Octane Fitness v. ICON Health & Fitness

PETITIONER: Octane Fitness, LLC
RESPONDENT: ICON Health & Fitness, Inc.
LOCATION: Octane Fitness, LLC

DOCKET NO.: 12-1184
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT:

CITATION: 572 US (2014)
GRANTED: Oct 01, 2013
ARGUED: Feb 26, 2014
DECIDED: Apr 29, 2014

ADVOCATES:
Carter G. Phillips - For the respondent
Rudolph Telscher - For the Petitioner

Facts of the case

ICON Health & Fitness, Inc. (ICON) manufactures and sells exercise equipment throughout the United States. In 2000, ICON obtained U.S. Patent No. 6,019,710 (the '710 patent) for a system designed to link parts in elliptical exercise machines. In 2010, ICON filed a complaint against another manufacturer and seller of exercise equipment, Octane Fitness (Octane), and claimed that Octane's elliptical design infringed upon the '710 patent.

The federal district court held that Octane's design did not violate ICON's '710 patent. ICON appealed to the U.S. Court of Appeal for the Federal Circuit. Octane argued that ICON's lawsuit was not based on any real patent infringement, but instead aimed at hampering upstart competitors with expensive, frivolous lawsuits. Therefore, Octane asked the court to apply a patent law attorney fees statute, a statute that awards attorney fees when the plaintiff's suit is found to be "exceptional." The appellate court affirmed the lower court's decision, but found that ICON had not acted "exceptionally" under the statute.

Question

Did the appellate court's interpretation of "exceptional" under the attorney fees statute improperly raise the standard for accused patent infringers to recoup attorney fees and encourage potential plaintiffs to bring frivolous patent lawsuits that cause competitive harm?

Media for Octane Fitness v. ICON Health & Fitness

Audio Transcription for Oral Argument - February 26, 2014 in Octane Fitness v. ICON Health & Fitness

Audio Transcription for Opinion Announcement - April 29, 2014 in Octane Fitness v. ICON Health & Fitness

Justice Sotomayor has the opinion of the Court in two cases this morning.

The first opinion is Octane Fitness v. Icon Health and Fitness, No. 12-1184.

The respondent Icon Health and Fitness sued the petitioner, Octane Fitness, for patent infringement.

After Octane successfully defended the suit, it moved for attorney's fees under the Patent Acts fee shifting provision, 35 U.S.C. Section 285.

Section 285 provides that ?the court in exceptional cases may award reasonable attorney fees to the prevailing party."

The Federal Circuit has held that a case is exceptional under Section 285 in two limited circumstances.

First, when there has been some material inappropriate litigation related misconduct or second, when the litigation is both brought in subjective bad faith and objectively baseless.

We reject the standard as inconsistent with the statutory text.

The text of Section 285 is inherently flexible.

It imposes only one constraint on the District Court's discretion to award attorney's fees in patent litigation.

The power is reserved for exceptional cases because the Patent Act does not define the term "exceptional," we interpreted in accordance with its ordinary meaning.

The word "exceptional" means uncommon, rare, or not ordinary.

We therefore hold that in exceptional cases simply one that stands out from others with respect to the substantive strength of a party's litigating position or the unreasonable manner in which the litigation was litigated.

District Courts may determine whether a case is exceptional in the case-by-case exercise of their discretion, considering the totality of the circumstances as the opinion explains in greater detail, the Federal standard is -- Federal Circuit standard is overly rigid and impermissibly encumbers a broad statutory grant of discretion to District Courts.

We also reject the Federal Circuit's requirement that patent litigants establish their entitlement to fees under Section 285 by clear and convincing evidence.

Section 285 demands a simple discretionary inquiry.

It imposes no specific evidentiary burden, much less such a high one.

The judgment of the United States Court of Appeals for the Federal Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.

This opinion is for unanimous court with the exception of Justice Scalia who does not join footnotes one to three.