Yesterday, the U.S. Supreme Court heard arguments in two related patent cases, Octane Fitness LLC v. ICON Health & Fitness LLC and Highmark Inc. v. Allmark Health Management Systems. Both cases have to do with the standard for fee-shifting in patent cases, but it’s the Octane case that is the most relevant.
The statute, 35 U.S.C. § 285, says that,
The court in exceptional cases may award reasonable attorney fees to the prevailing party.
In the Octane case, the question is pretty simple: when is a case “exceptional”? It turns out that the answer isn’t so simple. As the New York Times reported, the Justices were all over the map in trying to figure out how to draw the line. They really struggled in trying to understand what Congress intended.
One argument we’ve heard against patent reform is that the Supreme Court was going to take up the whole fee-shifting issue and might fix everything. After yesterday, I wouldn’t bet on the Court being able to fix fee-shifting or even improve the status quo.
The fact is, we need legislation, a clearer statute that makes it less profitable to be a patent An entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms.. (The Cornyn and Hatch bills both do this.)
So keep going, Senate!