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For purposes of awarding attorney's fees under 35 U.S.C.S. § 285, an “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position, considering both the governing law and the facts of the case, or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances. As in the comparable context of the Copyright Act, there is no precise rule or formula for making these determinations, but instead equitable discretion should be exercised in light of the considerations the United States Supreme Court has identified.
The Patent Act's fee-shifting provision authorized district courts to award attorney's fees to prevailing parties in “exceptional cases.” In Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381, the Federal Circuit defined an “exceptional case” as one which either involves “material inappropriate conduct” or is both “objectively baseless” and “brought in subjective bad faith.” Brooks Furniture also required that parties establish the “exceptional” nature of a case by “clear and convincing evidence.” Respondent ICON Health & Fitness, Inc., sued petitioner Octane Fitness, LLC, for patent infringement. The District Court granted summary judgment to Octane. Octane then moved for attorney's fees under § 285. The District Court denied the motion under the Brooks Furniture framework, finding ICON's claim to be neither objectively baseless nor brought in subjective bad faith. The Federal Circuit affirmed.
Was the Brooks Furniture framework consistent with the statutory text?
The Supreme Court held that the Brooks Furniture framework was unduly rigid and impermissibly encumbered the statutory grant of discretion to district courts. Section 285 imposed only one constraint on district courts' discretion to award attorney's fees in patent litigation: the power was reserved for "exceptional" cases. An "exceptional" case was simply one that stood out from others with respect to the substantive strength of a party's litigating position or the unreasonable manner in which the case was litigated. District courts were to consider the totality of the circumstances in determining whether a case was "exceptional." It was not necessary for a district court to find independently sanctionable conduct or both objective baselessness and subjective bad faith in order to justify a fee award, nor was clear and convincing evidence required.