`
`IN THE
`Supreme Court of the United States
`
`OCTANE FITNESS, LLC,
`
`Petitioner,
`
`v.
`
`ICON HEALTH & FITNESS, INC.,
`
`Respondent.
`
`ON PETITION FOR A WRIT OF CERTIORARI TO THE
`UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
`
`REPLY BRIEF
`
` RUDOLPH A. TELSCHER, JR.,
`Counsel of Record
`KARA R. FUSSNER
`HARNESS, DICKEY & PIERCE, PLC
`7700 Bonhomme Avenue,
`Suite 400
`St. Louis, MO 63105
`(314) 726-7500
`rtelscher@hdp.com
`
`Attorneys for Petitioner,
`Octane Fitness, LLC
`
`247769
`
`A
`
`(800) 274-3321 • (800) 359-6859
`
`
`
`i
`
`PARTIES TO THE PROCEEDING
`
`The Plaintiff below is Icon Health & Fitness, Inc.
`(“Icon).
`
`The Defendant-below/Petitioner is Octane Fitness,
`LLC (“Octane”).
`
`
`
`ii
`
`CORPORATE DISCLOSURE STATEMENT
`
`Octane is wholly owned by OF Holdings, Inc.
`
`
`
`iii
`
`TABLE OF CONTENTS
`
`Page
`PARTIES TO THE PROCEEDING . . . . . . . . . . . . . . . . .
`
`CORPORATE DISCLOSURE STATEMENT . . . . . . . .
`
`TABLE OF CONTENTS. . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . . .
`
`INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`I. The Decision Below Confl icts with Fogerty. . . . . .
`
`II. The Exceptional Case Standard Confl icts
`with the Standard Adopted by other Circuits
`Interpreting an Identical Provision of the
`Lanham Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`III. The Issue Was Properly Raised Below. . . . . . . . . .
`
`IV. Respondent’s Remaining Arguments, Though
`Incorrect, Are Irrelevant. . . . . . . . . . . . . . . . . . . . .
`
`A. The Question Presented Is Legal, Not
`Fact-Bound. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`B. Decision in Octane’s Favor Would Not
`“Supplant” Congress’ Legislative Role.. . . . .
`
`CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`
`
`iv
`
`TABLE OF CITED AUTHORITIES
`
`Page
`
`CASES
`
`Armstrong Paint & Varnish Works v.
`Nu-Enamel Corp.,
`305 U.S. 315 (1938) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`
`
`Door Sys., Inc. v. Pro-Line Door Sys., Inc.,
`
`126 F.3d 1028 (7th Cir. 1997) . . . . . . . . . . . . . . . . . . . . .
`
`Fogerty v. Fantasy, Inc.,
`
`510 U.S. 517 (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`Hartman v. Hallmark Cards, Inc.,
`
`833 F.2d 117 (8th Cir. 1987). . . . . . . . . . . . . . . . . . . . . . .
`
`Highmark, Inc. v.
` Allcare Health Mgmt. Sys., Inc.,
`
`687 F.3d 1300 (Fed. Cir. 2012) . . . . . . . . . . . . . . . . . . . .
`
`iLOR, LLC v. Google, Inc.,
`
`631 F.3d 1372 (Fed. Cir. 2011). . . . . . . . . . . . . . . . . . . . .
`
`In re Seagate Tech.,
`
`497 F.3d 1360 (Fed. Cir. 2007) . . . . . . . . . . . . . . . . . . . .
`
`Lebron v. National R.R. Passenger Corp.,
`
`513 U.S. 374 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`MedImmune, Inc. v. Genentech, Inc.,
`
`549 U.S. 118 (2007). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`
`
`v
`
`Cited Authorities
`
`Page
`
`National Ass’n of Professional Baseball
`Leagues, Inc. v. Very Minor Leagues, Inc.,
`223 F. 3d 1143 (10th Cir. 2000) . . . . . . . . . . . . . . . . . . . .
`
`
`
`Nelson v. Adams USC, Inc.,
`
`529 U.S. 460 (2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`Noxell Corp. v.
` Firehouse No. 1 Bar-B-Que Restaurant,
`
`771 F.2d 521 (D.C. Cir. 1985) . . . . . . . . . . . . . . . . . . . . .
`
`Securacomm Consulting, Inc. v. Securacom Inc.,
`
`224 F.3d 273 (3d Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . .
`
` Stephen W. Boney, Inc. v. Boney Services, Inc.,
`
`127 F.3d 821 (9th Cir. 1997) . . . . . . . . . . . . . . . . . . . . . .
`
`Tamko Roofi ng Products, Inc. v. Ideal Roofi ng Co.,
`
`282 F.3d 23 (1st Cir. 2002). . . . . . . . . . . . . . . . . . . . . . . .
`
`United States v. United Foods, Inc.,
`
`533 U.S. 405 (2001). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`Yee v. Escondido,
`
`503 U.S. 519 (1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`STATUTES
`
`15 U.S.C. § 1117 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`35 U.S.C. § 284. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`
`
`vi
`
`Cited Authorities
`
`Page
`35 U.S.C. § 285. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`RULES
`
`Fed. R. Civ. P. 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`S. Ct. R. 15.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`OTHER AUTHORIES
`
`J. A l l i s on e t a l ., Pa t e n t Q u a li ty a n d
`S e t t l e m e n t A m o n g R e p e a t Pa t e n t
` Litigants, 99 Geo. L. J. 677, 693-694 (2011) . . . . . . . . .
`
`C. Chien, Patent Trolls by the Numbers,
` Patently-O, Mar. 14, 2013 . . . . . . . . . . . . . . . . . . . . . . . .
`
`Randall R. Rader, et al., Op-Ed., Make Patent
` Trolls Pay in Court, N.Y. Times, June 4, 2013. . . . . . .
`
`Octane Br., 2012 WL 481412 (Fed. Cir.
`
`Jan 27, 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`Octane Reply Br., 2012 WL 1943711 (Fed. Cir.
` May 3, 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`SHIELD Act II, S.1013 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
`
`
`
`1
`
`INTRODUCTION
`
` The most compelling reasons to grant certiorari
`are left, in most all respects, unaddressed by the
`Respondent. First, the Federal Circuit’s current
`exceptional case standard is squarely in confl ict with this
`Court’s holding in Fogerty v. Fantasy, Inc., 510 U.S. 517
`(1994), see Pet. 30, a case which Respondent does not even
`cite, much less discuss. Fogerty mandates that plaintiffs
`and defendants be treated alike under an analogous
`fee-shifting provision in the Copyright Act. Respondent
`claims an even-handed approach by the Federal Circuit
`here, but neither the differing language used by the
`Federal Circuit, nor the disparate fee awards between
`plaintiffs and defendants, support its assertion. Second,
`other circuits have interpreted identical language in the
`Lanham Act in a manner that confl icts with the Federal
`Circuit’s interpretation here. See Pet. 36. Respondent does
`not address this confl ict at all, let alone contest it. Third,
`Respondent does not dispute that the Federal Circuit’s
`fee-shifting standard in patent cases is essentially
`coterminous with the standard for Rule 11 sanctions,
`rendering section 285 of the Patent Act a nullity. Finally,
`Respondent does not dispute the ballooning cost of patent
`litigation, the high incidence of meritless suits designed
`to extort licensing fees, or the salutary effect that section
`285—properly interpreted—could have on combatting
`these trends, a point made earlier this week in an editorial
`piece in the New York Times. Randall R. Rader, et al., Op-
`Ed., Make Patent Trolls Pay in Court, N.Y. Times, June
`4, 2013, at A25. In short, this case has all the ingredients
`of a successful petition for certiorari.
`
`
`
`2
`
` Without any substantial challenge to the cert-
`worthiness of this case, Respondent resorts to inaccuracies
`and red herrings that only distract from the real issues.
`Respondent tries to label the dispute “fact-bound,”
`when, in fact, the question presented is legal: whether
`the Federal Circuit’s exceptional case standard is a
`proper interpretation of the Patent Act. And Respondent
`puzzlingly claims that this issue was not raised below, when
`it was clearly presented to and rejected by the Federal
`Circuit, and then presented again in an en banc petition.
`The rest of Respondent’s arguments go to the merits, and
`therefore—inaccuracies and unpersuasiveness aside—
`have no bearing upon certiorari.
`
`ARGUMENT
`
`I. The Decision Below Confl icts with Fogerty.
`
`In Fogerty v. Fantasy, Inc., this Court held that
`“[p]revailing plaintiffs and prevailing defendants are to
`be treated alike” for purposes of fee awards under the
`Copyright Act. 510 U.S. at 534. The Court rejected a
`“dual standard” that had treated plaintiffs more favorably.
`In so holding, the Court specifi cally noted that “federal
`fee-shifting statutes in the patent and trademark fi elds
`. . . support a party-neutral approach.” Id. at 525 n.12.
`The Federal Circuit’s decision to treat plaintiffs more
`favorably defi es this Court’s decision in Fogerty, and must
`be reversed.
`
`Icon counters that the Federal Circuit’s standard
`“is the same for patent plaintiffs and defendants” and
`that it is Octane’s proposed interpretation that would
`expand the statute for prevailing defendants if bad faith
`were removed. Opp. 17. That is wrong. A prevailing
`
`
`
`3
`
`plaintiff can recover attorneys’ fees if it can show willful
`infringement—that the defendant was or should have
`been aware of an objectively high likelihood that the
`plaintiff would prevail. In re Seagate Tech., 497 F.3d 1360,
`1371 (Fed. Cir. 2007) (en banc). By contrast, a prevailing
`defendant must show that a plaintiff “actually kn[e]w”
`that its case had “no objective foundation.” iLOR, LLC
`v. Google, Inc., 631 F.3d 1372, 1377 (Fed. Cir. 2011); see
`Pet. App. 25a. While at times the Federal Circuit has
`described the subjective prong consistent with that used
`in the context of willful infringement, see Highmark, 687
`F.3d 1300, 1309 (Fed. Cir. 2012) (citing Seagate for the
`same subjective standard), the second prong of the test is
`neither articulated nor applied on an even-handed basis. A
`plaintiff knowing, actually or recklessly, that its case has
`“no objective foundation” (a situation that would invoke
`Rule 11), is not the reciprocal of a defendant knowing,
`actually or recklessly, that the plaintiff has a “high
`likelihood of success” of showing infringement. And the
`disparity is borne out by the statistics: prevailing plaintiffs
`are twice as likely to win attorneys’ fees as prevailing
`defendants. Pet. 30.
`
`Further, patentees must prove at least objective
`recklessness for a fi nding of willful infringement, but
`willful infringement is only one way to make a case
`“exceptional.” Courts should be able to look to the “totality
`of the circumstances” in the case of a prevailing patentee,
`just like Octane proposes for a prevailing defendant.
`Of course, if a prevailing patentee can also prove an
`infringer’s subjective bad faith, it may then be entitled
`to treble damages under 35 U.S.C. § 284, in addition
`to an award of attorneys’ fees under 35 U.S.C. § 285, as
`a punitive remedy. But an award of attorneys’ fees is
`separate.
`
`
`
`4
`
`II. The Exceptional Case Standard Confl icts with the
`Standard Adopted by other Circuits Interpreting
`an Identical Provision of the Lanham Act.
`
`Just like the Patent Act, the Lanham Act provides
`that a “court in exceptional cases may award reasonable
`attorney fees to the prevailing party.” 15 U.S.C. § 1117.
`Several circuits have interpreted this provision in a
`manner that is inconsistent with the Federal Circuit’s
`interpretation of identical language in the Patent Act.
`For example, the Seventh Circuit has held that “bad faith
`is not the correct standard for determining whether to
`award attorneys’ fees to the defendant in a Lanham Act
`case.” Door Sys., Inc. v. Pro-Line Door Sys., Inc.,126
`F.3d 1028, 1031 (7th Cir. 1997). “[A] suit can be oppressive
`because of lack of merit and cost of defending even though
`the plaintiff honestly though mistakenly believes that
`he has a good case and is not trying merely to extract a
`settlement based on the suit’s nuisance value.” Id. at 1032.
`The Eighth Circuit has similarly held that “[b]ad faith is
`not a prerequisite to a Lanham Act fee award.” Hartman
`v. Hallmark Cards, Inc., 833 F.2d 117, 123 (8th Cir. 1987)
`(citation omitted), and a number of other circuits agree,
`Tamko Roofi ng Products, Inc. v. Ideal Roofi ng Co., 282
`F.3d 23, 32 (1st Cir. 2002); Securacomm Consulting, Inc. v.
`Securacom Inc., 224 F.3d 273, 280 (3d Cir. 2000); National
`Ass’n of Professional Baseball Leagues, Inc. v. Very
`Minor Leagues, Inc., 223 F. 3d 1143, 1147 (10th Cir. 2000);
`Stephen W. Boney, Inc. v. Boney Services, Inc., 127 F.3d
`821, 827 (9th Cir. 1997); Noxell Corp. v. Firehouse No. 1
`Bar-B-Que Restaurant, 771 F.2d 521, 526 (D.C. Cir. 1985).
`Thus, there is a clear circuit split on the proper standard
`for fee awards under the Patent Act and Lanham Act, a
`split neither intended by the Legislature nor practical in
`its application, (particularly in cases where both causes of
`
`
`
`5
`
`action are presented in the Federal Circuit). Certiorari is
`appropriately granted to resolve this confl ict.
`
`III. The Issue Was Properly Raised Below.
`
`Respondent contends that this Court should deny
`the petition because Octane’s arguments were not
`presented to the lower courts. That is demonstrably
`untrue. In the Federal Circuit, Octane specifically
`advocated for reconsideration of the Federal Circuit’s
`interpretation of the exceptional case standard. It
`dedicated an entire section of its opening appeal brief to
`the argument that “Abuses in Patent Litigation Counsel
`for Reconsideration of the Judicially Created Standards
`for Determining Exceptional Case Status for Prevailing
`Alleged Infringers.” See Octane Br., 2012 WL 481412,
`at 67-80 (Fed. Cir. Jan 27, 2012). In that 12-page section,
`Octane asked for reconsideration of the Federal Circuit’s
`two-part objectively baseless/subjective bad faith test,
`in favor of an interpretation that would allow discretion
`to award fees where patentees proceeded unreasonably,
`without the need for a separate showing of subjective bad
`faith. Octane then petitioned for en banc review of that
`same issue. That was more than enough to preserve the
`argument for review. See MedImmune, Inc. v. Genentech,
`Inc., 549 U.S. 118, 125 (2007).
`
`Icon’s assertion that the argument was not raised
`below, appears to center on Octane’s specifi c use of the
`words “low likelihood of success” in its briefi ng to this
`Court versus its prior use of words like “objectively
`unreasonable” to describe what should qualify as an
`“exceptional case.” But the basic point—made both below
`and in the petition—is that the “exceptional case” statute,
`while certainly not entitling every prevailing defendant
`
`
`
`6
`
`to fees, should not require a showing of baselessness on
`par with a Rule 11 violation (the Federal Circuit’s current
`articulation), and it should not require proof of subjective
`bad faith (the second prong of the Federal Circuit’s test
`derived from this Court’s ruling in the PRE case). See,
`e.g., Octane Fed Cir. Br., 2012 WL 481412, at 74-76, 77-80.
`Instead, and consistent with the legislative intent and this
`Court’s precedent, district courts should have discretion
`to award fees to prevailing accused infringers on par with
`prevailing patentees: when the defendant shows that the
`patentee proceeded with a case unreasonably or in the face
`of a “low likelihood of success,” that should be suffi cient
`to deem a case exceptional.
`
`Thus the exact issue presented here was raised
`below. And even if the specifi c formulation of the standard
`now advocated here was not proposed below (though its
`substance was), that does not make review now improper:
`The “traditional rule is that once a federal claim is
`properly presented, a party can make any argument in
`support of that claim; parties are not limited to the precise
`arguments they made below.” Lebron v. National R.R.
`Passenger Corp., 513 U.S. 374, 379 (1995) (quoting Yee v.
`Escondido, 503 U.S. 519, 534 (1992) (internal quotations
`omitted)). The principle that an issue must be raised in
`the lower court in order to be preserved as potential
`grounds of decision in higher courts “does not demand the
`incantation of particular words; rather, it requires that
`the lower court be fairly put on notice as to the substance
`of the issue.” Nelson v. Adams USC, Inc. 529 U.S. 460,
`469 (2000).
`
`The sole case Icon cites does not hold otherwise. In
`United States v. United Foods, Inc., 533 U.S. 405 (2001),
`
`
`
`7
`
`the Government, for the fi rst time in its brief on the
`merits to this Court, argued that the advertisements at
`issue constituted “government speech” immune from the
`level of scrutiny that would otherwise apply. Its failure
`to make this argument in the lower court deprived the
`respondent and the lower court of the ability to address
`factual matters about the program which would bear on
`its categorization as “government speech.” Id. at 416-17.
`
`Here, Octane is not raising new issues. It is asking
`this Court to consider whether or not the Federal Circuit’s
`rigid two-part test for labeling a case “exceptional” for a
`prevailing accused infringer is in accord with the statute,
`legislative intent and case precedent. This was the issue
`presented to the Federal Circuit, and the Federal Circuit
`decided “[w]e have no reason to revisit the settled standard
`for exceptionality.” Pet. App. 17a. While Octane may have
`refi ned the wording of the proposed standard for when
`a case is “exceptional” under section 285 to harmonize
`it with legislative intent and this Court’s precedent (i.e.,
`“objectively unreasonable” or “low likelihood of success”),
`the issue has remained the same—the standard for an
`award of attorneys’ fees under section 285. That issue is
`properly presented here.
`
`IV. Respondent’s Remaining Arguments, Though
`Incorrect, Are Irrelevant.
`
`A. The Question Presented Is Legal, Not Fact-
`Bound.
`
`Much of Icon’s brief is devoted to arguing about how
`the facts of this case allegedly fail to establish Icon’s
`subjective bad faith. This misses the point. The relevant
`
`
`
`8
`
`question is not whether Icon engaged in bad faith,
`but, instead, whether clear and convincing evidence of
`subjective bad faith should be a requirement for proving
`an exceptional case for an award of fees. As set forth above
`and in Octane’s opening brief, it should not.
`
`Both the district court and the Federal Circuit found
`that Octane’s accused elliptical machines do not infringe
`the claims of the ‘710 patent as a matter of law. Octane
`provided some background facts merely to highlight the
`rigid nature of the Federal Circuit’s test and the diffi culty
`of securing fees for a prevailing accused infringer, even
`when, as here, a party enforces a patent that it had sitting
`on the shelf, that was not commercially viable, and against
`a competitor with award-winning products utilizing a
`design licensed under different and pre-dating technology.
`
`Although Icon calls these facts “extraneous” and
`argues the claim language controls, Icon does not, in
`its entire brief in opposition, reference the ‘710 patent’s
`claim language or discuss how the accused products
`could reasonably have been said to infringe those claims
`(because the allegation was groundless from the get-go).1
`Indeed, because Icon does not even dispute that its claim
`had an objectively low likelihood of success, this Court can
`regard that point as conceded for purposes of the petition.
`See S. Ct. R. 15.2. In any event, if this Court grants the
`petition, it need only clarify the proper standard for an
`
`1. Instead, Icon argues that damning emails in the record
`were allegedly written by a Vice President of “Free Motion
`Fitness”, not “Icon.” While irrelevant to the certiorari petition,
`this assertion is also incorrect. The record below refl ecting this
`executive’s status as an Icon witness is found at Octane Br., 2012
`WL 1943711, at 21-22 (Fed. Cir. May 3, 2012).
`
`
`
`9
`
`exceptional case fi nding. If it feels there are factual issues
`relating to the application of that standard best left to
`the trial court in the fi rst instance, it can remand for
`reconsideration in light of the corrected standard. That
`does not make the dispute “fact-bound.”
`
`B. Decision in Octane’s Favor Would Not
`“Supplant” Congress’ Legislative Role.
`
`Respondent urges that a decision in Octane’s favor
`would be a “legislative” act. It would not: Octane merely
`asks the Court to interpret the meaning of a phrase in
`the Patent Act. The Federal Circuit has misconstrued the
`meaning of an “exceptional case”; if this Court intervenes
`to correct that misconstruction, it will restore the law
`that Congress actually passed. That is at the heart of the
`judicial function. See Armstrong Paint & Varnish Works
`v. Nu-Enamel Corp., 305 U.S. 315, 332-33 (1938).
`
`The pendency of the SHIELD Act (I or II) also has no
`bearing on the cert-worthiness of this case. For starters,
`the bill is at a very preliminary stage: it has been referred
`to a House committee, which has not even voted on it.
`Further, the bills under consideration do not contemplate
`revision of the statute at issue here. Instead, they seek
`to address the perceived problems of “non-practicing
`entities” (“NPEs”), also known as patent trolls, and
`overly-broad computer-related patents. But NPEs are
`not the only entities to unscrupulously assert patents (as
`aptly illustrated here), and proper interpretation of the
`existing fee standard remains an important part of the
`equation for curbing abuse.
`
`
`
`10
`
`In any event, the proposed SHIELD Act II goes
`much further than anything Octane has advocated here.
`The proposed SHIELD Act II provides for the award
`of attorney fees, in a lawsuit brought by an NPE (with
`some exceptions), to the prevailing party unless the
`non-prevailing party’s “position and conduct … were
`objectively reasonable and substantially justified” or
`where the exceptional circumstances make the award
`unjust. 2 SHIELD Act II, S.1013.
`
`A presumption of an award of fees to the prevailing
`party is not the standard advocated by Octane here.
`Octane does not propose a presumption for fees. Rather,
`Octane contends that the standard articulated by the
`Federal Circuit, beginning with Brooks Furniture,
`has strayed from the statutory language and intent of
`Congress for an award of fees in “exceptional cases”; it is
`not consistent with this and other courts’ interpretation
`of the same statutory language in analogous fi elds (i.e.,
`Copyright and trademark law); and, contrary to Icon’s
`assertions, it does not treat prevailing plaintiffs and
`prevailing defendants the same.
`
`2. Contrary to Respondent’s suggestion, see Opp. 20-22,
`amendments to SHIELD Act I’s fee provision in no way constitutes
`a rejection of Octane’s proposal here for interpretation of section
`285. Congress expanded the availability of fees in a party-
`neutral way and, if anything, refl ects Congress’ endorsement of
`an interpretation that prevents abuse in patent litigation. In any
`event, to the extent relevant at all, this is a merits argument, which
`the Court can address if it decides to grant certiorari; it is not a
`reason for denying review.
`
`
`
`11
`
`CONCLUSION
`
` The Federal Circuit’s present exceptional case
`standard is inconsistent with this Court’s precedents,
`inconsistent with cases from other circuits, and wrong
`as a matter of statutory construction. It is also hugely
`important: the cost of patent litigation is skyrocketing.
`Pet. 24-25. According to the New York Times, Apple
`and Google, two of the world’s top innovators, now spend
`more on patents and patent litigation than research and
`development.3 While part of this increase stems from the
`rise in meritless NPE litigation,4 patent abuse extends
`beyond the realm of NPEs. As exemplifi ed here, because
`the Federal Circuit has made it virtually impossible for
`successful defendants to recover attorneys’ fees both
`NPE’s and others can assert weak patent claims to extract
`royalties and/or harm smaller competitors, without fear
`of having to pay fees to compensate the defendant in any
`way. This Court’s intervention is sorely needed.
`
`3. http://www.nytimes.com/2012/10/08/technology/patent-
`wars-among-tech-giants-can-stifl e-competition.html.
`
`4. Litigation by NPEs has increased from 19% in 2006, to over
`60% today. C. Chien, Patent Trolls by the Numbers, Patently-O,
`Mar. 14, 2013. And suits fi led by NPEs have a startlingly low
`success rate: Such entities win only 8% of the time when the suit
`is actually litigated to judgment (a rare occurrence), compared
`with a 40% success rate for companies that actually practice their
`patents. J. Allison et al., Patent Quality and Settlement Among
`Repeat Patent Litigants, 99 Geo. L. J. 677, 693-694 (2011).
`
`
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`12
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`For the foregoing reasons, and the reasons stated in
`the petition, Octane Fitness, LLC respectfully requests
`that the Court grant the petition.
`
`
`
`
`
`
`
`Respectfully submitted,
`
`RUDOLPH A. TELSCHER, JR.,
`Counsel of Record
`KARA R. FUSSNER
`HARNESS, DICKEY & PIERCE, PLC
`7700 Bonhomme Avenue,
`Suite 400
`St. Louis, MO 63105
`(314) 726-7500
`rtelscher@hdp.com
`
`Attorneys for Petitioner,
`Octane Fitness, LLC