No. 12-1163
` In the Supreme Court of the United States
`
`
`
`
`HIGHMARK INC., PETITIONER
`
` v.
`ALLCARE HEALTH MANAGEMENT SYSTEMS, INC.
`
`
`
`ON WRIT OF CERTIORARI
`
`TO THE UNITED STATES COURT OF APPEALS
`
`FOR THE FEDERAL CIRCUIT
`
`
`BRIEF FOR THE UNITED STATES
`
`
`AS AMICUS CURIAE SUPPORTING PETITIONER
`
`
`DONALD B. VERRILLI, JR.
`
`Solicitor General
`Counsel of Record
` STUART F. DELERY
`
`
`
`Assistant Attorney General
` MALCOLM L. STEWART
`
`
`
`Deputy Solicitor General
`ROMAN MARTINEZ
`
`Assistant to the Solicitor
`General
`
` SCOTT R. MCINTOSH
`
`
` MICHAEL E. ROBINSON
`
`
`
` Attorneys
`
`Department of Justice
`Washington, D.C. 20530-0001
`SupremeCtBriefs@usdoj.gov
`(202) 514-2217
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
` NATHAN K. KELLEY
`
`
` Solicitor and Deputy
`
`General Counsel
` JAMIE L. SIMPSON
`
`
`
`
`JOSEPH MATAL
` LORE A. UNT
`
`
`
`Associate Solicitors
`United States Patent and
`Trademark Office
`
`Alexandria, Va. 22313
`
`
`
`
`
`

`
`
`
`QUESTION PRESENTED
`
`
`Section 285 of the Patent Act provides that “[t]he
`court in exceptional cases may award reasonable at-
`torney fees to the prevailing party.” 35 U.S.C. 285.
`
` The question presented is as follows:
`Whether a district court’s determination that a par-
`ty’s litigating position is objectively baseless for pur-
`poses of Section 285 is subject to de novo review on
`appeal.
`
`
`
`(I)
`
`
`
`

`
`
`
`TABLE OF CONTENTS
`
`
`
`
`Page
`
` Interest of the United States ........................................................ 1
`
`
`Statement ......................................................................................... 2
`
`Summary of argument ................................................................... 8
`
`
`Argument ....................................................................................... 10
`
`
`I.
`Section 285 fee awards are subject to a unitary
`
`
`
`abuse-of-discretion standard of review on appeal..... 11
`
`
`
`
`A. Section 285 grants district courts discre-
`
`
`tionary authority over fee awards....................... 11
`
`
`
`
`B. There is a longstanding historical tradition
`
`of reviewing Section 285 awards deferentially
`
`
`
`
`on appeal................................................................. 19
`
`
`
`C. The sound administration of justice favors
`
`
`an abuse-of-discretion standard .......................... 21
`
`
`
`
`II. A unitary abuse-of-discretion standard will not
`
`
`preclude correction of pure legal error....................... 28
`
`
`
`III. The Federal Circuit’s analysis is flawed, and the
`
`
`case should be remanded.............................................. 31
`
`
`
`
`Conclusion ...................................................................................... 34
`
`
`
`
`TABLE OF AUTHORITIES
`
`
`
`
`
`
`
` Cases:
`
`
` Algren Watch Findings Co. v. Kalinsky, 197 F.2d 69
`
`
` (2d Cir. 1952) ................................................................... 13, 15
`
`American Safety Table Co. v. Schreiber, 415 F.2d 373
`
`(2d Cir. 1969), cert. denied, 396 U.S. 1038 (1970)............. 19
`
`
`
`Bard Peripheral Vascular, Inc. v. W.L. Gore & As-
`
`socs., Inc., 682 F.3d 1003 (Fed. Cir. 2012), cert.
`
`
`
`denied, 133 S. Ct. 932 (2013) ........................................... 6, 25
`
`
`
`
`Blanc v. Spartan Tool Co.:
`
`
`
`168 F.2d 296 (7th Cir.), cert. denied, 335 U.S. 853
`
`
`(1948) ............................................................................. 14
`
`
`178 F.2d 104 (7th Cir. 1949)............................................. 13
`
`
`
`
`(III)
`
`
`

`
`IV
`
`
`
`Page
`
`
`
`
`Cases—Continued:
`Blue v. United States Dep’t of the Army, 914 F.2d
`
`
`525 (4th Cir. 1990), cert. denied, 499 U.S. 959 (1991) ......18
`
`
`
`
`
`
`Bolt, Beranek & Newman, Inc. v. McDonnell
`
`
`Douglas Corp., 521 F.2d 338 (8th Cir. 1975),
`
`
`
`
`
`cert. denied, 423 U.S. 1073 (1976).......................................20
`
`
`
`Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc.,
`
`
`393 F.3d 1378 (Fed. Cir. 2005) ..............................................3
`
`
`
`CTS Corp. v. Piher Intern. Corp., 727 F.2d 1550
`
`
`(Fed. Cir.), cert. denied, 469 U.S. 871 (1984) ....................21
`
`
`
`Chambers v. NASCO, Inc., 501 U.S. 32 (1991) .............. 18, 29
`
`
`Christiansburg Garment Co. v. EEOC, 434 U.S. 412
`
`(1978) ............................................................................ 8, 18, 29
`
`Cooter & Gell v. Hartmarx Corp., 496 U.S. 384
`
`
`
`(1990) ............................................................................. passim
`
`Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448
`
`(Fed. Cir. 1998) .....................................................................30
`
`
`
`Denton v. Hernandez, 504 U.S. 25 (1992) ...................... 17, 29
`
`
`
`
`
`Digeo, Inc. v. Audible, Inc., 505 F.3d 1362
`
`
`(Fed. Cir. 2007) .....................................................................20
`
`
`
`Dixie Cup Co. v. Paper Container Mfg. Co., 174 F.2d
`
`
`
`
` 834 (7th Cir.), cert. denied, 338 U.S. 867 (1949) ......... 13, 15
`
`
`Dubil v. Rayford Camp & Co., 184 F.2d 899
`
`
`
`
` (9th Cir. 1950).................................................................. 13, 15
`
`
`Eichman v. Linden & Sons, Inc., 752 F.2d 1246 (7th
`
`
` Cir. 1985)................................................................................18
`
`
`Eon-Net LP v. Flagstar Bancorp, 653 F.3d 1314
`
`
`
` (Fed. Cir. 2011), cert. denied, 132 S. Ct. 2391 (2012).......20
`
`
`
`Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994) .....................12
`
`
`
`Garner v. Cuyahoga Cnty. Juvenile Court,
`
`554 F.3d 624 (6th Cir. 2009) ................................................18
`
`
`
`
`Garrett Corp. v. American Safety Flight Sys., Inc.,
`
`
`502 F.2d 9 (5th Cir. 1974) ....................................................20
`
`
`
`
`
`
`
`
`
`
`
`

`
`V
`
`
`Page
`
`Cases—Continued:
`General Motors Corp. v. Devex Corp., 461 U.S. 648
`
`(1983) .................................................................................. 3, 15
`
`
`Haynes Int’l, Inc. v. Jessop Steel Co., 8 F.3d 1573
`
`
`
`
`
`(Fed. Cir. 1993) ..................................................................... 20
`
`
`Hensley v. Eckerhart, 461 U.S. 424 (1983)..................... 23, 27
`
`
`
`Hughes Aircraft Co. v. Messerschmitt-
`
`Boelkow-Blohm, GmbH, 625 F.2d 580 (5th Cir.
`1980), cert. denied, 449 U.S. 1082 (1981) ..................... 19, 20
`
`
`
`iLOR, LLC v. Google, Inc., 631 F.3d 1372
`
`(Fed. Cir. 2011) ................................................................... 3, 6
`
`
`
`J.P. Stevens Co. v. Lex Tex Ltd., 822 F.2d 1047 (Fed.
`
`Cir. 1987)................................................................................ 21
`
`
`
`Kearney & Trecker Corp. v. Cincinnati Milacron
`
`Inc., 562 F.2d 365 (6th Cir. 1977) ....................................... 20
`
`
`
`Koon v. United States, 518 U.S. 81 (1996) ............... 10, 28, 29
`
`
`
`Lam, Inc. v. Johns-Manville Corp., 668 F.2d 462
`
`(10th Cir.), cert. denied, 456 U.S. 1007 (1982) .................. 20
`
`
`
`Laufenberg, Inc. v. Goldblatt Bros., Inc., 187 F.2d
`
`
`823 (7th Cir. 1951)................................................................. 14
`
`
`
`LeBlanc-Sternberg v. Fletcher, 143 F.3d 765
`
`
`(2d Cir. 1998) ......................................................................... 18
`
`
`Lighting Ballast Control LLC v. Philips Elecs.
`
`
`N. Am. Corp., 500 Fed. Appx. 951 (Fed. Cir. 2013) ......... 30
`
`
`
`
`Lincoln Elec. Co. v. Linde Air Prods. Co.,
`
`74 F. Supp. 293 (N.D. Ohio 1947) ................................ 13, 14
`
`
`
`Loctite Corp. v. Fel-Pro, Inc., 667 F.2d 577
`
`
`(7th Cir. 1981)........................................................................ 20
`
`
`Martin v. Franklin Capital Corp., 546 U.S. 132
`
`(2005) ................................................................................ 12, 28
`
`Marx v. General Revenue Corp., 133 S. Ct. 1166
`
`
`(2013) ........................................................................................ 2
`
`
`
`
`
`
`
`
`

`
`VI
`
`
`
`
`
`
`Page
`
`
`Cases—Continued:
`Merrill v. Builders Ornamental Iron Co.,
`
`
`
`197 F.2d 16 (10th Cir. 1952) ................................................ 14
`
`
`Miller v. Fenton, 474 U.S. 104 (1985) ............................. 11, 22
`
`
`
`
`Miller-El v. Cockrell, 537 U.S. 322 (2003)............................ 26
`
`
`Monolithic Power Sys., Inc. v. O2 Micro Int’l Ltd.,
`
`
`
` 726 F.3d 1359 (Fed. Cir. 2013)............................................ 10
`
` Norton Co. v. Carborundum Co., 530 F.2d 435
`
`
` (1st Cir. 1976) ........................................................................ 19
`
`
`Noxell Corp. v. Firehouse No. 1 Bar-B-Que Rest.,
`
`
`771 F.2d 521 (D.C. Cir. 1985) .............................................. 12
`
`
`Oetiker v. Jurid Werke GmbH, 671 F.2d 596
`
`
`
`(D.C. Cir. 1982) ..................................................................... 20
`
`
`Omark Indus., Inc. v. Colonial Tool Co., 672 F.3d
`
`
`
`
`362 (3d Cir. 1982) .................................................................. 19
`
`
`
`Orrison v. C. Hoffberger Co., 190 F.2d 787
`
`
`
`(4th Cir. 1951)............................................................ 13, 14, 15
`
`
`Park-In-Theatres v. Perkins, 190 F.2d 137
`
`
`
`
`(9th Cir. 1951)........................................................................ 14
`
`
`Pennsylvania v. Delaware Valley Citizens’ Council
`
`
`
`for Clean Air, 483 U.S 711 (1987)....................................... 27
`
`
`
`Pennsylvania Crusher Co. v. Bethlehem Steel Co.,
`
`
`193 F.2d 445 (3d Cir. 1951).................................................. 14
`
`
`
`Pharmacia & Upjohn Co. v. Mylan Pharm., Inc.,
`
`
`182 F.3d 1356 (Fed. Cir. 1999)............................................ 20
`
`
`
`Phonometrics, Inc. v. Westin Hotel Co., 350 F.3d
`
`
`
`1242 (Fed. Cir. 2003) ............................................................ 20
`
`
`Pickering v. Holman, 459 F.2d 403 (9th Cir. 1972)............ 20
`
`
`
`Pierce v. Underwood, 487 U.S. 552 (1988) .................. passim
`
`
`
`Professional Real Estate Investors, Inc. v. Columbia
`
`
`Pictures Indus., Inc., 508 U.S. 49 (1993)....................... 6, 32
`
`
`
`Pullman-Standard v. Swint, 456 U.S. 273 (1982) .............. 28
`
`
`
`Salve Regina Coll. v. Russell, 499 U.S. 225 (1991) ............. 28
`
`
`
`
`
`
`

`
`VII
`
`
`Page
`
`Cases—Continued:
`Teese v. Huntingdon, 64 U.S. (23 How.) 2 (1860) .................2
`
`
`
`United States v. Burr, 25 F. Cas. 30 (C.C.D. Va.
`
`
`
`
`1807) .......................................................................................28
`
`
`Vischer Prods. Co. v. National Pressure Cooker Co.,
`
`
`
`92 F. Supp. 138 (W.D. Wis. 1950) .......................................14
`
`
`
`
`Western Elec. Co. v. Stewart-Warner Corp., 631 F.2d
`
`
`
`
`
`
`
`333 (4th Cir. 1980), cert. denied, 450 U.S. 971 (1981) ......19
`
`
`Whitney Bros. v. Sprafkin, 60 F.3d 8 (1st Cir. 1995) .........18
`
`
`
`
`
`Constitution, statutes and rules:
`
`
`
`
`U.S. Const. Art. I, § 8, Cl. 8 (Patent Clause) .........................2
`
`
`Act of Aug. 1, 1946, ch. 726, 60 Stat. 778 (35 U.S.C. 70
`
`
`(1946)) ................................................................................. 2, 13
`
`
`Equal Access to Justice Act, 28 U.S.C. 2412(d) (2006
`
`
`& Supp. V 2011) ......................................................................7
`
`
`
`28 U.S.C. 2412(d)(1)(A)......................................... 12, 21, 29
`
`
`
`Lanham Act, 15 U.S.C. 1117(a) .............................................12
`
`
`
`15 U.S.C. 1692k(a)(3) ..............................................................12
`
`
`
`28 U.S.C. 1915(d) (1994) ................................................... 17, 29
`
`
`
`28 U.S.C. 1927 ..........................................................................19
`
`35 U.S.C. 2(a)(1).........................................................................1
`
`35 U.S.C. 2(b)(8).........................................................................1
`
`35 U.S.C. 281 ..............................................................................2
`
`35 U.S.C. 285 ................................................................... passim
`
`
`
`42 U.S.C. 1988 (1988) ..............................................................17
`
`
`
`42 U.S.C. 2000e-5(k).......................................................... 18, 29
`
`
`
`Fed. R. Civ. P.:
`
`
`
`Rule 11 .................................................................... 5, 7, 9, 33
`
`
`
`Rule 11, 480 U.S. 962 (1987) ...................................... 19, 23
`
`
`
`Rule 16 ................................................................................19
`
`
`
`Rule 52(a) ...........................................................................30
`
`
`
`
`
`
`

`
`VIII
`
`
`Page
`
`
`Miscellaneous:
`1 Steven Alan Childress & Martha S. Davis, Federal
`
`
`Standards of Review (4th ed. 2010) ........... 17, 19, 24, 28, 29
`
`
`
`
`7 Donald S. Chisum, Chisum on Patents (1999) ................. 15
`
`
`
`
`
`92 Cong. Rec. 9188 (1946)....................................................... 13
`
`
`
`98 Cong. Rec. (1952):
`
`
`p. 9097 ................................................................................. 16
`
`
`
`p. 9323 ................................................................................. 16
`
`
`
`Harry T. Edwards et al., Federal Standards of Re-
`
`view: Review of District Court Decisions and
`
`
`Agency Actions (2d ed. 2013)........................................ 17, 28
`
`
`
`
`P.J. Federico, Commentary on the New Patent Act,
`
`75 J. Pat. & Trademark Off. Soc’y 161 (1993)................... 16
`
`
`
`
`Henry J. Friendly, Indiscretion About Discretion,
`
`31 Emory L.J. 747 (1982)..................................................... 17
`
`
`
`Gov’t Accountability Office, Report No. GAO-13-465,
`
`Intellectual Property: Assessing Factors That Af-
`
`fect Patent Infringement Litigation Could Help
`
`
`Improve Patent Quality (Aug. 2013)................................. 27
`
`
`Jonathan L. Moore, Particularizing Patent Plead-
`
`ing: Pleading Patent Infringement in a Post-
`
`Twombly World, 18 Tex. Intell. Prop. L.J. 451
`
`
`
`
`
`(2010) ...................................................................................... 26
`
`Kimberly A. Moore, Forum Shopping in Patent
`
`
`Cases: Does Geographic Choice Affect Innovation?,
`
`
`
`79 N.C. L. Rev. 889 (2001)................................................... 26
`
`
`
`Patent Law Codification and Revision: Hearings
`
`Before Subcomm. No. 3 of the House Comm. on the
`
`Judiciary, 82d Cong., 1st Sess. (1951) .............................. 16
`
`
`
`Maurice Rosenberg, Judicial Discretion of the Trial
`
`Court, Viewed from Above, 22 Syracuse
`
`
`
`L. Rev. 635 (1971) ........................................................... 17, 22
`
`
`
`S. Rep. No. 1503, 79th Cong., 2d Sess. (1946).................. 3, 13
`
`
`
`
`

`
`IX
`
`
`Miscellaneous—Continued:
`Page
`S. Rep. No. 1979, 82d Cong., 2d Sess. (1952) ....................... 15
`
`
`
`U.S. Patent No. 5,301,105 (filed Apr. 8, 1991) ................... 4, 6
`
`
`
`Webster’s New International Dictionary of the Eng-
`lish Language (2d ed. 1958) ................................................ 12
`
`
`
`
`
`
`
`
`
`
`
`
`

`
`
`In the Supreme Court of the United States
`
`
`
`
`No. 12-1163
`
`HIGHMARK INC., PETITIONER
`
`
` v.
`ALLCARE HEALTH MANAGEMENT SYSTEMS, INC.
`
`
`
`ON WRIT OF CERTIORARI
`
`TO THE UNITED STATES COURT OF APPEALS
`
`FOR THE FEDERAL CIRCUIT
`
`
`BRIEF FOR THE UNITED STATES
`
`
`AS AMICUS CURIAE SUPPORTING PETITIONER
`
`
`
`
`
`
`
`
`
`INTEREST OF THE UNITED STATES
`
`This case concerns the operation of 35 U.S.C. 285,
`which authorizes district courts to award attorney’s
`fees in lawsuits under the Patent Act. The United
`States Patent and Trademark Office is responsible for
`issuing patents and—through the Secretary of Com-
`merce—advising the President on issues of patent
`policy. See 35 U.S.C. 2(a)(1) and (b)(8). Several other
`agencies of the federal government also have a strong
`regulatory interest in improving the efficacy of the
`patent system and in reducing the costs and burdens
`
`of patent litigation. The extent to which prevailing
`parties may recover attorney’s fees has potentially
`significant bearing on the incentives for parties to
`pursue abusive claims and defenses in patent in-
`fringement litigation. The United States therefore
`
`
`
`(1)
`
`

`
`2
`
`
`
`
`
`
`has a substantial interest in the Court’s resolution of
`the question presented.
`STATEMENT
` This case involves the standard of appellate review
`
`that applies to a district court’s discretionary decision
`to award fees under the Patent Act, 35 U.S.C. 285.
`Here, the Federal Circuit reversed part of a fee award
`after concluding, based on its de novo review of the
`question, that the district court had erred in charac-
`terizing one of respondent’s infringement allegations
`as objectively baseless.
`1. The Patent Clause of the Constitution empowers
`Congress “[t]o promote the Progress of Science and
`
`useful Arts, by securing for limited Times to * * *
`
`
`Inventors the exclusive Right to their * * * Dis-
`coveries.” U.S. Const. Art. I, § 8, Cl. 8. Title 35 es-
`tablishes the statutory framework governing the issu-
`ance of patents, and it grants a patentee “remedy by
`civil action for infringement of his patent.” 35 U.S.C.
`281. The Act also authorizes a prevailing party in a
`patent action to seek attorney’s fees. 35 U.S.C. 285.
`a. Until 1946, patent lawsuits were subject to the
`“American Rule,” under which “[e]ach litigant pays
`his own attorney’s fees, win or lose.” Marx v. General
`Revenue Corp., 133 S. Ct. 1166, 1175 (2013) (citation
`omitted; brackets in original); see, e.g., Teese v. Hun-
`tingdon, 64 U.S. (23 How.) 2, 8 (1860). That year,
`Congress enacted a new provision declaring that a
`district court could, in its discretion, award reasonable
`attorney’s fees to the prevailing party. Act of Aug. 1,
`1946 (1946 Act), ch. 726, 60 Stat. 778 (35 U.S.C. 70
`(1946)). The provision was not intended to make fee-
`shifting “an ordinary thing in patent suits,” but it
`
`granted broad discretion to award fees, both to deter
`
`
`
`
`
`
`

`
`3
`
`
`infringement and “to prevent a gross injustice to an
`alleged infringer.” S. Rep. No. 1503, 79th Cong., 2d
`Sess. 2 (1946) (1946 Senate Report).
`In the Patent Act of 1952, Congress reorganized
`the patent laws and, in doing so, made non-substantive
`changes to the fee-shifting provision “for purposes of
`clarification only.” General Motors Corp. v. Devex
`Corp., 461 U.S. 648, 653 n.8 (1983). As revised and
`codified at 35 U.S.C. 285, the new provision declared
`that “[t]he court in exceptional cases may award rea-
`sonable attorney fees to the prevailing party.” That
`version of Section 285 remains in effect today.
`b. The Federal Circuit has interpreted Section 285
`to make fee awards appropriate in a range of circum-
`stances, including when a losing plaintiff’s legal or
` 
`
`factual claims are so unreasonable that it would be
`grossly unjust to force the prevailing defendant to pay
`his own fees. See, e.g., iLOR, LLC v. Google, Inc., 631
`F.3d 1372, 1376-1378 (2011); Brooks Furniture Mfg.,
`Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (2005).
`The court has held that to obtain fees under Section
`
`285 in such cases, the defendant must prove—by clear
`and convincing evidence—that the plaintiff’s claim
` 
`
`was both (1) “objectively baseless,” and (2) brought in
`“subjective bad faith.” iLOR, 631 F.3d at 1376.
`In Octane Fitness, LLC v. Icon Health & Fitness,
`
`Inc., cert. granted, No. 12-1184 (oral argument sched-
`uled for Feb. 26, 2014), this Court is now considering
`whether this two-prong test unduly restricts fee
`awards in these circumstances. The United States has
`filed an amicus brief in Octane, arguing that the Court
`should reject the two-prong test in favor of a broader
`and more flexible inquiry into whether, under the
`totality of circumstances present in each case, it would
`
`
`
`
`
`
`
`

`
`4
`
`
`
`
`be grossly unjust for the prevailing defendant to pay
`
` his own fees. Under any test, however, this Court will
`need to determine the standard of review that applies
`to a district court’s determination that a Section 285
`fee award is appropriate because of the unreasonable-
`ness of the losing party’s legal or factual arguments.
`
`2. This case is an infringement action involving a
`patent relating to the healthcare industry.
`a. Petitioner Highmark, Inc., is a non-profit Blue
`
`Cross Blue Shield Plan that provides health insurance
`
` Petitioner administers its
`to its members. Pet. 5.
`plans using a system of “utilization review”—the pro-
`cess by which a health insurer determines whether to
`approve payment for treatment given to particular
`patients. Pet. App. 2a-3a, 46a; see id. at 75a-76a (de-
`scribing petitioner’s system).
`Respondent Allcare Health Management Systems,
`Inc., is the owner of U.S. Patent No. 5,301,105 (filed
`Apr. 8, 1991) (the ’105 patent). Pet. App. 2a. The ’105
`patent is directed to “managed health care systems”
`
`that connect patients with physicians, medical facili-
`ties, insurers, and banks, particularly for purposes of
`utilization review. Id. at 2a-3a. The patent’s claims
`generally cover a method for determining “whether
`utilization review is necessary in a particular in-
`stance” and “whether a recommended treatment is
`
`appropriate,” and also for “prevent[ing] authorization
`and payment” for the treatment until it has been ap-
`proved. Id. at 3a.
`b. In April 2002, respondent threatened legal ac-
`tion against petitioner, alleging that petitioner’s sys-
`tem of utilization review infringed the ’105 patent.
`Pet. App. 45a. Petitioner sued respondent, seeking a
`declaratory judgment of invalidity, noninfringement,
`
`
`
`
`
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`

`
`5
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`
`
`
`and unenforceability. Id. at 47a. Respondent coun-
`terclaimed for
`infringement, asserting specifically
`that petitioner’s system infringed claims 52, 53, and
`102 of the patent. Ibid. Respondent eventually with-
`
`drew its infringement allegations with respect to claim
`102, and the court granted petitioner summary judg-
`ment of non-infringement of claims 52 and 53. Re-
`spondent appealed to the Federal Circuit, which af-
`firmed without written opinion. 329 Fed. Appx. 280;
`Pet. App. 5a-6a.
`c. While the merits appeal was pending, petitioner
`
`filed a motion in the district court seeking attorney’s
`fees under Section 285. The district court granted the
`fee request in April 2010. Pet. App. 6a.1
`
`In finding that the case was “exceptional” under
`Section 285, the district court stated that respondent
`had engaged in numerous instances of “vexatious” and
`“deceitful” conduct over the course of the litigation.
`Pet. App. 90a. Specifically, it concluded that respond-
`ent had “maintained infringement claims well after
`such claims had been shown by its own experts to be
`without merit” and had “asserted defenses it and its
`attorneys knew to be frivolous.” Ibid. The court ulti-
`
`mately awarded petitioner approximately $4.9 million
`in attorney’s fees and costs under Section 285. Id. at
`
`169a.
`d. Respondent appealed the fee award to the Fed-
`eral Circuit. On appeal, a divided panel affirmed in
`part and reversed in part. Pet. App. 14a-31a.
`The panel majority first addressed the standard of
`review applicable to a district court’s decision to
`
`1
`
` Petitioner also initially obtained sanctions against respondent
`
`under Fed. R. Civ. P. 11, but the district court vacated the sanc-
`
`
`tions in August 2010. Pet. App. 103a-152a.
`
`
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`
`

`
`
`
`
`
`
`
`6
`
`
`
`
`award fees on the ground that a party’s litigating
`position was frivolous. It began by noting that circuit
`precedent requires proof that the position is both
`(1) “objectively baseless,” and (2) brought in “subjec-
`tive bad faith.” Pet. App. 8a. Relying on Professional
`
`Real Estate Investors, Inc. v. Columbia Pictures
`Industries, Inc., 508 U.S. 49 (1993), and Bard Periph-
`
`eral Vascular, Inc. v. W.L. Gore & Associates, Inc.,
`682 F.3d 1003 (Fed. Cir. 2012), cert. denied, 133 S. Ct.
`932 (2013), the panel held that objective baselessness
`is “a question of law based on underlying mixed ques-
`tions of law and fact” and, as such, is reviewed “de
`
`novo” and “without deference” on appeal. Pet. App.
`
`9a & n.1 (quoting Bard, 682 F.3d at 1005). The panel
`also noted that the existence of subjective bad faith “is
`reviewed under a deferential standard” for “clear
`error.” Id. at 10a n.1, 12a.
`Applying those standards, the panel affirmed the
`district court’s fee award with respect to the allega-
`tion that petitioner’s system infringed claim 102 of the
`’105 patent. See Pet. App. 14a-18a. The panel re-
`versed the award with respect to claim 52, however,
`concluding that respondent’s allegation of infringe-
`ment under claim 52 was not objectively unreasonable.
`Id. at 19a-22a. Specifically, the panel determined—
`contrary to the judgment of the district court—that
`“[respondent]’s argument with respect to [claim 52]
`was not ‘so unreasonable that no reasonable litigant
`could believe it would succeed.’” Id. at 21a-22a (quot-
` 
`ing iLOR, 631 F.3d at 1378). The panel majority also
`ruled that none of respondent’s alleged litigation mis-
`conduct rendered the case exceptional. Id. at 23a-31a.
`
`
`Judge Mayer dissented in part. Pet. App. 31a-43a.
`He rejected the majority’s view that “no deference is
`
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`
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`
`

`
`
`
`7
`
`
`
`
`owed to a district court’s finding that the infringement
`claims asserted by a litigant at trial were objectively
`unreasonable.” Id. at 31a. He would have held that
`
`
`“reasonableness is a finding of fact which may be set
`aside only for clear error.” Ibid.; see also id. at 35a.
`Judge Mayer noted that this Court has prescribed
`deferential standards of review for awards of attor-
`ney’s fees against the United States under the Equal
`Access to Justice Act (EAJA), 28 U.S.C. 2412(d) (2006
`& Supp. V 2011), and for orders imposing sanctions
`under Federal Rule of Civil Procedure 11. Pet. App.
`37a-38a (citing Pierce v. Underwood, 487 U.S. 552, 565
`
`(1988), and Cooter & Gell v. Hartmarx Corp., 496 U.S.
`384, 401 (1990)). He added that “[e]ncouraging reliti-
`gation of factual disputes on appeal is an enormous
`waste of the litigants’ resources and vitiates the criti-
`cally important fact-finding role of the district courts.”
`Id. at 33a.
`e. The Federal Circuit denied rehearing en banc,
`with five judges dissenting. Pet. App. 179a-214a.
`Judge Dyk—the author of the panel opinion—
`concurred in the denial of review, elaborating on the
`rationale previously articulated by the panel majority.
`Pet. App. 182a-190a. Judge Moore, joined by four
`other judges, filed a dissent that criticized the panel
`for “deviat[ing] from precedent, invad[ing] the prov-
`ince of the fact finder, and establish[ing] a review
`standard for exceptional case findings in patent cases
`that is squarely at odds” with this Court’s decisions in
`Pierce and Cooter & Gell. Id. at 191a-203a. Judge
`
`Reyna also dissented, likewise criticizing the panel
`decision for violating circuit precedent and adopting a
`non-deferential de novo standard of review for trial
`court determinations of objective baselessness. Id. at
`
`
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`

`
`8
`
`
`
`
` 203a-214a (joined in part by Judge Rader and in full
` 
`by the other three dissenters).
`SUMMARY OF ARGUMENT
`I. When deciding what standard of review to ap-
`
`ply to a particular type of trial-court determination,
`
`this Court considers (1) any statutory direction pro-
`vided by Congress, (2) the history of appellate prac-
`tice with respect to the determination, and (3) the
`
` need to promote the sound functioning of our judicial
`system. Pierce v. Underwood, 487 U.S. 552, 558-560
`(1988). All three guideposts point to a unitary abuse-
`of-discretion standard for reviewing fee awards under
`Section 285.
`
`A. Congress has long vested district courts with
`broad discretion to determine when fee awards are
`necessary to prevent gross injustice in appropriate
`patent cases. The 1946 version of the fee-shifting
`provision was explicit in this respect. Appellate courts
`interpreting that provision consistently acknowledged
`the discretion of district courts over fee awards and
`reviewed such awards deferentially. Congress reaf-
`firmed that understanding when it enacted Section
`285 in 1952.
`This Court’s precedents make clear that when
`Congress clearly vests the district court with discre-
`tion over a particular decision, the court’s exercise of
`that discretion must be reviewed deferentially on
`appeal. That principle generally applies even to a trial
`court’s subsidiary analysis of mixed questions of law
`and fact, including its determination that a party’s
`litigating position is so unreasonable that it justifies a
`fee award in a particular case. See, e.g., Christians-
`burg Garment Co. v. EEOC, 434 U.S. 412, 421, 423
`(1978). All aspects of a Section 285 fee award, includ-
`
`
`
`
`

`
`9
`
`
`ing the trial court’s determination that a case is “ex-
`ceptional” due to a party’s baseless litigating position,
`
`therefore must be reviewed for abuse of discretion.
`
`B. Until the decision below, there was a long and
`unbroken historical tradition of reviewing Section 285
`
`fee awards deferentially. For three decades after
`Section 285 was passed, the regional circuits consist-
`ently reviewed such awards for abuse of discre-
`tion. The Federal Circuit continued that approach
`after it assumed exclusive jurisdiction over patent
`
`appeals in 1982. It was not until this case that the
`Federal Circuit first broke with 60 years of practice
`and announced that baselessness determinations
`should be reviewed de novo. The prior tradition of
`deferential review strongly supports an abuse-of-
`discretion standard.
`
`C. Functional considerations confirm that deferen-
`tial review is most likely to promote the sound admin-
`istration of justice. In Pierce and Cooter & Gell v.
`
`Hartmarx Corp., 496 U.S. 384 (1990), this Court ad-
`dressed the proper standard of review that applies to
`fee awards under EAJA and Rule 11, respectively. In
`both cases, the Court confronted essentially the same
`issue it faces here—whether appellate courts should
`defer to trial-court determinations that a party’s ar-
`gument is so unreasonable that its adversary should
`be granted attorney’s fees. In both, the Court con-
`cluded that deferential review was appropriate be-
`cause baselessness determinations involve a fact-
`intensive analysis that the trial court is best posi-
`tioned to conduct. The Court should follow the same
`approach here.
`II. Even under the abuse-of-discretion standard,
`appellate courts remain free to reverse decisions
`
`
`
`
`
`

`
`10
`
`
`
`premised on a pure error of law. The Court in Cooter
`& Gell said so explicitly, 496 U.S. at 402, and this
`Court’s subsequent decisions confirm that “[t]he
`abuse of discretion standard includes review to de-
`termine that the discretion was not guided by errone-
`ous legal conclusions.” Koon v. United States, 518
`U.S. 81, 100 (1996). Although appellate courts must
`defer to trial-court determinations that a party’s ar-
`gument is unreasonable under the particular circum-
`stances of the case, they need not defer to the trial
`court’s misstatement of the law or (in patent cases)
`the court’s flawed claim construction.
`III. Rather than defer to the district court’s
`
`firsthand assessment of the case, the Federal Circuit
`applied de novo review to the court’s baselessness
`
`determination under Section 285. That approach is
`inconsistent with this Court’s precedents and with the
`text and history of Section 285. This Court should
`clarify that Section 285 awards are subject to unitary
`abuse-of-discretion review on appeal, and should re-
`mand the case for further consideration under that
`standard.
`
`ARGUMENT
`The Federal Circuit has recognized that a district
`court’s ultimate decision to award attorney’s fees
`under Section 285 must be reviewed for abuse of dis-
`cretion. See, e.g., Monolithic Power Sys., Inc., v. O2
`Micro Int’l Ltd., 726 F.3d 1359, 1365 (2013). The
`court in this case nevertheless applied de novo review
`to the district court’s subsidiary determination that
`respondent’s litigating position was “objectively base-
`less,” on the theory that the baselessness determina-
`tion is a legal conclusion. This Court should reject
`that approach and hold that a unitary abuse-of-
`
`
`
`
`

`
`11
`
`
`
`
` discretion standard governs appellate review of all
`as