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Intellectual Property Law

New Matter FALL 2015 Volume 40, Number 3

Patent Trolling in the Wake of the Octane Fitness Case

ROBERT W. FLETCHER IPISC

Octane Fitness, LLC v. Icon Health & Fitness, Inc.1 was decided by the U.S. Supreme Court on April 29, 2014. Since that time, it has become more and more of a landmark decision. While the case itself was between competitors the issue to be decided was more far reaching. It required resolution of the question of whether or not the lower court erred in holding that the facts did not support the case being "exceptional" under 35 U.S.C. § 285. The Supreme Court reversed the Court of Appeals for the Federal Circuit (CAFC), which had affirmed that the case was not exceptional. The decision opened the door to a significant uptick in the finding of exceptional cases and thus fee awards. It further has had a significant impact upon the practice of patent trolling and actions of the Executive and Legislative branches of government in addressing such practices. It is important to take cognizance of the fact that everything done to curtail the practice of patent trolling has the potential to have a negative impact upon the legitimate efforts to monetize inventions by making patent enforcement more difficult.

THE OCTANE FITNESS CASE IN A NUTSHELL

Much has been written about the Octane Fitness case (Octane Fitness vs. Icon Health and Fitness) and its companion case Highmark vs. All Care Health Management.2 The cases have significance for certain questionable patent litigation practices. These practices have gained the label of "patent trolling." Patent trolling is the term applied to parties who recognize that the high cost of litigation creates the perfect platform from which to launch extortionist-type activities in which non-manufacturing entities purchase relatively unworthy patents and assert them against unsuspecting parties and then settle the cases using as leverage the high cost of the legal defense. These parties have from time to time been referred to by various names, such as non-producing entities (NPEs) or patent assertion entities (PAEs), but "Patent Trolls" seems to be a more colorful and, from the defendant’s point ofview, an appropriate label.

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