Last week’s Supreme Court decision in Octane Fitness, LLC v. ICON Health & Fitness, Inc. broadened the “exceptional case” rubric used to determine when an award of attorney fees is appropriate in a district court patent dispute. On the same day, in Highmark Inc. v. Allcare Health Mgmt. Sys., the Court re-calibrated the level of deference the CAFC must accord to such determinations on appeal. It remains unclear if improving the odds of securing fees in a legal sense will translate to practical impact for patent litigants. That is, given the historic disinclination of district court judges to award fees, especially in certain plaintiff friendly jurisdictions, whether these decisions will really advance the needle for accused infringers. What is certain, however, is that accused infringers will be far more active in seeking such relief going forward, and may seek to creatively leverage PTAB patent challenge proceedings to support their case.
Can an ongoing PTAB proceeding help distinguish an “exceptional” case?
Granted, almost every litigation is now accompanied by a PTAB post grant patent challenge. That, coupled with the fact that the PTAB historically accepts most such requests, would not seem to be a very compelling demonstration of an exceptional case— a PTAB Trial Order is anything but atypical. That said, there are situations in which an Order or completed PTAB proceeding might be creatively leveraged post-Octane.
1. PTAB Trial Order (claim construction)
Certainly a PTAB Trial Order that fails to reach a broad infringement read of a patentee under the broadest reasonable interpretation would be strong evidence of an unreasonable position.The CAFC has found such findings of the USPTO compelling evidence in the past. Likewise, determinations of insufficient means-plus-function-structure in the PTAB Trial Order, or maybe even a 101 rejection in a CBM/PGR could be argued as demonstrating a lack of objectivity for some patentees insistent on continued litigation.
2. Completed PTAB Challenge.
If the PTAB ultimately cancels the claims of the challenged patent, and the patentee opposed an earlier stay pending PTAB review, it might be argued that the patentee assumed the risk of an attorney fee award by forging ahead. That is moving forward with an expensive trial was objectively unreasonable after three technically trained judges determined that the asserted patent was reasonably likely to be proven unpatentable. (Perhaps this argument will hinge on 102 grounds, or art that was known to the patentee but never disclosed to the PTO). For that matter, might creative district court judges force the patentee to stipulate to an award of attorney fees in exchange for denying a motion to stay?
While any one PTAB development alone may not be enough to push a given case into the exceptional realm, such developments might tip the scales with the right litigation history and/or bad actor patentee. Given the backlash against NPEs, these disputes will almost certainly be the most likely test cases. Time will tell.