___ U.S. ___ (2014), 12-1163, Highmark Inc. v. Allcare Health Management System, Inc.

Docket Nº:12-1163
Citation:___ U.S. ___, 134 S.Ct. 1744, 188 L.Ed.2d 829, 82 U.S.L.W. 4328, 110 U.S.P.Q.2d 1343, 24 Fla.L.Weekly Fed. S 729
Opinion Judge:SOTOMAYOR, J.
Party Name:HIGHMARK INC., Petitioner v. ALLCARE HEALTH MANAGEMENT SYSTEM, INC.
Attorney:Neal K. Katyai, Washington, DC, for Petitioner. Brian H. Fletcher, for the United States as amicus curiae, by special leave of the Court, supporting the Petitioner. Donald R. Dunner, Washington, DC, for Respondent. Cynthia E. Kernick, James C. Martin, Thomas M. Pohl, Reed Smith LLP, Pittsburgh, P...
Judge Panel:Roberts, Scalia, Kennedy, Thomas, Ginsburg, Breyer, Alito, Sotomayor, Kagan.
Case Date:April 29, 2014
Court:United States Supreme Court
 
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___ U.S. ___ (2014)

134 S.Ct. 1744, 188 L.Ed.2d 829, 82 U.S.L.W. 4328, 110 U.S.P.Q.2d 1343, 24 Fla.L.Weekly Fed. S 729

HIGHMARK INC., Petitioner

v.

ALLCARE HEALTH MANAGEMENT SYSTEM, INC.

No. 12-1163

United States Supreme Court

April 29, 2014

Roberts, Scalia, Kennedy, Thomas, Ginsburg, Breyer, Alito, Sotomayor, Kagan.

Argued February 26, 2014

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT

[134 S.Ct. 1745] Syllabus [*]

Petitioner Highmark Inc. moved for fees under the Patent Act's fee-shifting provision, which authorizes a district court to award attorney's fees to the prevailing party in "exceptional cases." 35 U.S.C. §285. The District Court found the case "exceptional" and granted Highmark's motion. The Federal Circuit, reviewing the [134 S.Ct. 1746] District Court's determination de novo, reversed in part.

Held:

All aspects of a district court's exceptional-case determination under §285 should be reviewed for abuse of discretion. Prior to Octane Fitness, LLC v. ICON Health & Fitness, Inc., ante, p. ___, 134 S.Ct. 1749, 188 L.Ed.2d 816, this determination was governed by the framework established by the Federal Circuit in Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378. Octane rejects the Brooks Furniture framework as unduly rigid and holds that district courts may make the exceptional-case determination under §285 in the exercise of their discretion. The holding in Octane settles this case. Decisions on "matters of discretion" are traditionally "reviewable for 'abuse of discretion, '" Pierce v. Underwood, 487 U.S. 552, 558, 108 S.Ct. 2541, 101 L.Ed.2d 490, and this Court previously has held that to be the proper standard of review in cases involving similar determinations, see, e.g., id., at 559, 108 S.Ct. 2541, 101 L.Ed.2d 490; Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d. 359. The exceptional-case determination is based on statutory text that "emphasizes the fact that the determination is for the district court, " Pierce, 487 U.S., at 559, 108 S.Ct. 2541, 101 L.Ed.2d 490; that court "is better positioned" to make the determination, id., at 560, 108 S.Ct. 2541, 101 L.Ed.2d 490; and the determination is "multifarious and novel, " not susceptible to "useful generalization" of the sort that de novo review provides, and "likely to profit from the experience that an abuse-of discretion rule will permit to develop, " id., at 562, 108 S.Ct. 2541, 101 L.Ed.2d 490. Pp. 1748-1749, 188 L.Ed.2d, at 833-834.

687 F.3d 1300, vacated and remanded.

Neal K. Katyai, Washington, DC, for Petitioner.

Brian H. Fletcher, for the United States as amicus curiae, by special leave of the Court, supporting the Petitioner.

Donald R. Dunner, Washington, DC, for Respondent.

Cynthia E. Kernick, James C. Martin, Thomas M. Pohl, Reed Smith LLP, Pittsburgh, PA, Neal Kumar Katyai, Counsel of Record, Dominic F. Perella, David M. Ginn, R. Craig Kitchen, Amanda K. Rice, Jonathan D. Shaub, Hogan Lovells U.S. LLP, Washington, DC, for Petitioner.

Erik R. Puknys, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Palo Alto, CA, Donald R. Dunner, Counsel of Record, Don O. Burley, Jason W. Melvin, Cora R. Holt, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, Washington, DC, for Respondent.

OPINION

SOTOMAYOR, J.

Section 285 of the Patent Act provides: "The court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. In Brooks Furniture Mfg., Inc. v. Dutailier Int'l, Inc., 393 F.3d 1378 (2005), the United States Court of Appeals for the Federal Circuit interpreted §285 as authorizing fee awards only in two circumstances. It held that "[a] case may be deemed exceptional" under §285 "when there has been some material inappropriate conduct, " or when it is both "brought in subjective bad faith" and "objectively baseless." Id., at 1381. We granted certiorari to determine whether an appellate court should accord deference to a district court's determination that litigation is "objectively baseless." [134 S.Ct. 1747] On the basis of our opinion in Octane Fitness, LLC v. ICON Health & Fitness, Inc., __ U.S. __, 134 S.Ct. 1749, 188 L.Ed.2d 816, (April 29, 2014) argued together with this case and also issued today, we hold that an appellate court should review all aspects of a district court's §285 determination for abuse of discretion.

I

Allcare Health Management System, Inc., owns U.S. Patent No. 5, 301, 105 ('105 patent), which covers "utilization review" in "'managed health care systems.'"1 687 F.3d 1300, 1306 (C.A.Fed.2012). Highmark Inc., a health insurance company, sued Allcare seeking a declaratory judgment that the '105 patent was invalid and unenforceable and that, to the extent it was valid, Highmark's actions were not infringing it. Allcare counterclaimed for patent infringement. Both parties filed motions for summary judgment, and the District Court entered a final judgment of noninfringement in favor of Highmark. The Federal Circuit affirmed. 329 Fed.Appx. 280 (2009) (per curiam).

Highmark then moved for fees under § 285. The District Court granted Highmark's motion. 706 F.Supp.2d 713 (N.D. Tex.2010). The court reasoned that Allcare had engaged in a pattern of "vexatious" and "deceitful" conduct throughout the litigation. Id., at 737. Specifically, it found that Allcare had "pursued this suit as part of a bigger plan to identify companies potentially...

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