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SUPREME COURT OF THE UNITED STATES
_________________
No. 12–1184
_________________
OCTANE FITNESS, LLC, PETITIONER v. ICON HEALTH
& FITNESS, INC.
on writ of certiorari to the united states
court of appeals for the federal circuit
[April 29, 2014]
Justice Sotomayor
delivered the opinion of the Court.[
1]*
Section 285 of the
Patent Act authorizes a district court to award attorney’s
fees in patent litigation. It provides, in its entirety, that
“[t]he 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 held that “[a] case may be
deemed exceptional” under §285 only in two limited
circumstances: “when there has been some material
inappropriate conduct,” or when the litigation is both
“brought in subjective bad faith” and
“objectively baseless.” Id., at 1381. The question
before us is whether the Brooks Furniture framework is consistent
with the statutory text. We hold that it is not.
I
A
Prior to 1946, the
Patent Act did not authorize the awarding of attorney’s fees
to the prevailing party in patent litigation. Rather, the
“American Rule” governed: “ ‘[E]ach
litigant pa[id] his own attorney’s fees, win or
lose . . . .’ ” Marx v.
General Revenue Corp., 568 U. S. ___, ___ (2013) (slip op., at
9). In 1946, Congress amended the Patent Act to add a discretionary
fee-shifting provision, then codified in §70, which stated
that a court “may in its discretion award reasonable
attorney’s fees to the prevailing party upon the entry of
judgment in any patent case.” 35 U. S. C. §70
(1946 ed.).[
2]
Courts did not award
fees under §70 as a matter of course. They viewed the award of
fees not “as a penalty for failure to win a patent
infringement suit,” but as appropriate “only in
extraordinary circumstances.” Park-In-Theatres, Inc. v.
Perkins, 190 F. 2d 137, 142 (CA9 1951). The provision enabled
them to address “unfairness or bad faith in the conduct of
the losing party, or some other equitable consideration of similar
force,” which made a case so unusual as to warrant
fee-shifting. Ibid.; see also Pennsylvania Crusher Co. v. Bethlehem
Steel Co., 193 F. 2d 445, 451 (CA3 1951) (listing as
“adequate justification[s]” for fee awards “fraud
practiced on the Patent Office or vexatious or unjustified
litigation”).
Six years later,
Congress amended the fee-shifting provision and recodified it as
§285. Whereas §70 had specified that a district court
could “in its discretion award reasonable attorney’s
fees to the prevailing party,” the revised language of
§285 (which remains in force today) provides that “[t]he
court in exceptional cases may award reasonable attorney fees to
the prevailing party.” We have observed, in interpreting the
damages provision of the Patent Act, that the addition of the
phrase “exceptional cases” to §285 was “for
purposes of clarification only.”[
3] General Motors Corp. v. Devex Corp., 461 U. S. 648
, n. 8 (1983); see also id., at 652, n. 6. And the parties
agree that the recodification did not substantively alter the
meaning of the statute.[
4]
For three decades after
the enactment of §285, courts applied it—as they had
applied §70—in a discretionary manner, assessing various
factors to determine whether a given case was sufficiently
“exceptional” to warrant a fee award. See, e.g., True
Temper Corp. v. CF&I Steel Corp., 601 F. 2d 495,
508–509 (CA10 1979); Kearney & Trecker Corp. v. Giddings
& Lewis, Inc., 452 F. 2d 579, 597 (CA7 1971); Siebring v.
Hansen, 346 F. 2d 474, 480–481 (CA8 1965).
In 1982, Congress
created the Federal Circuit and vested it with exclusive appellate
jurisdiction in patent cases. 28 U. S. C. §1295. In
the two decades that followed, the Federal Circuit, like the
regional circuits before it, instructed district courts to consider
the totality of the circumstances when making fee determinations
under §285. See, e.g., Rohm & Haas Co. v. Crystal Chemical
Co., 736 F. 2d 688, 691 (1984) (“Cases decided under
§285 have noted that ‘the substitution of the phrase
“in exceptional cases” has not done away with the
discretionary feature’ ”); Yamanouchi
Pharmaceutical Co., Ltd. v. Danbury Pharmacal, Inc., 231 F. 3d
1339, 1347 (2000) (“In assessing whether a case qualifies as
exceptional, the district court must look at the totality of the
circumstances”).
In 2005, however, the
Federal Circuit abandoned that holistic, equitable approach in
favor of a more rigid and mechanical formulation. In Brooks
Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F. 3d
1378 (2005), the court held that a case is
“exceptional” under §285 only “when there
has been some material inappropriate conduct related to the matter
in litigation, such as willful infringement, fraud or inequitable
conduct in procuring the patent, misconduct during litigation,
vexatious or unjustified litigation, conduct that violates Fed. R.
Civ. P. 11, or like infractions.” Id., at 1381. “Absent
misconduct in conduct of the litigation or in securing the
patent,” the Federal Circuit continued, fees “may be
imposed against the patentee only if both (1) the litigation
is brought in subjective bad faith, and (2) the litigation is
objectively baseless.” Ibid. The Federal Circuit subsequently
clarified that litigation is objectively baseless only if it is
“so unreasonable that no reasonable litigant could believe it
would succeed,” iLOR, LLC v. Google, Inc., 631 F. 3d
1372, 1378 (2011), and that litigation is brought in subjective bad
faith only if the plaintiff “actually know[s]” that it
is objectively baseless, id., at 1377.[
5]
Finally, Brooks
Furniture held that because “[t]here is a presumption that
the assertion of infringement of a duly granted patent is made in
good faith[,] . . . the underlying improper conduct and
the characterization of the case as exceptional must be established
by clear and convincing evidence.” 393 F. 3d, at
1382.
B
The parties to this
litigation are manufacturers of exercise equipment. The respondent,
ICON Health & Fitness, Inc., owns U. S. Patent No.
6,019,710 (’710 patent), which discloses an elliptical
exercise machine that allows for adjustments to fit the individual
stride paths of users. ICON is a major manufacturer of exercise
equipment, but it has never commercially sold the machine disclosed
in the ’710 patent. The petitioner, Octane Fitness, LLC, also
manufactures exercise equipment, including elliptical machines
known as the Q45 and Q47.
ICON sued Octane,
alleging that the Q45 and Q47 infringed several claims of the
’710 patent. The District Court granted Octane’s motion
for summary judgment, concluding that Octane’s machines did
not infringe ICON’s patent. 2011 WL 2457914 (D Minn., June
17, 2011). Octane then moved for attorney’s fees under
§285. Applying the Brooks Furniture standard, the District
Court denied Octane’s motion. 2011 WL 3900975 (D Minn., Sept.
6, 2011). It determined that Octane could show neither that
ICON’s claim was objectively baseless nor that ICON had
brought it in subjective bad faith. As to objective baselessness,
the District Court rejected Octane’s argument that the
judgment of noninfringement “should have been a foregone
conclusion to anyone who visually inspected” Octane’s
machines. Id., *2. The court explained that although it had
rejected ICON’s infringement arguments, they were neither
“frivolous” nor “objectively baseless.”
Id., *2–*3. The court also found no subjective bad faith on
ICON’s part, dismissing as insufficient both “the fact
that [ICON] is a bigger company which never commercialized the
’710 patent” and an e-mail exchange between two ICON
sales executives, which Octane had offered as evidence that ICON
had brought the infringement action “as a matter of
commercial strategy.”[
6]
Id., *4.
ICON appealed the
judgment of noninfringement, and Octane cross-appealed the denial
of attorney’s fees. The Federal Circuit affirmed both orders.
496 Fed. Appx. 57 (2012). In upholding the denial of
attorney’s fees, it rejected Octane’s argument that the
District Court had “applied an overly restrictive standard in
refusing to find the case exceptional under §285.” Id.,
at 65. The Federal Circuit declined to “revisit the settled
standard for exceptionality.” Ibid.
We granted certiorari,
570 U. S. __ (2013), and now reverse.
II
The framework
established by the Federal Circuit in Brooks Furniture is unduly
rigid, and it impermissibly encumbers the statutory grant of
discretion to district courts.
A
Our analysis begins
and ends with the text of §285: “The court in
exceptional cases may award reasonable attorney fees to the
prevailing party.” This text is patently clear. It imposes
one and only one constraint on district courts’ discretion to
award attorney’s fees in patent litigation: The power is
reserved for “exceptional” cases.
The Patent Act does not
define “exceptional,” so we construe it
“ ‘in accordance with [its] ordinary
meaning.’ ” Sebelius v. Cloer, 569 U. S. ___,
___ (2013) (slip op., at 6); see also Bilski v. Kappos, 561
U. S. 593 , ___ (2010) (slip op., at 6) (“In patent law,
as in all statutory construction, ‘[u]nless otherwise
defined, “words will be interpreted as taking their ordinary,
contemporary, common meaning” ’ ”). In
1952, when Congress used the word in §285 (and today, for that
matter), “[e]xceptional” meant “uncommon,”
“rare,” or “not ordinary.” Webster’s
New International Dictionary 889 (2d ed. 1934); see also 3 Oxford
English Dictionary 374 (1933) (defining “exceptional”
as “out of the ordinary course,” “unusual,”
or “special”);Merriam-Webster’s Collegiate
Dictionary 435 (11th ed. 2008) (defining “exceptional”
as “rare”); Noxell Corp. v. Firehouse No. 1 Bar-B-Que
Restaurant, 771 F. 2d 521, 526 (CADC 1985) (R. B.
Ginsburg, J., joined by Scalia, J.) (interpreting the term
“exceptional” in the Lanham Act’s identical
fee-shifting provision, 15 U. S. C. §1117(a), to
mean “uncommon” or “not
run-of-the-mill”).
We hold, then, that an
“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. District courts may determine whether a case is
“exceptional” in the case-by-case exercise of their
discretion, considering the totality of the circumstances.[
7] As in the comparable context of the
Copyright Act, “ ‘[t]here is no precise rule or
formula for making these determinations,’ but instead
equitable discretion should be exercised ‘in light of the
considerations we have identified.’ ” Fogerty v.
Fantasy, Inc., 510 U. S. 517, 534 (1994) .
B
1
The Federal
Circuit’s formulation is overly rigid. Under the standard
crafted in Brooks Furniture, a case is “exceptional”
only if a district court either finds litigation-related misconduct
of an independently sanctionable magnitude or determines that the
litigation was both “brought in subjective bad faith”
and “objectively baseless.” 393 F. 3d, at 1381.
This formulation superimposes an inflexible framework onto
statutory text that is inherently flexible.
For one thing, the
first category of cases in which the Federal Circuit allows fee
awards—those involving litigation misconduct or certain other
misconduct—appears to extend largely to independently
sanctionable conduct. See ibid. (defining litigation-related
misconduct to include “willful infringement, fraud or
inequitable conduct in procuring the patent, misconduct during
litigation, vexa-tious or unjustified litigation, conduct that
violates Fed. R. Civ. P. 11, or like infractions”). But
sanctionable conduct is not the appropriate benchmark. Under the
standard announced today, a district court may award fees in the
rare case in which a party’s unreasonable conduct—while
not necessarily independently sanctionable—is nonetheless so
“exceptional” as to justify an award of fees.
The second category of
cases in which the Federal Circuit allows fee awards is also too
restrictive. In order for a case to fall within this second
category, a district court must determine both that the litigation
is objectively baseless and that the plaintiff brought it in
subjective bad faith. But a case presenting either subjective bad
faith or exceptionally meritless claims may sufficiently set itself
apart from mine-run cases to warrant a fee award. Cf. Noxell, 771
F. 2d, at 526 (“[W]e think it fair to assume that Congress
did not intend rigidly to limit recovery of fees by a [Lanham Act]
defendant to the rare case in which a court finds that the
plaintiff ‘acted in bad faith, vexatiously, wantonly, or for
oppressive reasons’ . . . . Something
less than ‘bad faith,’ we believe, suffices to mark a
case as ‘exceptional’ ”).
ICON argues that the
dual requirement of “subjective bad faith” and
“objective baselessness” follows from this
Court’s decision in Professional Real Estate Investors, Inc.
v. Columbia Pictures Industries, Inc., 508 U. S. 49 (1993)
(PRE), which involved an exception to the Noerr-Pennington doctrine
of antitrust law. It does not. Under the Noerr-Pennington
doctrine—established by Eastern Railroad Presidents
Conference v. Noerr Motor Freight, Inc., 365 U. S. 127 (1961)
, and Mine Workers v. Pennington, 381 U. S. 657 (1965)
—defendants are immune from antitrust liability for engaging
in conduct (including litigation) aimed at influencing
decisionmaking by the government. PRE, 508 U. S., at 56. But
under a “sham exception” to this doctrine,
“activity ‘ostensibly directed toward influencing
governmental action’ does not qualify for Noerr immunity if
it ‘is a mere sham to cover . . . an attempt to
interfere directly with the business relationships of a
competitor.’ ” Id., at 51. In PRE, we held that to
qualify as a “sham,” a “lawsuit must be
objectively baseless” and must “concea[l] ‘an
attempt to interfere directly with the business relationships of a
competitor . . . .’ ” Id., at
60–61 (emphasis deleted). In other words, the plaintiff must
have brought baseless claims in an attempt to thwart competition
(i.e., in bad faith).
In Brooks Furniture,
the Federal Circuit imported the PRE standard into §285. See
393 F. 3d, at 1381. But the PRE standard finds no roots in the
text of §285, and it makes little sense in the context of
determining whether a case is so “exceptional” as to
justify an award of attorney’s fees in patent litigation. We
crafted the Noerr-Pennington doctrine—and carved out only a
narrow exception for “sham” litigation—to avoid
chilling the exercise of the First Amendment right to petition the
government for the redress of grievances. See PRE, 508 U. S.,
at 56 (“Those who petition government for redress are
generally immune from antitrust liability”). But to the
extent that patent suits are similarly protected as acts of
petitioning, it is not clear why the shifting of fees in an
“exceptional” case would diminish that right. The
threat of antitrust liability (and the attendant treble damages, 15
U. S. C. §15) far more significantly chills the
exercise of the right to petition than does the mere shifting of
attorney’s fees. In the Noerr-Pennington context, defendants
seek immunity from a judicial declaration that their filing of a
lawsuit was actually unlawful; here, they seek immunity from a far
less onerous declaration that they should bear the costs of that
lawsuit in exceptional cases.
2
We reject Brooks
Furniture for another reason: It is so demanding that it would
appear to render §285 largely superfluous. We have long
recognized a common-law exception to the general “American
rule” against fee-shifting—an exception,
“inherent” in the “power [of] the courts”
that applies for “ ‘willful disobedience of a
court order’ ” or “when the losing party has
‘acted in bad faith, vexatiously, wantonly, or for oppressive
reasons . . . .’ ” Alyeska Pipeline
Service Co. v. Wilderness Society, 421 U. S. 240 –259
(1975). We have twice declined to construe fee-shifting provisions
narrowly on the basis that doing so would render them superfluous,
given the background exception to the American rule, see
Christiansburg Garment Co. v. EEOC, 434 U. S. 412, 419 (1978)
; Newman v. Piggie Park Enterprises, Inc., 390 U. S. 400 ,
n. 4 (1968) (per curiam), and we again decline to do so
here.
3
Finally, we reject
the Federal Circuit’s requirement that patent litigants
establish their entitlement to fees under §285 by “clear
and convincing evidence,” Brooks Furniture, 393 F. 3d,
at 1382. We have not interpreted comparable fee-shifting statutes
to require proof of entitlement to fees by clear and convincing
evidence. See, e.g., Fogerty, 510 U. S., at 519; Cooter &
Gell v. Hartmarx Corp., 496 U. S. 384 (1990) ; Pierce v. Underwood,
487 U. S. 552, 558 (1988) . And nothing in §285 justifies
such a high standard of proof. Section 285 demands a simple
discretionary inquiry; it imposes no specific evidentiary burden,
much less such a high one. Indeed, patent-infringement litigation
has always been governed by a preponderance of the evidence
standard, see, e.g., Béné v. Jeantet, 129 U. S.
683, 688 (1889) , and that is the “standard generally
applicable in civil actions,” because it “allows both
parties to ‘share the risk of error in roughly equal
fashion,’ ” Herman & MacLean v. Huddleston,
459 U. S. 375, 390 (1983) .
* * *
For the foregoing
reasons, the judgment of the United States Court of Appeals for the
Federal Circuit is reversed, and the case is remanded for further
proceedings consistent with this opinion.
It is so ordered.
