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Fee Shifting Has Arrived, Thanks to The Supreme Court

By William Peacock, Esq. on June 03, 2014 | Last updated on March 21, 2019

On April 29, 2014, the Supreme Court fixed fee shifting in patent cases. The Court lowered the bar for awarding fees and tweaked the appeals court's review standard to force them to respect the trial court's discretion.

Discretion which must, in the first instance, actually be used. You see, back when the standards were impossibly high and non-deferential (April 28 or so), there was no fee-shifting -- only 20 out of 3,000 cases filed in 2011 led to an award of fees.

Like we said in April: the Court's given trial judges the power. Now they have to use it.

FindTheBest Beats Lumen Down

FindTheBest is a startup company. Lumen, by all accounts, is a patent troll.

"Lumen's motivation in this litigation was to extract a nuisance settlement from FTB on the theory that FTB would rather pay an unjustified license fee than bear the costs of the threatened expensive litigation," U.S. District Court Judge Denise Cote wrote last week. "Lumen's threats of 'full-scale litigation,' 'protracted discovery,' and a settlement demand escalator should FTB file responsive papers, were aimed at convincing FTB that a pay-off was the lesser injustice."

The opinion went on to describe the typical patent trolling tactics: mass boilerplate filings with no reasonable pre-suit investigation to justify the claims.

The case itself wasn't even close, and when it came time to apply the Supreme Court's shiny new Octane Fitness "exceptional case" standard, that wasn't close either.

SCOTUS Says:

The statute allows fee-shifting in exceptional cases, but doesn't define "exceptional." The Supreme Court finally filled in the gap in Octane Fitness:

[A]n "exceptional" case is simply one that stands out from others with respect to the substantive 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.

And if that isn't clear enough, the Court also mentioned a "nonexclusive" list of factors: "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."

As you may have guessed, Judge Cote found that the shoe fit. Ars Technica says this appears to be the first time the standard has been applied since the landmark decision.

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