(Photo by Diego M. Radzinschi)
Litigants have filed briefs in the U.S. Court of Appeals for the Federal Circuit to reargue an important patent decision in a Texas case.
The development comes after the U.S. Supreme Court rejected the Federal Circuit’s de novo review of a Fort Worth federal judge’s decision. The high court instead granted trial court judges more discretion in determining whether a claim is “baseless” and thus allows for the statutory award of the prevailing party’s attorney fees.
But trial court judges in the Lone Star State’s famous Eastern District of Texas, which is home to the nation’s busiest patent docket, aren’t showing much inclination to exercise their prerogative to find cases “exceptional” under the Supreme Court’s April 29 decision in Highmark v. Allcare Health Management System, said a Texas patent attorney who has analyzed the decision’s recent impact.
In Highmark, a case originally appealed out of the Northern District of Texas, Senior U.S. District Judge Terry Means granted summary judgment in favor of an alleged patent infringer and awarded nearly $6 million in attorney fees after finding that Allcare had maintained infringement claims against Highmark “well after such claims had been shown by its own experts to be without merit.”
The Federal Circuit partly affirmed and partly reversed Means’ decision after reviewing his exceptional case finding de novo. The Federal Circuit ruled that none of Allcare’s conduct warranted an award of attorney fees.
In a unanimous decision, the Supreme Court reversed and vacated the Federal Circuit’s rulings in Highmark, remanding the case to the Federal Circuit. The high court found that the Federal Circuit should give more deference to trial courts that make exceptional case findings—decisions that are not suitable for de novo review.
Parties submitted briefs to the Federal Circuit last month; Highmark urged the Federal Circuit to confirm the attorney fee award, and Allcare argued that Means abused his discretion in the case.
Peter Corcoran, an East Texas solo patent attorney who clerked for former Federal Circuit Chief Judge Randall Rader, said that Eastern District federal judges have recently cited three times either Highmark or Octane Fitness v. ICON Health & Fitness, a companion ruling in which the high court found that the Federal Circuit’s rules for determining what constitutes exceptional case findings under 35 U.S.C. §285 were too strict. Two Eastern District judges declined to award defendants attorney fees under §285, he said, and one judge cited both the Highmark and Octane Fitness opinions in suggesting that the defendants reconsider their claims construction position if they were an “attempt to impose costs on plaintiff.”
“Based on these initial decisions, much to their dismay, patent infringement defendants, at least in the Eastern District of Texas, may continue to see their motions for attorney fees be denied, even under the relaxed standard proscribed in Octane Fitness,” Corcoran said. “In fact, at least Eastern District of Texas judges may become more comfortable with granting attorney fees and costs to plaintiffs if the Federal Circuit adheres to the Supreme Court’s instructions and provides deference to the judges’ rulings under Highmark.”
“It is too early to predict how the judges in the other Texas federal courts will apply Octane Fitness to their exceptional-case rulings,” Corcoran said. “But, more than likely, those judges will continue their historic practice of ruling on such motions, except now with more ease.”
Cynthia Kernick a partner in the Pittsburgh office of Reed Smith who represents Highmark, declined to comment. Erik Puknys, a partner in the Palo Alto office of Finnegan, Henderson, Farabow, Garrett & Dunner who represents Allcare, also declined to comment.