patent trolls

Issues

Respondent Allcare Health Management Systems, Inc., owns U.S. Patent No. 5,301,105, which covers a method of data entry and management used in the context of medical treatment. In 2002, Allcare notified Petitioner Highmark, Inc., a medical insurance provider, that Highmark was infringing on Allcare’s patent. Highmark sought a declaratory judgment of noninfringement; Allcare counterclaimed for infringement. After the district court granted summary judgment in Highmark’s favor, Highmark moved for an award under 35 U.S.C. § 285, which grants attorneys’ fees for “exceptional cases.” Though the district court granted the award for two of Allcare’s claims, the Federal Circuit Court of Appeals reviewed the claims de novo and reversed one of them. The Supreme Court granted certiorari to determine the scope of deference given to district courts to find “exceptional cases.” The ruling in this case, in tandem with another case before the Court, Octane Fitness, LLC v. Icon Health & Fitness, Inc., will impact how long and how readily litigants may pursue future patent cases.

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Issues

Respondent Allcare Health Management Systems, Inc., owns U.S. Patent No. 5,301,105, which covers a method of data entry and management used in the context of medical treatment. In 2002, Allcare notified Petitioner Highmark, Inc., a medical insurance provider, that Highmark was infringing on Allcare’s patent. Highmark sought a declaratory judgment of noninfringement; Allcare counterclaimed for infringement. After the district court granted summary judgment in Highmark’s favor, Highmark moved for an award under 35 U.S.C. § 285, which grants attorneys’ fees for “exceptional cases.” Though the district court granted the award for two of Allcare’s claims, the Federal Circuit Court of Appeals reviewed the claims de novo and reversed one of them. The Supreme Court granted certiorari to determine the scope of deference given to district courts to find “exceptional cases.” The ruling in this case, in tandem with another case before the Court, Octane Fitness, LLC v. Icon Health & Fitness, Inc., will impact how long and how readily litigants may pursue future patent cases.

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Issues

Icon Health & Fitness sued Octane Health, alleging patent infringement over an elliptical exercise machine. After Octane won in federal district court on summary judgment, it moved for an award of attorney’s fees, arguing that the suit was an “exceptional case” under 35 U.S.C § 285. The district court denied the motion, and the Federal Circuit affirmed. In this case, the Supreme Court may determine the scope of a district court’s discretion in granting fees under § 285. Although affirming the Federal Circuit’s standard would prevent attorney fees in most instances, it would follow the usual American rule that each party generally bears its own costs of litigation. However, if the Supreme Court decides to broaden the lower courts’ discretion, this may limit frivolous or predatory patent suits. Icon argues that the Supreme Court should affirm the Federal Circuit’s two-part test because it comports with the legislative intent behind § 285 and prior judicial interpretation of that provision. Octane argues that the Supreme Court should overturn the Federal Circuit’s test because the test is not party neutral and violates principles of statutory construction.

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