The future of attorneys' fee awards in patent cases

When Congress next addresses patent litigation legislation, it will need to consider whether the Octane Fitness (see what we wrote here and here) decision in April 2014 has adequately overcome the perceived obstacles to awarding attorneys' fees under 35 U.S.C. § 285 in patent cases. If a need for further change is perceived, we suggest that Congress consider conforming Section 285 to the statutory language of the attorneys' fee section of the Copyright Act and endorsing that section's interpretation by the Courts. That section simply states that "the court may also award reasonable attorney’s fee to the prevailing party as part of the costs." 17 U.S.C. § 505. See Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994).

In Octane Fitness, the Supreme Court loosened the standards for awarding attorneys' fees under 35 U.S.C. § 285 in patent cases, but did not read out the requirement that such awards be made only in cases which are "exceptional." 134 S. Ct. 1749. Rather, it determined that the word "exceptional" should reflect what it means in everyday language. The Court held that "exceptional" cases are ones that "stand out" from others. In addition, to help guide lower courts in a case-by-case inquiry into the "totality of the circumstances," Octane Fitness noted Section 505 of the Copyright Act. Drawing from cases interpreting that section, the Court compiled a non-exclusive list of factors to consider when deciding whether to award fees: "frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." See Fogerty, 510 U.S. at 534 n.19. However, in applying Patent Act Section 285, unlike Copyright Act Section 505, courts must still find a case "exceptional" in order to award attorneys' fees, albeit under a less restrictive standard than the one that the Federal Circuit had prescribed.

Since Octane Fitness, there appears to have been a substantial increase in the number of attorneys' fee applications in patent cases and district courts appear to have taken the Octane Fitness factors to heart; however, the focal point remains whether or not the case is "exceptional." In other cases, however, courts have declined to award fees under the new section 285 standard.

By listing the factors considered for award of attorneys' fees under the "may award" standard of the Copyright Act and—in effect—endorsing that standard, Octane Fitness has indicated how the same, discretionary standard might be applied in patent litigation if the "exceptional" requirement were removed from Section 285.