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Patent Litigation Fee-Shifting

By David E. Mixon and Jeremy A. Smith
July 02, 2014

In April, the Supreme Court reshaped the patent litigation landscape with its Octane Fitness, LLC v. Icon Health & Fitness and Highmark, Inc. v. Allcare Health Management System, Inc., rulings. The statute at issue in both rulings was 35 U.S.C. ' 285, which provides that a “court in exceptional cases may award reasonable attorney fees to the prevailing party.” The clear implication is that litigants in patent infringement litigation now have a greater opportunity to recover their attorneys' fees and expenses from adverse parties. These rulings serve as a warning to patent litigants to carefully consider their strategy before initiating continuing litigation under some circumstances.

Fee-Shifting in Patent Litigation

Under 35 U.S.C. ' 285, in exceptional cases a district court may award reasonable attorneys' fees to the prevailing party. Although ' 285 appears to give district courts broad latitude to award fees in patent litigation, the Federal Circuit Court of Appeals had previously established that exceptional cases were either based on litigation-related misconduct or if the litigation was both “(1) brought in subjective bad faith and (2) objectively baseless.” Brooks Furniture Mfg. v. Dutailier, Inc., 393 F.3d 1378 (Fed. Cir. 2005)

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