Rudy Telscher ()
Don Dunner isn’t the only lawyer making his first-ever U.S. Supreme Court appearance this week as the justices take up the question of fee shifting in patent cases.
Rudy Telscher of the IP boutique Harness Dickey & Pierce will stand before the high court for the first time in his career on Wednesday. He’s set to argue on behalf of Octane Fitness, a small exercise equipment company, in a case with major ramifications for the patent bar.
Telscher could have hardly chosen a more public case for his Supreme Court debut. The appeal, Octane Fitness v. Icon Health and Fitness, is among the most closely watched matchups at the court this term, especially for patent lawyers. The case will be heard back-to-back with another high-profile fee-shifting challenge, Highmark v. Allcare Health Management, which will also feature arguments by a Supreme Court newcomer, IP veteran Donald Dunner of Finnegan, Henderson, Farabow, Garrett & Dunner. And to top it all off, Telscher’s opposing counsel is Sidley Austin’s Carter Phillips, who will be arguing his 77th case before the Supreme Court—more than any lawyer currently in private practice.
Telscher insists that he’s not intimidated. “This is the Supreme Court, the Super Bowl of law, so I fully expect to face talented opposing counsel,” Telscher said. “But I am ready.”
Telscher was once dubbed “an intellectual property slugger” for beating Major League Baseball in a publicity rights battle in his hometown of St. Louis, and again at the U.S. Court of Appeals for the Eighth Circuit. In that case, the appeals court concluded that Telscher’s client, a company that produced fantasy baseball products, had a First Amendment right to use the names, performance and biographical data of professional baseball players. The Supreme Court denied MLB’s petition for cert in 2008, handing Telscher a total victory.
Octane is a very different kind of lawsuit. The case stems back to 2008, when Octane was sued for patent infringement by a larger competitor—ICON Health and Fitness Inc. Telscher won the case for Octane on summary judgment in U.S. district court in Minnesota, and the ruling was affirmed last year by the U.S. Court of Appeals for the Federal Circuit.
Both courts, however, denied Telscher’s request to award Octane more than $1.3 million in attorney fees that it spent defending the case. Telscher argued that the case qualified as “exceptional” under 35 U.S.C. § 285, which allows for the awarding of attorney fees in patent cases. But the courts held to the Federal Circuit’s strict standard, which says a case is only exceptional when it meets two criteria: that the litigation is brought in subjective bad faith, and the claims are objectively baseless.
That, Telscher says, makes it almost impossible for successful defendants to recover attorney fees under almost any circumstances. So on Wednesday, he will argue that the Federal Circuit’s interpretation of the standard for awarding attorney fees in patent litigation is too strict.
“Since 2005, the number of lawsuits in which attorney fees have been both awarded and affirmed is zero,” Telscher told the Litigation Daily. “There’s clearly something wrong with that, which is why we have amicus briefs from some of the largest tech companies in the world—some that are often plaintiffs as well as defendants in patent cases.”
Indeed, big-name companies ranging from General Electric Co. to Yahoo! Inc. to Google Inc. have filed amici briefs in support of Octane, as have 30 individual states. The U.S. Department of Justice is also supporting Octane’s position, and will argue Wednesday as an amicus in the case.
The concept of fee shifting in patent cases has generated growing interest in recent years, especially as a means to combat patent trolls. The White House has recommended that Congress establish legislation that gives judges more discretion in awarding fees to prevailing parties in patent disputes. The Innovation Act passed by the U.S. House of Representatives in December loosens the requirements for fee shifting, as does a version of the bill pending in the U.S. Senate.
Even Federal Circuit Chief Judge Randall Rader, who sat on the panel that denied Octane attorney fees, spoke out about the fee-shifting provision in an op-ed in The New York Times, suggesting that federal judges should apply §285 more frequently to discourage troll-like behavior.
When Telscher makes the case for Octane on Wednesday, he will likely try to differentiate his case from the controversial fee shifting sections of patent reform legislation pending in Congress. His challenge will be to convince the justices that district courts should have discretion to award fees when a patent holder pursues a case with an objectively high chance of failure.
Aside from the usual immersion in the facts and in case law, Telscher has been preparing for the day by attending and participating in moot courts. He said he also planned to attend one or two Supreme Court arguments as a spectator this week so he can see the court in action—something he has never done.
From the moment he took the case for Octane, Telscher said, he was convinced that ICON’s lawsuit was frivolous and that he would prevail. He recognized, however, that given the statistics, it would be hard to win attorney fees.
“I expected that even if we won attorney fees at the district court level, we’d be reversed,” he said. “So I was thinking Supreme Court back then and wrote my briefs with that in mind.”
This week Telscher’s careful planning will be tested.
“I know this case,” he said. “I’m confident that I will go before the court as prepared as I can be.”