Six days after the Supreme Court handed down its opinion in Alice Corp. v. CLS Bank, which invalidated certain patents disclosing “a computer-implemented scheme for mitigating ‘settlement risk,’” the USPTO issued its own Preliminary Examination Instructions. (An overview of the Alice Corp. decision can be found here.)
In two related decisions, the Supreme Court relaxed the standard to award attorney’s fees under Section 285 of the Patent Act (“§285”) and ruled that decisions on §285 are entitled to deference on appeal. In the first case, the Court found that the Federal Circuit’s test for §285, as described in Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378, 1380 (Fed. Cir. 2005), is “unduly rigid” and inconsistent with the statutory language. Octane Fitness, LLC v. Icon Health & Fitness, Inc., 12-1184, Slip Op. at 7 (2014). The Court reasoned that the only constraint imposed by the text of §285 on a district court’s discretion to award attorney’s fees is that the case must be exceptional. Id. According to its ordinary meaning, the Court held, “an ‘exceptional’ case is simply one that stands 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.” Id. at 7-8. Further, district courts should consider the totality of the circumstances and make a case-by-case determination on §285 questions. Id. at 8. Finally, the Court held that the evidentiary burden for §285 is a preponderance of the evidence, not clear and convincing evidence as required by the Federal Circuit. Id. at 11.