The “exceptional” patent case just became more common. On April 29, in Octane Fitness v. Icon Health & Fitness, No. 12-1184, and Highmark v. Allcare Health Management Systems, No. 12-1163, the Supreme Court relaxed the standard for deeming a patent infringement case “exceptional” and for awarding attorney fees to the prevailing party.
In patent infringement cases, the common law “American rule” is generally followed, i.e., each party bears his own expenses and attorney fees. However, under the statutory fee-shifting provision of 35 U.S.C., section 285, a court may award to the prevailing party his attorney fees if the court finds that the case is “exceptional.” The Court of Appeals for the Federal Circuit has recently interpreted “exceptional cases” to mean only those cases a) where there has been misconduct by a party during the litigation or in course of securing the patent, b) that were brought in subjective bad faith, or c) where the losing party’s position was “objectively baseless.” Octane, slip op. at 4.
May 9, 2014
If the Supreme Court decides to grant certiorari in Kimble v. Marvel Enterprises, 727 F.3d 856 (9th Cir. 2013), to get rid of the universally-disliked, yet never abrogated, doctrine embodied in its 1964 decision in Brulotte v. Thys, it will be thanks in part to “your friendly neighborhood Spider-Man.” The Plaintiff in Kimble was issued a patent in 1990 for a toy that allowed a child (“or other user,” as the Ninth Circuit’s opinion carefully notes) to imitate Spider-Man’s web shooting abilities by allowing the user to shoot a foam string via a trigger attached to the palm of a glove, which trigger was attached to a line leading to a can of foam strapped to the user’s wrist. 727 F.3d at 857-58. Kimble pitched his invention to Marvel Enterprises, who agreed to compensate him if it used his ideas, although it claimed a lack of interest. Marvel, however, later came out with a suspiciously similar “Spider-Man role-playing toy” called the “Web Blaster.” Id. at 858. Kimble sued Marvel for patent infringement and for breach of contract. In 2001, the parties settled. Id. The settlement agreement required a lump sum payment and a running royalty payment of 3% on sales of the Web Blaster, in perpetuity, despite the fact that the patent expired in 2010. Id. at 858-59.
April 8, 2014
The single-serve coffee industry is brewing up a set of interesting legal issues relating to the interplay of patent and antitrust law. Thanks in no small part to a seemingly well-managed portfolio of patents covering single-serve brewers and accompanying “K-cups” (i.e., disposable pods filled with pre-packaged ground coffee, tea, hot chocolate, etc.), Keurig has led the single-serve coffee industry and arguably achieved “household name” status. Keurig’s patents have allowed it in some ways to exercise a “legal monopoly” over products that fall within the scope of its patents– but patents do not last forever. How does Keurig maintain its leadership in the market once some or all of its patents expire? What happens when competitors cleverly design around Keurig’s patents and sell similar (but not identical) products for use in Keurig’s brewers? Does Keurig surrender its market share, or does it fight for it? Keurig has chosen to fight, but at least one competitor says it has done so anti-competitively in violation of federal and state antitrust laws.
March 11, 2014