The United States Supreme Court ruled in favor of Octane Fitness, LLC on its petition regarding collecting attorneys' fees, making it easier for patent lawsuit winners to secure legal fees from the losing parties and helping to curb unreasonable patent claims that are currently plaguing the courts and legitimate U.S. businesses.
Icon Health & Fitness, Inc. sued Octane for infringing on two of its patents on its elliptical machines – one on electronic heart rate monitoring and one on linkage of the moving pedals. The heart rate claim was so unreasonable that Icon was forced to drop it from the case early in the litigation, and Octane won on the linkage issue and requested reimbursement for $1.8 million in attorneys' fees. The U.S. District Court for the District of Minnesota and the U.S. Court of Appeals for the Federal Circuit both agreed that Icon’s claims were sufficiently weak that a jury trial was not necessary and that summary judgment in Octane’s favor was appropriate. Yet, both found the case was not “exceptional” enough to warrant fees, the standard under 35 USC 285.
In response, Octane filed a petition for certiorari with the U.S. Supreme Court, arguing that this statutory interpretation had become a “rigid and virtually insurmountable test,” and that trial judges should be able to award fees when a patent holder “unreasonably pursues a case having an objectively low likelihood of success” to serve as a deterrent to litigation abuse via groundless lawsuits.
After oral arguments on the petition on Feb. 26, the U.S. Supreme Court overturned the appeals court, and sent the case back to the lower court for reconsideration, in view of the new standard that provides district courts with considerably more discretion to award fees where weak patent claims are asserted. In the unanimous ruling, Justice Sonia Sotomayor wrote, “A case presenting either subjective bad faith or exceptionally meritless claims may sufficiently set itself apart from mine-run cases to warrant a fee award.”
This decision reduces the standard of proof for legal fee reimbursement from “clear and convincing evidence” to a “preponderance of the evidence,” and thereby provides district court judges with more latitude in awarding fees on lawsuits that they think should not have been brought.
“We are thrilled to be in the position of helping relieve the burden of meritless lawsuits on businesses across all industries with this historic decision,” said Dennis Lee, president and CEO of Octane Fitness. ”We take intellectual property very seriously and have spent six years defending against this unjustified allegation.”
Many technology companies, including Apple Inc. and Google Inc., face numerous unwarranted patent lawsuits, and 15 amicus briefs were filed in support of Octane’s petition, including one by the United States Solicitor General’s Office. Apple and Google also pressed the High Court to consider how fees are awarded, and Congress is considering legislation on attorneys’ fees.
The case is Octane Fitness v. Icon Health & Fitness, 12-1184.
