04 May 2014

Law in Plain English: Octane Fitness v. Icon Health and Fitness

This is one in a series of posts designed to describe court decisions in plain English. For more detail and background on the legal issues, see the link to the case below. For similar posts, click here.

SCOTUSblogOctane Fitness v. Icon Health and Fitness (see Highmark Inc. v. Allcare Management Systems, Inc. for another case that discusses the same issue).

Argument: Feb 26 2014 (Aud.)

Internal emails show ICON's  tactics in using a old patent to go after a smaller start-up.
Background: ICON Health and Fitness filed a complaint against Octane Fitness alleging that Octane's Q45 and Q47 elliptical machines infringed on ICON's patent.  The patent claims at issue focus on the "linkage system" connecting the foot rail to the frame via the "stroke rail." The District Court concluded that the "stroke rail" and "means for connecting" limitations were absent in the Q45 and Q47 machines and granted summary judgment of noninfringement. The District Court ruled, pursuant to 35 U.S.C. § 285, that the case was not "exceptional" (§ 285 provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party"). The District Court, citing the line of Federal Circuit cases holding that in the absence of litigation misconduct, fees may only be awarded if the allegations are both 1) objectively baseless and 2) there is clear and convincing evidence of subjective bad faith; found that neither prong was met. The Federal Circuit affirmed.

Issue: The question before the Court is whether the Federal Circuit’s promulgation of a rigid and exclusive two-part test for determining whether a case is “exceptional” under 35 U.S.C. § 285 improperly appropriates a district court’s discretionary authority to award attorney fees to prevailing accused infringers in contravention of statutory intent and this Court’s precedent, thereby raising the standard for accused infringers (but not patentees) to recoup fees and encouraging patent plaintiffs to bring spurious patent cases to cause competitive harm or coerce unwarranted settlements from defendants.

Holding: In a 9-0 decision, the Supreme Court ruled that the Brooks Furniture framework that the Federal Circuit relied upon to determine exceptional cases is unduly rigid and impermissibly encumbers the statutory grant of discretion to district courts. District courts may determine whether a case is exceptional in the case-by-case exercise of their discretion, considering the totality of the circumstances.
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