The U.S. Patent Laws provide for the potential of recovery of enhanced damages and attorneys’ fees in exceptional cases. Until at least recently, good luck getting the Federal Circuit Court of Appeals agreeing that the case was indeed exceptional to merit an award of attorneys’ fees unless there was misconduct in litigation or securing the patent. But the pendulum is swinging and it may be easier to see a path to an award of attorneys’ fees in patent infringement cases.
At the end of December, the Federal Circuit decided the Kilopass Technology, Inc. v. Sidense Corp. case. While the law or standard hasn’t changed—the moving party still has to show (1) the litigation was brought in subjective bad faith and (2) the litigation was objectively baseless and with clear and convincing evidence, evidence that the patent owner had actual knowledge that its case had no foundation is not required. Subjective bad faith only requires proof that the lack of objective foundation for the claim was either known by the patent owner or so obvious that it should have been know. Further, the trial court erred (in determining no exceptional case) because it may have required too great a showing of subjective bad faith and may have took too narrow of a view of proof that could satisfy the subjective portion of the analysis. Rather, the trial court should have determined subjective bad faith from a totality of the circumstances.
This decision is important as there are many voices that are shouting about abusive patent litigation. Making the loser pay, while not the American Rule, is being discussed and making its way into updates to patent law legislative drafts. The Federal Circuit, as the sole patent infringement appellate court (save for the U.S. Supreme Court), is weighing in making the test for exceptionalness (under the statute) less rigid. Patent owners that have done a poor job of determining the merits of its patent infringement claims need to beware.