The US Supreme Court [official website] heard oral arguments [day call, PDF] Wednesday in two cases. In Octane Fitness v. Icon Health and Fitness [transcript, PDF], the court is considering whether the US Court of Appeals for the Federal Circuit's [official website] promulgation of a rigid and exclusive two-part test for determining whether a case is "exceptional" under 35 USC § 285 [text] improperly appropriates a district court's discretionary authority to award attorney fees. Icon Health and Fitness sued Octane Health [corporate websites] over alleged patent infringement involving an elliptical exercise machine. Octane prevailed in federal district court but was denied attorneys' fees [opinion, PDF] by the Federal Circuit Court, which affirmed that the suit was not "exceptional" because it held that, absent litigation or patent misconduct, attorneys fees would only be granted if a patent holder brought an "objectively baseless" claim in "subjective bad faith." Octane petitioned [text, PDF] for certiorari, and the Supreme Court granted the petition in October.
In Highmark v. Allcare Health Management Systems [transcript, PDF], the Supreme Court is considering whether a district court's finding that a patent case is exceptional based on its judgment that a suit is "objectively baseless" is entitled to deference in higher courts. Allcare Health Management Systems notified Highmark [corporate websites] of patent infringement concerning a method of data entry and management used in medical treatment situations. Highmark then sought a declaratory noninfringement judgment and Allcare counterclaimed. Highmark prevailed in the district court and then moved to be granted attorneys' fees for an exceptional cases. The district court granted attorneys' fees for two of the claims, but the Federal Circuit Court reviewed the claims de novo [opinion, PDF] and reversed one of awards. The Supreme Court granted certiorari the same day as it did for Icon Health and Fitness v. Octane Fitness to determine what level of review the appellate court should have granted the claim.