional was within the district court’s discre-
covers attorney fee shifting to prevailing parties. tion, on a case-by-case basis, considering the to-
ICON claimed an elliptical exercise machine. tality of the circumstances. The Supreme Court
The district court granted summary judgment also rejected the Federal Circuit’s requirement
of no infringement, but denied Octane’s motion that parties establish their entitlement to attorney
for attorney’s fees. The Federal Circuit upheld fees by “clear and convincing evidence.” “. . .
the denial of attorney’s fees because ICON’s suit patent –infringement litigation has always been
was neither objectively baseless nor brought in governed by a preponderance of the evidence
subjective bad faith. standard . . . .”
The Supreme Court held the two-part test was
“overly rigid.” The statutory text was “patently
www.ipo.org
