04/30/2014

Highmark v. Allcare Health: SCOTUS finds §285 Attorney's Fees Standard of Review is "Abuse of Discretion"


Category: Damages 
 
 
 
By: Jesus Hernandez, Blog Editor/Contributor   
 
TitleHighmark, Inc. v. Allcare Health Mgmt. Syst., Inc., No. 12-1163 (April 29, 2014).
IssueWe granted certiorari to determine whether an appellate court should accord deference to a district court’s determination that litigation is “objectively baseless.”
Highmark, Inc. at *1.
HoldingWe therefore hold that an appellate court should apply an abuse-of-discretion standard in reviewing all aspects of a district court’s §285 determination. Although questions of law may in some cases be relevant to the §285 inquiry, that inquiry generally is, at heart, “rooted in factual determinations,”
Id. at *5.
 
 
 
Editor's Notes
For further insight, check out the Audio Brief of oral arguments in Highmark v. Allcare Health by clicking here.
 
 

Procedural History[After a final judgment of non infringement in favor of Highmark,] Highmark then moved for fees under §285. The District Court granted Highmark’s motion. […] The court reasoned that Allcare had engaged in a pattern of “vexatious” and “deceitful” conduct throughout the litigation. […] [The Federal Circuit] affirmed the District Court’s exceptional-case determination with respect to the allegations that Highmark’s system infringed […] but reversed the determination with respect to another claim of the patent […] In reversing the exceptional-case determination as to one claim, the court reviewed it de novo.
Highmark, Inc. at *2-3 (internal citations omitted).
 
 
 
Legal Reasoning (Sotomayor for the Court)
Octane Holding Controls Outcome: review standard is "clear error"
Our opinion in Octane Fitness, LLC v. ICON Health & Fitness, Inc., rejects the Brooks Furniture framework as unduly rigid and inconsistent with the text of §285. It holds, instead, that the word “exceptional” in §285 should be interpreted in accordance with its ordinary meaning. Ante, at 7. An “exceptional” case, it explains, “is simply one that stands out from others with respect to the sub- stantive 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.” Ante, at 7–8. […] Our holding in Octane settles this case: Because §285 commits the determination whether a case is “exceptional” to the discretion of the district court, that decision is to be reviewed on appeal for abuse of discretion.
Highmark, Inc. at *4
[T]he determination whether a case is “exceptional” under §285 is a matter of discretion. And as in our prior cases involving similar determinations, the exceptional-case determination is to be reviewed only for abuse of discretion. […] As in Pierce, the text of the statute “emphasizes the fact that the determination is for the district court,” which “suggests some deference to the district court upon appeal,” […]
Id. at *4-5 (internal citations omitted).
Conclusion
The judgment of the United States Court of Appeals for
the Federal Circuit is vacated, and the case is remanded for further proceedings consistent with this opinion.
Highmark, Inc. at *5.
 
 
 
 
 
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