Highmark Inc. v. Allcare Management Systems, Inc.

Whether permitting the award of attorney’s fees to the prevailing party, in exceptional cases under 35 U.S.C. § 285, based on a court's judgment that a suit is objectively baseless, is entitled to deference.

Petitioner brought a baseless counterclaim in violation of 35 U.S.C. § 285 of the Patent Act. A violation of 35 U.S.C. § 285 is reserved for "exceptional" cases in which the party found to be in violation must give attorney fees to the opposing party. The United States Court of Appeals for the Federal Circuit held that an "exceptional" case is one found to be (1) objectively baseless; and (2) asserted in subjective bad faith. Additionally, the court held that the ultimate decision to award enhanced damages and attorneys' fees is at the district court's discretion and that the district court's findings on the bad faith component are subject to review for clear error. The objectively baseless component is reviewed as a matter of law and not left to the courts discretion.

The Supreme Court granted certiorari to decide whether to review the "objectively baseless" component as a matter of law, which is without deference, or as a finding of fact that can only be set aside for "clear error" therefore entitled deference.